Another Supreme Court Decision Will Make It Easier for Employers to Challenge Federal Rules: 5 Steps to Planning for a New Future

All eyes were on the Supreme Court’s decision to overturn decades-old legal doctrine and redefine the balance of power between federal agencies and courts, but the Court also snuck in another ruling that will allow employers to challenge federal regulations long after they’re finalized. On July 1, SCOTUS ruled that the six-year statute of limitations for challenging regulatory actions under the Administrative Procedures Act (APA) doesn’t start running until someone is actually harmed by the regulation, which could extend the deadline to file a lawsuit for years, giving employers another weapon to fight federal agency abuses. What do you need to know about the decision, and what are five steps you should take because of it?

1-2 Hit

By now you have probably heard about the Supreme Court’s decision of June 28 Loper Bright Enterprises v. Raimondo that upended the legal world. The ruling significantly curtailed the power of federal regulators and gave more authority to judges — a move that will have a huge impact on workplace regulation for years to come.

The court overturned the verdict issued several decades ago Chevron doctrine that required courts to defer to a federal agency’s position on the law when the statute is ambiguous and open to interpretation. SCOTUS instead rejected that standard in favor of judicial interpretation, allowing courts to make their own interpretations, potentially invalidating long-standing agency rules. You can read more about that here.

But it was probably lost in the chaos on July 1st. Corner Post Inc. v. Board of Governors decision. The key points you should know are:

In 2011, the Federal Reserve Board issued a regulation regulating the fees merchants must pay when their customers use a debit card.
Ten years later, a gas station in North Dakota that only started doing business in 2018 joined the lawsuit to challenge the regulation.
Lower courts dismissed the gas station’s lawsuit because federal law requires parties to bring lawsuits challenging regulations issued under the APA within six years of their enactment.
But the Supreme Court dealt federal agencies another blow by ruling that the six-year deadline begins to run when a party is harmed by a rule (not when it is promulgated, as a lower court had held), giving the gas station case the green light to proceed.

If not for this decision, the truck stop’s challenge to the regulation would have been time-barred in this case. Its only option to challenge the regulation in the future would have been to limit itself to defending itself in the event of enforcement proceedings, which may or may not have ever taken place.

How will this affect you?

You now have a new weapon in your arsenal. Suddenly, the universe of long-standing federal laws that are now vulnerable to attack in court has been expanded, giving your organization a potential new bite of the apple in an APA challenge that may not have existed before.

And now that Chevron the doctrine has was eliminated and you have new arguments against federal rules and regulations, this decision will expand your ability to pursue such claims. With these two decisions, SCOTUS lowered the bar and then opened the door wider for you.

What should you do after Drifter AND Corner post?

Here’s a five-step action plan for this new era.

1. Revisit your existing compliance practices

First, identify any areas where your organization might be vulnerable to harm from existing federal regulations—especially those that may predate your company or have been deemed unchangeable. You should also identify any areas where changing regulatory requirements could benefit your organization.
Please consult with your attorney to assess potential risks and develop a strategy to address possible threats to applicable law.

2. Assess the potential impact on business

Work with your advisor to understand how potential regulatory changes could impact your business.
Assess the risks associated with litigation, including whether your attention could be diverted from your core business activities and whether you want your organization to be at the forefront of regulatory challenges.

3. Prepare for litigation if necessary

If you conclude that the benefits of taking legal action outweigh the costs and risks, be sure to develop a proactive legal strategy that will allow you to challenge unfavorable regulations.
Work with your attorney to document the ways in which your organization has been “harmed” by the challenged regulations through adverse impacts or other harm.

4. Strengthen your advocacy efforts

Engage with decision-makers to influence regulatory policy and protect your company’s interests.
Collaborate with other companies and industry groups by joining forces with other partners to strengthen your voice in regulatory discussions.

5. Stay up to date

If you choose to work with industry associations or other trade organizations, leverage their unique and specialized resources to stay current on legal developments.