The Supreme Court’s recent decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System has sent shockwaves through the administrative law landscape, upending long-held assumptions about the time limits for challenging agency regulations.
The July 1, 2024 ruling, which followed closely on the heels of the Court’s overturning of Chevron deference, has “significantly expanded [ed] opportunities for APA challenges,” according to a blog post by Holland & Knight.
Personal Statutes of Limitations for Every Entity
At the heart of the Corner Post decision is a new interpretation of the six-year statute of limitations for facial challenges to agency rules under the Administrative Procedure Act (APA). The Court held that this time limit begins running when the regulation injures the plaintiff, not when the regulation is published. Tax attorney Stu Odintz explained to Accounting Today that “[e]veryone now has their own personal statute of limitations,” based on when they come into existence and are first affected by a rule.
Debit Card Interchange Fee Cap Challenged a Decade Later
The practical implications of this ruling can be seen in the Corner Post case itself, which involved a challenge to the Federal Reserve Board’s Regulation II capping debit card interchange fees. Although the rule was promulgated in 2011, Corner Post did not open its doors until 2018 and filed suit in 2021. “In this case, Corner Post’s limitations period runs out in 2027,” Odintz noted, even though “presumably any challenge to [the regulation] had to be made by 2022.”
Emboldened Corporations and Threatened Protective Regulations
The Corner Post decision, particularly when coupled with the Court’s overturning of Chevron deference, is expected to lead to a surge in legal challenges to a wide range of agency rules. Earthjustice Senior Vice President Sambhav Sankar warned that “[c]orporations will look out at a sea of judges eager to strike down protective regulations and be emboldened to take a shot at challenging them.”
Strain on Agency Resources and Regulatory Uncertainty
As old regulations face a new wave of litigation, agencies will likely find their resources strained as they defend previously considered settled rules. “This creates chaos,” Odintz told Accounting Today. “It also creates additional work for the IRS. They’re hiring additional staff, but the potential for additional work due to this decision is great.” The Corner Post decision injects new uncertainty into the regulatory landscape for regulated entities, potentially disrupting operations and planning.
Governance and Compliance Roles in High Demand
As financial institutions grapple with the fallout from the Corner Post decision, demand for professionals with expertise in governance, risk management, and compliance (GRC) is expected to soar. GRC teams will play a critical role in helping institutions navigate the new wave of regulatory challenges, identifying and mitigating legal risks, ensuring compliance with evolving standards, and defending against potential litigation.
The ability to adapt quickly to changes in the regulatory landscape will be a key skill for GRC professionals in the coming years, as the Corner Post decision ushers in a new era of uncertainty and instability.
