A North Dakota truck stop is at the center of a US Supreme Court case that could make federal regulations, like those that aim to protect public health and safety, vulnerable to legal challenge long after they’ve been put in place.
Corner Post’s case, which is set for argument on Tuesday, has gotten little attention compared to two other disputes this term that seek to undercut the power of the federal bureaucracy. A ruling in one could significantly broaden the effect of the other.
“This is a sleeper case that could really destabilize the regulatory regimes of all the regulatory agencies if the plaintiff wins,” said Daniel Jarcho, a partner in Alston & Bird’s litigation and trial practice group and a former Justice Department trial attorney.
The justices are being asked to decide if the six-year statute of limitations for legal challenges to regulations under the Administrative Procedure Act starts ticking when a rule is first adopted or when it first causes legal harm.
The court this term is also considering whether to overturn Chevron deference, a legal doctrine that directs courts in regulatory fights to defer to an agency’s reasonable interpretation when the governing law is ambiguous. Because Chevron tipped the scales toward government over industry, it had a chilling effect on regulatory challenges, Jarcho said.
If Chevron goes away, that could make companies more likely to challenge regulations and if Corner Post wins and companies can go back decades to challenge regulations, the impact of the rulings combined could be drastic, he said.
Decisions in the cases are due before the end of June.
Stale Claims
The Watford City truck stop and convenience store had nothing to do with the dispute when it began in 2021 as a fight over a 2011 Federal Reserve rule that set maximum fees banks can charge merchants for debit card transactions.
The North Dakota Retailers Association and the North Dakota Petroleum Marketers Association represented by the National Retail Federation added Corner Post as a party after the federal government said the trade groups’ suit was barred by a six-year statute of limitations and had to be dismissed.
Though their initial case was over debit card swipe fees, supporters say the dispute is now about ensuring businesses have their day in court when they’ve been injured by a regulation. Because Corner Post didn’t open until 2018, there’s no way it could have sued in time.
“The position that they find themselves is not unique to them,” said Angelo Amador, executive director of the Restaurant Law Center. “Restaurants are so dynamic and there’s always new brands coming through that it’s impossible for ones that exist to know what are the issues that a new concept might have tomorrow with a particular regulation.”
The Justice Department noted that the Federal Reserve rule already faced one challenge from the National Retail Federation and the National Association of Convenience Stores, and was upheld by the US Court of Appeals for the DC Circuit in 2014.
A ruling for Corner Post’s approach would allow businesses to bring the type of “stale, decades-old claims” against regulations that the six-year statute of limitations was designed to prevent, US Solicitor General Elizabeth Prelogar and attorneys in her office told the court.
But if the government wins and the statute of limitations starts when the rule is finalized, business groups say it will prevent some of their clients from ever challenging the validity of illegal, unconstitutional regulations.
A person must have suffered an injury from an agency action to sue “and the injury for Corner Post could not have happened before they started business,” said Elizabeth Milito, executive director of the Small Business Legal Center at the National Federation of Independent Business. The group filed a brief with the Restaurant Law Center supporting the truck stop.
Sympathetic Parties
The case is similar to the Chevron challenges in that it’s a David v. Goliath type fight that’s backed by bigger business interests looking to rein in what they view as a permanent state of regulatory overreach. Groups tied to powerful sources of conservative funding were behind the herring fishermen at the center of Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Dept. of Commerce.
Much of this litigation against administrative power is coming from industry groups, said Nicolas Sansone, a staff attorney at consumer advocate Public Citizen, which filed a brief supporting the government.
“Nine out of 10 times it doesn’t initiate with the mom and pop shop that is fed up with X,Y, Z regulation,” he said. “It’s a concerted effort by industry to challenge some particular aspect of the regulatory regime.”
The strategy though isn’t unique to conservatives. Progressive groups seek out sympathetic litigants, too, said Nicholas Bagley, who teaches administrative law at the University of Michigan.
“Finding a good plaintiff helps to make concrete the harms that you’re complaining about in a way that can not only sort of engage a judge’s sympathy but might also lead them to think twice about whatever rule might be causing this particular individual harm,” he said.
Corner Post is an affiliate of Lund Oil, a family-owned oil company in North Dakota. Messages left for its vice president, Brady Lund, weren’t returned. The truck stop’s attorney Tyler Green, of Consovoy McCarthy, didn’t respond to requests for comment. Neither did Mike Rud, who leads the North Dakota Retailers Association and the North Dakota Petroleum Marketers Association.
Even though trade groups initiated the litigation, Milito doesn’t doubt Corner Post was actually injured by the rule at issue.
“I represent small businesses and, I can tell you, that swipe fees impose significant burdens,” she said, adding that it’s challenging for businesses, small ones in particular, to challenge federal regulations.
“That is why there is a benefit to having associations who can keep their eye on the federal regulator and call them out,” she said.
The case is Corner Post, Inc. v. Bd. of Governors Federal Reserve System, No. 22-1008.