Small Businesses Cry Foul Over Inability To Challenge Federal Rules

Image Credit: Grace David / The Center Square

The Center Square [By Casey Harper] –

A U.S. Supreme Court Case awaiting a ruling has small businesses calling for an end to the statute of limitations blocking them from challenging a federal agency regulation six years after it was enacted.

A change to the statute of limitations could open a flood of new challenges to federal rules from businesses that argue while the regulation may be more than six years old, the injury that sparked the lawsuit is new and worthy of legal action.

The National Federation of Independent Businesses filed an amicus brief in that case, Corner Post, Inc. v. Board of Governors of the Federal Reserve System.

“The current rule under the APA leaves existing and would-be small business owners in an impossible situation,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “Businesses are denied the right to challenge agency regulations that are more than six years old, even if the regulation predates the business itself. However, there is no way to challenge a regulation until you have a business to be affected by it.

Unlike larger businesses with bigger legal operations, small businesses don’t have the same ability to coordinate and fund legal battles.

“Small businesses are overwhelmed by a multitude of regulations from the moment they begin operating,” Milito said. “This rule enables agencies to enact and maintain harmful regulations without opposition, to the detriment of current and future small businesses. NFIB urges the court to reverse the judgment of the Eighth Circuit and correct the majority rule.”

The Administrative Procedure Act created that statute of limitations. The Restaurant Law Center, the Buckeye Institute, and the Manhattan Institute joined the brief. Proponents of the restriction fear that litigation abuse say businesses could abuse the new power and file endless litigation.

NFIB say the APA’s majority rule “prevents businesses from challenging the validity of a crushing regulation if more than six years passed between the final rule and the opening of the business, forcing new businesses to acquiesce to burdensome fees and regulations…”

The statute of limitations issue is part of a legal challenge about fees for debit and credit cards, which disproportionately hurt businesses that use small-dollar transactions, such as convenience stores.