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Todd H Baker is a senior fellow at Richman Center for Business, Law and Public Policy at Columbia Business School and Columbia Law School.
On Wednesday, the Bank Policy Institute and The Clearing House moved to intervene in a case called Corner Post vs. Board of Governors of the Federal Reserve System.
If that sounds vaguely familiar, that’s because this was the case through which the US Supreme Court significantly extended the timeframe in which courts can review federal agency regulations, allowing newly-minted entities the opportunity to re-litigate ostensibly “final” rules years after the rules are promulgated.
Along with the Supreme Court’s decision in Loper Bright Enterprises vs. Raimondo — which eliminated the so-called “Chevron deference” to administrative agency statutory interpretations — Corner Post was heralded gleefully in business circles as the end of the “administrative state”.
That’s because the two cases made it far easier for a regulated entity to challenge any agency’s action and made judges, rather than bureaucrats, the principal interpreters of law and congressional intent.
As the American Bankers Association president said at the time, (referring to Loper Bright):
[T]he ruling sends a crystal-clear message to federal agencies that their powers are not unlimited . . . This is an important win for accountability and predictability at a time when agencies are unleashing a tsunami of regulation — in many cases clearly exceeding their statutory authority while making it harder for banks to serve their customers.
However, apparently the big dogs of the US banking industry weren’t paying enough attention to the leopards in their midst. The kind of leopards that eat your face even after you vote for them.
The oopsie here is that the Corner Post case involves a challenge to the Federal Reserve Board’s 2011 rule implementing the so-called Durbin amendment. The bigger banks hate this with the heat of a thousand suns because it cut debit card interchange fees by more than half and shifted the economics of bank consumer payments in favour of retailers.
The plaintiff in Loper Bright was a truck-stop conveniently established in 2018, after the six-year statute of limitations on rule challenges was thought to have expired. It claimed a continuing right to challenge the Fed’s rule as too lenient to the banks under the statute, arguing for an even lower cap on bank debit card interchange than the Fed had provided. The Supreme Court agreed.
The BPI and TCH are in effect now saying they never thought the leopards would eat their faces. It appears that agency statutory interpretations are just fine when they go your way — it’s only a problem when they don’t.
In the words of Greg Baer, the BPI President and CEO:
Banks oppose the Durbin Amendment’s price fixing requirement as a matter of policy but stand with the Federal Reserve to defend the legality of its 2011 implementing regulation . . .
It’s clear now that the lobbyists and others who worked so hard to undermine the so-called “administrative state” didn’t worry enough about what the new judge-arbitrated, endlessly-challengeable rulemaking model would produce when agencies started issuing regulations that businesses actually liked. Here’s the full motion to intervene.
If only they had read the original Chevron case.
This involved a challenge by environmentalists to a Republican-appointed EPA administrator’s conservative and business-protective interpretation of air pollution law. The lower court had rejected the EPA’s interpretation and substituted a harsher standard.
Chevron appealed and won the case when the Supreme Court ruled that the lower court erred by substituting its judgment for the EPA’s because the agency’s statutory interpretation was “a reasonable policy choice for the agency to make.”
Maybe the leopards ate their copy.
