U.S. Supreme Court Expands Window to Challenge Agency Rules

On July 1, 2024, the Court issued a 6-3 ruling in Corner Post v. Board of Governors of the Federal Reserve System holding that an Administrative Procedures Act (APA) claim does not accrue for the purposes of §2401(a) – the default six-year statute of limitations applicable to suits against the United States – until the plaintiff is injured by final agency action. 

Justice Barrett led the majority opinion writing, “[b]ecause an APA plaintiff may not file suit and obtain relief until she suffers an injury from final agency action, the statute of limitations does not begin to run until she is injured.”  The majority held that for a corporation that opened seven years after a final agency rule was issued, the six-year statute of limitations for a facial challenge began running when the corporation began operating and was injured by the rule. Before the Supreme Court’s decision, most circuit courts of appeal held that the statute of limitations for a facial challenge to an agency rule begins running when the final rule is published, while the statute of limitations for an as-applied challenge begins when the plaintiff is harmed.

The majority opinion was joined by Justices Roberts, Alito, Gorsuch and Kavanaugh. Justice Kavanaugh also filed a concurring opinion.

Justice Jackson filed a dissenting opinion joined by Justices Sotomayor and Kagan. Justice Jackson wrote that “[i]t is utterly inconceivable that §2401(a)’s statute of limitations was meant to permit fresh attacks on settled regulations from all new comers forever. Yet, that is what the majority holds today.”

Implications of the Court’s Decision 

This decision comes on the heels of the Court’s ruling in Loper Bright Enterprises, Inc. v. Raimondo that overturned the longstanding administrative law doctrine known as Chevron deference. Taken together, the Court’s rulings will alter how regulations are written as well as litigated under the APA.

Justice Jackson’s opinion expressed the dissenting justices’ concern that “The tsunami of lawsuits against agencies that the Court’s holdings in this case and Loper Bright have authorized has the potential to devastate the functioning of the Federal Government.” 

Background on Corner Post v. Board of Governors of the Federal Reserve System

This case deals with interchange fees for debit card transactions. The fee amount is determined by the company processing the transaction. In 2011, the Federal Reserve Board issued a regulation to govern these interchange fees, known as Regulation II. Regulation II caps the fees that banks are allowed to charge for each debit card transaction. 

In 2021, the North Dakota Retail Association and the North Dakota Petroleum Marketers Association challenged Regulation II, alleging that it allows higher interchange fees than the statute permits, and thereby is arbitrary and capricious under the APA.  When the Federal government moved to dismiss their challenge based on the six-year statute of limitations, the two groups amended their complete to add Corner Post, a company that started operating in 2018.

The district court dismissed the case as time-barred under 28 U. S. C. §2401(a),  ruling that the statute of limitations began in 2011 with the original publication of Regulation II. The U.S. Court of Appeals for the Eight Circuit affirmed. The plaintiffs sought review by the U.S. Supreme Court. The Supreme Court held that Corner Post’s challenge was not time-barred because its injury did not occur until after it began operating in 2018.

Contact your BBK attorney or the BBK authors of this alert if you have questions regarding the potential implications of this decision for your organization.

Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.