Washington, D.C. (July 1, 2024) – On July 1, 2024, the U.S. Supreme Court issued another end-of-term major decision limiting the scope of federal agency actions in Corner Post, Inc. v. Board of Governors of the Federal Reserve System. Adding to the tectonic shift in the regulatory landscape created by the Court's June 27 and 28 rulings constraining the role of administrative law judges and overturning longstanding "Chevron deference" by courts to federal agency expertise, the decision in Corner Post establishes a newly expanded time frame for affected entities to challenge final agency action. Instead of confirming that final agency action is subject to a default six-year statute of limitations, the Court held that under the Administrative Procedure Act (APA), the time limit for appeal begins to run when a plaintiff is injured by the agency's action, not when the action becomes final. This decision has important implications for businesses and others affected by federal regulations.
The case arose when Corner Post, a truck stop and convenience store in North Dakota that opened in 2018, challenged a 2011 Federal Reserve Board regulation (Regulation II) that set maximum interchange fees for debit card transactions. Corner Post filed suit in 2021, arguing that Regulation II allowed higher fees than permitted by statute. The lower courts dismissed the suit as time-barred under 28 U.S.C. § 2401(a), which effectively requires APA claims to be filed "within six years after the right of action first accrues."
In a 6-3 decision authored by Justice Amy Coney Barrett, the Court held that an APA claim does not "accrue" for purposes of § 2401(a) until the plaintiff is injured by the final agency action. Rejecting the Federal Reserve's argument that the limitations period begins when the agency action becomes final, regardless of when a particular plaintiff is injured, the Court interpreted "accrues" according to its traditional meaning: when the plaintiff has a "complete and present cause of action." For APA claims, this occurs when the plaintiff is injured by final agency action, as both injury and finality are required to bring suit under the APA. The Court distinguished between statutes of limitations (like § 2401(a)) and statutes of repose, which start the clock based on the defendant's actions rather than the plaintiff's injury. Notably, the Court rejected policy arguments about administrative finality, emphasizing that the statutory text controls.
This decision has far-reaching implications for businesses and other affected parties. These entities now have a longer timeframe to challenge federal regulations that injure them - even if the regulations were enacted years ago - if they can show they were only later injured. This is particularly significant for new market entrants or entities that begin engaging in regulated activities long after a rule's promulgation. However, this may also lead to increased uncertainty in regulated industries, as federal agencies may face challenges to longstanding regulations.
The Dissent, in an opinion authored by Justice Ketanji Brown Jackson, links the impact of the Corner Post decision to the June 28 ruling that overturned the 40-year old "Chevron doctrine," which afforded federal agencies deference from courts, saying the "tsunami of lawsuits against agencies" that the two cases "have authorized has the potential to devastate the functioning of the Federal Government." Jackson, J., Dissent, slip op. at 23. Perhaps the Dissent is envisioning a scenario in which, if a newly eligible litigant were successful in winning the right to challenge an established rule, the legal review would presumably take place without Chevron deference to the agency's view of its authority. This, in turn, could theoretically result in a different outcome than would have been the case if the agency action had been challenged when it was finalized. To avoid this type of outcome and a deluge of litigation, the Dissent calls upon Congress to pass new legislation "to make clear that lawsuits bringing facial claims against agencies are not personal attack vehicles for new entities created just for that purpose." Id. at 24.
The Court's blockbuster end-of-term decisions will upend conventional administrative law teachings and create both opportunities and concerns for the full range of regulated entities and those with standing to participate in litigation challenging (or defending) federal agency actions. More litigation is sure to follow in the wake of these new precedents, and affected businesses and other entities will need to consider the benefits and risks of their new options going forward. This analysis may need to factor in consequences of the upcoming election, whichever way it goes.
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