US Supreme Court extends window to challenge agency rulesThe US Supreme Court concluded its summer term this week by announcing several important decisions.
On July 1, 2024, the Court issued a 6-3 decision in Corner Post v. Board of Governors of the Federal Reserve System, holding that an Administrative Procedure Act (APA) claim does not accrue within the meaning of §2401(a) – the default six-year statute of limitations applicable to suits against the United States—until the plaintiff is harmed by the agency’s final action.

Justice Barrett led the majority opinion, writing: “(b) because an APA claimant cannot file suit and obtain relief until she suffers an injury from the agency’s ultimate 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 an agency final rule was issued, the six-year statute of limitations for a facial challenge began to run when the corporation began operating and was injured by rule. Prior to the Supreme Court’s decision, most circuit courts of appeals held that the statute of limitations for a facial challenge to an agency rule begins to run when the final rule is published, while the statute of limitations for an as-applied challenge begins when the plaintiff is injured.

Justices Roberts, Alito, Gorsuch and Kavanaugh joined the majority opinion. Judge 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 absolutely inconceivable that the statute of limitations of §2401(a) was intended to permit forever new attacks on established regulations by all newcomers. Yet that is what the majority holds today.”

Implications of the Court’s Decision

This decision follows the Court’s decision in Loper Bright Enterprises, Inc. v. Raimondo, which overturned the long-standing administrative law doctrine known as Chevron deference. Taken together, the Court’s rulings will change how regulations are drafted, as well as how they are 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 operation of the federal government.”

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

This case concerns interchange fees for debit card transactions. The amount of the fee is determined by the company processing the transaction. In 2011, the Federal Reserve Board issued a regulation to regulate these interchange fees, known as Regulation II. Regulation II limits the fees banks can charge for each debit card transaction.

In 2021, the North Dakota Retail Trade Association and North Dakota Petroleum Merchants Association challenged Regulation II, alleging that it allows higher interchange fees than the statute allows and is therefore arbitrary and capricious under the APA . When the federal government decided to dismiss the challenge based on the six-year statute of limitations, the two groups completely amended to add Corner Post, a company that began operating in 2018.

The district court dismissed the case as time-barred under 28 USC §2401(a), ruling that the statute of limitations began in 2011 with the initial publication of Regulation II. The US Court of Appeals for the Eighth Circuit affirmed. The plaintiffs sought review from the US Supreme Court. The Supreme Court held that the 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 any questions about the potential implications of this decision for your organization.

Written by BBK principal Ana Schwab and partners Lowry Crook and Andre Monette.

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

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