Corner Post, Inc. v. Board of Governors of the Federal Reserve System

Today, the Supreme Court issued a 6-3 decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, holding that the Administrative Procedures Act’s six-year statute of limitations for facial challenges of final regulations does not begin until the plaintiff is injured by the regulation, rather than at the time the regulation is made final. This case opens the floodgates for challenges to longstanding federal regulations and is yet another example the Court undermining separation of powers and the ability of federal agencies to do their jobs.

What You Need to Know

• Relevant Background: Section 702 of the Administrative Procedure Act (APA) provides that “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action” may seek judicial review. Section 2401(a) of Title 28 of the United States Code generally requires that the complaint to commence such an action must be “filed within six years after the right of action first accrues.”
• Facts of the Case: In July 2011, the Board of Governors of the Federal Reserve System (the Board) issued Regulation II, which placed a cap on the interchange fees that are paid in connection with debit-card transactions. In April 2021, the North Dakota Retail Association and the North Dakota Petroleum Marketers Association (collectively, the Associations) filed a complaint, challenging Regulation II under the APA. The Board moved to dismiss, arguing that the statute of limitations had run out. In an effort to circumvent the statute of limitations, the Associations amended their complaint and added as a plaintiff Corner Post, which incorporated in 2017 and began operating a truck stop and convenience store in 2018. The plaintiffs argued that, as it related to Corner Post, the statute of limitations did not begin to run until it had opened in 2018. The district court rejected this argument and dismissed the case, holding that section 2401(a)’s statute of limitations began running when Regulation II was published in July 2011. Corner Post sought review by the Supreme Court.
• Question Presented: Whether a plaintiff’s APA claim “first accrues” under 28 U.S.C. § 2401(a) when the agency issues a rule or when the rule first causes the plaintiff to suffer a “legal wrong” or be “adversely affected or aggrieved.”
• Oral Argument: During the oral argument this past February, the justices questioned how the statutory language should be parsed and considered what effects might follow if parties were allowed to bring facial challenges more than six years after a final agency action. For example, Justice Jackson asked whether this could risk destabilizing industry and noted that “we have settled rules that govern all sorts of industries, the healthcare industry, the finance industry, and people have adjusted themselves around them.”
• The Decision: The majority in Corner Post reasoned that “accrues,” as used in the APA’s stature of limitations, is well understood to mean that the clock begins “only after the plaintiff suffers the injury required,” rather than at the time the defendant acts. The Court held that this is the “standard rule for limitations periods” under its precedent and that therefore, though Regulation II was made final in 2011, the statute of limitations as it related to Corner Post did not begin to run until 2018. The Court acknowledged that Congress could create a “statute of repose” that places an outer limit on filing causes of action measured from the time of the government’s final act or omission, but the Court was unwilling to infer such an intent in this instance.
• The Dissent: In a dissent joined by Justices Kagan and Sotomayor, Justice Jackson criticizes the majority for ignoring the Court’s precedent that the term “accrues” is context specific. In the administrative context, she argues, this has long meant that statues of limitations run from the time of agency action. She also notes that in facial challenges to agency action, such as the present case, the plaintiff’s injury is irrelevant. She argues, therefore, that the Court’s conclusion is “baseless,” and effectively eliminates any limitations periods for facial challenges to agency action.
• Potential Impact: The Court’s holding that section 2401(a)’s limitations period does not begin to run for a particular party until that party is injured by a final agency action enables newly formed entities to bring facial challenges to agency rules and regulations that have been in place for decades. In other words, the Court’s decision effectively destroys the finality that Congress chose to provide by establishing the statute of limitations.