Published in the Federal News Network
Federal agencies may need to call the bullpen for a relief pitcher after the last two weeks of hits delivered by the Supreme Court of the United States.
The default limitations period for Administrative Procedure Act (APA) challenges runs from when a plaintiff is injured by final agency action, not the moment the regulation is issued - SCOTUS decided on July 1, 2024, in Corner Post v. Board of Governors of the Federal Reserve System.
The Corner Post decision further fundamentally alters American administrative law, coming just days after the June 28, 2024, decision in Loper Bright Enterprises v. Secretary of Commerce.
The historic SCOTUS Loper Bright decision reversed decades of increased federal executive agency power by overturning the longstanding deference to agency interpretations of statutes that resulted from Chevron v. Natural Resources Defense Council. (Read our coverage of that decision)
If a business or organization suffers a harm in the future that is based on prior agency action (i.e., rulemaking, policy decisions, etc.), it can then challenge the legality of that action without automatically being booted by the statute of limitations, and the agency will no longer be given Chevron’s deference in defending against the challenge.
This is a whole new ball game.
Breaking Down the Corner Post Opinion
Corner Post is a truck stop business that opened in North Dakota in 2018, and like other merchants, accepted debit cards as forms of payment by customers. Three years later, Corner Post filed a lawsuit against the Federal Reserve System, claiming financial harm from the Federal Reserve’s adoption of the credit card fee structure in Regulation II.
Corner Post argued the regulation allowed higher fees than permitted by law. Since the regulation was issued in 2011, the APA’s six-year statute of limitations and deadline for any legal challenges concluded in 2017. But the truck stop argued the six-year statute should not begin until the business was adversely affected by the regulation.
As a side note, Corner Post was not the first to challenge these fees. In 2014, after applying Chevron’s two-step deference framework, the D.C. Circuit rejected a business group’s challenge to Regulation II, holding that “we must defer to the Board’s reasonable determination” that the statute allows the fees (NACS v. Board of Governors of the Federal Reserve System, 746 F.3d 474 (D.C. Cir. 2014)).
Corner Post lost an appeal to the Eighth Circuit, which again sided with the Federal Reserve, finding that the statute of limitations under the APA begins to run when a regulation is published. Corner Post successfully appealed this ruling to SCOTUS, which rejected the Eighth Circuit’s interpretation of the APA’s statute of limitations and now allows the Corner Post lawsuit to proceed.
“We must decide when a claim brought under the Administrative Procedure Act accrues for purposes of this provision,” wrote Justice Amy Coney Barrett in the 6-3 majority opinion. “The answer is straightforward. A claim accrues when the plaintiff has the right to assert it in court — and in the case of the APA, that is when the plaintiff is injured by final agency action.”
The Court further stated that the statute of limitations begins only after the plaintiff has a “complete and present” cause of action, reasoning that a plaintiff cannot bring a lawsuit to challenge agency action unless and until he/she suffers an injury.
Justice Ketanji Brown Jackson wrote the dissenting opinion:
“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. Even more to the present point, that result simply cannot be what Congress intended when it enacted legislation that stood up and funded federal agencies and vested them with authority to set the ground rules for the individuals and entities that participate in our economy and our society. It is utterly inconceivable that §2401(a)’s statute of limitations was meant to permit fresh attacks on settled regulations from all newcomers forever. Yet, that is what the majority holds today.”
Justice Barrett responded to dissenting criticism by reminding the justices that Congress could have used language to make it clear that the statute of limitations begins to run when the regulation is issued or the agency action takes place, but it did not.
Conclusion
If baseball analogies apply, maybe football analogies do too. The goalposts have been moved.
The SCOTUS decision in Corner Post extends the APA’s six-year time limit in which to challenge the federal government’s adoption of a regulation by moving the goalposts from the date the regulation is promulgated to when an injury or harm occurs, potentially allowing decades-old regulations to be challenged — now without applying the Chevron deference.
Will this create a tsunami of lawsuits as suggested by Justice Jackson? Or will this decision be a victory for businesses in allowing more flexibility in challenging issued federal regulations?
Either way, Corner Post is another hit to federal agency power and precedent, reducing the power of our executive branch and further changing the field of play of regulatory compliance and enforcement by the federal government.
And again, Corner Post came just days after our highest court found that Chevron’s holding overstepped federal agency authority by allowing agencies to interpret statutes – a power expressly assigned to the Judiciary in Article III of the Constitution. The Loper Bright decision will have immediate and widespread impacts on federal agencies’ ability to create statutorily required regulations, especially with regards to the environment and the workplace.
We will continue to monitor significant lawsuits that follow, and further fallout from the SCOTUS Corner Post and Loper Bright decisions.
About Our Author
Rob Fowler serves as the Adams and Reese Environmental Team Leader, assisting clients throughout the firm’s regional and national footprint on environmental matters. Rob has over 28 years of experience in environmental and natural resource law. Rob helps clients navigate the complexities of the Clean Water Act, Clean Air Act, Surface Mining Control and Reclamation Act, Resource Conservation & Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act, Endangered Species Act, National Environmental Policy Act, and various historic preservation laws.