‘The Ball is in Congress’ Court’: U.S. Supreme Court Corner Post Paving Way for Challenge to Long-Ruling Treasury Rules

In the final decision of the Supreme Court term, the Court reconsidered the Administrative Procedure Act (“APA”). Like earlier decisions of this term regarding the APA (see here and here ), the opinion in Corner Post, Inc. v. Board of Governors¹ divided doctrinal lines, with Justice Barrett writing for the majority (with Justice Kavanaugh concurring) and Justice Jackson writing for the dissent (joined by Justices Sotomayor and Kagan). The opinion paves the way for new challenges to the old rules and is especially important in light of the reversal Chevron doctrine in Loper Bright Enterprises v. Raimondo.

The dispute in Corner post focused on whether the APA’s challenge to a regulation of the Federal Reserve Board (the “Board”) establishing a maximum interchange fee for debit card transactions was barred by the six-year statute of limitations under 28 U.S.C. § 2401(a). That section requires that “the action (be) filed within six years after the right to bring a claim accrues.” The regulation at issue was promulgated in 2011; the plaintiff in this case began doing business and paying interchange fees in 2021. Before the decision in Corner postSix circuits have held that the “statute of limitations period for ‘face’ APA complaints begins on the date of the agency’s final action— e.g.“at the time the regulation was issued — regardless of when the plaintiff was injured.”² The United States Court of Appeals for the Sixth Circuit, in turn, “has held as a general rule that the statute of limitations under § 2401(a) begins when a plaintiff suffers harm as a result of an agency action, even if that harm does not occur for many years after the cause of action becomes final.”³

The majority found that the interpretation of section 2401(a) hinges on the meaning of the word “accumulates” and held that an APA claim does not accrue for purposes of section 2401(a) until the plaintiff is harmed by a final agency action. The court distinguished a statute of limitations—such as section 2401(a)—from a statute of limitations that “sets an extrinsic limit on the right to bring a civil action, measured not from the date the claim accrues but from the date of the defendant’s last culpable act or omission.”⁴ In this way, the Court rejected the Management Board’s arguments that the time of accrual should be measured from the date everyone plaintiff was injured. The Court also rejected the policy concerns raised by the Board that federal regulations required the six-year cut-off period to be final. According to the Court, “Administrative inconvenience grounds… never justify departing from the clear text of the statute.”⁵ Rather, the court cited what it described as “a deeply rooted historical tradition that everyone should have their own day in court.”⁶

A completely different view was presented by representatives of a different tone, writing:

At the end of an important term, one thing is clear: a tsunami of lawsuits against the agencies that the Court rules on, Loper Light authorize has the potential to destroy the functioning of the Federal Government. Moreover, at this point, this outcome simply cannot be what Congress intended when it passed the legislation that established and funded federal agencies and gave them the authority to set ground rules for persons and entities participating in our economy and our society. It is utterly inconceivable that the statute of limitations on §2401(a) was intended to allow new attacks on established rules by all newcomers in perpetuity.⁷

There is little in Corner post which both the majority and minority agree on, except that both sides state that “the ball is in Congress’s court” to explain the meaning of the APA.⁸

Corner postin conjunction with the decision in Loper Bright, creates a clear path for challenging long-standing Treasury regulations. As we noted in our previous discussion Loper LightTaxpayers should review prior positions to determine whether refund or protective claims should be filed in light of the “tsunami of lawsuits” anticipated by the dissenting judgment. Corner postHowever, questions remain regarding the interplay of the general statute of limitations under section 2401(a) discussed in Corner post and the statute of limitations provisions contained in the Tax Code, which will require analysis taking into account the specificity of taxpayers.

¹ No. 22-1008, foreword (U.S. July 1, 2024), available at https://www.supremecourt.gov/opinions/23pdf/22-1008_1b82.pdf.

² ID. at 3.

³ ID. at 4 (quoting Herr v. United States Forest Serv., 803 F.3d 809, 820–822 (6th Cir. 2015)).

⁴ ID. in 9 (internal citations and references omitted).

⁵ ID. in 20 (internal quotes and references omitted).

⁶ ID. in pp. 21–22 (internal quotations and references omitted).

⁷ ID. (Jackson, J., dissenting opinion) at pp. 23–24.

⁸ ID. (Barrett, J., writing for the majority) at 22 (“However, we agree with the dissent on one point: ‘(The) ball is in Congress’s court’”); (Jackson, J., dissenting) at 24 (“Thus, although the Court has messed up this crucial statute, and the consequences are serious, ‘the ball is in Congress’ court’”).