Restart the clock: SCOTUS extends time frame for challenging agency actions

(co-author: Jessica Wright – summer contributor)

Why do environmentalists talk about the Federal Reserve Board? Because the Supreme Court ruled on July 1, 2024, that the APA’s six-year statute of limitations (SOL) for challenging an agency rule in court begins when a plaintiff is harmed by a final agency action, not when the agency first issues the rule. That decision, Corner Post vs. Board of Governors of the Federal Reserve Systemwas a 6-3 ruling, split along ideological lines, and was one of several rulings this term that will change the current landscape of administrative law.

Corner Post is a truck stop and grocery store in North Dakota that opened in 2018.

In 2011, the Federal Reserve Board (Board) issued a regulation that set the maximum interchange fee at $0.21 per transaction plus 0.05% of the transaction value. In 2021, Corner Post joined the lawsuit, arguing that the Board’s regulation was unlawful because it allowed banks to charge higher fees than those permitted by statute. Corner Post’s claim was dismissed by both the District Court and the Eighth Circuit as precluded by the SOL. Corner Post argued for its day in court because it did not exist to challenge the regulation at the time it was promulgated or during the period the SOL was in effect. In other contexts, such as environmental regulation, this scenario can turn new owners or operators into challengers of long-standing regulations.

The majority, authored by Justice Barrett, sided with Corner Post and held that the SOL period for an APA claim does not accrue until the plaintiff is injured by a final agency action. Before that ruling, most courts that have faced the issue had held that the SOL period for pre-enforcement review began when the provision became effective, not when the plaintiff was injured. However, the majority held that the plain text of the statute provides that the SOL period does not begin to run until the APA plaintiff has a full cause of action for the injury. The majority argued that this interpretation of the statute is consistent with the “traditional rule” that, in the absence of any other indication, the SOL period begins to run at the time the plaintiff has a right to sue for relief.

The dissent, authored by Judge Jackson, disagreed with the majority’s interpretation of the text of the statute. She found that the text, especially in the context of several other APA SOL statutes, leads to the conclusion that the SOL statute runs from the time of the agency action, not the time of injury. Specifically, she noted that the plaintiff’s injuries are “wholly irrelevant” to the APA’s facial claim because the claim is for what the agency itself did, and therefore the SOL statute should run from the time of that action, not the time of injury caused by that action.

Justice Jackson expressed several concerns about the majority’s interpretation of the SOL, namely that finality and certainty in administrative regulation would now remain elusive because any party could challenge a regulation if it wronged it, no matter how long the rule has been in force. Justice Jackson warned that such an outcome would be deeply destabilizing for government and businesses, stating that it was unfair to allow newcomers to a regulated industry to mount legal challenges and overturn established regulations to which the market has adapted. She also warned that the ruling could amplify the effects of the decision, Loper Bright Enterprises v. Raimondothat struck down Chevron’s deference rule. She noted that with those decisions taken together, more challenges would arise, and without Chevron’s deference rule, judges could make their own “unfettered judgments” about whether an administrative rule should be struck down.

To address the dissent’s concerns about the ruling, Judge Barrett noted that the decision does not affect all claims brought under the APA because the existing provision in this case does not have a listed SOL. Judge Barrett also reasoned that most major provisions are immediately challenged, so courts hearing new challenges to established rule can look to binding Supreme Court and district court precedent to guide their decisions.

Corner postalong with several other decisions affecting administrative law made this semester, creates uncertainty for environmental professionals. The decisions will trigger a wave of regulatory challenges, change the way administrative agencies promulgate rules and regulations, and change the approach judges take when reviewing an agency’s interpretation of a statute. Now, businesses, advocacy groups, and others must navigate this changing landscape as administrative agencies adjust to the new constraints imposed on them by these decisions.