[co-author: Jessica Wright - Summer Associate]
Why are environmental professionals talking about the Federal Reserve Board? Because the Supreme Court, on July 1, 2024, ruled that the APA’s six-year statute of limitations (SOL) for facial challenges to agency regulations begins running when a plaintiff is injured by the final agency action, not when the agency first issues that regulation. This decision, Corner Post v. Board of Governors of the Federal Reserve System, was a 6-3 ruling, divided along ideological lines, and was one of several cases handed down this term that will change the current administrative law landscape.
Corner Post is a North Dakota truck stop and convenience store that opened in 2018.
In 2011, the Federal Reserve Board (Board) promulgated a regulation that set a maximum interchange fee of $0.21 per transaction plus 0.05% of the transaction’s value. In 2021, Corner Post joined a suit alleging that the Board’s regulation was unlawful because it allowed banks to charge higher fees than those allowed by the statute. Corner Post’s claim was dismissed by both the District Court and Eighth Circuit as barred by the SOL. Corner Post argued for its day in court since it was not in existence to challenge the regulation at the time it was promulgated or during the SOL period. In other contexts, like environmental regulation, this scenario could turn new owners or operators into challengers of longstanding regulations.
The majority, authored by Justice Barrett, sided with Corner Post, and held that an APA claim’s SOL does not accrue until the plaintiff is injured by the final agency action. Prior to this ruling, most courts faced with this issue had held that the SOL for pre-enforcement review began when the rule became effective rather than when the plaintiff was injured. But the majority held the plain text of the statute says the SOL does not begin to run until an APA plaintiff has a complete cause of action from suffering an injury. The majority reasoned that this interpretation of the statute follows the “traditional rule” that absent other indication, a SOL period begins to run at the time the plaintiff has the right to apply to the court for relief.
The dissent, authored by Justice Jackson, disagreed with the majority’s textual reading of the statute. She found that the text, particularly when taken in context with several other APA SOLs, leads to the conclusion that the SOL runs from the moment of agency action rather than from the moment of injury. Particularly, she noted, a plaintiff’s injury is “utterly irrelevant” to a facial APA challenge because the claim is about what the agency itself did and, therefore, the SOL should begin when that action occurs, not when an injury caused by that action occurs.
Justice Jackson voiced several concerns with the majority’s reading of the SOL, namely that the finality and certainty of administrative rules will now remain elusive as any party can challenge a regulation if it is injured by it, no matter how longstanding that rule is. Justice Jackson cautioned that this result would be profoundly destabilizing for the government and for businesses stating it was unfair to allow newcomers to the regulated industry to bring legal challenges and overturn settled regulations that the marketplace has adapted to. She also warned that this ruling could amplify the effects of the decision, Loper Bright Enterprises v. Raimondo, that overturned Chevron deference. She noted that with these decisions taken together, more challenges will come, and, without Chevron deference, judges can make their own “unfettered judgment” as to whether an administrative rule should be overturned.
To counter the dissent’s concerns with the ruling, Justice Barrett noted that this decision does not impact all claims brought under the APA as the applicable provision in this case does not have a listed SOL. Justice Barrett also reasoned that most major regulations are challenged immediately, so courts entertaining new challenges to an established rule can look to binding Supreme Court and circuit court precedent to guide their decisions.
Corner Post, along with the several other decisions impacting administrative law decided this term, creates uncertainty for environmental professionals. These decisions will invite a wave of regulatory challenges, change the way administrative agencies promulgate rules and regulations, and alter the approach judges take when reviewing an agency’s interpretation of a statute. Now, businesses, advocacy groups, and others must navigate this shifting landscape as administrative agencies adapt to the new constraints imposed on them by these decisions.
