When the Right “Accrues”: Corner Post Extends the Statute of Limitations under the Administrative Procedure Act
When the Right “Accrues”: Corner Post Extends the Statute of Limitations under the Administrative Procedure Act
On July 1, 2024, the U.S. Supreme Court issued a decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, holding that an Administrative Procedure Act (APA) claim does not accrue for purposes of the APA’s six-year statute of limitations until the plaintiff is injured by final agency action. The question before the Court was whether a plaintiff’s APA claim first accrues when (a) an agency issues a rule—regardless of whether the plaintiff suffered an injury as a result of the rule on that date, or (b) the rule first causes a plaintiff to suffer a legal harm. In its holding, the Court clarified that “[a] right of action ‘accrues’ when the plaintiff has a ‘complete and present cause of action’—i.e., when she has the right to ‘file suit and obtain relief.’”
In Corner Post, the plaintiff merchant did not open its doors and begin accepting debit cards until more than six years after the promulgation by the Federal Reserve Board (Board) of Regulation II. Before courts could assess the challenge to Regulation II on its merits, they first had to determine whether the plaintiff’s claim was time-barred. As a result of this holding, the lower court may now hear the plaintiff’s underlying claims.
The Court’s holding resolves a circuit split over when the APA’s statute of limitations begins to run for APA suits challenging agency actions. As the Court notes, at least six circuits had determined that the limitations period for “facial” APA challenges begins on the date of final agency action, whereas the Sixth Circuit has found that the APA’s statute of limitations does not begin to run until a plaintiff is injured by agency action, regardless of when such agency action was finalized.
Relying upon the statutory language of the APA, which provides that “every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues[,]”[1] the Court held that a right of action does not begin to “accrue” until the plaintiff suffers injury, which may occur after the date of final agency action. This holding will permit challenges to long-standing regulations if the plaintiff is able to establish that it first suffered an injury during the statute of limitations period.
While the Court considered only timeliness in Corner Post, the plaintiff’s underlying substantive claims center on the interchange fee calculation set forth in Regulation II. Through authority conferred by Congress, the Board implemented Regulation II to, among other things, establish an interchange fee cap that was “reasonable and proportional to the cost” banks incur when processing a debit card transaction.
Corner Post is not the first legal challenge to Regulation II. Following the promulgation of Regulation II in 2011, merchant associations and trade groups sued the Board in NACS v. Board of Governors of the Federal Reserve System, contending that Regulation II is not consistent with the statute.
While the Court declined to opine on the substantive merits of the case in Corner Post, it did acknowledge the holding in NACS, noting that the U.S. Court of Appeals for the D.C. Circuit held that “the Board’s rules generally rest on reasonable constructions of the statute.”[2]
It is widely anticipated that the Corner Post decision will increase the number of challenges to agency actions and regulations, because newly formed or newly injured parties will be able to challenge long-standing agency actions. Corner Post, as an entity, demonstrates why this is so. Corner Post’s litigation can continue because the company sued less than six years after it was created and started accepting debit cards. New businesses open every day, and any of those new entities will have six years to challenge regulatory actions that allegedly harm them, even if those actions were taken decades before the business opened its doors.
Taken together, Corner Post and Loper Bright, which overruled a long-standing doctrine that granted deference to agency interpretation of ambiguous statutes, and is discussed in greater detail in our earlier client alert, are likely to have a substantial impact on the landscape of administrative law moving forward. The decisions impact both when a plaintiff can challenge an agency action and the discretion agencies have to interpret statutes when promulgating regulations.
[1] Emphasis added.
[2] Internal quotations omitted.