Timing is Everything; The Potential Impacts of Corner Post v. Federal Reserve on the Statute of Limitations Under the Administrative Procedure Act

by Megan VanGilder, Associate Member, University of Cincinnati Law Review Vol. 92

I. Introduction

Everyone has times when they miss an appointment, accidentally go over a time limit, or forget about a deadline. Usually, these are small missteps that can be easily corrected—appointments can be rescheduled, and deadlines can be extended. However, anyone who has come into contact with the legal system knows that there is not always a quick fix, and missing a deadline can mean missing out on bringing a case at all. One mechanism for enforcing these strict deadlines are statutes of limitations. These statutes proscribe time limits within which certain lawsuits must be brought, after which potential plaintiffs will be unable to seek relief.¹ These limitations can be controversial, particularly in criminal cases.² However, in other contexts, imposing time limits on a plaintiff, or a whole class of plaintiffs, may be extremely beneficial.³

This benefit is particularly significant when it comes to federal rules promulgated by the various administrative agencies, specifically because these lawsuits are matters of public interest and protected by a great deal of oversight.⁴ Per the Administrative Procedure Act and 28 U.S.C. §2401(a), facial claims⁵ are barred after six years.⁶ While statues of limitations can begin to run at different times, under these statutes, the six year timeframe starts at the date of final agency action—the date when the regulation is formally put into effect.⁷ This interpretation has been settled law for decades; however, Corner Post, Inc., a North Dakota convenience store, is now challenging when the statute of limitations for claims under the Administrative Procedure Act start to run.⁸

Corner Post would have the Supreme Court hold that the statute of limitations does not begin to run until an individual plaintiff has been harmed by a regulation, rather than from when the regulation was first adopted.⁹ In response, the Federal Reserve is asking the Court to affirm the lower court rulings that upheld the long-settled understanding of when the clock begins to run.¹⁰ This article breaks down Corner Post, arguing that the Supreme Court should side with the respondent and uphold the settled interpretation of accrual under §2401(a). Part II will describe the facts and procedural history of Corner Post v. Federal Reserve, outline the key arguments made by the parties, and summarize the justices’ questioning at oral argument. Part III argues that the Supreme Court should side with the government due to the stronger legal reasoning and policy concerns. Finally, Part IV offers a brief conclusion.

II. Background

A. Facts and Procedural History

Corner Post, Inc. v. Board of Governors of the Federal Reserve System arose out of a 2021 challenge brought by the North Dakota Retail Association and the North Dakota Petroleum Marketers Association, which argued that the Federal Reserve’s Regulation II violated the Administrative Procedure Act.¹¹ Regulation II resulted from an amendment to the Electronic Fund Transfer Act, which revised the statute to narrow discretionary power for determining interchange fees for merchants who process debit card transactions.¹² In response to this amendment the Federal Reserve imposed Regulation II, which capped the fees that banks can charge for each debit card transaction, imposing a maximum fee of twenty one cents plus 0.05% per transaction.¹³ The plaintiffs challenged the regulation in U.S. District Court as arbitrary and capricious under the Administrative Procedure Act.¹⁴

Responding to the complaint, the Federal Reserve moved to dismiss the claim, arguing that the six-year statute of limitations imposed by 28 U.S.C. §2401(a) had expired.¹⁵ However, the two original plaintiffs amended their complaint to add Corner Post, Inc. as a plaintiff.¹⁶ Adding Corner Post—a business that was not incorporated until 2017 and did not begin accepting debit card payments until 2018¹⁷—introduced the question of when the statute of limitations first begins to run.¹⁸ Despite this, the District Court granted the Federal Reserve’s motion to dismiss, holding that the statute of limitations begins on the day the regulation is entered in the Federal Register, and therefore, Corner Post’s claims were time-barred.¹⁹

Corner Post then appealed the District Court’s decision to the Eighth Circuit Court of Appeals, arguing that its facial challenge first accrued when Corner Post opened and was first affected by the regulation in 2018.²⁰ The Eighth Circuit affirmed the lower court, holding again that the statute of limitations begins to run on the date the regulation is published.²¹ The court also rejected the plaintiffs’ reliance on a Sixth Circuit case, Herr v. United States Forest Service, which held that first accrual is when the plaintiff is first injured.²² Despite this holding, the Eighth Circuit found that Herrwas not persuasive as it dealt with an as-applied challenge, rather than a facial challenge.²³ Finally, Corner Post appealed to the United States Supreme Court.²⁴ The Court granted certiorari on September 29, 2023, and heard oral argument on February 29, 2024.²⁵ On this final appeal the parties asked the Court to decide whether claims under the Administrative Procedure Act first accrue under 28 U.S.C. §2401(a) when an agency issues its rule, or when the regulation first harms the plaintiff.²⁶

B. Parties’ Arguments

The dispute in Corner Post is grounded in an understanding of 28 U.S.C. §2401(a)—a statute which sets a six-year limitation for parties to bring a civil suit against the United States—as applied to claims arising under the Administrative Procedure Act.²⁷ Corner Post maintains that under §2401(a), the clock starts to run when the party is first injured, not when the law is first recorded.²⁸ They further assert that no cause of action can arise until a party actually exists and suffers injury.²⁹ Following this line of reasoning, they maintain that starting the clock when the rule is first promulgated will subject companies to injury immediately upon founding, with no ability to challenge the rule.³⁰

Conversely, the Federal Reserve asserts that §2401(a)’s timeframe has always been held to begin when the challenged action occurs, citing numerous other agencies with similar regulations which have been previously upheld by the Supreme Court.³¹ The Federal Reserve also argues that this interpretation is in line with congressional intent to advance judicial economy by allowing courts to avoid hearing untimely issues.³² Further, the Federal Reserve maintains that the purpose of statutes of limitations is to avoid the unnecessary monetary burdens associated with lengthy litigation and to allow for more efficient resolution of cases.³³

More than just dealing with the statute of limitations, this case also involves interpretating §702 of the Administrative Procedure Act, which outlines who may challenge agency actions under the Act.³⁴ Corner Post urges that the court of appeals improperly interpreted the provision by failing to separate the two requirements to bring suit.³⁵ These requirements include both the final agency action and the resulting harm to regulated parties.³⁶ Corner Post asserts that the statute of limitations can only begin to run when both the final agency action has occurred, and the party has suffered harm—meaning that in this case, the statute could not have begun to run until 2018 when Corner Post first began accepting credit card payments.³⁷ However, the Federal Reserve responds that §702’s purpose is only to identify the relevant class of persons who may sue, and to then to impose a statute of limitations on those parties.³⁸ The government maintains that the provision explicitly bars extending the start date of the statute of limitations past when the agency rule is finalized.³⁹ Given the parties’ drastically differing views on these two issues and the consequences of reversal, the Supreme Court dealt with both at length during oral argument, with almost equal questioning directed at both parties.⁴⁰

C. Oral Argument

The Justices vigorously questioned both sides at oral argument, with no clear indication of an ultimate outcome. Despite this, some of the Justices’ inquiries hinted at their views on the matter.⁴¹ Notably, Justices Sotomayor, Kagan, and Jackson seemed skeptical of petitioner Corner Post’s arguments, noting both legal and practical holes in the argument.⁴² On the other hand, Justices Alito, Roberts, and Gorsuch appeared sympathetic to the petitioner, and seemed eager to ensure that all interested parties are able to bring suit.⁴³ On the more skeptical side, Justice Kagan pointed out that until the Herr decision, the circuit courts were united in holding that the statute of limitations began to run at the time of agency action, and that when the Administrative Procedure Act says “accrues” it means that a full cause of action can be brought.⁴⁴ Justice Jackson followed up by stating that a cause of action accrues when all of the necessary facts to establish a cause of action have occurred, but that the law regarding when a plaintiff can bring a claim is different.⁴⁵ She asserted that a cause of action arises out of the final agency action because that is the point at which a plaintiff could sustain a claim against the agency.⁴⁶ She added that, under petitioner’s view, every new company would be able to claim that their harm is the first time a particular cause of action has arisen under the Administrative Procedure Act no matter how long the rule has existed.⁴⁷

Conversely, while questioning the government, Chief Justice Roberts expressed concern for newly incorporated business to have their complaints heard.⁴⁸ In his view, it seems problematic that not everyone gets their day in court—that they are out of luck because other individuals or entities had a chance to do something about it.⁴⁹ Additionally, as this line of questioning continued, Chief Justice Roberts did not appear swayed by the respondent’s insistence that other means remain available for plaintiffs such as Corner Post to obtain relief.⁵⁰ Further, Justice Gorsuch pushed the respondent to address the traditional meaning of “accrues”—the moment when a plaintiff is injured.⁵¹ While the respondent urged that congressional intent was to ascribe an alternative meaning to the word, Justice Gorsuch did not appear convinced that this was the case.⁵² With three Justices seemingly planted on each side and three Justices whose votes could go either way, it is still unclear how the Court will ultimately come down on this case. However, for the reasons discussed below, the Court should side with the respondent and affirm the Eighth Circuit’s holding.

III. Discussion

While judicial parsing of the word “accrues” may not seem significant, the outcome of this case could have major impacts on agency regulations, potentially destabilizing decades of settled regulatory environments.⁵³ More than this, §2401(a) deals with all civil suits against the federal government, not only the discrete issue at the heart of this case.⁵⁴ If the Court were to side with the Corner Post it would open the door to an avalanche of litigation involving final agency actions. While the Justices seemed aware of the consequences of siding with the petitioner, it is not evident that the entire Court finds the consequences as troubling as others. However, based on the parties’ arguments and their responses at oral argument, the Court should side with the government on this issue, if not because of the sound legal reasoning, then for the myriad of policy concerns wrapped up in this case.

A. The Court Should Uphold the Current Understanding of Accrual

Looking to both the parties’ arguments and the Justices’ questioning at oral argument, the Court should side with the respondent. First, Justice Jackson’s argument that the focus should be on the time at which the cause of action became available is a compelling interpretation of the statute. Further, looking at the existence of a cause of action rather than when an individual plaintiff could bring a challenge appears to be in line with Congressional intent.⁵⁵ If the purpose of the statute of limitations is to promote judicial economy by allowing judges to avoid relitigating similar claims over and over, it makes more sense to start the clock when the cause of action first accrues, not with each plaintiff’s purported injury.⁵⁶

Further, when plaintiffs claim that a regulation is facially invalid, their argument is that the regulation is invalid by virtue of its language, and that there are no circumstances in which it could be valid.⁵⁷ Therefore, if the regulation is blatantly invalid, the cause of action would have accrued when that regulation was first promulgated, since the creation of the rule is the alleged harm. This would mean that both §702 requirements are met at the time of the rule’s promulgation since there would be both a final agency action and harm to the regulated parties.⁵⁸ It does not follow that newly incorporated business could come along years or decades later and claim they have suffered a unique harm. Under a facial claim, all plaintiffs are similarly situated by virtue of being affected by the regulation.⁵⁹ Similarly, and as several Justices pointed out, businesses already in existence at the time of the rule’s promulgation have plenty of time to bring claims within the statute of limitations and would likely do so if the regulation were so blatantly injurious.⁶⁰

Second, while Chief Justice Roberts called attention to the ideal that every party is entitled to their day in court, the respondent pointed out that other avenues exist for plaintiffs to challenge a rule.⁶¹ All that would be prevented by siding with respondent are facial challenges to agency rules—plaintiffs could still raise as-applied challenges or petition the agency for rulemaking.⁶² Further, as counsel for the respondent pointed out, if Corner Post were a regulated party rather than an affected party, it would be entitled to additional rights.⁶³ Additionally, both Justice Jackson and Justice Sotomayor pointed out that new companies are born into a particular regulatory environment governed by long-established rules that direct all other companies in that environment.⁶⁴ It does not make sense that new companies would be unaware of the space they are entering such that they could claim they have been harmed by long-standing regulations, the overturning of which would unsettle decades of regulation. If the Justices want to exercise judicial restraint, promote stability, and adhere to Congressional intent, they should side with the Federal Reserve and affirm the Eighth Circuit’s holding.

B. Policy Implications

More than simply siding with the stronger legal arguments, the Court should side with the government to prevent the destabilizing policy consequences of a ruling for Corner Post. First, as pointed out at oral argument, new businesses are created every day.⁶⁵ If the statute of limitations is not cut off at the time of final agency action, the time for bringing new challenges would go on effectively forever—the statute of limitations would be reduced to meaningless words. A new business could come into existence and claim it has been harmed by a decades-old regulation, potentially disrupting an entire regulatory structure, and shifting the practices of an entire sector. More than this, the respondent pointed out that this ruling would apply to more than just the regulatory context at issue in this case.⁶⁶ Rather, a new interpretation would apply across the entire federal government and all of the final agency actions made by the government.⁶⁷ In making this point, counsel for the respondent hypothesized someone could potentially visit a dam for the first time, feel injured by it, and then challenge the permit which allowed it to be constructed and operated even if it had been decades since it was issued.⁶⁸ While this example may be relatively unlikely, it illustrates the widespread implications of adopting Corner Post’s interpretation of accrual.

IV. Conclusion

Corner Post is urging the Supreme Court to overturn decades of settled administrative law practice. As noted by the respondent, and some of the Justices, the Federal Reserve’s interpretation of accrual and beginning the six-year time limit on the date of final agency action has been the consensus not only amongst federal agencies, but also the courts of appeal throughout the statute’s existence.⁶⁹ Further, upholding this precedent would not cause any real harm to a large swath of plaintiffs—parties would still be free to bring as-applied challenges past the six-year deadline, and other avenues for relief remain available.⁷⁰ However, siding with the petitioner could have a myriad of consequences that threaten the stability and overall function of administrative agencies by subjecting each new regulation to potentially never-ending facial challenges when new business come into existence and decide to take issue with a long-standing rule. For the reasons stated above, the Court should affirm the lower courts’ rulings and side with the Federal Reserve.

Cover Photo by Diego Carneiro on Unsplash

Megan VanGilder

Megan is a 3L at the University of Cincinnati College of Law. Originally from Louisville, Kentucky, she is a graduate of the University of Kentucky with a Bachelor's degree in Political Science and Integrated Strategic Communication. At the College of Law, she has served as a policy fellow with the Ohio Innocence Project and is currently a Notes and Comments Editor for the Law Review. She is also a member of the Law Review’s Diversity, Equity, and Inclusion committee.

References

1
Statute of Limitations, Cornell L. Sch. Legal Info. Inst., https://www.law.cornell.edu/wex/statute_of_limitations.
2
See generally Rachel Korberg, Statutes of Limitations for Sex Crimes Further Punish Survivors. It’s Time to End Them, Wash. Post. (Feb. 4, 2022), https://www.washingtonpost.com/opinions/2022/02/04/sex-crime-statutes-of-limitations-end/ (opinion piece arguing for the removal of statutes of limitations for sex crimes); see alsoRAINN’s Recommendations for Effective Sex Crim Statutes of Limitations, RAINN (Mar. 2017), https://www.rainn.org/sites/default/files/import/Recommendations-Effective-Sex-Crime-Statutes-of-Limitations.pdf.
3
See Susan C. Morse, Old Regs: The Default Six-Year Time Bar for Administrative Procedure Claims, 31 Geo. Mason L. Rev. 191, 196 (2024).
4
Id. at 195-96.
5
Id. at 242; see also Facial Challenge, Wolters Kluwer Bouvier L. Dictionary (Desk Edition)(facial challenges are challenges to the validity of a rule or law based on its words rather than its application to a specific set of facts. To claim that a provision is facially invalid is to claim that no matter how it is applied it will always be invalid.).
6
28 U.S.C. § 2401(a); The Administrative Procedure Act, 5 U.S.C. § 702.
7
Statute of Limitations, supra note 1; see also Grace Braider & Victor Galov, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, Cornell L. Sch. Legal Info. Inst., https://www.law.cornell.edu/supct/cert/22-1008; 28 U.S.C. § 2401(a); The Administrative Procedure Act, 5 U.S.C. §§ 551-59.
8
Braider, supra note 7; see also Morse, supra note 3, at 198.
9
Braider, supra note 7; see also Morse, supra note 3, at 198.
10
Braider, supranote 7; see also Morse, supra note 3, at 198.
11
Braider, supra note 7; see also Morse, supra note 3, at 198.
12
Braider, supra note 7; see also Morse, supra note 3, at 198.
13
Braider, supra note 7; see also Morse, supra note 3, at 198; Oral Argument, Corner Post, Inc. v. Bd. of Governors of the Fed. Rsrv. Sys., 144 S. Ct. 375 (2023) (No. 22-1008), https://www.oyez.org/cases/2023/22-1008 (last visited Mar. 13, 2024).
14
Braider, supra note 7; see also Oyez, supra note 13.
15
Braider, supra note 7; see also Oyez, supra note 13; 28 U.S.C. § 2401(a).
16
Braider, supra note 7.
17
Id. (seven years after final agency action).
18
Braider, supra note 7; see also Oral Argument, supranote 13.
19
Braider, supra note 7.
20
Id.
21
Id.
22
Id.; see also Herr v. United States Forest Serv., 803 F.3d 809 (6th Cir. 2015).
23
Braider, supra note 7; see also Herr, 803 F.3d 809. Unlike a facial challenge, which asserts that a law or regulation is blatantly invalid against any party, an as-applied challenge asserts that a provision is invalid as it applies to a particular plaintiff or set of facts.
24
Braider, supra note 7.
25
Id.; see also Oral Argument, supranote 13.
26
Oral Argument, supra note 13.
27
Braider, supra note 7; see also Oral Argument, supra note 13; 5 U.S. Code § 706 – Scope of Review, Cornell L. Sch. Legal Info. Inst., https://www.law.cornell.edu/uscode/text/5/706; Administrative Procedure Act, 5 U.S.C. § 706 (courts may set aside administrative actions they deem to be arbitrary and capricious).
28
Braider, supra note 7.
29
Id.
30
Id.
31
Braider, supra note 7; see also Morse, supra note 3, at 224-25. The National Highway Traffic Safety Administration and the Food and Drug Administration have similar sixty-day statutes of limitation which explicitly begin to run at the time of the agency action, not when the alleged harm occurred.
32
Braider, supra note 7; see also Morse, supra note 3, at 224-25.
33
Braider, supra note 7; see also Morse, supra note 3, at 224-25.
34
Braider, supra note 7; see also Morse, supra note 3, at 224-25; Administrative Procedure Act, 5 U.S.C. § 702.
35
Braider, supra note 7.
36
Id.
37
Id.
38
Id.
39
Id.
40
See generally Oral Argument, Corner Post Inc., v. Bd. of Governors of the Fed. Rsrv. Sys., 144 S. Ct. 375 (2023) (No. 22-1008), https://www.oyez.org/cases/2023/22-1008 (last visited Mar. 13, 2024).
41
Id.
42
Id.
43
Id. at 34:34 – 35:16.
44
Id. at 6:34 – 8:01.
45
Id. at 11:12 – 12:10.
46
Id.
47
Id. at 34:34.
48
Id.
49
Id. at 36:40.
50
Id. at 39:42.
51
Id.
52
Id. at 40:06 – 41:21.
53
Id. at 29:25, 1:07:09.
54
28 U.S.C. § 2401(a); see also Oral Argument, supra note 40.
55
See Braider supra note 7; see also Morse, supra note 3, at 198, 218.
56
See Morse, supra note 3; see also Braider, supra note 7.
57
See Sheppard, supra note 5.
58
See Braider, supra note 7; see also Administrative Procedure Act, 5 U.S.C. § 702.
59
See Morse, supra note 3, at 242; see also Sheppard, supra note 5.
60
See Oral argument, supra note 40, at 06:55.
61
Id. at 34:34 – 36:42.
62
Id. at 36:27.
63
Id. at 38:32.
64
Id. at 5:08, 54:47.
65
Id. at 1:07:27.
66
Id. at 44:08.
67
Id.
68
Id.
69
See Oral Argument, supra note 40, at 6:34 – 8:01.
70
Id. at 36:27.