We would like to bring to your attention a recent significant ruling by the U.S. Supreme Court that impacts the ability to challenge federal regulations under the Administrative Procedure Act (APA). In a 6-3 decision in the case of Corner Post, Inc. v. Board of Governors of the Federal Reserve System (case number 22-1008), the Court ruled that legal challenges to federal regulations can be brought outside the normal six-year statute of limitations if the challenger is adversely affected after the six-year window has closed.

Summary of the Supreme Court Opinion

The Court’s decision, authored by Justice Amy Coney Barrett, clarifies when a claim under the APA “accrues” for the purposes of the statute of limitations. The key issue was whether the six-year statute of limitations begins when an agency issues a rule or when the rule first adversely affects a plaintiff. The Court held that a claim accrues when the plaintiff is injured by the final agency action, not when the rule is issued.

Justice Barrett wrote, “A claim accrues when the plaintiff has the right to assert it in court—and in the case of the APA, that is when the plaintiff is injured by final agency action.” This interpretation aligns with the traditional understanding of when a right of action “accrues,” which is when the plaintiff has a complete and present cause of action.

Implications of the Decision

This decision allows entities that were not initially affected by a regulation—because they did not exist or were not operating at the time the rule was promulgated—to bring challenges against long-standing regulations once they are impacted. The case involved Corner Post, a North Dakota truck stop that opened in 2018 and challenged a 2011 Federal Reserve regulation capping debit-card transaction fees in 2021, arguing that it unduly favored large banks.

The ruling overturns the Eighth Circuit’s decision, which had held that the statute of limitations began when the rule was issued in 2011. The Supreme Court’s decision means that Corner Post’s challenge, filed in 2021, is timely because the company was not injured by the rule until after it began operations.

Broader Context and Potential Impact

The Supreme Court’s ruling represents a significant shift, potentially opening the door to a wave of challenges against federal regulations that have been in place for many years. Government officials have warned that this could cast doubt on countless old regulations. For example, new entities could challenge regulations that were established decades ago, such as those prohibiting racial discrimination in federally funded housing or setting banking safety standards.

Justice Ketanji Brown Jackson, writing for the dissenters, expressed concern about the “far-reaching results” of the decision, warning of its potential to create a “never-ending stream of suits against rules dating back decades.”

Conclusion

This ruling marks an important development in administrative law and the ability of businesses and other entities to challenge federal regulations. It underscores the Supreme Court’s ongoing re-evaluation of administrative authority and the balance of power between regulatory agencies and the regulated community.

For more detailed information or to discuss the potential implications of this ruling on your operations, please do not hesitate to contact us.