Issues
Whether a plaintiff’s Administrative Procedure Act claim “first accrues” under 28 U.S.C. § 2401(a) when an agency issues a rule—regardless of whether that rule injures the plaintiff on that date—or when the rule first causes a plaintiff to “suffer[] legal wrong” or be “adversely affected or aggrieved.”
This case asks the Supreme Court to decide whether Corner Post, Inc.’s (“Corner Post”) claim under the Administrative Procedure Act was barred under a particular statute of limitation, and whether that six-year statute began running 2011 when the Board of Governors of the Federal Reserve (“Federal Reserve”) published their regulation, or in 2018 when Corner Post was first founded and affected by it. Corner Post asserts that interpreting statutes of limitations to start when harm is inflicted on plaintiffs is consistent with historic models of statutory interpretation and fairness. The Federal Reserve counters that the statute in question was clear in its terms and intentions to give administrative agencies a distinct time period during which to expect legal challenges, and as such the six-year statute would begin with the promulgation of the regulation. The outcome of this case has serious implications for administrative law and statutory interpretation, particularly with respect to the practicability of suing agencies for long-standing policies.
Questions as Framed for the Court by the Parties
Whether a plaintiff’s Administrative Procedure Act claim “first accrues” under 28 U.S.C. § 2401(a) when an agency issues a rule—regardless of whether that rule injures the plaintiff on that date—or when the rule first causes a plaintiff to “suffer[] legal wrong” or be “adversely affected or aggrieved.”
Facts
In 2010, Congress amended the Electronic Fund Transfer Act to address fees for consumer debit transactions charged to merchants, “interchange fees,” by debit-card-issuing banks (e.g., Visa and Mastercard). Brief of Respondent, Board of Governors of the Federal Reserve System (“Board”) at 4. The “Durbin Amendment,” 15 U.S.C. § 1693o-2(a)(1), (2), narrows network discretion to determine the amount of the interchange fee for transactions it processes. Id. In July 2011, following notice-and-comment procedures, the Board of Governors of the Federal Reserve System (“Board”) imposed a maximum fee of twenty-one cents plus 0.05% charged to merchant per transaction by virtue of Regulation II. Id.
In April 2021, the North Dakota Retail Association (NDRA) and the North Dakota Petroleum Marketers Association (NDPMA) brought the present suit in the United States District Court of North Dakota contending that Regulation II violates the Administrative Procedure Act, APA because it is contrary to law, arbitrary, and capricious. Id. at 637–38. In response to a motion to dismiss by the Board, the NDRA and NDPMA amended the complaint to add Corner Post as plaintiff (collectively, “Merchants”). Id. Corner Post Inc. (“Corner Post”), a truck stop convenience store in North Dakota that was incorporated in 2017, began accepting debit-card payments in 2018, which subjected them to the Board-mandated maximum interchange fee. Id. In July 2021, Corner Post joined other parties as plaintiff in an action challenging Regulation II. N.D. Retail Ass’n v. Bd. Of Governors of the Fed. Rsrv. Sys. at 637. The Board moved to dismiss Corner Post’s claims, contending that the six-year statute of limitations had run, and so the claims were time barred pursuant to the six-year statute of limitations provided by 28 U.S.C. § 2401(a). Id. at 638. In granting the motion, the district court held that the six-year period begins on the publication date of the regulation in the Federal Register, and thus Corner Post’s facial claims, brought after July 2017 are time barred. Id.
Merchants appealed to the United States Court of Appeals for the Eighth Circuit in 2022, contending that their facial challenge first accrued when Corner Post first opened and was subject to regulation in 2018. Id. at 639. In affirming the district court’s ruling, the court of appeals held that the statute of limitations began to run upon the publication of the regulation. Id. at 641. The court rejected Merchants’ reliance on the Sixth Circuit case Herr v. United States Forest Serv., which held that first accrual occurs when the plaintiff is injured, because the Herr Court “did not distinguish between as-applied and facial challenges.” Id. at 640.
The court of appeals recognized that because Corner Post came into existence more than six years after the publication of Regulation II, the issue was novel, but ultimately found it reconcilable with an Eighth Circuit case where the court time barred the plaintiff’s facial challenges to an agency action because the complaint was filed ten years after its founding. Id. at 639. In addition, the publication-based accrual approach was adopted by five other circuits and so the court of appeals held that the statute of limitations bars Corner Post’s claims. Id. at 643.
The United States Supreme Court granted certiorari on September 29, 2023.
Analysis
TIMELINESS OF STATUTES OF LIMITATIONS
Corner Post, Inc. (“Corner Post”) argues that the court of appeals erred in holding that their claim under the Administrative Procedure Act (“APA”) was barred by the six-year statute of limitations. Brief for Petitioner at 14. Corner Post contends that section 2401(a) is a statute of limitations which only starts when a party is injured, rather than when the law was first promulgated. Id. at 16-17. As such, Corner Post asserts that their claim first accrued when the business was founded and first paid Regulation II’s interchange fee in 2018, rather than in 2011, when the regulation was published. Id. at 14. Corner Post further asserts that this interpretation is consistent with historic precedent and traditional methods of statutory interpretation. Id. at 15. Corner Post contends that the statutory language clearly indicates claims must be filed within six years of the date where “the right of action first accrues,” and that a right of action cannot possibly accrue until the party actually exists. Id. Corner Post maintains that the purpose of a statute of limitations has always been to establish a temporal stop to a particular party’s ability to file a claim over a past grievance, and that in the case at hand this aim could not be fulfilled because the grievance would not necessarily be in the past. Id. at 22. Corner Post continues that starting the timer at the time of a law’s promulgation will inevitably lead to a situation where a company is founded, immediately injured by a particular law or regulation, but already outside of the statute of limitations to bring a claim against the agency. Id. at 18. Corner Post concludes that such an outcome would not only go against the nature of statutes of limitations but would also be fundamentally unfair to a company which has not in any way been negligent or slow in bringing its claim. Id. at 19.
The Board of Governors of the Federal Reserve System (“Federal Reserve”) counters that the six-year statute of limitations has always been held to start at when the challenged action occurs. Brief for Respondent at 11. The Federal Reserve further asserts that a range of other administrative agencies have similar regulations regarding their statute of limitations, and that these regulations have been upheld by the Supreme Court in line with the requirements of the APA and the Constitution. Id. at 15. The Federal Reserve cites the Food and Drug Administration and the National Highway Traffic Safety Administration as exemplary of this principle: both administrative agencies have differently worded sixty-day statutes of limitation which explicitly begin their respective timers at the commencement of agency action, and not the imposition of some alleged harm. Id. at 15-16. The Federal Reserve maintains that Congress imposes statutes of limitations to allow courts to avoid wasting time adjudicating untimely issues, and that starting with the date of the agency action instead of forcing courts to determine operative dates on a case-by-case basis furthers that aim. Id. at 17. In addition, the Federal Reserve highlights that the goal of statutes of limitation is to allow litigation to be resolved more quickly, avoiding the sort of financial burdens that uncertain or prolonged trials bring upon both the Federal government and hypothetical plaintiffs bringing suit. Id. at 17-18. The Federal Reserve further argues that because the resolution of many case types is built around determinations of an agency’s intentions and application of regulation at the time of their action commencing, permitting a far wider window of time to bring up suits would lead to issues with the maintenance of documents and a muddying of the historical and procedural record. Id. at 19.
STATUTORY INTERPRETATION
Corner Post argues that the court of appeals erred in its decision and went against traditional modes of statutory interpretation and contradicted Congress’s intentions. Brief for Petitioner at 20. Corner Post asserts that the common meaning of a phrase should dictate how a court reads statutory language. Id. Corner Post further asserts that the government wrongly appealed to a circular argument and mischaracterized precedent in its interpretation of the statute of limitations. Id. at 21. Corner Post maintains that the court of appeals did not properly separate the two requirements to bring suit under Section 702: the final agency action and the harm suffered by the regulated parties that results from the action. Id. Corner Post argues that this creates an unwarranted assumption that all relevant parties must necessarily be harmed on the day of the agency’s action. Id. Corner Post asserts that the proper interpretation instead allows the two times to be separated and that the statute of limitations runs only when both requirements are met. Id. at 22. Corner Post continues by arguing that the government’s interpretation goes against the basic limitation principles that Court has always applied in other cases using similar language and construction. Id. at 24. Corner Post maintains Congress knows how to start a statute of limitation at the point of an agency orders entry and has chosen not to do so in this case, but that the governments interpretation would imply Congress used such language either accidentally or incorrectly. Id. at 27.
The Federal Reserve counters that Corner Post's argument is constructed by cherry-picking favorable lines of the statute and making overly broad conclusions using unverifiable common parlance from those rather than understanding the section's intended purpose within a broader statutory scheme. Brief for Respondents at 16. The Federal Reserve asserts that Section 702 makes it clear that it serves only to identify a relevant class of persons who can sue and to impose on them a statute of limitations, and that this stated intent should inform a court’s interpretation of its boundaries. Id. at 17. The Federal Reserve argues that the requirements for bringing suit under this section explicitly bar prolonging the start time of statute of limitation past the date of an agency's finalization of a decision. Id. The Federal Reserve maintains that this is how most courts understand such statutes, informed in part by a statute of limitation’s purpose to create a definitely bounded timeline during which agencies can expect to face legal pushback, and is not intended to create an uncertain timeline dependent upon plaintiffs and their circumstances. Id. at 18. The Federal Reserve further argues that Corner Post’s assertion of confusion or a circuit split on the issue is a mischaracterization, and that it is well understood that legal actions by administrative agencies implicate not only the agencies themselves but also the numerous private parties they cooperate with, which informs Congressional intent. Id. at 19-20. The Federal Reserve maintains that despite Corner Post’s assertions, such a reading of statutes limiting particular APA challenges could not substantively affect plaintiffs’ abilities to access the Courts and seek a redress of grievances, as a host of other legal avenues exist to tackle the substance of the harm, rather than its procedural implementation years or even decades prior. Id. at 20-21. The Federal Reserve thus argues that their understanding of such concrete limitations imposed by Congress is consistent with the usual tools of statutory interpretation, and that Corner Post's indefinitely renewable standard for the statute of limitations would not only be pointless but also counterproductive to Congress’s stated intent in applying time-based limitations in the first place. Id. at 16-17.
Discussion
FAIRNESS AND PRACTICALITY
The CATO Institute (“CATO”), in support of Corner Post, contends that publication-based accrual bars would-be plaintiffs from suing before a right of action even arises. Brief of Amicus Curiae the CATO Institute, in Support of Petitioner at 13. The National Federation of Independent Business Small Business Legal Center, Inc. and other public policy organizations (collectively “NFIB et al.”) assert that because many regulations influence even non-regulated entities, such a scheme would unreasonably force prospective business owners to allocate limited resources towards anticipating agency rule promulgation that may affect their new business. Brief of Amici Curiae the National Federation of Independent Business Small Business Legal Center, Inc. et al., in Support of Petitioner at 17.
The Chamber of Commerce, in support of Corner Post, posits that publication-based accrual arbitrarily distinguishes parties immediately harmed by an unlawful regulation from those who experience no harm until several years later. Brief of Amicus Curiae the Chamber of Commerce, in Support of Petitioner at 21. The Chamber of Commerce claims that businesses moving into new sectors or regulated entities receiving new agency-issued interpretive guidance would be forced to violate a regulation in order to challenge a rule through an agency enforcement proceeding, thereby incurring significant administrative costs and delay. Id. at 17–18. The Chamber of Commerce contends that the in-house adjudication process—a prerequisite for regulated entities to challenge a regulation in Article III court—is an “administrative purgatory” because of lengthy procedures, exorbitant cost, and possible bias of the administrative law judge. Id. at 18.
Small Business Majority and other business associations (collectively Small Business Associations “SBA”), in support of the Board, counter that an injury-based accrual standard would not comport with the APA’s “snapshot-in-time review” because it is confined to the administrative record at the time of decision making. Brief of Amici Curiae Small Business Associations, in Support of Respondent at 19. SBA further claims that an injury-based accrual standard would create a “workaround [to] the APA’s time bar,” permitting parties who did not diligently nor timely pursue their rights to substitute a newly injured party as lead plaintiff. Id. at 20–22.
Similarly, Public Citizen, in support of Respondent, argues that injury-based accrual would leave agency regulation perpetually open to attack and runs afoul of APA notice-and-comment procedures. Brief of Amicus Curiae Public Citizen, in Support of Respondent at 9–10. SBA and Public Citizen argue that the grave remedies associated with judicial review of facial challenges (i.e., injunction and vacatur) are properly cabined at the six-year time limit, and after that period, a dissatisfied party must rely on a petition to the agency for rulemaking, pursuant to §553(e) of the APA. Id. at 6–7; Brief of Amici Curiae Small Business Associations at 13–15.
BALANCING AGENCY ACCOUNTABILITY AND REGULATORY STABILITY INTERESTS
NFIB and the CATO Institute, in support of Corner Post, contend that most injured persons—merchants and consumers alike—are not subject to enforcement actions, and are thus denied such opportunity for judicial review. Brief of Amicus Curiae the CATO Institute at 17; see Brief of Amici Curiae NFIB, et al. at 13 The New Civil Liberties Alliance further argues that seeking review via petition is inadequate because an agency’s denial of such a petition is merely subject to limited and highly deferential scope of judicial review. Brief of Amicus Curiae New Civil Liberties Alliance, in Support of Petitioner at 16. CATO claims that the agency may even elect to decline issuing a decision on a petition “or delay such action indefinitely,” such that judicial review is never triggered. Brief of Amicus Curiae the CATO Institute at 20.
Public Citizen, in support of the Board, counters that injury-based accrual may subject longstanding regulations to adjudicative attacks, threatening the reliance interests of both the public and regulated entities in organizing their affairs. Brief of Amicus Curiae Public Citizen at 10–11. SBA submits that the APA’s statutory limit is meant to ensure regulatory stability, upon which small businesses, in particular, rely before engaging in costly compliance costs. Brief of Amici Curiae Small Business Associations at 10–11.