![](https://www.theregreview.org/wp-content/uploads/2024/07/SM-7-30-172628618.jpg)
The Court offers a possible constraint to claims that agencies have exceeded their statutory authority.
It took the Supreme Court until the last day of its term to decide Corner Post v. Board of Governors of the Federal Reserve System—a “sleeper” administrative law case. Even Justice Amy Coney Barrett, who authored the 6–3 opinion, opened her announcement by joking that this was not the most exciting last-day case. Maybe not. But Corner Post is pretty important. Combined with Loper Bright Enterprises v. Raimondo, Corner Post vastly increases the exposure of federal agency regulations to claims that they exceed statutory authority—no matter how old the regulations are.
In Corner Post, the Court declined to time bar a facial, pre-enforcement challenge brought by a convenience store to a Federal Reserve regulation setting maximum debit card swipe fees for banks. The Court held that, under a statute providing a six-year limitation period for commencing a civil action against the United States, “a claim brought under the Administrative Procedure Act” (APA) accrues “when the plaintiff has the right to assert it in court.” The Court’s reasoning rested heavily on the dictionary and historical meanings of “accrual” for a statute of limitations. The Court also distinguished statutes of repose such as the Hobbs Act, which runs 60 days from the “entry” of an agency order.
In response to policy concerns with exposing regulations to challenge forever, the Court responded that if Congress wants to change the limitations period statute, it can do so.
This straightforward-sounding analysis obscures some subtleties. The “deepened” circuit split the majority identified did not exist, because the only case the plaintiffs claimed was on their side—Judge Jeffrey Sutton’s Sixth Circuit decision in Herr v. U.S. Forest Service—offered analysis for an as-applied claim, not a facial claim. Instead, the Court made its rule out of whole cloth.
As Justice Ketanji Brown Jackson wrote in dissent, the Court disregarded the fact that the historical and dictionary meanings of accrual as “plaintiff specific” related to claims that were “plaintiff specific,” such as contract and tort claims. But, as Justice Jackson explained, “facial administrative-law claims are not” plaintiff specific.
The majority responded that the “most natural” reading of the statute is plaintiff specific because the statute uses “the definite article ‘the’ to link ‘the complaint’ to ‘the right of action.’” This seems backwards, as the existence of the non-plaintiff-specific right of action would precede in time the plaintiff specific complaint, and not be retroactively controlled by it.
Another twist in Corner Post is Justice Brett Kavanaugh’s concurrence. Its focus is vacatur—the remedy that Corner Post seeks as an “unregulated plaintiff” affected by “an allegedly unlawful agency rule that regulates others but also has adverse downstream effects on the plaintiff.” Justice Kavanaugh wrote to endorse the remedy of universal vacatur, despite a 2023 concurrence by Justice Neil Gorsuch—joined by Justice Barrett and Justice Clarence Thomas—expressing skepticism about the remedy. Justice Barrett’s opinion for the Court carefully declined to decide whether vacatur is the right remedy, but Kavanaugh at least has said where he stands.
In any event, the APA claims covered by Corner Post as a practical matter have no time limit, since it is always possible for a new plaintiff to come into existence and suffer harm because of a pre-existing regulation. The facts of Corner Post itself illustrate the potential for gamesmanship.
As Justice Ketanji Brown Jackson explained in her dissent, the origins of the challenge to Regulation II, the Federal Reserve’s 2011 maximum debit card swipe-fee regulation, lie in a suit brought by two trade associations of convenience stores and like businesses. The U.S. Court of Appeals for the D.C. Circuit handed the associations a loss in 2014. The associations then added Corner Post, a truck stop which began doing business in 2018, to the suit in order to “do an end run around” the six-year time bar and try again in the U.S. Court of Appeals for the Eighth Circuit.
In Corner Post, the Court is mostly thinking about a claim “that the regulation violates the statute—a prototypical substantive challenge.” This kind of claim is not a Chevron claim anymore, since the Court’s decision in Loper Bright overruled Chevron v. NRDC—a case that required federal courts to defer to federal agencies in their interpretation of ambiguous statutes.
A better label for such a “substantive challenge” is an “ultra vires” claim. In other words, the Corner Post Court is thinking about a claim that the regulation exceeds the authority of a statute such as the Durbin Amendment, the substantive law under which the Federal Reserve promulgated its debit card swipe-fee regulations.
Under Loper Bright, federal courts must decide what statutes mean, without the Chevron presumption of deference to agency interpretation. Agency interpretations receive respect for their “power to persuade,” but courts have the final say. This shift of interpretive power and responsibility to courts will encourage ultra vires challenges to regulations.
Under Corner Post, there is no time limit to such a challenge so long as a fresh litigant harmed by the regulation of interest can be produced. Moreover, Corner Post explicitly covers facial challenges to regulations, made without any agency attempt to enforce. Thus, Corner Post greatly expands the Loper Bright result.
Loper Bright does not overrule decided cases that relied on or cited Chevron in the course of upholding old regulations, such as Chevron itself, which upheld an EPA regulation, or the D.C. Circuit’s decision that upheld Regulation II in 2014. But old regulations that have not been litigated yet are open to ultra vires challenge on Loper Bright terms, as are old regulations that have been litigated in only some circuits.
The interaction of Loper Bright and Corner Post could be overwhelming, as Justice Jackson predicts. That will depend on how many old regulations litigants dislike.
The Corner Post result—later, plaintiff-focused accrual—is clear for ultra vires claims. But this later-accrual result may not be clear for procedural claims. Corner Post’s intriguing footnote eight indicates that earlier, at-promulgation accrual could still apply for some claims—even if they are also brought under the APA.
The footnote explains that it “may be that some injuries can only be suffered by entities that existed at the time of the challenged action.” What kind of injury? Perhaps a “‘procedural’ shortcoming, like a deficient notice of proposed rulemaking.”
As it happens, Corner Post’s complaint included two counts. One count alleged that Regulation II exceeded the authority of the Durbin Amendment. The other count alleged that the Federal Reserve acted in an arbitrary and capricious manner when it promulgated Regulation II.
In footnote eight, the Court says that it is enough to decide the case that “the rule’s alleged conflict with the Durbin Amendment” is not time-barred. The footnote then explains that “even if some of Corner Post’s claims might be procedural, its central claim—that the regulation violates the statute—is a prototypical substantive challenge.” This explanation makes clear that the ultra vires claim can proceed. At the same time, it offers the possibility that the arbitrary and capricious claim is a time-barred “procedural” claim.
In its Supreme Court briefing in Corner Post, the government lumped facial claims together, whether substantive or procedural, and it argued that all such claims accrued at promulgation. This argument failed. On remand, the government will presumably choose a different dividing line in an effort to at least obtain a time bar of the arbitrary and capricious claim.
Rather than distinguishing facial from as-applied claims, the government should distinguish ultra vires—or substantive—claims from procedural claims. It should argue that a cause of action to challenge a procedural error—such as a notice and comment failure or an arbitrary and capricious rulemaking—accrues when the agency promulgates the regulation. This would comport with all existing case law, which accrues the six-year statute of limitations at promulgation for such procedural claims, including arbitrary and capricious challenges. In response, courts will have to grapple with the question of whether a particular claim should be treated as substantive or procedural.
The Corner Post time bar game is not over yet.
This essay is part of a series, titled The Supreme Court’s 2023-2024 Regulatory Term.