The Supreme Court will resolve a Circuit split regarding when the statute of limitations begins to run under the Administrative Procedure Act

The United States Supreme Court granted a Writ of Certiorari filed by Corner Post, Inc., seeking review of an Eighth Circuit’s affirmation of a dismissal finding the action time-barred by the six-year statute of limitations under the Administrative Procedural Act (APA), teeing up the resolution of a Circuit Split regarding the statute of limitations under the APA. The Eighth Circuit joined with the Fourth, Fifth, and Ninth Circuits in holding that an APA claim “first accrues” when the administrative agency issues a rule, regardless of when a party alleges they suffered injury from the rule. The Sixth Circuit holds that a plaintiff’s claim “accrues” when the rule causes plaintiff to suffer a legal wrong or be adversely affected or aggrieved. The statute of limitations begins to run when the injury accrues, and the Sixth Circuit’s rule allows for a much longer trail of possible litigation following an administrative agency’s action.

In the underlying litigation, the North Dakota Retail Association and the North Dakota Petroleum Marketers Association (collectively the “Merchants”) sued the Board of Governors of the Federal Reserve System (the “Board”) alleging that fees relating to debit card transactions violated the Durbin Amendment’s [1] requirements that the Board regulate debit card fees so that they are “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.” The Merchants challenged a rule adopted by the Board in 2011; specifically, the Board set a debit card interchange-fee cap at 21 cents per transaction plus an ad valorem component of .05% of the transaction’s value. Recent data from the Board shows that big banks’ average costs for processing debit-card transactions range between 3.6 and 5 cents per transaction. The merchants argued the 16-18 cent profit per transaction constituted a violation of the reasonable and proportional requirement of the Durbin Amendment.

Corner Post became a named Plaintiff when the Board sought dismissal pursuant to the statute of limitations, and the Merchants argued that injury accrued when Corner Post started operations in 2018. The district court dismissed the case finding the claims were barred by the statute of limitations, which began to run when the Board adopted the rule, and the Eighth Circuit affirmed the decision.

Corner Post and the Merchants contend that starting the clock on a statute of limitations period when the administrative agency enacts a rule, conflicts with Supreme Court precedent stating that a limitations period commences when the plaintiff has a complete and present cause of action. Their argument is that a plaintiff who has not been harmed does not have a complete and present cause of action. As such, the majority rule starts the statute of limitations even for plaintiffs who cannot state a claim challenging the agency action. The Board of Governors takes the position that a challenge to an administrative agency action accrues when the regulation becomes final, and therefore subject to judicial review, without regard to the circumstances of any individual plaintiff. The Board argues the APA’s allowance of a challenge to an administrative agency rule is a waiver of the Government’s sovereign immunity, and therefore must be strictly construed to limit claims. The Board also argues the certainty that results from a limitations period running from a “definitely ascertained time” accomplishes the practical consideration of limiting the length of time for possible litigation. The Board contends allowing a newly formed entity to have a new limitations period would result in the statute of limitations provisions of the APA serving no purpose.

Amicus Briefs Submitted to Supreme Court

A number of Amicus Briefs have been filed in support of Corner Post’s position. The National Federation of Independent Business Small Business Legal Center argues that the Eighth Circuit’s decision creates detriment for small businesses. The Cato Institute also supports Corner Post, arguing the decision deprives persons newly injured by old agency action of access to the federal courts in clear contravention of the pertinent statutory text, and thus allows unlawful agency action to evade judicial correction.

What to Expect

The Supreme Court will resolve this Circuit Split regarding when the statute of limitations regarding a challenge to an agency action under the APA first accrues. If the Court finds in favor of Corner Post, new challenges to old agency acts may flood courts, creating a long trail of litigation for administrative agencies.