SCOTUS to hear oral argument on February 20 to determine timing for facial challenges to federal regulations

The U.S. Supreme Court has scheduled oral argument for Tuesday, February 20, 2024 in Corner Post, Inc. v Board of Governors of the Federal Reserve System. The question that the Supreme Court will decide is when a right of action first accrues for an Administrative Procedure Act (APA) Section 702 challenge to a final rule issued by a federal agency—when the final rule is issued or when the rule first causes injury. This case involves a merchant who sued the Federal Reserve Board seeking to invalidate its Regulation II which caps debit card interchange fees. The district court and Eighth Circuit ruled that the six-year statute of limitations for bringing facial APA claims (28 U.S.C. § 2401(a)) begins to run when a final rule is issued, which meant that the limitations period had run before the merchant had opened his business.

In its brief, Corner Post argues that if the statute of limitations for bringing a facial challenge under the APA can expire before a plaintiff is injured by final agency action, a plaintiff seeking to challenge a regulation beyond the six-year period would be forced to intentionally violate a regulation to induce an enforcement proceeding to manufacture an “as applied” challenge. The Federal Reserve argues in its brief that the tolling provision in 28 U.S.C. § 2401(a) would be unnecessary if the statute of limitations did not begin to run until a final rule first caused injury. Twelve amicus briefs have been filed in the case, including a brief supporting the Petitioner filed by the West Virginia Attorney General and 17 other state AGs. In its reply brief, Corner Post argues that the government’s argument misconstrues § 2401(a) and the standard accrual rules governing APA claims.

As we previously blogged, this is one of four critical cases for the consumer financial services industry that are currently pending before the U.S. Supreme Court.

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