“The Ball is in Congress’ Court”: U.S. Supreme Court in Corner Post Paves the Way for Challenges to Longstanding Treasury Regulations

The dispute in Corner Post centered on whether an APA challenge to a Federal Reserve Board (“Board”) regulation setting a maximum interchange fee on debit card transactions was barred by the six-year statute of limitations under 28 U.S.C. § 2401(a). That section requires “the complaint [to be] filed within six years after the right of action first accrues.” The subject regulation was promulgated in 2011; the plaintiff in the case began conducting business and paying interchange fees in 2021. Prior to the decision in Corner Post, six Circuits had held that “the limitations period for ‘facial’ APA challenges begins on the date of final agency action — e.g., when the rule was promulgated — regardless of when the plaintiff was injured.”² The U.S. Court of Appeals for the Sixth Circuit had, by contrast, “stated a generally applicable rule that § 2401(a)’s limitations period begins when the plaintiff is injured by agency action, even if that injury did not occur until many years after the action became final.”³

The majority concluded that the interpretation of section 2401(a) turns on the meaning of “accrues,” and held that an APA claim does not accrue for purposes of section 2401(a) until the plaintiff is injured by final agency action. The Court distinguished between a statute of limitations — like section 2401(a) — and a statute of repose, which “puts an outer limit on the right to bring a civil action that is measured not from the date on which the claim accrued but instead from the date of the last culpable act or omission of the defendant.”⁴ In doing so, the Court rejected arguments by the Board that the point of accrual should be measured from the date any plaintiff was injured. The Court also rejected policy concerns raised by the Board that federal regulations demand the finality of a six-year cutoff. According to the Court, “Pleas of administrative inconvenience . . . never justify departing from the statute’s clear text.”⁵ Rather, the Court relied on what it described as a “deep-rooted historic tradition that everyone should have his own day in court.”⁶

The dissent had a very different view, writing that:

At the end of a momentous Term, this much is clear: The tsunami of lawsuits against agencies that the Court’s holding in this case and Loper Bright have authorized has the potential to devastate the functioning of the Federal Government. Even more to the present point, that result simply cannot be what Congress intended when it enacted legislation that stood up and funded federal agencies and vested them with the authority to set the ground rules for the individuals and entities that participate in our economy and our society. It is utterly inconceivable that §2401(a)’s statute of limitations was meant to permit fresh attacks on settled regulations from all new comers forever.⁷

There is little in Corner Post on which the majority and minority agree, except that they both state that “The ball is in Congress’ court” to clarify the meaning of the APA.⁸

Corner Post, coupled with the decision in Loper Bright, creates a clear avenue for challenges to longstanding Treasury regulations. As we noted in our prior coverage of Loper Bright, taxpayers should examine previously taken positions to determine whether to file refund claims or protective claims in light of the “tsunami of lawsuits” predicted by the dissent in Corner Post. Questions remain, however, about the interplay between the general statute of limitations under section 2401(a) addressed in Corner Post and the statute of limitations provisions in the Internal Revenue Code, which will merit taxpayer-specific analysis.

¹ No. 22-1008, slip op. (U.S. July 1, 2024), available at https://www.supremecourt.gov/opinions/23pdf/22-1008_1b82.pdf.

² Id. at 3.

³ Id. at 4 (citing Herr v. United States Forest Serv., 803 F.3d 809, 820–822 (6th Cir. 2015)).

⁴ Id. at 9 (internal quotations and citations omitted).

⁵ Id. at 20 (internal quotations and citations omitted).

⁶ Id. at 21–22 (internal quotations and citations omitted).

⁷ Id. (Jackson, J., dissenting) at 23–24.

⁸ Id. (Barrett, J., writing for the majority) at 22 (“But we do agree with the dissent on one point: ‘[T]he ball is in Congress’ court.’”); (Jackson, J., dissenting) at 24 (“So, while the Court has made a mess of this pivotal statute, and the consequences are profound, ‘the ball is in Congress’ court.’”).