Okay, let’s get right down to it.
Oral argument in Loper Bright and its companion case, Relentless, Inc. v. Dept. of Commerce, No. 22-1219, made plain back in January that the Chevron doctrine’s survival came down to whether the Chief Justice and Justice Barrett would choose to narrow or overturn it. They chose the latter. It turns out that, according to Chief Justice Roberts’ opinion for a six-justice majority, the Chevron doctrine has been flatly contradicting the Administrative Procedure Act (APA) for these last forty years.
You may recollect that Chevron itself revolved around EPA’s interpretation of the statutory phrase “stationary source.” The Supreme Court explained that courts, when reviewing an agency’s construction of a statute that the agency administers, should first determine if Congress has “directly spoken to the precise question at issue.” Where Congress has done so, courts should give effect to its intent. If, however, a “statute is silent or ambiguous with respect to a specific issue,” a court should defer to the agency’s reasonable interpretation of the statutory language. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984).
The Chevron court explained that this approach was good because agencies enjoy greater subject matter expertise and political accountability than generalist judges. Also, the Court characterized statutory ambiguity in an enabling act as Congress’s way of implicitly delegating authority to the agency to make the policy judgments necessary to fill the gaps. The underlying rationale for this fiction was that Congress, being reasonable, would naturally want courts to defer to reasonable agency policy choices resolving those statutory ambiguities that remain after courts have exhausted traditional tools of statutory construction. Congress wants agencies, not courts, to make policy.
Over the course of the next forty years, Justice Scalia and the Reagan administration seized on the Chevron doctrine to push executive interpretations through the courts; the Chevron doctrine grew increasingly complicated as courts adopted “step zero” tests to determine which agency interpretations deserved deference; law professors wrote countless articles debating the merits of the Chevron doctrine and how it should work; the Chevron doctrine became the bête noire of the conservative legal movement; and Chevron was cited in over 18,000 cases.
And so we come to Loper Bright. Let’s skip the facts and the specific problem of statutory construction implicated by the case as no one but the parties cared about them—to a rounding error, all of the argument focused on the question of whether Chevron should be overruled.
The Chief Justice began his analysis by citing James Madison to show that the Framers were wise enough to understand that “‘[a]ll new laws …’ would be ‘more or less obscure and equivocal, until their meaning’ was settled ‘by a series of discussions and adjudications.’” Loper Bright, 144 S. Ct. at 2257 (quoting The Federalist No. 37) (J. Madison)). For evidence that courts are in charge of this process of settling legal meaning, he turned to the other Publius, citing Alexander Hamilton for the proposition that the “final ‘interpretation of the laws’ would be the ‘proper and peculiar province of the courts.’” Id. (quoting The Federalist No. 78, (A. Hamilton) but adding the word “final”). The Chief Justice then observed that the Supreme Court has long agreed that the Supreme Court is in charge of legal interpretation, quoting Marbury’s ringing declaration, “[i]t is emphatically the province and duty of the judicial department to say what the law is.” Id. at 2257 (quoting Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803)).
Balancing the scales a bit, Chief Justice Roberts noted that there is a long tradition of courts according “due respect to Executive interpretations of federal statutes,” especially interpretations issued near the time of a statute’s enactment that have been consistent over time. For a suitable model of judicial respect, the Chief Justice turned to Skidmore v. Swift & Co., 323 U.S. 134 (1944). Under Skidmore, statutory interpretations of an agency are not binding but provide a source of informed guidance. According to Skidmore’s familiar incantation, the “weight” of this guidance “would depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” 144 S. Ct. at 2259 (quoting Skidmore, 323 U.S. at 140) (cleaned up).
With the table thus laid, the Chief Justice reached the heart of the matter: Chevron deference violates the APA. Section 706 instructs courts to apply deferential standards of review to policy and fact determinations. By contrast, it commands reviewing courts that:
[t]o the extent necessary to decision and when presented, [they] shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.
5 U.S.C. § 706.
Where a court determines that “agency action, findings, and conclusions” are “not in accordance with law,” the court shall “hold [them] unlawful and set [them] aside.” Id. This language, according to the Chief Justice, “codifies for agency cases the unremarkable, yet elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal questions by applying their own judgment.” 144 S. Ct. at 2261. The Chief Justice added that the APA’s legislative history, the Attorney General’s Manual on the Administrative Procedure Act, and eminent contemporaneous legal commentators all agreed.
Providing guidance for navigating the post-Chevron world, the Chief Justice reiterated that courts exercising independent judgment to determine statutory meaning can still, a la Skidmore, “seek aid from the interpretations of those responsible for implementing particular statutes.” Id. at 2262. “[I]nterpretations issued contemporaneously with the statute at issue, and which have remained consistent over time, may be especially useful.” Id. Also, in a critical passage that is sure to play an important role in future litigation, the Chief Justice recognized that a court exercising independent judgment to pick the best interpretation of a statute might conclude that it grants discretionary authority to an agency. This delegation may be express, or it might take the form of “empower[ing] an agency to prescribe rules to ‘fill up the details’ of a statutory scheme.” Id. at 2263 (citing Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 43 (1825)). Congress can also delegate such authority by authorizing an agency “to regulate subject to the limits imposed by a term or phrase that leaves agencies with flexibility, such as ‘appropriate’ or ‘reasonable.’” Id. (cleaned up). Within the space of such delegations, courts should review an agency’s exercise of policymaking discretion deferentially for “reasoned decisionmaking.” Id. A big project for practitioners of administrative law will be to identify such Loper Bright delegations as well as their scope.
The Chief Justice devoted Part III of Loper Bright to many more criticisms of Chevron and rejoinders to Justice Kagan’s dissent. Of special note, he insisted that courts are perfectly capable of using the tools of statutory interpretation to resolve ambiguities—it is in the job description. Id. at 2266. Using this power, their task is to find the “single, best meaning” of a statute, not to defer to suboptimal agency constructions. Id. All statutory phrases must have such a “single, best meaning” because “[t]hat is the whole point of having written statutes” Id. One need not worry that finding this “single, best meaning” presents an insurmountable epistemic challenge because this meaning turns out to be “‘the reading the court would have reached’ if no agency were involved.’” Id. (quoting but rejecting Chevron, 467 U.S. at 843, n.11).
Most of Part IV of Loper Bright explains why principles of stare decisis did not require the Court to stick to the Chevron doctrine. As usual, the Court did not seem to have much difficulty justifying, at least to itself, overruling a precedent that a majority had concluded was seriously wrong.
More importantly for future litigation, the last paragraph of Part IV addressed a related stare decisis problem: What to do with forty years of opinions applying Chevron that had affirmed agency statutory constructions not because they were the best but because they were reasonable? Did Loper Bright open the door to challenging these outcomes? The Court answered this question by characterizing these opinions as holding that “specific agency actions are lawful.” These holdings “are still subject to statutory stare decisis despite our change in interpretive methodology,” and mistaken reliance on Chevron “is not enough to justify overruling a statutory precedent.” Id. at 2273.
Justice Thomas wrote a concurring opinion to underscore the “more fundamental problem” that Chevron deference violates separation of powers. Id. at 2273 (Thomas, J., concurring).
Justice Gorsuch wrote a lengthy concurrence explaining why the doctrine of stare decisis supported the Court’s decision to “place[ ] a tombstone” on Chevron’s radical experiment. Id. at 2275 (Gorsuch, J., dancing on tombstone).
Justice Kagan’s dissent emphasized:
What are we to make of Chevron’s death at forty? Despite the best efforts of leading administrative law professors, it has never been clear how much Chevron deference has mattered in cases that matter much. Even without Loper Bright’s death blow, Chevron deference would have mattered less in the future given the coming of the Major Questions Doctrine and increasing skepticism of the administrative state in some quarters of the federal judiciary. Some of the substance of Chevron deference may be preserved by deference to Loper Bright delegations. And then there is always the “suspicion that the rules governing judicial review have no more substance at the core than a seedless grape.” Gellhorn & Robinson, Perspectives on Administrative Law, 75 Colum. L. Rev. 771, 780 (1975). It may well be that other Supreme Court opinions from the last few terms, such as Securities and Exchange Commission v. Jarkesy, 144 S. Ct. 2117 (2024), discussed below, will have more direct, consequential effects on the power of the administrative state going forward. None of these opinions, however, has sent a louder, clearer signal of the Supreme Court’s commitment to curbing administrative power.
In Jarkesy, the Court addressed the constitutionality of a Securities and Exchange Commission (SEC or Commission) administrative enforcement action against George Jarkesy and his advisory firm Patriot28, L.L.C. The enforcement action sought civil penalties for alleged securities fraud. Under the Dodd Frank Act, the SEC has the choice of filing such enforcement actions in federal court or initiating its own administrative proceedings. The SEC chose to pursue an administrative enforcement proceeding against Jarkesy, in which an administrative law judge (ALJ) found that he and Patriot28 had violated the securities laws. The Commission affirmed in pertinent part and ordered Jarkesy, inter alia, to pay a civil penalty. On review, the Fifth Circuit held, by a 2-1 vote, that: (a) Congress violated the Seventh Amendment by authorizing the Commission to seek civil penalties for fraud via administrative enforcement proceedings; (b) Congress’s decision to grant the Commission power to choose between judicial and administrative enforcement actions for civil penalties violated the nondelegation doctrine; and (c) the APA’s “for cause” removal protections of ALJs unconstitutionally infringed on the president’s authority under Article II.
The Supreme Court did not address the nondelegation or removal questions. It did, however, affirm on Seventh Amendment grounds, in the process significantly narrowing its constitutional jurisprudence regarding administrative adjudication.
In its 6-3 decision by Chief Justice Roberts, the majority began by addressing whether the Seventh Amendment right to a civil jury trial applied to the civil penalty action against Jarkesy. It did, the Court explained, if the enforcement proceeding was “legal in nature” within the meaning of the Amendment. Whether a proceeding is legal under the Seventh Amendment depends on both the cause of action and nature of the remedy, but because some causes of action can be both legal and equitable, the remedy is the “‘more important’ consideration.” Id. at 2129. The remedy in this case—civil monetary penalties—was “all but dispositive,” according to the Court. Id. It noted that monetary remedies can also be both legal and equitable, but that monetary remedies that are punitive, like those the SEC levied against Jarkesy, are “a type of remedy at common law” because they are “designed to punish and deter, not to compensate.” Id. at 2129, 2130. To support its conclusion, the majority relied on the fact that victims are not legally entitled to any of the money paid in penalties, and that the statutory provisions establishing the applicability and size of the penalties focus on the defendant’s culpability and deterrence, rather than remedial considerations.
The Court then turned to what it described as the less compelling factor in determining if a proceeding is legal in nature for Seventh Amendment purposes: the cause of action. Although it conceded that securities fraud is both “narrower” and “broader” than common law fraud, the majority found that because the two doctrines “target the same basic conduct” and Congress “chose to draw upon common law fraud” in the securities laws, they have a “close relationship” that “confirms” that the SEC enforcement proceeding against Jarkesy is “‘legal in nature.’” Id. at 2130, 2131. The combination of punitive monetary relief and a cause of action analogous to one at common law thus requires that Jarkesy be granted a jury trial under the Seventh Amendment.
Once it established that the enforcement proceeding triggered a Seventh Amendment right to a jury trial, the Court shifted to address whether the “public rights doctrine” nevertheless permitted the proceeding to take place in an administrative tribunal rather than an Article III court. The majority stressed that the public rights doctrine is an exception to Article III jurisdiction, which “prohibits Congress from ‘withdraw[ing] from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law,’” id. at 2131, and that separation of powers principles create a presumption against it. In terms of when it applies, the Court pointed to subjects that “historically could have been determined exclusively by [the executive and legislative] branches,” such as the power to force revenue officials to pay public money into the treasury, immigration, tariffs, “relations with Indian tribes … the administration of public lands … [and] the granting of public benefits such as payments to veterans, pensions, and patent rights.” Id. at 2132, 2133. It noted that public rights can also be found where a proceeding is “closely intertwined” with a regulatory regime. Id. at 2135.
The Court held that the SEC’s action against Jarkesy did not fall within the public rights exception. It relied heavily on its prior decision in Granfinanciera, S. A. v. Nordberg, 492 U.S. 33 (1989), in which the Court held that the public rights exception did not apply to a fraudulent conveyance claim between private parties in a bankruptcy proceeding because the claim was of a kind “traditionally decided by law courts” and was not “closely intertwined” with the bankruptcy regime, as it was not “highly interdependent,” nor did it require “coordination” with other claims in the proceeding. Id. at 2135.
The majority also rejected several arguments from the SEC that its enforcement proceeding was distinguishable from the claim in Granfinanciera. First, it rejected the Commission’s claim that the securities fraud claim was “closely intertwined” with the SEC’s regulatory regime because it “[o]riginated in [that] newly fashioned regulatory scheme.” Id. at 2136. The Court contended that, like the fraudulent conveyance claim in Granfinanciera, the securities fraud claim was a “traditional legal claim,” and thus could not fall within the public rights exception despite its “statutory origins.” Id.
The Court next rejected the SEC’s argument that the public rights exception applies because the government is a party to the enforcement proceeding against Jarkesy. Claiming that the Court has never relied on that distinction in applying the public rights exception, the majority returned its focus to the “substance of the suit.” Id. Despite the fact that the enforcement proceeding is brought by the Commission as a party, the Court focused on the “object” of the proceeding, namely “to regulate transactions between private individuals interacting in a pre-existing market.” Id. Because the “causes of action are modeled on common law fraud and [] provide a type of remedy available only in law courts,” the majority viewed the enforcement proceeding as “a common law suit in all but name.” Id. Such a suit “must be adjudicated in Article III courts.” Id.
Finally, the majority sought to distinguish the primary case relied on by the SEC, Atlas Roofing Co. v. Occupational Safety and Health Review Commission, 430 U.S. 442 (1977). Atlas Roofing involved a challenge to Occupational Safety and Health Administration (OSHA) enforcement of its workplace safety rules, which included civil monetary penalties. Atlas Roofing upheld the constitutionality of OSHA’s enforcement proceeding, including its monetary penalties, under the public rights doctrine (the Court in Atlas Roofing did not refer to the public rights doctrine as an “exception”). The majority in Jarkesy distinguished Atlas Roofing on the grounds that the claims in Atlas Roofing were not analogous to common law claims, but “instead resembled a detailed building code.” Id. at 2137. Atlas Roofing and the cases it relied on were, in the majority’s mind, distinct from the situation in Jarkesy because they all involved actions that were neither “suits at common law” nor “in the nature of such suits.” Id. at 2138.
Justice Sotomayor filed a lengthy dissent, which Justices Kagan and Jackson joined. She began by pointing out that the majority’s application of the Seventh Amendment and public rights doctrine were backwards. The majority began with the Seventh Amendment by asking if the enforcement proceeding was legal in nature, and only then whether it was permissible for the proceeding to be conducted in an administrative tribunal. Justice Sotomayor cited several cases in support of the notion that, because the Seventh Amendment only applies to proceedings in an Article III court, a reviewing court should first ask whether the proceeding is properly in an administrative tribunal (the public rights doctrine). As the Court put it in a recent case applying the doctrine: “The conclusion that Congress properly assigned a matter to an agency for adjudication therefore necessarily ‘resolves [any] Seventh Amendment challenge.’” Id. at 2158 (quoting Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U.S. 325, 345 (2018)).
This is important because the majority relies on the legal nature of the proceeding in both analyses. It relies on its conclusion in the Seventh Amendment analysis that the securities fraud action is akin to common law fraud as support for the fact that the action is also one traditionally at common law under Article III. But this analysis overlooks two prominent features of the doctrine. First, as Justice Sotomayor points out, it has “long been settled” that “a matter of public rights arises ‘between the government and persons subject to its authority.’” Id. at 2158. Atlas Roofing is part of that history. It upheld a civil penalty scheme under a Seventh Amendment challenge “even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned to a federal court of law.” Id. at 2162. Atlas Roofing rejected the majority’s proposition that the remedy in a civil penalty case is “all but dispositive” of the constitutional analysis. Instead, Justice Sotomayor pointed to Atlas Roofing’s focus on the fact that the OSHA adjudication was, like the SEC’s enforcement proceeding in Jarkesy, the product of a new statutory scheme designed by Congress to protect the public interest.
Justice Sotomayor went on to criticize the majority for not only misreading Atlas Roofing, but also putting forth its own, novel account of the public rights doctrine that does not fit within other longstanding Supreme Court precedents. For example, the Court failed to even mention CFTC v. Schor, 478 U.S. 833 (1986), Justice O’Connor’s landmark decision in which the Court articulated a five-factor balancing test for applying the public rights doctrine. It also neglected to explain how its decision can be reconciled with longstanding Supreme Court precedent permitting agencies to adjudicate actions between private parties if those actions are “closely integrated into a public regulatory scheme,” regardless of whether they are traditionally legal actions under the common law. Id. at 2165. Finally, Justice Sotomayor explained why the majority’s two primary cases, Granfinanciera and Tull v. United States, 481 U.S. 412 (1987), are inapposite. Although Granfinanciera held that an agency adjudication violated the public rights doctrine, the adjudication at issue was between private parties, not a government enforcement action. Tull involved a Seventh Amendment challenge to a civil penalty scheme, but did not involve agency adjudication; the proceeding in Tull began in federal court and therefore did not implicate the public rights doctrine.
Justice Sotomayor’s dissent highlights the potentially revolutionary scope of the majority’s decision in Jarkesy and the tension it creates for the future of agency adjudication. On the one hand, Jarkesy may simply be a case about securities fraud and civil penalties, such that it does not interfere with the “more than 200 [current] statutes authorizing dozens of agencies to impose civil penalties for violations of statutory obligations.” Id. at 2155. On the other hand, considerations of remedy and core executive and legislative function could supplant the existing public rights doctrine, which focuses on whether the government is a party and the relationship of the administrative action to the agency’s regulatory scheme. Jarkesy’s impact of course remains to be seen, but it would be a mistake to not take the Court at its word and at least consider how impactful its reasoning could become.
In Ohio, the Court either engaged in what may be a relatively mundane arbitrary and capricious analysis or it fashioned a new approach to gauging the role of public comments in judicial review of agency rulemaking.
The Clean Air Act (CAA) requires the Environmental Protection Agency (EPA) to set ambient air quality standards for certain pollutants, including ozone. States are primarily responsible for complying with those standards. To that end, states must submit implementation plans, designed to comply with the new standards, to EPA for approval. The CAA’s “good neighbor provision” requires state plans to consider the downwind effects of their pollution practices. If the EPA determines that a state implementation plan does not comply with statutory requirements, including the good neighbor provision, it must decline the state plan and implement its own national plan.
In 2015, the EPA issued revised standards for ozone emissions. In 2023, it rejected 23 states’ implementation plans on the grounds that they failed to meet statutory obligations under the good neighbor provision, thus triggering the need for EPA to implement a national plan under the CAA. EPA promulgated its plan—the “good neighbor plan”—in 2023. The good neighbor plan sought the most cost-effective means for achieving compliance with the new ozone standards by treating the action of all 23 states collectively.
The good neighbor plan was stayed pending judicial review in 12 of the 23 states it covers. Ohio, Indiana, and West Virginia challenged the plan in the D.C. Circuit and were denied a stay. They appealed the denial of the stay to the Supreme Court, arguing, inter alia, that the fact that the good neighbor plan is currently in effect in less than half of the states for which it was designed renders it arbitrary and capricious under the CAA, 42 U.S.C. § 7607(d)(9), because it depends for its success on a coordinated effort among all 23 upwind States.
The Supreme Court ruled 5-4 to stay the good neighbor plan pending resolution in the lower courts. Justice Gorsuch, writing for the majority, explained that the petitioners were likely to succeed on the merits of their challenge to the good neighbor plan because the plan was arbitrary and capricious under the CAA. According to the majority, the EPA designed its plan to maximize “cost-effectiveness” in ozone reduction by focusing on the “knee in the curve,” the point at which additional expenditures by upwind states would cease producing air quality improvements in downwind ones. Commentors suggested during the notice and comment period that the good neighbor plan was arbitrary and capricious under the CAA because it was designed for participation by all 23 covered states and the agency did not adequately explain why it would continue to be effective if fewer states participated. In part because 12 of the 23 covered states had already been awarded stays by other circuits, the Court held that the EPA’s continued pursuit of its plan was arbitrary because it “failed to offer a rational connection between the facts found and the choice made.” 144 S. Ct. at 2053 (quoting Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 43 (1983)).
In the process, the majority rejected the EPA’s argument that its severance provision, which stated that, even if the plan is found invalid with respect to some states, it can “continue to be implemented as to any remaining jurisdictions,” addressed the problem of partial participation. Id. at 2051. The EPA argued that the severability provision serves as a reasonable response to the commentors’ concern because it explains why the plan’s applicability does not depend on the participation of all 23 states. It noted that good neighbor obligations must be addressed “expeditiously” and it serves “important public health and environmental benefits” as well as reliance interests. The Court rejected this argument because it did not adequately explain why the good neighbor plan could still achieve the agency’s Ozone reduction goals with only partial participation by states. On the contrary, the Court held that the provision “did not address the applicants’ concern [about less than 23 states being part of the plan] so much as sidestep it.” Id. at 2055.
Justice Barrett dissented, joined by Justices Jackson, Kagan, and Sotomayor. She offered a different account of the rulemaking record. First, she disputed whether the public comments cited by the majority questioned the effect of partial participation on the good neighbor plan’s efficacy with the “reasonable specificity” required to trigger arbitrary and capricious review under the CAA. 42 U.S.C. § 7607(d)(7)(B). According to Justice Barrett, the public comments relied on by the majority addressed the plan’s timing and its applicability to specific pollution sources and industries, but did not address the effect of partial state participation. The Court concluded otherwise, Justice Barrett argued, only by “putting in the commenters’ mouths words they did not say.“ Id. at 2061.
Justice Barrett also took issue with the majority’s characterization of the agency’s conduct in creating the good neighbor plan. She noted that the state-specific data collected by EPA in preparing its plan focused on the pollution budget of each state, but the “final rule suggests that EPA calculated cost-effectiveness thresholds based on … national, industry-wide data,” and did not, “[c]ontrary to the Court’s speculations … depend on the number of covered States.” Id. at 2065 (emphasis in original).
Taken on its face, the majority opinion may simply represent a rigorous application of hard look review under the CAA’s arbitrary and capricious standard. Justice Barrett’s dissent, however, offers an alternative perspective that raises the specter of future disputes within the Court over the scope of an agency’s obligation to respond to individual comments in rulemaking, an issue which could have far broader consequences going forward.
Corner Post is a merchant that accepts debit cards as a form of payment. In exchange for the privilege of processing debit card transactions, merchants must pay an “interchange fee” to the bank issuing the card. In an amendment to the Dodd Frank Act, Congress empowered the Federal Reserve Board (“Board”) to set “standards for assessing whether the amount of any interchange transaction fee … is reasonable and proportional to the cost incurred by the issuer with respect to the transaction.” 15 U.S.C. § 1693o–2(a)(3)(A). The Board responded in 2011 by promulgating Regulation II, which set a maximum interchange fee of $0.21 plus an additional 0.05% of the transaction’s value.
Corner Post brought suit under the Administrative Procedure Act (APA) challenging the Board’s rule for exceeding the statutory maximum interchange fee. The case was governed by the default six-year statute of limitations period for the federal government, 28 U.S.C. § 2401(a). While Corner Post filed its suit more than six years after Regulation II’s enactment, it was less than six years from the date when Corner Post was first injured by the rule. The district court dismissed the suit for being untimely under § 2401(a). The Eighth Circuit affirmed.
In an opinion by Justice Barrett, the Supreme Court reversed. Sections 702 and 704 of the APA govern when a challenge to agency action may take place. Section 702 requires a litigant to show they are injured in fact and § 704 requires that any agency action be final before it may be challenged. Section 2401(a) bars suits against the government “within six years after the right of action first accrues.”
The Board argued that all three sections taken together indicate that a cause of action accrues when the agency action is final (i.e., when the regulation is enacted), even if the plaintiff has yet to suffer an injury. The Court, however, disagreed. Citing the text and legislative history of § 2401(a), the Court held that a cause of action accrues within the meaning of § 2401(a) when the plaintiff is first injured. In addition to relying on precedent and contemporaneous dictionary definitions of the word accrues, Justice Barrett focused on the statute’s phrase “when the right of action first accrues” (emphasis added). The definite article before “right of action” suggests that it is a specific right of action, i.e., one belonging to a specific plaintiff. This suggests that the statute is plaintiff focused, such that “accrue” must refer to the point at which the claim comes into existence for the plaintiff—when he or she is first injured.
Justice Barrett also contrasted the language of §2401(a) with statutes of repose. Statutes of repose are “measured … from the date of the last culpable act or omission of the defendant,” in this case the Board, and are focused on the “last culpable act … of the defendant.” By contrast, statutes of limitation, including § 2401(a), contain “plaintiff-focused language” that supports the holding that a claim “accrues” under the statute when plaintiff suffers an injury giving rise to the claim.
Justice Barrett went on to reject the Board’s arguments that “many specific review provisions start the clock at finality,” and that it is an important principle of administrative law that statutes of limitations begin to run from the time an agency action becomes final. Id. at 2453. While specific review provisions often refer to the date of entry of an agency action, § 2401(a) refers to when “a right of action first accrues,” which is more consistent with a statute of limitations, not one of repose. Moreover, specific review provisions sometimes reflect the finality timeline, indicating that Congress is aware of the potential problem and able to fix it if it so chooses. Finally, the Court rejected the Board’s argument that principles of administrative law support reading the finality timeline into § 2401(a) because “agencies and regulated parties need the finality of a 6-year cutoff.” Id. at 2458. Justice Barrett countered by pointing out that “administrative convenience” is not a reason to “depart[] from the statute’s clear text,” and that it would be problematic for the Court to read the same language in § 2401(a) differently for cases involving administrative action without a legislative amendment. Id.
Justice Kavanaugh filed a concurring opinion to weigh in on the controversial topic of the scope of judicial power to invalidate an unlawful agency action. Justice Kavanaugh cited the “set aside agency action” language in APA § 706 to support the proposition that the APA empowers courts to invalidate agency rules that are unlawful, even if they may not have the power to issue nationwide injunctions with respect to statutes. Section 706 does not, according to Justice Kavanaugh, limit a court’s holding invalidating agency action only to the parties in the case.
Justice Jackson dissented. She argued, along with Justice Kagan and Sotomayor, that the majority’s holding will create a tremendous disruption in agency activity, as any aggrieved party can challenge agency action at any time after it becomes final, provided that it is within six years of the plaintiff’s initial injury. The facts of the case demonstrate her point. Corner Post, a truck stop in North Dakota, was only added as a plaintiff to the case after two large trade organizations who initially challenged Regulation II had their claims dismissed as untimely under § 2401(a). The majority’s interpretation is ripe for manipulation, Justice Jacson argued, as new plaintiffs can be created decades after an agency action goes final.
Furthermore, she argued, the Court’s interpretation is simply wrong. Rather than having a fixed meaning, when a claim accrues depends on the nature of the claim. Because facial administrative law claims are not plaintiff-specific, those claims begin to accrue when the agency action is final, not whenever plaintiff happens to be injured by it. Justice Jackson supports this argument by pointing out that the text of § 2401(a) refers to “when a right of action first accrues” (emphasis added). The word “first” indicates that the statute “start[s] the clock at the earliest possible opportunity once the claim accrues,” which for a widely applicable agency action like Regulation II is the point at which it becomes final.
Corner Post may not be as high profile a case as Loper Bright or Jarkesy, but it may be just as consequential. While many agencies have more specific statutes of limitations that explicitly adopt the finality timeline, and others may seek to use rulemaking to do so in response to the Court’s decision, reading the default statute to run only when an individual plaintiff is injured threatens to eviscerate “any limitations period for lawsuits that challenge agency regulations on their face.” Id. at 2470. New challengers may continually emerge years or even decades after agency action is finalized, thereby permanently disrupting an agency’s ability to rely on the validity of its conduct.
In Alliance for Hippocratic Medicine, anti-abortion physicians and national associations challenged various FDA actions that had widened access to the abortion-inducing drug, mifepristone. 602 U.S. 367 (2024). Writing for a unanimous Court, Justice Kavanaugh held that the federal courts lacked Article III standing to hear the plaintiffs’ claims. His opinion provides guidance on the causality requirement of Article III standing as well as the types of injuries that can count for organizational standing under Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982).
Justice Kavanaugh explained that causality is generally more difficult to establish for plaintiffs who are not themselves subject to government regulation but who instead complain of the government’s “‘unlawful regulation (or lack of regulation) of someone else.’” Id. at 382 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-562 (1992)). In order “to thread the causation needle in those circumstances,” the plaintiff must show that other parties will act in “predictable ways that in turn will likely injure the plaintiffs.” Id. (cleaned up). Plaintiffs may not rely on “attenuated” or “speculative” links to establish causation. Resolving whether a plaintiff has demonstrated causality is not “mechanical” and involves fact-dependent “question[s] of degree.” Id. at 384. But, fortunately, the Court “has identified a variety of familiar circumstances where government regulation of a third-party individual or business may be likely to cause injury in fact to an unregulated plaintiff”:
For example, when the government regulates (or under-regulates) a business, the regulation (or lack thereof) may cause downstream or upstream economic injuries to others in the chain, such as certain manufacturers, retailers, suppliers, competitors, or customers. When the government regulates parks, national forests, or bodies of water, for example, the regulation may cause harm to individual users. When the government regulates one property, it may reduce the value of adjacent property. The list goes on.
Id. (internal citations omitted).
The plaintiff doctors claimed that the challenged FDA actions would cause them to suffer conscience injuries and economic injuries. They failed, however, to demonstrate causation for either of these theories.
The conscience injury claim was based on the idea that the FDA actions would cause more women to suffer mifepristone complications that would require emergency room visits where the plaintiff doctors might have to provide emergency abortions. The Court was satisfied, however, that federal law ensured that the doctors would not need to provide services that violated their consciences.
The economic injury claim fared no better. The doctors claimed that FDA’s actions would cause them to “divert[ ] resources and time from other patients to treat patients with mifepristone complications” and increase “risk of liability suits from treating those patients,” which would “potentially increase[ ] insurance costs.” Id. at 390. The Court characterized these claims as lacking record support and highly speculative.
More broadly, the Court was concerned not to create a novel rule of “doctor standing” that would allow doctors to challenge any “loosening of general public safety requirements simply because more individuals might then show up at emergency rooms or in doctors’ offices with follow-on injuries.” Id. at 391.
Next, the Court addressed standing for the national associations, which had claimed organizational standing under Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982). In Havens Realty, the Court had recognized that a housing counseling organization (HOME) had suffered a cognizable injury when the defendant had provided HOME’s African American employees with false information about apartment availability. 144 S. Ct. at 395. Independent of any actions HOME might have taken to address this misconduct (e.g., suing the defendant), it had “directly affected and interfered with HOME’s core business activity” of providing counseling and referral services. Id.
By contrast, the national associations claimed injuries based on their responses to the FDA actions—expending resources on studies of mifepristone, drafting citizen petitions to submit to the FDA, and engaging in public advocacy. The problem, of course, with allowing such responses to count as injuries is that any entity can manufacture them by spending a dollar on responding to an agency action. Id. at 395. The Court rejected this type of maneuver, adding, “Havens was an unusual case, and this Court has been careful not to extend the Havens holding beyond its context. So too here.” Id. at 396.
Trade associations representing payday lenders sued the Consumer Financial Protection Bureau (CFPB) to challenge the Bureau’s “Payday Lending Rule” on various grounds, including that the CFPB’s statutory funding scheme runs afoul of the Appropriations Clause of the U.S. Constitution. Writing for a 7-2 majority, Justice Thomas rejected this contention.
The Appropriations Clause provides that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” U.S. Const. Art. I, § 9, cl. 7.
Most agencies are funded through an annual appropriations process. The CFPB, by contrast, has been authorized by Congress to requisition funds “reasonably necessary to carry out” the CFPB’s duties from the Federal Reserve System. This authorization is subject to an inflation-adjusted cap. 12 U.S.C. §§ 5497(a)(1), (2).
The Fifth Circuit concluded that this funding mechanism violated the Appropriations Clause by creating a “self-actualizing, perpetual funding mechanism” that abandoned Congress’s obligation to use its fiscal power “to maintain the boundaries between the branches and preserve individual liberty from the encroachments of executive power.” 601 U.S. at 424 (quoting Community Financial Services Assoc. of America v. Consumer Financial Protection Bureau, 51 F.4th 616, 637-39 (5th Cir. 2022) (cleaned up)).
To support rejecting this argument, Justice Thomas traced the development of appropriations practices in England, the colonies, early state legislatures, and Congress. This review confirmed that, although “appropriations needed to designate particular revenues for identified purposes,” legislatures exercised “a wide range of discretion” in choosing how to do so. Id. at 430-31. Some appropriations specified amounts to spend, some set caps, some were time limited, some were not. Id. at 431. Of special note, Congress allowed some agencies, such as Customs collectors, “to indefinitely fund themselves directly from revenue collected.” Id. at 433 (observing that the First Congress adopted this fee-based model).
The CFPB’s funding mechanism specified a source (the earnings of the Federal Reserve System); it set a cap; and it specified purposes for which the agency could spend the funds. Id. at 435. It therefore satisfied the spare requirements of the Appropriations Clause.
