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8th Cir. Holds Statute of Limitations for Facial Challenges to Agency Action Accrue at Publication

interchange feesThe U.S. Court of Appeals for Eighth Circuit recently held that, when plaintiffs bring a facial challenge to a final agency action, the right of action accrues, and the limitations period begins to run upon publication of the regulation.

A copy of the opinion in North Dakota Retail Assoc. v. Board of Governors is available at:  Link to Opinion.

The North Dakota Retail Association, the North Dakota Petroleum Marketers Association, and a North Dakota convenience store (“Merchants”) filed a complaint against the Board of Governors of the Federal Reserve System (“FRB”) raising a facial challenge to a regulation relating to the collection of interchange fees by third parties authorized to collect interchange fees, alleging that the regulation violated the Administrative Procedures Act, 5 U.S.C. § 704. 

The FRB moved to dismiss the complaint as barred by the statute of limitations. The trial court dismissed, finding (i) a 2015 clarification of the regulation at issue did not constitute a final agency action to renew the statute of limitations, (ii) the statute of limitations on the convenience store’s claims began to run with the publication of the regulation in 2011, and (iii) the Merchants’ claims did not warrant equitable tolling. The Merchants timely appealed.

On appeal, the Merchants first argued that the statute of limitations renewed when the FRB published the clarification in 2015.

“Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review.” 5 U.S.C. § 704. Under the APA, “[t]wo conditions must be satisfied for an agency action to be final.” Sisseton-Wahpeton Oyate of Lake Traverse Res. v. Corps of Eng’rs, 888 F.3d 906, 914-15 (8th Cir. 2018). 

First, the action cannot be tentative or interlocutory in nature and “must mark the ‘consummation of the agency’s decision-making process.’” Id. at 915, quoting Bennett v. Spear, 520 U.S. 154, 177- 78 (1997). “Second, ‘the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.’” Id., quoting Bennett, 520 U.S. at 178. 

“To constitute a final agency action, the agency’s action must have inflicted ‘an actual, concrete injury’ upon the party seeking judicial review.” Id., quoting Williamson Cty. Reg’l Planning v. Hamilton Bank, 473 U.S. 172, 193 (1985).

Here, the Eighth Circuit held that the 2015 clarification was not a final agency action because it was not the final “consummation of the agency’s decision-making process.” Sisseton-Wahpeton Oyate, 888 F.3d at 915. Specifically, the clarification did not modify the regulation or create any additional rights or obligations as to the Merchants. See id. 

Furthermore, the Court observed that the clarification did not create a new fee or expand any existing fees, nor did it “inflict[] ‘an actual, concrete injury’ upon the [Merchants].” Id., quoting Williamson Cty. Reg’l Planning, 473 U.S. at 193.

The Merchants also asserted that the convenience store’s facial challenge to the regulation first accrued when the store opened in 2018, rather than when the regulation was published in 2011.

Claims arising under the APA are subject to a six-year statute of limitations. See 5 U.S.C. § 704; 28 U.S.C. § 2401(a); see also Izaak Walton League of Am., Inc. v. Kimbell, 558 F.3d 751, 758 (8th Cir. 2009). “A claim against [the] United States first accrues on the date when all the events have occurred which fix the liability of the Government and entitle the claimant to institute an action.” Id. at 759. 

The “standard rule [is] that accrual occurs when the plaintiff has a complete and present cause of action.” Rassier v. Sanner, 996 F.3d 832, 836 (8th Cir. 2021), quoting Bay Area Laundry & Dry Cleaning Pension Tr. Fund v. Ferbar Corp. of California, 522 U.S. 192, 201 (1997).

The Eighth Circuit rejected the Merchants’ argument because, in Izaak Walton, it held that the six-year statute of limitations accrued upon publication of the regulation and barred plaintiffs’ facial challenge. See Izaak Walton, 558 F.3d at 762. 

Additionally, the Court noted that other circuit courts have held that APA claims accrue, and the statute of limitations begins to run, when an agency publishes a regulation. See, e.g., Trafalgar Cap. Assocs. v. Cuomo, 159 F.3d 21, 34 (1st Cr. 1998); Wong v. Doar, 571 F.3d 247, 263 (2d Cir. 2009); Paucar v. AG of the United States, 545 Fed. Appx. 121, 124 (3d Cir. 2013); Outdoor Amusement Bus. Ass’n v. Dep’t of Homeland Sec., 983 F.3d 671, 681-82 (4th Cir. 2020); Sierra Club v. Slater, 120 F.3d 623, 631 (6th Cir. 1997); Shiny Rock Min. Corp. v. United States, 906 F.2d 1362, 1363 (9th Cir. 1990); Vincent Murphy Chevrolet Co. v. United States, 766 F.2d 449, 452 (10th Cir. 1985); Ctr. for Biological Diversity v. Hamilton, 453 F.3d 1331, 1334-35 (11th Cir. 2006); Harris v. FAA, 353 F.3d 1006, 1010 (D.C. Cir. 2004); Preminger v. Sec’y of Veterans Affairs, 498 F.3d 1265, 1272 (Fed. Cir. 2007).

Thus, the Eighth Circuit concluded that, when plaintiffs bring a facial challenge to a final agency action, the right of action accrues, and the limitations period begins to run, upon publication of the regulation.

In this case, the Merchants challenged the collection of interchange fees by third parties authorized to collect interchange fees by the regulation. See 76 Fed. Reg. 43,394. As part of this challenge, the Merchants sought to invalidate the text of the regulation in all applications. Thus, the Eighth Circuit concluded that the Merchants brought a facial challenge to the regulation, making it untimely. See 28 U.S.C. § 2401(a).

However, the Eighth Circuit observed that plaintiffs, like the convenience store, with untimely facial challenges may have a remedy. 

“In some cases, a plaintiff may escape the statute of limitations by establishing that he or she is eligible for equitable tolling.” Sisseton-Wahpeton Oyate, 888 F.3d at 917. “Equitable tolling allows for an extension of the prescribed limitations period ‘when the plaintiff, despite all due diligence, is unable to obtain vital information bearing on the existence of his [or her] claim.’” Id.

A plaintiff is entitled to equitable tolling only by showing “‘(1) that he [or she] has been pursuing his [or her] rights diligently, and (2) that some extraordinary circumstances stood in his [or her] way’ and prevented timely filing.” Holland v. Florida, 560 U.S. 631, 649 (2010), quoting Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005).

Ultimately, the Eighth Circuit held that the Merchants’ equitable tolling argument failed on its merits. The Merchants had notice of the publication of the regulation in 2011 but did not sue the FRB until more than 10 years later. The Merchants also failed to show that they had been pursuing their rights diligently. See Holland, 560 U.S. at 649. 

Because the FRB published the regulation in 2011 and the Merchants were not eligible for equitable tolling, the Court concluded that the Merchants’ facial challenge to the regulation remained time-barred by the six-year statute of limitations under 28 U.S.C. § 2401(a).

Accordingly, the Eighth Circuit affirmed the judgment of the trial court.

Photo: seksan94/stock.adobe.com

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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