Morse: Old Regs

Susan C. Morse (Texas; Google Scholar), Old Regs, 31 Geo. Mason L. Rev. __ (2023):

Old regs should not be subject indefinitely to administrative procedure challenge. Instead, we should leave them alone. The consensus case law view applies the six-year limitations period under 28 U.S.C. § 2401(a) with accrual at the time of promulgation. This strikes the right balance between accuracy and repose and correctly reflects that all of the elements of the administrative procedure claim are in place at the time of the alleged error, when the regulation was promulgated. When -- as is sometimes true in tax -- the government delays a claim through no fault of any plaintiff, equity provides the appropriate judicial solution.

Conclusion
The puzzle presented by administrative procedure challenges to old regs amounts to a classic tension in law: the tradeoff between accuracy and repose. The puzzle is solved by the default six-year limitations period of 28 U.S.C. § 2401(a). Applicable case law correctly holds, although without carefully explaining its reasoning, that this period begins to run when a regulation is promulgated for administrative procedure claims. Tax provides a good test case, which is to say a difficult test case, for exploring this issue. It systematically raises issues of pre-litigation delay, intervening case law, and nonenforcement thatraise the question of whether exceptions to the six-year limitations period should be made.

The right solution in tax and in other areas of law is that the six-year limitations period should begin to run for administrative procedure claims when a regulation is promulgated. When read in isolation, the statutory text that refers to the time when the claim “first accrues” suggests the opposite, that accrual should begin separately for each specific plaintiff’s claim. But when read together with the Administrative Procedure Act, the text of the statutes reveals that accrual at promulgation is the better reading.

As a policy matter, accrual at promulgation is better than accruing the limitations period separately for separate plaintiffs, which would hold the period open indefinitely and would ignore the value of repose. Accrual at promulgation is consistent with the fact that all of the elements of the administrative procedure claim exist, are discoverable, and are common to all potential plaintiffs at the time of the alleged administrative procedure error. Appropriate adjustments can be achieved through administrative restraint and under the doctrines of equitable tolling and equitable estoppel.