Opinion ID: 2446
Heading Depth: 3
Heading Rank: 2

Heading: The 2003 Reconsideration Decision

Text: After the district court granted judgment to AI, the INS moved for reconsideration under Rule 59. For the first time, the INS argued that AI's challenge to the validity of the 1966 regulation was time-barred because it had not been brought within six years of the promulgation of the regulation. The district court acknowledged that the federal statute of limitations for claims against the government is six years, and it described the defense as unwaivable because compliance with the statute is a jurisdictional predicate for the court's ability to entertain the claim. Air India v. Brien, 261 F. Supp. 2d 134, 137 (E.D.N.Y. 2003). The district court cited several Courts of Appeals decisions addressing the same question that all found that claims based on procedural defects in the promulgation of a regulation accrue when the regulation is published in the Federal Register. See, e.g., Dunn-McCampbell Royalty v. Nat'l Park Serv., 112 F.3d 1283, 1287 (5th Cir. 1997); Commonwealth of Penn. Dep't of Welfare v. U.S. Dep't of HHS, 101 F.3d 939, 947 (3d Cir. 1996). Here, the regulation was published in 1966, and the period of limitations governing challenges to the regulation expired long before AI brought its claim. Because compliance with the six-year statute of limitations was jurisdictional, the district court found it appropriate to grant the INS's motion for reconsideration notwithstanding its failure to raise the defense at summary judgment. Rejection of AI's procedural challenge to the 1966 regulation did not, however, dispose of AI's substantive challenge. The district court noted that it had already considered and rejected several of AI's claims regarding the meaning of the 1966 regulation, but it had not consider[ed] [AI's] claim that imposition of fines under the regulation was improper in that it violated the stated intent of the Attorney General in promulgating the amendment. Id. at 139. The 1966 regulation was accompanied by a statement that the regulation was not subject to notice and comment because it confers benefits on persons affected thereby. Id. (internal quotation marks omitted). The district court determined that [t]his clear expression of intent refutes the argument that the regulation was intended to impose liability on the airlines when none had existed under the prior version of the regulation as amended in 1957. Id. Moreover, the INS had not imposed fines under the 1966 regulation for 22 years, and the agency could not explain why it began imposing fines in 1988. To the extent that any evidence of the INS's intent existed, it was in the form of an internal memorandum directing staff to begin enforcing the 1966 amendment against airlines and explaining that the agency was shifting policy to maximize revenues. Such motivation, found the court, was not a proper basis for a change in enforcement policy. Id. at 140. The district court therefore concluded that the INS's decision to begin fining air carriers some twenty-two years after the 1966 regulation was promulgated was arbitrary, capricious and an abuse of discretion, and the fines imposed thereunder must still be vacated. Id. Finally, because the period of limitations for challenging regulations begins accruing at the time of publication in the Federal Register, the district court reversed its earlier finding that AI's challenge to the 1998 regulation was unripe, at least insofar as AI was challenging the 1998 regulation on procedural grounds for lack of a notice-and-comment period. The district court determined that the 1998 regulation was not merely interpretive, as even if it were designed to correct a technical error in the 1997 amendment of the regulation, its correction plainly altered the substantive rights of those affected by it. Id. at 141. In response to the INS's invocation of the good-cause exception, [6] the district court found that the INS had failed to show any good cause existed to dispose of the notice-and-comment requirement. Because no exception applied and the 1998 regulation had therefore been issued in violation of the APA, the district court declared it void. The INS filed a notice of appeal, but the parties later stipulated to dismissal of the appeal and AI's cross-appeal.