Maehr v. U.S. Dep't of State

Decision Date20 July 2021
Docket NumberNo. 20-1124,20-1124
Citation5 F.4th 1100
Parties Jeffrey T. MAEHR, Plaintiff - Appellant, v. UNITED STATES DEPARTMENT OF STATE, including Secretary of State Antony Blinken, in his official capacity, Defendant - Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Bennett L. Cohen (Sean R. Gallagher and Megan E. Harry with him on the briefs), Polsinelli PC, Denver, CO, for Plaintiff - Appellant.

Kathleen E. Lyon, Attorney (Richard E. Zuckerman, Principal Deputy Assistant Attorney General, Joshua Wu, Deputy Assistant Attorney General, Francesca Ugolini, Attorney, Arthur T. Catterall, Attorney, and Jason R. Dunn, United States Attorney with her on the brief), Tax Division, U.S. Department of Justice, Washington, D.C., for Defendant - Appellee.

Before MATHESON, Circuit Judge, LUCERO, Senior Circuit Judge, and PHILLIPS, Circuit Judge.

PER CURIAM

In this appeal, we affirm the judgment of the district court. This disposition is addressed in two opinions: one by Judge Lucero, and one by Judge Matheson.

Parts I, II, and III of Judge Lucero's opinion constitute the unanimous opinion of the court. Part I provides relevant background. Part II concludes the district court had subject-matter jurisdiction under 28 U.S.C. § 1331 and 5 U.S.C. § 702. Part III rejects Mr. Maehr's arguments concerning the Privileges and Immunities clauses and the common law principle of ne exeat republica .

Judge Matheson's opinion, joined by Judge Phillips, is the majority opinion on Mr. Maehr's substantive due process challenge. On this issue, Judge Lucero concurs in the judgment in Part IV of his opinion.

LUCERO, Senior Circuit Judge.

Six years ago, the federal government instituted a new approach to encourage delinquent taxpayers to pay up: threaten to withhold or revoke their passports until their tax delinquency is resolved. No nexus between international travel and the tax delinquency needs be shown; the passport revocation serves only to incentivize repayment of the tax debt. We are the first circuit to review the constitutionality of this approach.

Appellant Jeffrey T. Maehr is one of the Americans caught in the snares of this scheme. He challenged the lawfulness of the United States Department of State's revocation of his passport, arguing that it violates substantive due process, runs afoul of principles announced in the Privileges and Immunities clauses,1 and contradicts caselaw concerning the common law principle of ne exeat republica. The district court rejected all three of his challenges. We affirm the district court on each of these arguments.

I

In 2015, Congress passed and the President signed into law the Fixing America's Surface Transportation Act ("FAST Act"), Pub. L. 114-94, 129 Stat. 1312 (2015), an omnibus transportation bill that included a provision permitting the denial or revocation of passports for taxpayers with significant tax debts. Under the FAST Act, if a taxpayer is subject to a delinquent federal tax debt of $50,0002 or more, the IRS may certify the delinquency to the Secretary of the Treasury, who in turn transmits the certification to the Secretary of State. I.R.C. § 7345. The Secretary of State is thereafter prohibited from issuing a new passport to the taxpayer and is authorized, though not required, to revoke a previously issued passport.3 22 U.S.C. § 2714a(e)(1), (2). These consequences remain with the taxpayer until any of several circumstances occur, such as full satisfaction of the tax debt, entry into an installment agreement with the IRS, or a finding that the original certification was erroneous. I.R.C. § 7345(c).

The scheme's rationale appears to have been simply to use the threat of passport revocation as an incentive for tax compliance. No direct connection between tax delinquency and international travel, such as evidence the delinquent taxpayer is secreting assets overseas, is required to effect a passport revocation. Review of the legislative history also yields no evidence that passport revocation was aimed at, for example, thwarting delinquent taxpayers from fleeing the country or evading tax collection. See Michael S. Kirsch, Conditioning Citizenship Benefits on Satisfying Citizenship Obligations, 2019 U. Ill. L. Rev. 1701, 1712 (2019) ("[T]he GAO Report, upon which the FAST Act limitations are based, did not explicitly mention [an anti-fleeing rationale], focusing instead on the tax compliance incentives associated with the passport limitations."). Rather, a straightforward incentive mechanism—making tax delinquency more painful by inhibiting one's ability to enter or exit the country—explained why the Senate Finance Committee "believe[d] that tax compliance [would] increase if issuance of a passport is linked to payment of one's tax debts." S. Rep. No. 114-45, 57 (2015).

Passport revocation under the FAST Act is thus an example of a species of tax penalties known as collateral sanctions. "Unlike traditional tax penalties that require noncompliant taxpayers to pay money to the taxing authority, collateral tax sanctions require noncompliant taxpayers to forfeit a nonmonetary government benefit or service." Joshua D. Blank, Collateral Compliance, 162 U. Pa. L. Rev. 719, 728 (2014). They "increasingly apply to individuals who have failed to obey the tax law," perhaps because they "can promote voluntary tax compliance more effectively than the threat of additional monetary tax penalties." Id. at 720. States and the federal government impose a variety of collateral tax sanctions, ranging from diminished housing assistance to the cancelling of driver's licenses. Id. at 739-40. Passport revocation had not been used to thwart tax delinquency until the FAST Act, but it has been used in the context of non-payment of child support. See 42 U.S.C. § 652(k).

Appellant Jeffrey T. Maehr is among the many4 Americans whose tax delinquency rendered him subject to passport revocation under the FAST Act. Despite a number of challenges to a 2011 IRS tax assessment,5 Maehr owes approximately $250,000 in taxes. In 2018, the IRS certified Maehr's tax delinquency, and the State Department subsequently revoked Maehr's passport. Maehr then filed a complaint challenging the authority of the Department of State to revoke passports on the basis of tax debts.6

The district court granted the Department of State's motion to dismiss for failure to state a claim. It concluded that it would have subject-matter jurisdiction on the basis of the writ of mandamus if, and only if, the Department of State acted unconstitutionally in revoking Maehr's passport. Because the district court held that passport revocation under the FAST Act is supported by a rational basis and not otherwise unconstitutional, it dismissed Maehr's claim for want of jurisdiction. This appeal followed.

II

After spilling a great deal of ink thrashing out the issues of subject-matter jurisdiction and sovereign immunity before the district court, the parties appear to have settled on a mutually satisfactory resolution. Both Maehr and the Department of State now identify 28 U.S.C. § 1331 as a basis for the district court's subject-matter jurisdiction and 5 U.S.C. § 702 of the Administrative Procedure Act (APA) as an applicable waiver of sovereign immunity. We conclude the same.

Because Maehr seeks an injunction ordering the Department of State to return his passport, we are asked to "exercise[ ] [our] traditional powers of equity ... to prevent violations of constitutional rights." Simmat v. U.S. Bureau of Prisons, 413 F.3d 1225, 1231 (10th Cir. 2005). These powers flow from the long-recognized "jurisdiction of federal courts to issue injunctions to protect rights safeguarded by the Constitution." Bell v. Hood, 327 U.S. 678, 684, 66 S.Ct. 773, 90 L.Ed. 939 (1946). " Bell v. Hood held that suits for relief directly under the Constitution fall within [the] grant of jurisdiction" provided by § 1331. Simmat, 413 F.3d at 1232. " Section 1331 thus provides jurisdiction for the exercise of the traditional powers of equity in actions arising under federal law." Id. The district court therefore had jurisdiction under § 1331, and we have appellate jurisdiction under 28 U.S.C. § 1291.

Sovereign immunity is no bar to our or the district court's exercise of jurisdiction. Section 702 of the APA waives sovereign immunity for actions "stating a claim that an agency ... acted or failed to act ... under color of legal authority." "This waiver is not limited to suits under the Administrative Procedure Act." Simmat, 413 F.3d at 1233. It is therefore applicable to a claim that the Department of State acted unconstitutionally by revoking Maehr's passport.7 Consequently, the district court was free to exercise the jurisdiction conveyed by § 1331.

Without the benefit of briefing from either party on the applicability of § 702, the district court was left to determine whether jurisdiction and waiver of sovereign immunity was properly founded on a theory of mandamus, see 28 U.S.C. § 1361, or on the judicial review created by passport revocation itself, see § 7345. Our resolution of jurisdiction and sovereign immunity on the basis of § 1331 and § 702, respectively, obviates any need to consider that debate. We turn to the merits.

III

The opinion of the court is unanimous as to two of the arguments raised by Mr. Maehr. The first concerns the Privileges and Immunities clauses; the second relies on the common law principle of ne exeat republica. Each will be addressed in turn.

A

Maehr contends that the Privileges and Immunities Clause of Article IV, Section 2 and the Privileges or Immunities Clause of the Fourteenth Amendment encompass the right to international travel and thereby limit the federal government's ability to restrict such travel. His argument is implausible. These clauses apply to states, not the federal government, and Maehr can articulate no way around this fact. Even if the clauses could somehow constrain the federal government, no Supreme Court decision has ever interpreted these...

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