State of West Virginia, et al v. U.S. Department of the Treasury, et al, No. 22-10168 (11th Cir. 2023)Annotate this Case
Thirteen states sued the Treasury Secretary and related officials to challenge a tax offset provision in the American Rescue Plan Act, a coronavirus stimulus package passed by Congress in 2021. That offset provision prohibits states from using Rescue Plan funds “to either directly or indirectly offset a reduction in [their] net tax revenue” that results from a change in law that “reduces any tax.” The States argued that this “tax mandate” exceeds Congress’s authority under the Constitution. The district court agreed and permanently enjoined enforcement of the offset provision. The Secretary appealed.
At issue was whether the States’ challenge presents a justiciable controversy and if so, whether the offset provision is unconstitutional. The Eleventh Circuit affirmed, concluding that the district court answered both questions correctly. The court explained that all four elements weigh in favor of granting a permanent injunction. The district court did not misapply the law nor base its determination on clearly erroneous facts. It did not abuse its discretion. We also agree with the district court that the permanent injunction fully redresses the States’ harm in this case—declaratory relief is unnecessary. The court reiterated, however, that the permanent injunction applies only to Section 802(c)(2)(A), which is severable from the remaining provisions of the Act.