1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHASE BOURQUE, et al., Case No. 24-cv-06994-EMC (LJC)

8 Plaintiffs, ORDER RESOLVING JOINT LETTER 9 v. REGARDING QUERIES 8 AND 9

10 UNITED STATES OF AMERICA Re: Dkt. No. 91 DEPARTMENT OF STATE, et al., 11 Defendants.

12 13 This case essentially challenges Defendants’ increase of an expedited passport application 14 processing fee from $35 to $60 in 2002 and continued assessment of that fee through the present 15 day. See Am. Compl. (ECF No. 46) ¶ 23. Plaintiffs contend that the fee is arbitrary and 16 improperly exceeds Defendants’ costs. Id. ¶¶ 86–88, 97. The parties previously submitted a joint 17 letter raising disputes regarding certain search queries that Plaintiffs asked Defendants to run in 18 response to Plaintiffs’ first set of requests for production, which “sought documents explaining the 19 basis of the $60” fee that Defendants charge for expedited passport processing. ECF No. 67 at 1. 20 On September 25, 2025, the Court resolved some of their disputes but directed them to submit 21 another joint letter regarding Query Nos. 8 and 9, which sought documents related to a 2017 22 Office of Inspector General (OIG) audit and a 2022 Government Accountability Office (GAO) 23 report.1 ECF No. 75 at 2. The Court noted that those reports did not appear to consider 24 specifically the expedited processing fee at issue in this case, and thus directed the parties to 25 address the relevance to this case of Defendants’ general fee-setting methodology. Id. The 26 1 The record does not include Plaintiffs’ actual requests for production, and both parties’ address 27 the disputed search queries on the merits of whether they are sufficiently relevant and proportional 1 parties’ second joint letter, which was delayed by a lapse in Congressional appropriations, is now 2 before the Court. Dkt. No. 91.2 3 This Order presumes the parties’ familiarity with the case, the record, and general 4 principles of civil discovery in federal court. See, e.g., Fed. R. Civ. P. 26(b)(1). 5 A. Query No. 8 6 Query No. 8 seeks documents related to the Department of State Office of Inspector 7 General’s September 2017 report titled “Audit of the Bureau of Consular Affairs Fee-Setting 8 Methodology for Selected Consular Services” (the OIG Report).3 The contracted auditor, 9 “Kearney & Company, P.C. (Kearney), limited its audit scope to the three highest-earning 10 Department-retained fees during FYs 2014 and 2015: Western Hemisphere Travel Initiative 11 (WHTI) fee, Passport Security Surcharge (PSS), and [Machine Readable Visa] MRV fees.” OIG 12 Report at 1. Together, those three categories of fees made up around 73% of consular fees 13 collected in those years. See id. The report noted “fees charged to American citizens for 14 expedited processing of passports” as among the “many different fees” that the State Department 15 collected, but did not include those in the scope of its audit. Id. 16 The report determined that the State Department “recovered more than the full cost of 17 providing consular services” in each of the years it studied. Id. at 5. Some of that excess “may 18 have been allowable,” but some was not. Id. A portion of the unallowable excess recovery was 19 specific to the State Department’s treatment of MRV fees, which are not at issue in this case. Id. 20 at 6, 8–13. But even “[a]side from failing to adjust non-petition-based MRV fees to reflect costs, 21 CA [i.e., the Bureau of Consular Affairs] also generally collected revenues in excess of costs 22 because of several flaws in its fee-setting methodology.” Id. at 6. The report explained that the 23 Bureau of Consular Affairs “developed a Cost of Service Model (COSM) using commercial, off- 24 the-shelf software” in order to “determine the amount to charge for each type of consular service.” 25

26 2 The Court also more recently resolved a dispute regarding production schedules, ordering Defendants to produce documents in response to other queries by December 30, 2025. See ECF 27 No. 92. 1 Id. at 4. According to the report, the implementation of that model was flawed:

2 Although CA considered relevant factors during the fee-setting process, such as costs, levels of effort, and workload volumes, CA’s 3 process did not sufficiently consider carry forward balances during the fee-setting process. In addition, CA’s process did not sufficiently 4 analyze the long-term net financial results of its operations to determine whether adjustments to the fee-setting methodology were 5 needed. Kearney also identified issues concerning whether the data used were sufficient to set the fees, which would affect the accuracy 6 of the calculated fee amounts. For example, CA did not have policies or procedures that required the staff to maintain historical data or to 7 document methodologies used to calculate the fee. Moreover, CA did not have a sufficient process in place to perform quality control 8 activities related to the data. Although Kearney is unable to assign a specific portion of the CBSP revenue collected in excess of costs in 9 FYs 2014 and 2015 to the flaws in CA’s methodology, at the beginning of FY 2017, the total CBSP unobligated balance was 10 almost $1.4 billion. Annually, CA intends to carry 25 percent of its anticipated expenses in unobligated balances forward; however, the 11 FY 2017 balance is 31.4 percent of expenses, or $284 million more than CA anticipated needing. CA should address the flaws in its 12 methodology, determine whether 25 percent is an adequately precise and adequately explained estimate of costs, and remit the $284 13 million and any other amounts determined to be excessive to Treasury to be put to better use across the Federal Government to the benefit of 14 the taxpayers. 15 Id. at 6–7 (footnote omitted); see also id. at 13–19. 16 Those generalized concerns appear to implicate considerations that may have been relevant 17 to the expedited processing fee at issue in this case. 18 As Defendants note, id. at 5, the Bureau of Consular Affairs committed in 2017 to 19 adopting “a majority of the OIG’s recommendations in the 2016 Cost of Service Model (COSM) 20 and fee setting recommendation process.” OIG Report at 32. Defendants also assert, and 21 Plaintiffs do not dispute, that a new model was used for Fiscal Year 2018. ECF No. 91 at 5. 22 Defendants therefore contend that this report is not relevant to this case, see id., where Plaintiffs 23 acknowledge, that the class period in this case “runs from October 4, 2018 to the present,” id. at 2, 24 thus beginning in Fiscal Year 2019. 25 Though Plaintiffs do not meaningfully address that argument regarding the relevant time 26 period, the Court is not satisfied that it warrants limiting discovery. The expedited processing fee 27 at issue was increased to its current value of $60 in 2002. The extent to which Defendants became 1 made changes to that methodology as a result, may bear on the reasonableness of Defendants’ 2 decision to leave the expedited processing fee unchanged since 2002. Even accepting Defendants’ 3 legal contention that “a fee need only bear a reasonable relationship to the cost of the services 4 rendered by the agency,” purported methodological defects identified and potentially corrected 5 while the disputed fee was in place could be relevant to that inquiry. See ECF No. 91 at 4 6 (quoting Nat’l Cable Television Ass’n, Inc. v. FCC,

, 1108 (D.C. Cir. 1976)). On 7 the other side of the scale, Defendants have not shown any specific undue burden or prejudice in 8 running this query and producing the resulting documents to the extent they are discoverable. 9 Defendants are therefore ORDERED to search for documents using Query No. 8 and 10 produce the resulting discoverable documents in response to Plaintiffs’ requests for production no 11 later than January 9, 2026. 12 B. Query No. 9 13 Query No. 9 seeks documents related to an April 2022 Government Accountability Office 14 (GAO) report titled “CONSULAR AFFAIRS State May Be Unable to Cover Projected Costs if 15 Revenues Do Not Quickly Rebound to Pre-Pandemic Levels” (the GAO Report).4 That report was 16 primarily concerned with the State Department’s potential inability to cover its costs due to a 17 decline in revenue related to the COVID-19 pandemic. The GAO conducted its own analysis of 18 likely future costs and revenue, including specifically revenue from the expedited passport fee. 19 GAO Report at 92–93. It also noted that “State has historically made no obligations against 20 expedited passport fee revenue for consular services,” id. at 92, and that in 2020 the State 21 Department began shifting its allocation of such revenue “from supporting the Information 22 Technology Central Fund to supporting the Consular and Border Security Programs (CBSP) 23 account,” id. at 10 n.c; see also, e.g., id. at 12 nn.27–28; id. at 17–18; id. at 23 n.a; id. at 35. 24 The GAO therefore appears to have investigated at least to some degree how the State 25 Department actually used its expedited passport fees and how that affected its modeling of costs 26 and revenue. The GAO also raised similar concerns to the 2017 OIG report, noting a lack of 27 1 documentation for certain aspects of the State Department’s economic analysis with respect to its 2 || general Cost of Service Model. Id. at 48-54. Both of those topics have sufficient potential 3 relevance to warrant discovery in the absence of a specific showing of undue burden or prejudice. 4 || Defendants are therefore ORDERED to search for documents using Query No. 9 and produce the 5 || resulting discoverable documents in response to Plaintiffs’ requests for production no later than 6 January 9, 2026. 7 IT IS SO ORDERED. 8 Dated: December 12, 2025 9 10 Yon, [Harry — ‘A J. CISNEROS I ited States Magistrate Judge 12

15 16

= 17

Z 18 19 20 21 22 23 24 25 26 27 28