Carlson v. State, Commercial Fisheries Entry Com'n

• Decision Date: 21 June 1996
• Docket Number: No. S-6590,S-6590
• Parties: Donald H. CARLSON, Warren Hart, Gerard Haskins, Stephen R. Libby, Earl Weese, and Lyla C. Weese, Individually and as Class Representatives on behalf of All Persons Similarly Situated, Appellants, v. STATE of Alaska, COMMERCIAL FISHERIES ENTRY COMMISSION, Appellee.
• Court: Alaska Supreme Court

Page 1337

919 P.2d 1337

65 USLW 2023

Donald H. CARLSON, Warren Hart, Gerard Haskins, Stephen R.

Libby, Earl Weese, and Lyla C. Weese, Individually

and as Class Representatives on behalf

of All Persons Similarly

Situated, Appellants, v. STATE of Alaska, COMMERCIAL FISHERIES ENTRY COMMISSION, Appellee.

No. S-6590.

Supreme Court of Alaska.

June 21, 1996.

Loren Domke, Loren Domke, P.C., Juneau, for Appellants.

Stephen M. White, Marie Sansone, Assistant Attorneys General, and Bruce M. Botelho, Attorney General, Juneau, for Appellee.

Before RABINOWITZ, MATTHEWS, COMPTON and EASTAUGH, JJ.

OPINION

COMPTON, Justice.

I. INTRODUCTION

This is the second appeal from a class action challenging the State of Alaska's practice of charging nonresident commercial fishers licensing and limited entry permit fees which are three times greater than the fees charged resident commercial fishers. The class is comprised of "all persons who participated in one or more Alaska commercial fisheries at any time who paid non-resident assessments to the State for commercial or gear licenses or permits." Carlson v. State, 798 P.2d 1269, 1270 (Alaska 1990) (Carlson I ). In this appeal the class challenges the superior court's grant of summary judgment to the State. The class contends that the superior court misinterpreted our mandate on remand and that the fee differential violates the Commerce Clause ¹ and Privileges and Immunities Clause ² of the United States Constitution. We reverse and remand.

II. FACTS AND PROCEEDINGS

This appeal, like Carlson I, contests the constitutionality of AS 16.05.480, AS 16.43.160 and Alaska Administrative Code (AAC) 20.05.240. ³ Under AS 16.05.480 a resident pays $30 per year for a commercial fishing license, while a nonresident pays $90 per year for the same license. Similarly, under 20 AAC 5.240(a)(1)-(4) nonresidents pay three times more for limited entry permits. The fee for limited entry permits is determined by the value of the permit; ⁴ the fee range, for residents, is from $50 to $250. ⁵ See 20 AAC 5.240(a)(1)-(4).

In Carlson I the class alleged: (1) violations of the Privileges and Immunities Clause and Commerce Clause; and (2) the absence of State statutory authority to charge this type of fee differential prior to January 1983. We rejected the class's second contention that the statute did not authorize the 3:1 differential prior to 1983. Carlson I, 798 P.2d at 1278-79. However, as to the first issue we remanded the case and imposed on the State the burden of persuasion in defending the Commerce Clause and Privileges and Immunities challenges. Id. at 1274-78. With regard to the Privileges and Immunities Clause question we held:

Commercial fishing is a sufficiently important activity to come within the purview of the Privileges and Immunities Clause, and license fees which discriminate against nonresidents are prima facie a violation of it.... Thus the questions here are whether the state has a substantial reason for the discrimination, and whether the 3:1 fee ratio bears a sufficiently close relationship to the goal.

Carlson I, 798 P.2d at 1274 (citations omitted). In imposing the burden of persuasion on the State on this issue we adopted the Wisconsin Supreme Court's analysis. See Taylor v. Conta, 106 Wis.2d 321, 316 N.W.2d 814, 823 n. 17 (1982). In doing so we held that "the burden of persuasion to demonstrate justification is properly on the state." ⁶ Carlson I, 798 P.2d at 1276.

We framed the issue on remand as, "whether all fees and taxes which must be paid to the state by a nonresident to enjoy the state-provided benefit are substantially equal to those which must be paid by similarly situated residents when the residents' pro rata shares of state revenues to which nonresidents make no contribution are taken into account." Carlson I, 798 P.2d at 1278. We also held that the revenues derived by the State from petroleum production are "analytically[ ] equivalent to 'taxes which only residents pay.' " Carlson I, 798 P.2d at 1278.

On remand the parties cross-moved for summary judgment, each proposing a different method by which to compare the fees being paid by nonresidents with the expenditures of state revenues to which the nonresidents make no contribution (the costs to residents). The class proposed what it termed the per capita formula. The per capita formula computes the contribution made by each resident to the cost of maintaining the commercial fisheries and compares this with the fee differential. The State proposed what it termed the pro rata formula. The pro rata formula in effect compares the total contributions made to the cost of commercial fisheries by residents to the total fees paid by nonresidents. The superior court concluded that under this method of analysis, residents paid by way of taxes (or their analytical equivalent) substantially more than nonresident fishers paid. In reaching this conclusion, the superior court applied the State's proposed formula to the categories of expenses accepted by us in Carlson I. ⁷ As the licensing and permitting fees charged nonresidents did not exceed the amount paid by residents, the superior court concluded that the differential did not violate either the Commerce Clause or the Privileges and Immunities Clause. The class appeals.

III. DISCUSSION

A. Standard of Review

Both parties correctly argue that the Commerce Clause and the Privileges and Immunities Clause challenges to AS 16.05.480, AS 16.43.160 and 20 AAC 5.240 present questions of constitutional law which we review de novo. See Wright v. Black, 856 P.2d 477, 479 (Alaska 1993). The issue of whether the superior court erred in adopting the pro rata formula to calculate the contribution to commercial fisheries management made by residents is also an issue of law which we review de novo. Langdon v. Champion, 745 P.2d 1371, 1372 n. 2 (Alaska 1987).

B. The Challenged Fee Differential under the Commerce Clause

The class contends that two recent Supreme Court decisions require that the different fees charged to residents and nonresidents under AS 16.05.480, AS 16.43.160 and 20 AAC 5.240 be analyzed under the Commerce Clause. ⁸ See Oregon Waste Systems v. Dep't of Envtl. Quality, 511 U.S. 93, ----, 114 S.Ct. 1345, 1350, 128 L.Ed.2d 13 (1994); Chemical Waste Management, Inc. v. Hunt, 504 U.S. 334, 112 S.Ct. 2009, 119 L.Ed.2d 121 (1992). The class argues that the fee differentials in these statutes and regulations violate the negative Commerce Clause. ⁹ The class argues AS 16.05.480, AS 16.43.160 and 20 AAC 5.240 are per se invalid under the Commerce Clause. A substantial portion of the class's briefs is devoted to analogizing the different commercial licensing and permit fees charged residents and nonresidents to surcharges the states of Oregon and Alabama imposed on out-of-state waste. The Supreme Court struck down these surcharges. Oregon Waste Systems, 511 U.S. at ----, 114 S.Ct. at 1355; Chemical Waste, 504 U.S. at 334, 112 S.Ct. at 2009. The class contends that under the reasoning employed in Oregon Waste Systems and Chemical Waste, the 3:1 fee differential is tantamount to "differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter." Oregon Waste Systems, 511 U.S. at ----, 114 S.Ct. at 1350.

Oregon Waste Systems does not require that the fee differential challenged herein be evaluated under the Commerce Clause. In both Oregon Waste Systems and Chemical Waste, the Court found taxes imposed on out-of-state waste which were greater than the taxes imposed on in-state waste violated the negative Commerce Clause. In applying the negative Commerce Clause analysis in Oregon Waste Systems, the Court emphasized that the Commerce Clause prohibits states from unjustifiably discriminating against or burdening the interstate flow of articles of commerce. Oregon Waste Systems, 511 U.S. at ----, 114 S.Ct. at 1349. The Court went on to hold that "[i]t is well-established, however, that a law is discriminatory if it 'tax[es] a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State.' " Oregon Waste Systems, 511 U.S. at ----, 114 S.Ct. at 1350 (quoting Chemical Waste, 504 U.S. at 342, 112 S.Ct. at 2013).

Unlike the fee differentials in Oregon Waste Systems and Chemical Waste, the fee differentials at issue in this case are not predicated upon the movement of articles of commerce across state lines, but rather upon the residency status of those applying for permits. The Supreme Court has consistently analyzed statutes which purportedly classify on the basis of residency under the Privileges and Immunities or the Equal Protection Clauses. ¹⁰ In Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, 92 L.Ed. 1460 (1948), the Court evaluated South Carolina shrimping license fees, which were one hundred times greater for non-residents than for residents, under the Privileges and Immunities Clause. There the Court observed that the Privileges and Immunities Clause "was designed to insure to a citizen of State A who ventures into State B the same privileges which the citizens of State B enjoy." ¹¹ Toomer, 334 U.S. at 395, 68 S.Ct. at 1162.

C. The Challenged Fee Differential under the Privileges and Immunities Clause

The class contends also that the nonresident fee differential violates the Privileges and Immunities Clause of the United States Constitution. The Privileges and Immunities Clause is not absolute. "[I]t does not preclude disparity of treatment [of citizens of other states] in the many situations where there are perfectly valid independent reasons for it." Toomer, 334 U.S. at 396, 68 S.Ct. at 1162. A claim that a residency classification violates the Privileges and Immunities Clause requires a two-step inquiry:

First, the activity in question must be sufficiently basic to the livelihood of the Nation ... as to fall within the purview of the Privileges and Immunities...