Cruise Lines Int'l Ass'n Alaska v. City & Borough of Juneau

• Decision Date: 06 December 2018
• Docket Number: No. 1:16-cv-0008-HRH,1:16-cv-0008-HRH
• Citation: 356 F.Supp.3d 831
• Parties: CRUISE LINES INTERNATIONAL ASSOCIATION ALASKA and Cruise Lines International Association, Plaintiffs, v. The CITY AND BOROUGH OF JUNEAU, ALASKA, a Municipal Corporation, and Rorie Watt, in His Official Capacity as City Manager, Defendants.
• Court: U.S. District Court — District of Alaska

356 F.Supp.3d 831

CRUISE LINES INTERNATIONAL ASSOCIATION ALASKA and Cruise Lines International Association, Plaintiffs,

v.The CITY AND BOROUGH OF JUNEAU, ALASKA, a Municipal Corporation, and Rorie Watt, in His Official Capacity as City Manager, Defendants.

No. 1:16-cv-0008-HRH

United States District Court, D. Alaska.

Signed December 6, 2018

C. Jonathan Benner, Pro Hac Vice, Kathleen Elizabeth Kraft, Pro Hac Vice, Thompson Coburn LLP, Washington, DC, Herbert H. Ray, Jr., Schwabe, Williamson & Wyatt, Anchorage, AK, for Plaintiffs.

Megan J. Costello, Robert Blasco, Hoffman & Blasco, LLC, Juneau, AK, for Defendants.

ORDER

H. Russel Holland, United States District Judge

Cross-motions for Summary Judgment;

Motion to Determine Law of the Case

Plaintiffs move for summary judgment.¹ In response, defendants move for a determination of the law of the case on the Tonnage Clause and Rivers and Harbors Act.² Defendants also oppose plaintiffs' motion for summary judgment and cross-move for summary judgment.³ Defendants' motion for a determination of law is opposed⁴ as is defendants' cross-motion for summary judgment.⁵ Oral argument has been heard on the foregoing motions. At oral argument, counsel agreed that the defendants' motion to determine the law of the case was purely a matter of law and should be taken up first.

Facts

Plaintiffs are Cruise Lines International Association Alaska (CLIA Alaska)⁶ and Cruise Lines International Association (CLIA). CLIA is a global organization that represents 51 cruise lines operating worldwide. CLIA Alaska represented cruise lines that entered Alaska waters. CLIA Alaska members included Carnival Cruise Lines, Crystal Cruises, Disney Cruise Lines, Holland America Line, Norwegian Cruise Line, Oceana Cruises, Princess Cruises, Regent Seven Sea Cruises, Royal Caribbean International, and Silverseas Cruises.

Defendants are The City and Borough of Juneau, Alaska (CBJ) and Rorie Watt, in his official capacity as the City Manager. CBJ owns and operates the Cruise Ship Terminal and the Alaska Steam Ship Dock, which are two of the four cruise docks located in the downtown area of the City of Juneau. The other two cruise ship docks, AJ Juneau Dock and Franklin Dock, are privately owned. The Franklin Dock is owned by Princess Cruises.⁷ The AJ Juneau Dock is owned in part by Holland America.⁸ CBJ, which has approximately 32,000 year-round residents, receives approximately 1,000,000 cruise ship passengers each year from early May through mid-September.

This case involves challenges to two passenger fees imposed by CBJ. First, the Marine Passenger Fee (MPF) is a $5-per-passenger fee assessed on any marine passenger ship, with some exceptions,⁹ that enters any CBJ port. The MPF for each ship that enters any CBJ port is calculated based on the passenger manifest, and the owner or agent of the ship, not the individual passengers, is responsible for paying the MPF.¹⁰ CBJ Code §§ 69.20.030 and 69.20.040.¹¹ The MPF was first imposed in 2000, at which time the stated purpose of the fee was

to address the costs to the City and Borough for services and infrastructure usage by cruise ship passengers visiting Juneau, including emergency services, transportation impacts and recreation infrastructure use, and to mitigate impacts of increased utilization of City and Borough services by cruise ship passengers.^{[12 ]}

In 2012, CBJ amended the "purpose and intent" portion of the MPF ordinance. The purpose of the MPF is now "to address the costs to the City and Borough for services and infrastructure rendered to cruise ships and cruise ship passengers visiting the City and Borough."¹³ Revenue from the MPF is placed in the Marine Passenger Fund, and the proceeds of the Fund are:

appropriated in support of the marine passenger ship industry including:

(1) Design, construction, enhancement, operation, or maintenance of capital improvements;

(2) Operating funds for personnel, training, commodities, rentals, services and equipment for services provided, made available to, or required as a result of marine passenger ships and marine passengers;

(3) Projects and programs that promote safety, environmental improvements[,] efficiency of interstate and international commerce, or enforcement of laws caused or required by marine passenger ships and marine passengers;

(4) Acquisition of land required to execute the activities listed in this section;

(5) Reserved; [and]

(6) Surveys, analyses, polls, monitoring, and similar efforts to measure, describe or predict, or manage marine passengers, for items listed in subsection (a)(1)-(a)(4) of this section.

CBJ Code § 69.20.120. In FY 2017, the revenue from the MPF was approximately $5 million.

CBJ allocates a portion of the revenue generated by the MPF to municipal government departments which perform functions "that are available for use by cruise ship passengers."¹⁴ These departments have included Emergency Medical Services, Libraries, Police, Parks and Recreation, Streets, Finance, and the City Manager's Office.¹⁵ The allocated portion is transferred to the General Government Fund. "The amount allocated is based on the number of hours cruise ship passengers spend in Juneau compared to the number of hours residents, independent visitors, conventioneers, and embarking/disembarking passengers spend in Juneau on an annual basis."¹⁶

Revenue from the MPF is also used to directly fund projects. Each year, the City Manager accepts proposals for projects to be funded by the MPF. CBJ Code § 69.20.120(b)(1). A draft list of proposals is prepared and put out for public comment as well as comment from the cruise line industry. CBJ Code § 69.20.120(b)(3). After comment and review by the finance committee, a final list is forwarded to the Assembly for approval. Id.

The direct funding includes projects and services that are provided by CBJ. By way of example, for FY 2015, CBJ used revenue from the MPF¹⁷ for downtown foot/bike police patrols, downtown restroom cleaning, downtown sidewalk cleaning, Air Medevacs, EMS services, Docks and Harbors general operations and building maintenance, downtown pay phones, emergency room staff at the Bartlett Regional Hospital, and the city bus service.¹⁸

The direct funding also includes projects and services that are provided by third parties via operating grants. By way of example, for FY 2015, operating grants funded by revenue from the MPF were given to Tourism Best Management Practices,¹⁹ SAIL - Accessible Training and Trip Coordination,²⁰ Airlift Northwest,²¹ Franklin Dock Enterprises,²² AJ Juneau Dock, LLC,²³ Goldbelt,²⁴ and the Juneau Convention and Visitors Bureau.²⁵ Grant funds were also used to pay for the downtown crossing guards and the Downtown Security Program.²⁶

Finally, revenue from the MPF is also used for capital projects. By way of example for FY 2015, funds generated by the MPF were used for the Waterfront Seawalk,²⁷ electrical winches, real-time weather monitoring and communications, and Last Chance Basin Hydro-Geo.²⁸

The second fee being challenged is the Port Development Fee (PDF), which is a $3.00 fee imposed on, with a few exceptions,²⁹ "vessels carrying passengers for compensation on port calls in the City and Borough...."³⁰ Pursuant to Assembly resolutions, the PDF has been imposed by CBJ since at least 2002, although the amount of the fee has increased over time to the current $3.00. The owner or agent of the vessel is responsible for paying the PDF.³¹ Funds generated by the PDF are intended to be used "for capital improvements to the downtown waterfront for the provision of service to the cruise ship industry" and any projects paid for with PDF funds are intended "to benefit all entities which remit the Fee."³² In FY 2017, the PDF generated approximately $3 million in revenue. Since 2011, funds generated by the PDF have only been used for the 16B project³³ and the Seawalk project.³⁴

Claims and Issues

A. Plaintiffs' Claims/Issues

On April 13, 2016, plaintiffs commenced this action to challenge the MPF and PDF. In their first amended complaint, plaintiffs assert four causes of action. In their first cause of action, plaintiffs assert that the MPF and PDF violate the Tonnage Clause of the United States Constitution. In their second cause of action, plaintiffs assert that the MPF and PDF violate the Rivers and Harbors Appropriation Act of 1899 (RHAA), as amended, 33 U.S.C. § 5. In their third cause of action, plaintiffs assert that the MPF and PDF violate the Commerce Clause of the United States Constitution. In their fourth cause of action, plaintiffs assert that the MPF and PDF violate the Supremacy Clause of the United States Constitution, and they allege that 42 U.S.C. § 1983 provides a basis for their Tonnage Clause and Commerce Clause claims.

Plaintiffs seek declaratory and injunctive relief. Plaintiffs seek declarations that 1) the MPF and PDF violate the Tonnage Clause, the Supremacy Clause, and the Commerce Clause, 2) defendants have deprived plaintiffs of their federal rights in violation of § 1983, 3) "[d]efendants are legally barred from imposing or collecting" the MPF and PDF "to the extent that revenues therefrom are unlawful, excessive, or otherwise impermissible;" and 4) "[d]efendants are legally barred from further use of" the MPF and PDF "revenue to fund activities that are unrelated to and do not benefit the Cruise Lines' vessels and passengers or that do not reflect the direct cost of providing services to cruise vessels."³⁵ Plaintiffs seek a permanent injunction prohibiting defendants from 1) "imposing or collecting the" MPF and PDF "to the extent that the amount thereof is excessive or otherwise impermissible;" and 2) "further use of the revenues from the" MPF and PDF "to fund activities that are unrelated to and do not benefit the Cruise Lines' vessels and passengers, or approximate their use of CBJ's port."³⁶ Plaintiffs contend that many of CBJ's uses of the MPF and PDF revenue are unconstitutional or otherwise unlawful, including:

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