STATE COMMERCIAL FISHERIES ENTRY v. Carlson

Decision Date14 March 2003
Docket Number No. S-10101., No. S-10091
Citation65 P.3d 851
PartiesSTATE of Alaska, COMMERCIAL FISHERIES ENTRY COMMISSION, Appellant/Cross-Appellee, v. Donald H. CARLSON; Warren Hart; Gerard Haskins; Earl Weese; and Lyla C. Weese, Individually and as Class Representatives on Behalf of All Persons Similarly Situated, Appellees/Cross-Appellants.
CourtAlaska Supreme Court

Stephen M. White, Assistant Attorney General, and Bruce M. Botelho, Attorney General, Juneau, for Appellant/Cross-Appellee.

Loren Domke, Loren Domke, P.C., Juneau, for Appellees/Cross-Appellants.

Before: FABE, Chief Justice, MATTHEWS, EASTAUGH, BRYNER, and CARPENETI, Justices.

OPINION

FABE, Chief Justice.

I. INTRODUCTION

This is the third appeal arising out of a lawsuit centering on whether Alaska can charge nonresidents more for commercial fishing licenses than it charges resident commercial fishers. The case is brought as a class action by a group of nonresident commercial fishers. In previous rulings in this case, we held that different rates can be charged for resident and nonresident commercial fishers, and we derived a formula for calculating the acceptable difference. The components of this formula, including various budget expenditures and oil revenues, are in dispute in this appeal. We conclude that direct and indirect costs associated with the fisheries budget and costs associated with the hatcheries loan fund can be included in the calculation of the allowable fee differential. We further hold that at an earlier stage in this litigation the State conceded that the protest requirement for recovery of overpayment of taxes has been satisfied. Finally, we hold that prejudgment interest will be applicable if on remand it is determined that a refund of a portion of fees is required.

II. FACTS AND PROCEEDINGS

Litigation in this case began in 1984. At the time this case was first before this court, nonresident commercial fishers were charged three times as much as resident fishers for fishing license fees.1 The relevant statute at the time, AS 16.05.480(a), dealt primarily with authorizing the establishment of fees for commercial fishing: "A person engaged in commercial fishing shall obtain a commercial fishing license. The fee for the license is $30 for residents, and $90 for nonresidents." The relevant current statute, AS 16.05.480(h), establishes: "For a crewmember fishing license[2] issued for calendar year 2002 and following years, a nonresident engaged in commercial fishing who is 11 years of age or older and who does not hold an entry permit or an interim-use permit shall pay an annual base fee of $60 plus an amount, established by the department by regulation, that is as close as is practicable to the maximum allowed by law." The principal difference is that the current statute does not set the amount which nonresidents can be charged, but rather allows this amount to be set at the maximum legal amount.3

A similar fee structure is established for entry permits and interim-use permits where the creation of limited use zones is deemed necessary for controlling, through the permitting process, the number of people who can fish in a given geographic area.4 However, in 2001 the fees for nonresidents were three times the amount for residents.5 Crewmembers are not required to have entry or interim-use permits, although they are required to have a commercial (crewmember) fishing permit to work on a permit vessel.6 The class never specifically stated in its brief that it is challenging both commercial fishing licenses and entry permit fees, but one of the challenged superior court orders states that it applies to both "commercial licenses and limited entry permits." Furthermore, Carlson I defined the class as consisting 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."7 This language was taken directly from the initial complaint. We therefore find it appropriate to address both commercial fishing licenses and entry permit fees. For the sake of simplicity, the two will be referred to collectively as "commercial fishing fees," except in those instances where it is necessary to differentiate between the two.

A. Prior Case History Before the Alaska Supreme Court

Before proceeding with the issues in the present case, it is helpful to review the decisions in the previous appeals before this court. In Carlson I, we held that different fees for residents and nonresidents did not automatically violate either the Privileges and Immunities Clause or the Commerce Clause of the United States Constitution.8 We noted that "[l]ess favorable treatment by the state towards nonresidents runs afoul of the Privileges and Immunities Clause if: 1) the activity in question is `sufficiently basic to the livelihood of the Nation ... as to fall within the purview of the [clause], and 2)[it] is not closely related to the advancement of a substantial state interest.'"9 We proceeded to determine that "[c]ommercial 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."10 We recognized that states may "charge non-residents a differential which would merely compensate the State for any added enforcement burden they may impose or for any conservation expenditures from taxes which only residents pay."11 Because the appropriateness of a 3:1 fee differential had not been addressed, we remanded the case for such a determination, placing the burden of persuasion on the State.12

We conducted a similar analysis with regard to the Commerce Clause. Noting that the Commerce Clause "limits the power of the States to erect barriers against interstate trade,"13 we concluded that if a law is shown to discriminate against interstate commerce, either in its wording or in its effect, the burden is on the State "to demonstrate both that the statute `serves a legitimate local purpose,' and that this purpose could not be served as well by available nondiscriminatory means."14 We held that the superior court improperly relied upon Salorio v. Glaser15 in granting summary judgment to the State.16 We determined that applying Salorio, in which New Jersey imposed additional fees on nonresidents to pay for transportation facilities,17 to the present case would result in nonresidents subsidizing the activities of residents because nonresidents could then be required "to pay up to 100% of their pro rata share of expenditures regardless of what percentage of their pro rata share residents are in fact paying."18 However, because the majority of the state revenues are derived from petroleum production, a source to which nonresident fishers make no contribution, we ruled that the State could recoup conservation expenditures from nonresidents in the form of differential fees.19 We reasoned that the oil revenues spent on conservation "could have been used to benefit residents through various other programs and they are, analytically, equivalent to `taxes which only residents pay.'"20 In that the extensive use of oil revenues as a source for state expenditures created a greater financial burden on nonresidents than residents, a fee differential based upon residency was justified.21 Consequently, "the state may equalize the economic burden of fisheries management; where residents pay proportionately more by way of foregone benefits than nonresidents for fisheries management, nonresidents may be charged higher fees to make up the difference."22 This is the same conclusion that was reached in the Privileges and Immunities Clause analysis. Consequently, we remanded the case for a further determination of the appropriateness of the fees.23 In Carlson II, we addressed the question of what would be an acceptable fee differential for nonresidents to pay.24 We first affirmed our decision in Carlson I that neither the Commerce Clause nor the Privileges and Immunities Clause prevented the imposition of an increased fee for nonresident commercial fishers.25 The class had argued that two cases, which held that states violated the negative (also known as dormant) Commerce Clause by charging greater taxes on out-of-state waste than on in-state waste, decided by the United States Supreme Court after Carlson I but before Carlson II, were applicable to the present case.26 We distinguished these two cases by holding that the facts in the present case did not involve the "interstate flow of articles of commerce."27 In response to the class's Privileges and Immunities Clause argument, we stated that we did not in Carlson I advance the type of fee-shifting arrangement denounced in Oregon Waste Systems, but rather explicitly held that nonresidents could be required to pay only that amount that would make their contribution to state-provided benefits substantially equal to the contribution of similarly situated residents.28

Accepting the constitutionality of the fee differences, we next determined a formula for allowable differences. We adopted the per capita fee differential formula advocated by the class as opposed to the pro rata formula offered by the State, holding that the allowable fee differential could be determined by: (Fisheries Budget/Alaska Population) X (percentage of State Budget from oil revenues/1.0).29 We rejected the State's proposed formula30 because it improperly compared the contributions made by nonresident commercial fishers to those made only by resident commercial fishers, rather than viewing the resource expenditures benefitting the nonresidents in terms of the population of the state as a whole:31

Resident commercial fishers are paying the license and permit fees they are charged plus their per capita share of oil revenues which are diverted to fisheries management from other benefits or State services. It is this quantity
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