# Petition for Writ of Certiorari — Carlson, Individually and on Behalf of All Others Similarly Situated v. Alaska Commercial Fisheries Entry Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1821%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2003 - **Citation:** 540 U.S. 963 ## Text ‘he sam fas tem O02 73 Ju 11 208 Supreme Court of the Anited States 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, - Petitioners, V. STATE OF ALASKA, COMMERCIAL . FISHERIES ENTRY COMMISSION, Respondent. On Petition for Writ of Certiorari to the Supreme Court of Alaska PETITION FOR A WRIT OF CERTIORARI LOREN DOMKE BETH HEIFETZ LOREN DOMKE, P.C. GREGORY A. CASTANIAS 2201 North Jordan Avenue (Counsel of Record) Juneau, Alaska 99801 JULIA C. AMBROSE (907) 790-2844 JONES DAY 51 Louisiana Avenue, N.W. Washington, D.C. 20001 (202) 879-3939 Counsel for Petitioners QUESTIONS PRESENTED 1. Whether the Alaska Supreme Court erred in holding that only the Privileges and Immunities Clause, and nor the Commerce Clause, is implicated by Alaska’s imposition of fees on nonresident commercial fishermen that are three times greater than those imposed on resident commercial fishermen. 2. Whether the Aiaska Supreme Court erred in holding that the constitutional limits on “compensatory” taxes under the Commerce Clause do not apply to allegedly compensating taxes under the Privileges and Immunities Clause, thereby permitting Alaska to impose on nonresident commercial fishermen the general costs of state government. eden RS POC wpa MAREE Peon OPIS A abate il PARTIES TO THE PROCEEDINGS Other than the unnamed members of the plaintiff class, all of whom are individual commercial fishermen who are not residents of Alaska, there are no petitioners or respondents in addition to those named in the caption. iil TABLE OF CONTENTS Page SPR PRSE DOPE © MERI ILIS © iO Dvicpsssesscssvensesvenesssesnnsesevscesesneseveeis PR REED TP BONES OP FEISS ssnesesecsesescssosssessenesecesens i SPE FUR BBURIUNE © EIGRP vsssccevesccenesivesseucseseenssevesenevesseees Vv PETITION FOR A WRIT OF CERTIORARI..............0..0000. I OD enncksiiysscsescovaencaavavsebsnuuassanssosnnssinessaanese » i ca cenis suleuclakiebantaduenits sabixsenentee | CONSTITUTIONAL AND STATUTORY ee Pete BE OE, Ve iiiesvesvscexesnorsvacvnssoneseesssovessenseeseees | lata chid sco viciaibnisimennaheseniinwiaatsesenteesnetuannseicens I 1. The Alaskan License and Permit Tax shes cediananicdclrctaceisbanssstensansiisenundobanes 2 es FOE CUCS TCIOW....nossssscrsessverecsesnenoneossones 4 REASONS FOR GRANTING THE WRIT...................0008 9 I. ©THE DECISION BELOW CONFLICTS WITH COMMERCE CLAUSE DECISIONS OF I nk aah cicsidi ance aeenentheiacch eonnvewkhnconnernieretas 1] A. The Commerce Clause Applies Because Nonresident Commercial Fishermen Are Engaged In Interstate Commerce.....................05: 1] B. The Commerce Clause Applies To Discrimination Based On Residency.................. 14 II. THE DECISION BELOW AUTHORIZES DISCRIMINATION THAT NONE OF THIS COURT’S DECISIONS WOULD es sic horncapinienbavmietsaweirnnnasabiialoassennentes 17 A. The Carlson Formula Authorizes A Compensatory Tax That Would Violate Fe SI CII vac acne vccsvsseccseccersocvenessesesscs 18 1V TABLE OF CONTENTS (Continued) Page B. The Carlson Formula Sanctions A Discriminatory Fee That Toomer Does Not Pe staitniiastcincincsavniuiaiiniuipantencbinatiatasitiniiainensiuianion 23 Il. THE DECISION BELOW RAISES SIGNIFICANT CONSTITUTIONAL QUESTIONS WITH NATIONWIDE GD Aciisiinntseusmnesvenpesneasanssionncianeansamenensi 26 Se TT cies veicdntirviccdinlanieianponsiieniaaseentaaiendenmeauaniias 30 Vv TABLE OF AUTHORITIES Page Case Alaska v. Arctic Maid, 366 U.S. 199 (1961) ..cccecccccccccccecceeee 2 Allenberg Cotton Co. v. Pittman, 419 U.S. 20 (1974)....... 12 Anderson v. Mullaney, 191 F.2d 123 (9th Cir. 1951), aff'd, 342 U.S. 415 (1952)... eee 16,21, 27 Armco Inc. v. Hardesty, 467 U.S. 638 (1984).......c0.000. 19,21 Baldwin v. Fish & Game Comm'n of Montana, IP SEA. B78 Ce icsecicicennnadaaiea ss 13, 15 Brown v. Maryland, 25 U.S. (12 Wheat.) 419 (1827)........ 14 Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564 (1997) .0......cecccesceeeeee 8,9, 11, 12 Carlson v. State of Alaska, 798 P.2d 1269 EEE ON Te TEN 1,4, >, ae Carlson v. State of Alaska, 919 P.2d 1337 CRI Se eiiciciitencines ae erie cee passim Carlson v. Alaska Commercial Fisheries Entry Comme ‘nt, 519 U.S. 1101 (1997). .....cc0ccserscorvsveccsovesseceeves 8 Commonwealth Edisen Co. v. Montana, 453 U.S. Fe CA Privsheisintaepranindaan ae ee 13 Complete Auto Transit, Inc. v. Brady, Te Se eT Pe iccint dinate 13,18 Douglas v. Seacoast Prod., Inc., 431 U.S. 265 (1977)... 12 Edwards v. California, 314 U.S. 160 (1941) w..cccccecccecseees 1] Fulton Corp. v. Faulkner, 516 U.S. 325 (1996).......... passim Gov't Suppliers Consolidating Servs., Inc. v. Bayh, Fie Tae CET Ce Ce SO cicbiinnma ee 19 H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525 NI Hic iccicconiicinlesshecbidaseadonnseudiesmesdbiditta: tata nae 12 Heisler v. Thomas Colliery Co., 260 U.S. 245 (1922)....... 13 Henneford v. Silas Mason Co., 300 U.S. 577 STIS Reitiinscinuscneiigiananinunbiattiasi alia ne nea 19, 21 Hicklin v. Orbeck, 437 U.S. 518 (1978).......00.. 12, 15, 16, 27 Hillside Dairy, Inc. v. Lyons, 123 S. Ct. 2142 CD ss ccssinticciuceiivapenvibssiuateiien aphedaniiaaanea ieee: 16 V1 TABLE OF AUTHORITIES (Continued) Page Hope Natural Gas Co. v. Hall, 274 U.S. 284 SFE FP nadsnsiiehstosscinnncesseniaceeainaniddatinalieasemsianieanainbemmenmannll 13 Mullaney v. Anderson, 342 U.S. 415 (1952).......... 16, 26, 27 Oliver Iron Mining Co. v. Lord, 262 U.S. 172 (1923)....... 13 Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality, DEE Cr otix Fe Eo ee iristonseinsvndescinitaeetiantvacsincsectaanentl passim Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1869), overruled in part on other grounds, United States v. South-Eastern Underwriters Ass'n, 322 U.S. FID CEP ccusicsescieinitesensncsiniiaeaaeininbaaeiaviamacmeaammnsael 17 Pharm. Research & Mfrs. of Am. v. Walsh, LoD Wie: RRs. ACID CU Divokcesotlecnnissnasbiseciasdsaciiemsatalicmanbidaiaal 14 Sheley v. Alaska Bar Asz’n, 620 P.2d 640 (Alaska SSID P svoxcesecsisesnsesersbbsenasennaceunsionensstdaselidancnliosemuanisesiamamenal 27 Sosna V. Fowa, 419 U.S. SHS CUS 73) oserescoveccsescessrccesoncsoscoes 15 State of Alaska v. Carlson, 65 P.3d 851 (Alaska PTS} nvinreecrensneinscnicbiaaiaianadaaaaianiaee passim Supreme Court of New Hampshire v. Piper, STO US. £79 Ua iiisiseeiaiiaintcnnidadenming 16 Toomer v. Witsell, 334 U.S. 385 (1948)... passim United Bldg. & Constr. Trades Council v. Mayor & Council of Camden, 465 U.S. 208 (1984)................ 15, 16 Walling v. Michigan, 116 U.S. 446 (1886) ..................00008 14 Ward v. Maryland, 79 U.S. (12 Wall.) 418 (1870)............ 15 LOG V. Wittiames, 4ST UB. SSD CEB e picsevvsccessevecceceseeeseecove 28 Statutes BG U.Dik... & Dee anicserscnstaninieaaaneenbennaaaaanas 2 20 UA... | Uke Fel dndgcnninisieimaaeadiaame I Aim. Cae § Da 1 2B. cescrceceveserecesnsessis scndneselpicapiepalanicaalaeiiaieaii 28 Alaska Admin. Code tit. 20, § 05.240.................csssssssesseeeees 4 Adee DR. TR, 0G, FBR. Gaiancinniincnmiccinonananan 2 ASRERIMSUIR, § BGG i recnccerscsessicuiccemnncnamionia 2, 3,4 Asmeee GRRE: 6 BGS. BOD vesnisticassarvimasieninninnaians 2 Vil TABLE OF AUTHORITIES (Continued) Page Alaska Stat. § 16.43.020........ccccccsccscscesscssesecesseeceesecececeecec.. 2 Alaska Stat. § 16.43.100(a) .....ccccccccccsccsccsceecerececececeececeeeen. 2 Alaska Stat. § 16.43.160....0.cccccccccccccccsecccoccoeeeceeceeee. 3, 4. 25 Alaska Stat. § 16.43.160(€) .....eccccccccccccccccsceccececeececeececece. 3,4 Alaska Stat. § 43.75.015.......ccccccsscscsscssssssecsesesecsceesecesecce., 25 Alaska Stat.§ 43.75.130.......cccccccscsssscssssesecsesececseceseceecece., 25 Code Ark. R. 002 00 001 41.13 .oocccccccccccccccececececesececececcceee. 28 Cal. Fish & Game Code § 7852 oooccceccccccccccccecececceeeeeceeecccee, 28 Conn. Gen. Stat. § 26-1428 (C)...cccccccccccccsesecsesesecececeeeececece. 28 Del. Code Ann. tit. 7 § 914 .occccccccccccccceececeseeeececsesececccn, 28 Fla. Stat. Ann. § 370.06(2).......cccccccccccsecseccesecececcececeececccn. 28 X50, Coe Asam. § 27-2-23 ...ccecccccerscceccocsssesnccecesareseseseeseee.. 28 MMS COGS § BGG 1G ces cceceessccveccvsnesesscenesereseceseceeeseees, 28 S15 Tl. Comp. Stat. 5/20-45.00.. cc cccccccccsscscccccosesesececceseces, 28 Ind. Code Ann. § 14-22-14-6......cccccccccccccsececcoceseceeeecececcece. 28 cnthtipestie ce Lee ig LE, 28 Kan. Admin. Regs. § 115-21 ooccccccccccceccccscessesececececeeeeces, 28 301 Ky. Admin. Regs. 3:022..........ccccccccccoseccesecececeeceeeecece., 29 La. Rev. Stat. Ann. § 56:303..0.......cccccccccccocescocececeeceesecee... 29 Md. Code Ann., Natural Resources § 4-701 .occceccccccccceceee-. 29 Me. Rev. Stat. Ann. tit. 12, § 650] ......ccccccccccccccscccoccecceceees. 29 Mich. Comp. Laws § 324.47330(2) cocccccccccccecceceeeccoceeeeceec.. 29 Minn. Stat. Ann. §§ 974.461, 475 vo.cccccccccccceccccecesccceeee. ar Miss. Code Ann. §§ 49-15-80, 49-15-30 .....ccccccccccccc----. 29 Mo. Code Regs. tit. 3, § 10-10.720 ....ccccccccccccsssescscseececeeeees 29 N.C. Gen. Stat. § 113-168.2 0.0... cccccccccccccesccseseceseoseceeeeses, 29 N.D. Cent. Code, § 20.1-03-12 oo.c.cccccccccccccccececececcececeececees, 29 N.J. Stat. Arn. § 23:5-24.2..0oocccccccccssssscsccecesececcececoccesees, 29 Neb. Rev. Stat. § 37-4, 104 o.o....ccccccccccccccccecessesessececseeees.. 29 Okla. Stat. Ann. tit. 29, § 4-103 ooocccccccccccccecccsececcccececeeceeee, 29 | RE SA. TIMUR. 1 SEA wsncrnecncenceerenrcinsnsnrnnemnaeessmenesantesencs: 29 : Fe PO, COMID, TARE. GB ZOD occas csexsisevecccecrcessesressencsreceeseece cc 29 R.I. Gen. Laws §§ 20-2.1-5, 20-2.1-6....cccccccccccccsssecececececes 29 S.C. Code Ann. §§ 50-5-300, 50-5-3 10 .oceccccccccececececececeees. 29 Vill TABLE OF AUTHORITIES (Continued) Page pO FO 8 eee 29 Pe rs FR, Gee 0 ee iertnteeninilasicntsenninnceimninnien 29 4 Va. Admin. Code §§ 20-730-20, 20-920-30................... 29 Wash. Rev. Code Ann. §§ 77.65.160, 77.65.200............... 29 es is eee EE F cnkiiccnstcccinrnvicstntennnsiaacsanneseeuniinel 30 Miscellaneous Commercial Fisheries Entry Comm’n, 2001 Annual ET OW National Oceanic and Atmospheric Administration, Fisheries of the United States (2001) .............ccceeceeeeeee es 27 fe ee De eee ae ee eee PETITION FOR A WRIT OF CERTIORARI 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 (“Petitioners’’), respectfully petition for a writ of certiorari to review the judgment of the Supreme Court of Alaska in this case. OPINIONS BELOW The opinions of the Supreme Court of Alaska are reported as follows: State of Alaska v. Carison (Carlson IIT), 65 P.3d 851 (Alaska 2003) (App. la-52a); Carlson v. State of Alaska (Carlson IT), 919 P.2d 1337 (Alaska 1996) (App. 56a-82a); and Carlson v. State of Alaska (Carlson 1), 798 P.2d 1269 (Alaska 1990) (App. 88a-112a). The unreported final orders of the Superior Court of the State of Alaska are reproduced in the Appendix to this Petition as follows: “Findings of Fact and Law” (August 8, 2000) (App. 53a-55a): “Decision and Final Order on Reconsideration of the Court’s August 12, 1993 Order and Final Decision Granting the State’s Motion for Summary Judgment” (July 25, 1994) (App. 83a- 87a); “Final Order” (Feb. 21, 1989) (App. 1 13a). JURISDICTION The Supreme Court of Alaska entered its judgment on March 14, 2003. On June 5, 2003, Justice O’Connor granted Petitioners’ application to extend the time in which to file the petition for writ of certiorari to and including July 12, 2003. This Court’s jurisdiction is invoked under 28 U.S.C § 1257(a). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The relevant constitutional and Statutory provisions are located in the Appendix to this Petition at App. 114a-126a. STATEMENT The case presents important questions as to whether, consistent with the Commerce Clause and the Privileges and 2 Immunities Clause, Alaska may discriminate against nonresident commercial fishermen by charging them three times the licensing and permitting fees it charges resident commercial fishermen for access to the State’s fisheries. The Supreme Court of Alaska analyzed the fee differential under the Privileges and Immunities Clause but concluded that the Commerce Clause has no application to the State’s commercial-fishing-license scheme. The Alaska court’s analysis led it to endorse under the Privileges and Immunities Clause a facially discriminatory fee that would be invalidated under this Court’s long-standing Commerce Clause and compensatory-tax jurisprudence. 1. The Alaskan License and Permit Tax Schemes. Because Alaska controls the waters within three miles of its shore,! the state has the power to impose licensing and permitting fees for access to its fisheries. See Alaska v. Arctic Maid, 366 U.S. 199, 203 (1961); Toomer v. Witsell, 334 U.S. 385, 393 (1948); Alaska Stat. §16.43.100(a)(18). Fishermen seeking to operate fishing gear in the most intensively used Alaska commercial fisheries must purchase a limited entry permit.> Alaska Stat. § 16.43.140(a). A crewman working on the vessel of a gear license operator does not need a permit but must purchase a commercial fishing license. Alaska Stat. § 16.05.480 (App. 115a-117a). See 16 U.S.C. § 5102(6) (establishing an “Exclusive Economic Zone” (EEZ) in the area running three nautical miles to 200 nautical miles from shore; waters within the EEZ are, in general, regulated by the federal government, while the area from the shore out to three nautical miles is generally regulated by the states). The limited entry permit program is designed to maintain the “stability” of Alaska’s fisheries resources by “regulating and controlling entry” into its commercial fisheries. See Title 16, Art. 43, Alaska Stat.; Commercial Fisheries Entry Comm’n, 2001 Annual Report at 1, available at http://www.cfec.state.ak.us/annrpts/ar2001.pdf. Respondent Commercial Fisheries Entry Commission (“CFEC”) is the regulatory body created to manage that program. Alaska Stat., § 16.43.020. 2a a ee er ea ea... : 7 , Until 2001, a nonresident permit holder or nonresident crewman paid three times the fee residents paid. App. 117a, 22a. In actual dollars, residents annually paid between $50 and $250 for limited entry permits; nonresidents paid $150 to $750 for the same permit. App. 122a. Nonresidents therefore were required to pay as much as $500 more than residents for the same permit, year after year. Resident crewmen were charged $30 for a commercial license, while nonresidents paid $90 for the same license. App. 117a. Beginning in 2001, in response.to the Carlson decisions, Alaska amended its statutes to equalize resident and nonresident permit and license fees, setting a uniform “base fee” but continuing to impose a surcharge on all nonresidents, both permit holders and crewmen, a fee differential based solely on their nonresident status. Alaska Stat. §§ 16.05.480(h), 16.43.160(e) (App. 116a, 118a).* This differential is calculated from a formula first advanced in Carlson II. Based on Alaska’s discovery responses, petitioners estimate that the nonresident surcharge under the Carlson II formula will vary between $150 and $200 annually, and could be significantly higher, depending on how the state defines its fisheries costs under the formula. As a result of this case, the state amended Section 16.05.480 to provide that a resident adult will be charged $60 for a crewmember fishing license, while a nonresident must pay “$60 plus an amount, established by the [Commercial Fisheries Entry Commission] by regulation, that is as close as is practicable to the maximum allowed by law.” Alaska Stat. §16.05.480(g)-(h) (App. 116a). The “maximum allowed by law” refers to the fee differential formula approved by the Alaska courts in this case, discussed in detail infra. Like the commercial fishing license fee statute, the statute governing limited entry permit fees was similarly amended during the Carlson litigation. It now provides that the base fee for a limited entry or interim-use permit “may not be less than $10 or more than $300”; the fee for nonresidents ‘shall be higher than the annual base fee by an amount, established by the [CFEC] by regulation, that is as close as is practicable to the maximum allowed by law.” Alaska Stat. § 16.43.160(e) (App. 118a) (emphasis added). 4 The resulting economic disadvantage to nonresident commercial fishermen, and the adverse impact on interstate commerce, 1s both obvious and significant. 2. The Proceedings Below. Petitioners are a class of nonresident commercial fishermen who have been required to pay at least three times as much as Alaska residents to obtain fishing licenses and permits to fish in Alaska’s territorial waters. App. la-2a, 88a-89a. In 1984, Petitioners filed suit in Alaska Superior Court, challenging Alaska’s discriminatory commercial-fishing-license fee statutes and regulations, specifically Alaska Stat. §§ 16.05.480 and 16.43.160(b), and Alaska Admin. Code tit. 20, § 05.240, as violative of the Interstate Commerce and Privileges and Immunities Clauses of the United States Constitution. App. 2a-3a, 88a-89a. This case has now gone to the Alaska Supreme Court three times. Carlson I. On cross-motions for summary judgment, the Alaska Superior Court held that both Clauses apply to the discriminatory Alaska license scheme. The court nonetheless found no Commerce Clause violation because the “legitimate local purpose” of “ensuring that nonresidents pay their fair share of [fisheries] management costs .. . justified the discrimination, assuming the fee differential bore a substantial relationship to the purpose.” App. 96a. The Superior Court also found no violation of the Privileges and Immunities Clause because the state had demonstrated a “permissible” reason for the discriminatory fee: “to have the non-resident [fishermen] pay a part of their fair share of the costs of enforcement, management and conservation of the fisheries of the state, which costs are largely borne by the residents through general fund expenditures.” App. 95a. The Superior Court ultimately determined that the figures submitted by the state reflected the costs to Alaska of managing its commercial fisheries, and that the fee differential fairly reflected nonresidents’ “fair share” of those costs. App. 95a-96a, 97a. 5 On appeal, the Alaska Supreme Court agreed with the Superior Court that commercial fishing “license fees which discriminate against non-residents are prima fucie a violation” of the Privileges and Immunities Clause, App. 98a, but remanded for consideration of “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.” App. 105a-106a. Only if the “higher fees charged nonresidents are excessive” in comparison to the economic burden borne by state residents to support the state’s fisheries would the aifferential be unconstitutional. App. 106a. Alaska residents pay no state income tax. Instead, the majority of the state’s budget was derived from petroleum taxes and state oil royalties. See App. 106a (for fiscal year 1986, 86 percent of state revenues derived from oil production). The Alaska Supreme Court treated each resident’s share of oil revenues as equivalent to a tax payment, on the theory that revenues allocated to fisheries management that could have been put to other uses reflect “benefits foregone” by each resident. App. 106a. With respect to the Commerce Clause, the Alaska Supreme Court stated that the analysis, “assuming [the Clause] is implicated,” would be similar to the analysis under the Privileges and Immunities Clause. App. 103a. The court noted that early cases from this Court “suggested that the Commerce Clause does not come into play until the fish are actually harvested . . . ,” although “{d]ictum in more recent cases suggests the contrary.” App. 103a n.4. The Alaska Supreme Court reached no firm conclusion about the applicability of the Commerce Clause in Carlson J. Carlson II. On remand, the parties were required to propose a method by which to compare the fees paid by nonresidents with the expenditures of state revenues “to which non-residents make no contribution.” App. 59a. The j $ j 8 q % 6 Superior Court rejected Petitioners’ formula, which compared each Alaska resident’s per capita contribution toward maintaining Alaska’s commercial fisheries with the fee differential, and instead adopted the state’s proposed approach, which “in effect compares the total contributions made to the cost of commercial fisheries by residents to the total fees paid by non-residents.” App. 59a. Applying that analysis, the Superior Court concluded that the discriminatory fees did not violate the Constitution because “(rjesidents pa[id] by way of taxes, or the economic equivalent of taxes, i.e., benefits foregone, substantially more than non-resident fishers pay toward the benefits received....” App. 86a. On appeal, the supreme court held that the higher license cost for nonresidents did not implicate the Commerce Clause. According to the court in Carlson II, harvested fish only become articles of commerce when they cross state lines. Because “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,” App. 62a, the court concluded that the Commerce Clause does not apply. App. 62a-63a. As to the Privileges and Immunities Clause, the Alaska Supreme Court refused to apply this Court’s longstanding “compensatory tax” jurisprudence, then most recently articulated in Oregon Waste Systems, Inc. v. Department of Environmental Quality of Oregon, 511 U.S. 93 (1994), in which this Court held that the Commerce Clause does not permit states to consider residents’ contributions to general tax revenues as compensating for higher fees imposed on out-of-state competitors. App. 65a. Instead, the Alaska Supreme Court held that the Alaska fee differential “merely balances out ‘any conservation expenditures from taxes which only residents pay,’” a result the court found permissible under the Privileges and Immunities Clause in light of Toomer v. Witsell, 334 U.S. at 399. App. 66a. etre Aithvtth 6 ASANO cane 7 The Alaska Supreme Court in Carlson II approved Petitioners’ proposed per capita formula, which had been rejected by the trial court, and rejected the pro rata method proposed by the state and adopted by the trial court. App. 67a-69a. The court conceded that the comparison advocated by the state-the total fisheries-related expenditures made by the state verses the total contribution made by nonresident fishermen—would violate the Oregon Waste prohibition on compensatory taxes. App. 68a & n.16. The court believed, however, that the per capita formula avoided this problem by comparing each Alaska resident’s individual contribution toward fisheries management with the fee differential assessed against each individual nonresident fisher. The Carlson II court thus remanded the case to the Superior Court for application of the per capita formula in order to determine whether any nonresidents were due a partial refund of fees paid. App. 69a." Justice Rabinowitz dissented. App. 76a-82a. He would have applied the compensatory tax analysis of Oregon Waste to the Privileges and Immunities analysis of the Alaska fee differential. App. 78a. Justice Rabinowitz explained that the distinction drawn by the Alaska Supreme Court between the per capita and pro rata formulae is meaningless and does not save the discriminatory fee from invalidity under the compensatory tax rationale: “The approach authorized by [Carlson II] seems to place greater emphasis on the theoretical equality of individual contributions than the Under the per capita formula, the state’s fisheries budget is divided by the Alaska population. That amount then is multiplied by the percentage of the state’s budget derived from oil revenues, to determine each *.laska resident’s per capita contribution to the management and conservation of the state’s fisheries (by virtue of benefits foregone). App. 72a-73a. The resulting figure is compared to the nonresident fee differential to determine whether the differential is constitutionally excessive. App. 69a. 8 Oregon tax did. There is, however, no indication that the Oregon tax was designed to im,» e on out-of-state interests their ‘entire share’ of solid waste uisposal costs nor, for that matter, that the shares of disposers of in-state waste . . . were to be borne by the entire population.” App. 79a n.3. And even “[m]Jore importantly, the decision in Oregon Waste Systems did not turn on the fact that the surcharge was excessive but rather on the conclusion that any surcharge was constitutionally offensive under the circumstances.” /d. This Court denied certiorari. Carlson v. Alaska Commercial Fisheries Entry Comm'n, 519 U.S. 1101 (1997). Carlson III, On remand, the Alaska Superior Court held an evidentiary hearing to determine what state expenditures comprised the components of the formula approved by the Carlson II court. The Superior Court adopted virtually wholesale the state's proposed method for computing both its annual fisheries budget and the percentage of the total state budget derived from oil revenues for fiscal year 1996, and accepted without further inquiry the figures supplied by the state in making its calculations. Using the state's figures, the court determined a maximum allowable fee differential that could be charged to nonresidents in 1996 consistent with the Carlson II formula, App. 53a-55a, and directed the parties to use the court’s methodology to calculate the allowable fee differential for each year going back to 1984. Rather than perform this accounting, both parties appealed. On appeal, the Alaska Supreme Court in Carlson III declined to reconsider its Carlson I] Commerce Clause holding, despite two then-recent decisions of this Court: Fulton Corp. v. Faulkner, 516 U.S. 325 (1996), and Camps Newfound/Owatonna, Inc. v. Town of Harrison, Maine, 520 U.S. 564 (1997). App. 14a-24a. Reiterating its Carlson II reasoning, the court declared Fulton Corp. inapplicable “because commercial fishing licenses are not objects of interstate commerce” and because the Alaska fee differentials “relate not to commerce but rather to the Pel Bei BES NAB RAE, AIA iA AI HSB I 9 9 opportunity to utilize Alaska’s natural resources.” App. 20a- 21a. The court likewise distinguished Camps Newfound by noting that this Court had likened the charitable camp there at issue to a hotel, which the Alaska Supreme Court viewed as “a sufficient distinction from commercial fishing licenses and permits to allay concerns about the constitutionality of the fee differential.” App. 22a. The court offered no further analysis than that. In a footnote, the court declared that. even if Alaska’s fee differential implicated the Commerce Clause, it would nevertheless satisfy this Court’s rigorous compensatory tax jurisprudence, citing Fulton Corp., 516 U.S. at 331. App. 21an.78. But see App. 68a & n.16. The Alaska Supreme Court then reviewed the components of the state’s fisheries budget approved by the Superior Court and the calculation of the percentage of the state budget derived from oil revenues. App. 27a-37a. The Alaska Supreme Court found no clear error in the Superior Court’s determination that the “direct and- indirect operating expenditures’ calculated by the state should be included in the fisheries budget. App. 29a. The court also agreed with the Superior Court that categories of costs described by the state as “general governmental expenditures” and “foregone revenues’ from commercial fishery resources cannot be included. App. 3la-33a, 34a-35a. However, the court reversed the Superior Court’s determination that “capital costs” directly supporting the commercial fishing industry and the state’s “hatchery loan fund subsidy” should be excluded from the fisheries budget. App. 33a-34a. Carlson If left “to the superior court on remand to determine whether proportionality exists [between Alaska residents’ per capita contribution as calculated by the Carlson II formula and the fee differential imposed for a given year] and whether a refund is due.” App. 26a. REASONS FOR GRANTING THE WRIT This case presents important and far-reaching questions concerning the application and relationship of the Commerce 10 Clause and the Privileges and Immunities Clause. At issue here are discriminatory license fees that favor state residents over nonresidents who seek~to pursue their trade in the licensing state, and the constitutional limitations on a state’s ability to assess such discriminatory fees. Alaska requires all commercial fishermen to purchase licenses and permits to fish in Alaska’s territorial waters. Nonresidents are required to pay at least three times as much as residents. Despite this facially discriminatory surcharge, the Alaska Supreme Court held that higher costs charged to out-of-state residents for commercial fishing licenses do not even implicate the Interstate Commerce Clause. It concluded that Alaska’s discriminatory ccommercial-fishing-license scheme warrants scrutiny only under the Privileges_ and Immunities Clause, and that the overcharge of nonresidents is permissible under that Clause so long as it does no more than compensate the state for fisheries-related expenditures made from revenues to which only state residents contribute. Although it expressly refused to apply the Commerce Clause to Alaska’s fee differential, the Alaska Supreme Court selectively borrowed the Commerce Clause’s “compensatory tax” doctrine to justify imposing higher fees on nonresidents; even so, it refused to apply the rule of strict equality that is the essence of that doctrine. See, e.g., Oregon Waste Sys., Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93 (1994); Fulton Corp. v. Faulkner, 516 U.S. 325 (1996). The Carlson III holding thus invites states to justify, under the rubric of the P*ivileges and Immunities Clause, patently discriminatory taxes and fees imposed disproportionately on nonresidents. If not reversed, the decision below would sanction, under the auspices of the Privileges and Immunities Clause, a plainly discriminatory tax on a commercial activity that could not possibly survive scrutiny under this Court’s Commerce Clause jurisprudence. IRR OR NIE ERIS omit oe 11 I. THE DECISION BELOW CONFLICTS WITH COMMERCE CLAUSE DECISIONS OF THIS COURT A. The Commerce Clause Applies Because Nonresi- dent Commercial Fishermen Are Engaged In Interstate Commerce The Alaska Supreme Court refused to analyze the discriminatory license-fee scheme under the Commerce Clause based on its cramped view that the Commerce Clause applies only to “the interstate flow of articles of commerce.” Carlson II, 919 P.2d at 1340 (emphasis in original). The court distinguished between fee differentials “predicated upon the movement of articles of commerce across state lines” and those based on “the residency status of those applying for permits,” believing only the former to be subject to the Commerce Clause. /d. That holding cannot be reconciled with precedent, nor with common sense. Under the Commerce Clause, “commerce” is defined far more broadly than the Alaska Supreme Court acknowledged. In Camps Newfound/Owatonna v. Town of Harrison, 520 U.S. 564 (1997), this Court held that a charitable camp located in Maine that enrolled campers who resided in “all parts of the Nation” was engaged in interstate commerce: “The attendance of these campers necessarily generates the transportation of persons across state lines that has long been recognized as a form of ‘commerce.’” Jd. at 573. This holding was neither novel nor surprising: Over sixty years ago, in Edwards vy. California, 314 U.S. 160 (1941), this Court declared it “settled beyond question that the transportation of persons is ‘commerce,’ within the meaning of” the Commerce Clause. /d. at 172. The nonresident fishermen who travel to Alaska to fish (and pay a disproportionate price for that privilege) generate the same sort of interstate “commerce” as the campers in Camp Newfound and the indigent who traveled to California in Edwards. 12 Indeed, this Court has long recognized that commercial fishing is by its very nature an interstate, commercial enterprise: The business of commercial fishing must be conducted by peripatetic entrepreneurs moving, like their quarry, without regard for state boundary lines. . . . A number of coastal States have discriminatory fisheries laws, and with all natural resources becoming increasingly scarce and more valuable, more such restrictions would be a likely prospect, as both protective and retaliatory measures. Each State’s fishermen eventually might be effectively limited to working in the territorial waters of their residence, or in the federally controlled fishery beyond the three-mile limit. Such proliferation of residency require- ments for commercial fishermen would create precisely the sort of Balkanization of interstate commercial activity that the Constitution was intended to prevent. Douglas v. Seacoast Prod., Inc., 431 U.S. 265, 285-86 (1977) (footnotes omitted) (citing the Commerce Clause decisions in H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 532-39 (1949), and Allenberg Cotton Co. v. Pittman, 419 U.S. 20 (1974)). © And because that interstate commercial enterprise depends upon access to natural resources, the Commerce Clause applies with particular force. See, e.g., Hicklin v. Orbeck, 437 U.S. 518, 533-34 (1978) (“the Commerce Clause circumscribes a State’s ability to prefer its own citizens in the utilization of natural resources found within its borders, but destined for interstate commerce.”); Camps Newfound, 520 U.S. at 578 (“[b]y encouraging economic isolationism, prohibitions on out-of-state access to in-state resources serve the very evil that the dormant Commerce Clause was designed to prevent’). The natural resource at issue here—Alaska’s fishing waters and the fish that swim in them—is made available to Alaska residents on a far more favorable _ basis. And _ that favoritism impacts not 13 nonresidents’ use and enjoyment of the state’s fishing waters for recreation, cf. Baldwin v. Fish & Game Comm'n of Montana, 436 U.S. 371, 388 (1978) (higher licensing fees imposed on nonresidents for recreational elk hunting license did not implicate category of rights protected by Privileges and Immunities Clause), but their access to the very resource upon which their commercial interests depend. ‘ The Alaska Supreme Court’s original holding to the contrary-that the Commerce Clause has no application to the discriminatory license fee—was apparently premised on the fact that the license and permitting fees are imposed prior to any fish being harvested. See Carlson II, 919 P.2d at 1340 n.8. That rationale, however, has been soundly discredited. The Carlson court’s reasoning was derived from the Commerce Clause holding of Toomer v. Witsell, that a non- discriminatory South Carolina tax imposed on the taking of shrimp within the state’s territorial waters did not violate the Commerce Clause because the taxable event—the taking of the shrimp-—occurred before the shrimp “entered the flow of interstate commerce.” 334 U.S. 385, 394-95 (1948). Toomer’s Commerce Clause holding, and the cases upon which that holding rested, id. at 394-95 n.22. including Heisler v. Thomas Colliery Co., 260 U.S. 245 (1922): Oliver Iron Mining Co. v. Lord, 262 U.S. 172 (1923); and Hope Natural Gas Co. v. Hall, 274 U.S. 284 (1927), have long since been recognized as unsound. This Court has expressly disapproved “Heisler and its progeny” insofar as they Suggest that the Commerce Clause has no application until an article of commerce has entered “the stream of interstate commerce.” Commonwealth Edison Co. v. Montana, 453 U.S. 609, 614, 617 (1981). And the last vestiges of the rule that states could, without Commerce Clause limitation, freely tax certain purely local activities that occurred prior to the commencement of “interstate” commerce were eradicated in Complete Auto Transit v. Brady, 430 U.S. 274 (1977). In short, the Alaska court’s decision that the Commerce Clause has no application to Alaska’s discriminatory fee = ignores the reality of the interstate commercial interests—the “interstate commerce directly affected by the state’s licensing scheme. The discriminatory fee “impose[s] a disparate burden on any [nonresident] competitors’ who travel to Alaska to fish in the state’s commercial fisheries. Pharm. Research & Mfrs. of Am. v. Walsh, 123 S. Ct. 1855, 1871 (2003). And it is precisely such discriminatory measures protective of loca! commercial interests at the expense of nonresident competitors that the Commerce Clause forbids. B. The Commerce Clause Applies To Discrimination Based On Residency In holding that discrimination based on residency simply is not cognizable under the Commerce Clause, the Alaska Supreme Court boldly announced that this Court has instead “consistently analyzed statutes which purportedly classify on the basis of residency under the Privileges and Immunities or the Equal Protection Clauses.” Carlson I], 919 P.2d at 1340- 41. While the Privileges and Immunities Clause is of course implicated when states discriminate on the basis of residency, this Court has long recognized that the Commerce Clause also reaches such discrimination where interstate commerce is involved: “The distinction between a tax on the thing imported, and on the person of the importer, can have no influence on this part of the subject. It is too obvious for controversy, that they interfere equally with the power to regulate commerce.’ Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 448 (1827); see also Walling v. Michigan, 116 U.S. 446 (1886) (tax imposed only on nonresidents selling liquor in the state violated the Commerce Clause). The Alaska Supreme Court’s error is borne out by the fact that none of the decisions it cited (App. 62a-63a & n.10) even suggest that discrimination against commercial interests based on residency is not cognizable under the Commerce Clause. The wholly discredited Commerce Clause holding of Toomer v. Witsell did not relate to the higher license fees 15 imposed on nonresidents that were at issue in that case, but rather to a wholly separate and nondiscriminatory tax on the taking of shrimp. 334 U.S. at 394. In United Building & Construction Trades Council v. Mayor & Council of Camden, 465 U.S. 208, 213 (1984), a municipal resident hiring preference was not subject to the Commerce Clause because Camden was acting as a market participant; absent that fact, the Commerce Clause would have applied. In Hicklin v. Orbeck, 437 U.S. 518, 531 (1978), the parties did not raise a Commerce Clause challenge to an Alaska hiring law giving a preference to state residents. Sosna v. lowa, 419 U.S. 393 (1975), concerned residency limitations on a state court’s divorce jurisdiction; no commercial interests were advanced. And Baldwin v. Fish & Game Commission of Montana, 436 U.S. 371 (1978), involved recreational, not commercial, hunting, and the nonresident plaintiffs raised no Commerce Clause challenge. It is of course true that the Privileges and Immunities Clause protects the right of a citizen of one state to enter another state for the purpose of engaging in lawful commerce. See, e.g., Hicklin, at 524 (noting body of “decisions holding violative of the [Privileges and Immunities] Clause state discrimination against nonresidents seeking to ply their trade, practice their occupation, or pursue a common calling within the State.”); Baldwin, 436 U.S. at 383 (citing Ward v. Maryland, 12 Wall. 418, 20 L. Ed. 449 (1871)); United Bidg. & Const. Trades Council, 465 U.S. at 219. That principle applies equally where, as here, pursuit of the common calling depends upon access to natural resources found within the state: “[A] State’s interest in its wildlife and other resources must yield when, without reason, it interferes with a nonresident’s right to pursue a livelihood in a State other than his own, a right that is protected by the Privileges and Immunities Clause.” Baldwin, 436 U.S. at 386 (citing Toomer, 334 U.S. 385). When a common calling involves interstate as opposed to pureiy intrastate commerce, however, there is no basis for 16 concluding that the Commerce Clause is not also implicated. While the Privileges and Immunities Clause and the Commerce Clause “have different aims and set different standards for state conduct,” United Bldg. & Constr. Trades Council, 465 U.S. at 220 (“It 1s discrimination against out- of-state residents on matters of fundamental concern which triggers the [Privileges and Immunities] Clause, not regulation affecting interstate commerce.”), nothing in the Court’s jurisprudence precludes the application of both clauses when both concerns—a regulation that both affects “matters of fundamental concern” and impacts interstate commerce—are implicated. Indeed, just last Term in Hillside Dairy, Inc. v. Lyons, 123 §S. Ct. 2142 (2003), this Court held that claims by _ nonresidents challenging California’s milk pricing and pooling regulations are cognizable under both the Commerce Clause and the Privileges and Immunities Clause. This of course 1s appropriate, given “the mutually reinforcing relationship between the Privileges and Immunities Clause of Art. IV, § 2, and the Commerce Clause~a relationship that stems from their common origin in the Fourth Article of the Articles of Confederation and their shared vision of federalism.” Hicklin, 437 U.S. at 531-32 (footnote omitted); see also Supreme Court of New Hampshire v. Piper, 470 U.S. 274, 279-80 & n.8 (1985).° > As the Alaska Supreme Court noted (App. 63a n.11), the Ninth Circuit struck down an earlier version of Alaska’s discriminatory commercial-fishing-license scheme under the Commerce Clause. Anderson v Mullaney, 191 F.2d 123 (9th Cir. 1951). This Court affirmed the unconstitutionality of the discriminatory license scheme on Privileges and Imraunities Clause grounds without reaching the Ninth Circuit’s Commerce Clause holding. Mullaney v. Anderson, 342 U.S. 415 (1952). The Ninth. Circuit’s Commerce Clause holding therefore remains intact and conflicts with the Alaska Supreme Court’s holding that the Commerce Clause has no application to such discriminatory license fees. 2 9 3 P) | a a ; ¥ 2 2 17 The flaw in the Alaska Supreme Court’s reasoning . becomes apparent when it is applied to a slight factual variation: If the applicant for a commercial fishing license were an out-of-state corporation (which employs individual fishermen and pays the Alaska license fees on behalf of its employees) rather than an individual, the Privileges and Immunities Clause, which protects only “citizens,” would have no application. Paul v. Virginia, 75 U.S. (8 Wall.) 168, 180-82 (1868), overruled in part on other grounds, United States v. South-Eastern Underwriters Ass ‘n, 322 U.S. 533 (1944). But the Commerce Clause surely would protect the National marketplace against such patent local favoritism. Fulton Corp. v. Faulkner, 516 U.S. 325 (1996). It is unfathomable that the Commerce Clause would not be implicated (and violated) by such obvious favoritism. ll. THE DECISION BELOW AUTHORIZES DIS- CRIMINATION THAT NONE OF THIS COURT’S DECISIONS WOULD COUNTENANCE The Alaska Supreme Court, extrapolating from a fragment of a dictum in Joomer vy. Witsell, endorsed under the Privileges and Immunities Clause a surcharge imposed solely on nonresidents that could not possibly pass Commerce Clause muster. The court justified that surcharge on the ground that it “equalizes” expenditures made from Alaska’s general revenues. Even if the decision below were correct that only the Privileges and Immunities Clause applies, which Petitioners dispute, see Part I, supra, just as this Court has prohibited states under the Commerce Clause from shifting to nonresidents “charges purportedly included in general forms of intrastate taxation... . anytime the entities involved in interstate commerce happened to use facilities supported by general state tax funds,” Oregon Waste, 511 U.S. at 105 n.8, so too Alaska should be precluded from shifting such general costs of state government to nonresidents under the Privileges and Immunities Clause. 18 A. The Carlson Formula Authorizes A Compensatory Tax That Would Violate The Commerce Clause Carlson II approved a formula for determining whether the “differential in fees charged residents and nonresidents was sufficiently related” to the state’s asserted goal of “equalizing the burden of fisheries management” to justify the disparate treatment. App. 64a. According to Carlson I], the nonresident fee differential is allowable under the Privileges and Immunities Clause so long as the amount of the differential does not “substantially exceed” each Alaska resident’s per capita contribution (via expenditures from the state’s oil revenues, see n.4, supra) toward the maintenance and operation of Alaska’s fisheries, as calculated by the Carlson IT formula, in any given year. App. 72a-73a. While the description of the formula may seem complicated, it boils down to this: whether nonresidents pay, through license and permit fees, roughly the same amount residents “contribute” through state oil revenues. The fee differential sanctioned by Carlson II thus operates in theory as a compensatory tax— that is, a tax “designed simply to make interstate commerce bear a burden already borne by intrastate commerce.” Fulton Corp., 516 U.S. at 331 (citation omitted). But a compensatory tax is valid under the Commerce Clause—and, it should follow, under the Privileges and Immunities Clause-only if it satisfies this Court’s strict test for substantial equality. The Alaska surcharge plainly does not. This Court has acknowledged that “interstate commerce may be made to ‘pay its way.”” Oregon Waste, 511 U.S. at 102 (quoting Complete Auto Transit, Inc. v. Brady, 430 U.S. at 281). A state’s ability to exact from nonresidents a “fair share” of the state’s costs related to a particular transaction or course of commerce is, however, subject to “the strictest scrutiny, Oregon Waste. 511 U.S. at 100-01 (citation omitted), because permitting discriminatory taxes on interstate commerce to compensate for charges purportedly included in general 19 forms of intrastate taxation “would allow a state to tax interstate commerce more heavily than in-state commerce anytime the entities involved in interstate commerce happened to use facilities supported by general state tax funds.” Id. at 105 n.8 (quoting Gov't Suppliers Consolidating Servs., Inc. v. Bayh, 975 F.2d 1267, 1284 (7th Cir. 1992)); see also Fulton Corp., 516 U.S. at 335 (noting “the danger of treating general revenue measures as relevant intrastate burdens for purposes of the compensatory tax doctrine’”’). Accordingly, the Court has invalidated state laws imposing higher taxes on out-of-state commercial interests than those imposed on purely in-state commerce unless (1) the state identifies the specific intrastate tax burden for which it is attempting to compensate, (2) the tax on interstate commerce roughly approximates but does not exceed the tax on intrastate commerce, and (3) the in-state and out-of-state levies are imposed on substantially equivalent events. Fulton Corp., 516 U.S. at 332-33 (invalidating state intangibles tax on corporate stock that authorized residents to take deduction equal to percentage of corporation’s income subject to North Carolina income tax); see also Armco, Inc. v. Hardesty, 467 U.S. 638, 643 (1984) (invalidating gross receipts tax imposed on out-of-state wholesalers from which in-state manufacturers were exempt); Oregon Waste, 511 U.S. at 104-05. Under this strict test, “use taxes on products purchased out of state are the only taxes [the Court] ha[s] upheld in recent memory under the compensatory tax doctrine.” Jd. at 105; see Henneford v. Silas Mason Co., 300 U.S. 577 (1987) (upholding tax on use of any article of tangible personal property within the state unless article had already been subject to state sales tax in an equal or greater amount; although tax was facially discriminatory, the combined effect of the sales and use taxes was to impose equivalent burdens on interstate and intrastate commerce). 20 The surcharge Alaska has imposed on_ out-of-state commercial fishermen ostensibly to “equalize” expenditures from the state’s general oil revenues plainly fails under this Court’s compensatory tax jurisprudence. First, Oregon Waste makes clear that costs paid out of a state’s general tax revenues cannot support the imposition of allegedly “equivalent” taxes on out-of-state commerce. In Oregon Waste, this Court rejected, on Commerce Clause grounds, an Oregon surcharge imposed on the disposal in Oregon of waste generated in another state. The state defended the facial discrimination inherent in the surcharge by categorizing it as a “‘compensatory tax’ necessary to make shippers of [out-of-state] waste pay their ‘fair share’ of the costs imposed on Oregon by the disposal of their waste in the State.” 511 U.S. at 102. This Court soundly rejected the state’s attempted justification, noting that Oregon had not imposed “a specific charge” on the disposal of waste generated in-state for which the surcharge was intended to compensate. Instead, Oregon premised the surcharge on the theory that “intrastate commerce does pay its share of the costs underlying the surcharge through general taxation,” id. at 104, a theory that the Court rejected as incompatible with the Commerce Clause. Indeed, this Court has repeatedly “decline[d] . . . to open such an expansive loophole in [its] carefully confined compensatory tax jurisprudence.” Oregon Waste, 511 U.S. at 105 n.8. Carlson, however, opens precisely such a loophole, allowing the state to impose a discriminatory fee on out-of-state commercial fishermen to “compensate” for expenditures from the state’s general reveriues. Second, this Court’s compensatory tax jurisprudence requires that the purportedly compensating taxes “fall on substantially equivalent events.” See Fulton Corp., 516 U.S. at 338-39 (citing cases). While refusing to apply this test, the Alaska Supreme Court in Carlson III nevertheless claimed that the Alaska fee differential satisfied this rigorous equivalence requirement, because “the event being taxed, 21 namely the license to use state fisheries, is the same for residents and nonresidents.” App. 21a n.78. This superficial analysis contradicts this Court’s teachings. In Oregon Waste, the Court rejected the Oregon Surcharge as a compensatory tax in part because “earning income and disposing of waste at Oregon landfills are even less equivalent than manufacturing and wholesaling,” the taxable incidents compared in Armco, Inc. v. Hardesty, 467 U.S. 638 (1984). Oregon Waste, 511 U.S. at 105. Here, too, “the events being taxed” are not substantially equivalent: The tax on nonresidents falls on the privilege of fishing alone, but the State seeks to justify that higher tax on nonresidents by a combination of two “taxable events” for local residents—the lower cost of their fishing license, plus the local residents’ alleged share of the monies generated by petroleum production. These are not “substantially equivalent events.” Finally, many discriminatory taxing schemes that states attempt to justify as “compensatory taxes,” like the surcharge in Oregon Waste, fail for lack of proof that the tax is in fact a rough approximation of costs actually borne by state residents. See, e.g., Fulton Corp., 516 U.S. at 336-38. Alaska’s discriminatory surcharge is even further afield from the compensatory taxes that this Court rejected in Oregon Waste and Fulton Corp., however, given that the “burden” supposedly borne by Alaska residents does not even involve the payment of taxes in the first place. In evaluating whether a state is free to assess a “compensatory tax” against nonresidents in order to equalize a tax burden unfairly borne by state residents, it is significant that residents face a direct burden as a result of the obligation to contribute to the state’s tax fund, from which general expenditures are made. See, e.g., Henneford, 300 U.S. at 579-80 (direct tax of two percent imposed on retail sales within the state). An individual (or, as in Fulton Corp., a corporation) obligated to pay a tax on income “spends” personal funds in support of the state. No Alaska resident, however, makes- such a contribution to Alaska’s general 22 revenues, and none of the conservation (or other) expenditures cited by the state are made from “taxes which only residents pay,’ Toomer, 334 U.S. at 399, because Alaska does not impose an income tax on state residents. Instead, the expenditures the state seeks to recoup from nonresidents are made from “oil revenues’ generated by petroleum production within the state, which has been the primary source of Alaska’s revenues. See, e.g., App. 106a (in fiscal year 1986, 86 percent of state revenues derived from oil production). Carlson I nevertheless proclaimed the state’s oil revenues to be “analytically equivalent” to taxes paid only by state residents, without further analysis. App. 106a. In effect, the Alaska Supreme Court has allowed the state to use its natural oil bounty, the proceeds from which are themselves reserved for the residents of Alaska, as a justification for further, iHegal favoritism of its own residents with respect to the state’s natural bounty in fish. In treating expenditures from state oil revenues as tantamount to expenditures from state income tax revenues—because Alaska residents “pay proportionately more by way of foregone benefits then nonresidents for fisheries management,’ id—the Alaska Supreme Court vastly expanded the reach of, and the justification for, the compensatory tax doctrine. The Alaska Supreme Court’s analysis would allow virtually any tax to be imposed disproportionately on nonresidents: Following the Carlson reasoning, any expenditure from a state’s general revenues, whether or not derived from taxes imposed directly on residents, can be offset by imposing a “compensatory” tax or fee on any nonresident who seeks access to any resource or service located in or provided by the state. In short, although it explicitly disclaimed any intent to authorize the imposition of a “compensatory tax” upon nonresident commercial fishermen, App. 66a, close analysis reveals that the Alaska Supreme Court has done precisely that, but without any of the rigorous limits this Court has imposed on application of the doctrine. The Alaska court i a etd SARA LS eb ps nas ee Pat Vie ae Ree POLE P RIS CS 23 sanctioned under the Privileges and Immunities Clause precisely the sort of generalized tax-shifting that Oregon Waste prohibited under the Commerce Clause, on the theory that the fee differential does nothing more than “impos[e] on nonresidents their share of the costs of commercial fisheries,” thereby “balanc[ing] out ‘any conservation expenditures from taxes which only residents pay.”” App. 66a (quoting Toomer, 334 U.S. at 399). Semantics do not disguise the fact that Alaska has done what Oregon Waste forbids. if the Alaska license fee system is constitutionally permissible as a “compensatory fee,” there are no real limits on surcharges a state may impose on nonresidents in the name of equalizing expenditures from the state’s general revenues. B. The Carlson Formula Sanctions A Discriminatory Fee That Toomer Does Not Authorize The Toomer dictum can be read to crack an exceedingly narrow window under the Privileges and Immunities Clause for nonresident fee differentials that do no more than “compensate the state for any added enforcement burden [nonresidents] may impose or for any conservation expenditures from taxes which only residents pay.” Toomer, 334 USS. at 399. In light of the Toomer dictum and similar language with respect to the Commerce Clause in Oregon Waste, see 511 U.S. at 102, it is possible that perfect equality of treatment of nonresidents is not mandated by the Constitution, but that states may take into account limited enforcement and conservation expenses when imposing fees on nonresidents. Yet the Alaska Supreme Court’s rationale for upholding the state’s nonresident fee differential, which was imposed without reference to any such costs (and in the absence of any “taxes” paid by residents), would vastly expand upon Toomer and would permit far more discrimination than absolutely necessary to compensate the State for any additional “enforcement burden” generated by nonresidents or “conservation expenditures” from state funds. In fact, Alaska has conceded that nonresident 24 commercial fishermen do not impose any greater costs on the state than do residents. See State of Alaska v. Carlson, No. S-10091/10101, Joint Excerpt of Record on Appeal at 119 (Alaska Supreme Ct., filed Sept. 17, 2001). Most alarmingly, the Alaska court’s approach would allow a state to shift to nonresidents a wide range of generalized costs of state government—a result plainly prohibited by this Court’s compensatory tax cases, see supra pp. 20-21; Oregon Waste, 511 U.S. at 105 n.8, and clearly beyond the extraordinarily limited category of “enforcement” and “conservation” expenditures that the Privileges and Immunities Clause allows to be taken into account, Toomer, 334 U.S. at 399. The decision below invites such post hoc accounting abuses, as a liriitless array of costs can be (and has been) characterized as sufficiently related to a particular state program or service to warrant inclusion in the category of costs shifted to nonresidents. Here, Alaska seeks to pass along to nonresident commercial fishermen far more than the costs of any “added enforcement burden” imposed by the presence of nonresidents in the state’s commercial fisheries (Alaska has cited none) or even “conservation expenditures” made from Alaska’s revenues. Toomer, 334 U.S. at 399. The Alaska Supreme Court reasoned that the appropriate calculation instead derives broadly from “what the State spends from its general funds on its commercial fisheries.” App. 27a. Relying upon that expansive premise, Alaska included in its submission to the court significant components that can only be described as general costs of state government, such as “mechanical inspection[s]” performed by the Department of Labor, occupational safety inspections, and legal costs associated with “statehood defense/federal relations” and “Environmental-Exxon Valdez.” App. 127a. Indeed, Alaska’s breakdown of its fisheries expenditures includes such all-encompassing categories as “Public Safety- Administration Services” and “Community & Regional Affairs-Community Development Quota Program.” App. 25 127a-128a. The state also included costs of the Department of Fish and Game attributable to “sport fish,” App. 128a, a recreational category that by definition should not be charged to commercial fishermen. And the state’s budget includes “shared fish taxes,” see Alaska Stat. §§ 43.75.015, 43.75.130, which are business taxes collected by the state from fish processors and then passed through to municipal governments for general uses. App. 128a. In fact, these broad categories of costs are now enumerated in the permit fee statute, which notes that nonresident permit fees may reflect, among other things, “the “direct operating expenditures’ of a variety of state agencies and institutions including the Office of the Governor, the. Department of Community and Economic Development, the Department of Labor, the Alaska court system, and others, and “capital expenditures to support the commercial fishing industry as measured t, annual depreciation of public facilities and infrastructure.” Alaska Stat. § 16.43.160(e) (App. 118a- 120a). The state has been given such leeway in calculating its fisheries budget that it can—and perhaps did—include costs directly related to this very litigation (under such broad categories as “Law/Civil” or “CFEC”). The costs to the state of preparing the accounting used to calculate the state’s fisheries budget may also be included within the broad categories of fisheries-related legal or administrative costs the state seeks to pass along to nonresidents. In essence, the state could shift a portion of its legal fees to the very class of nonresident fishermen who challenged the discriminatory fee that prompted this case. Such a perverse result cannot be intended by the Toomer dictum. There is no hint in Toomer (much less in the Court’s compensatory tax cases) that the constitutionality of a facially discriminatory fee turns on this sort of line-item accounting of every conceivable general cost associated with the operation of Alaska’s commercial fisheries, much less a post hoc accounting prepared by the state and accepted 26 virtually wholesale by the courts. This Court has made clear that “[c]Jonstitutional issues affecting taxation do not turn on even approximate mathematical determinations.” Mullaney, 342 U.S. at 418. The open-ended invitation to Alaska to define and calculate its fisheries budget encouraged the state to inflate its fisheries-related costs (in ways the Alaska legisiature never considered) to justify the substantial differential. Indeed, under the Carlson formula, Alaska can attempt to impose a fee differential greater than the current three-to-one surcharge, so long as the state can assemble a sufficiently large “fisheries budget” after the fact. The potential for abuse-at the expense of out-of-state commercial interests—is virtually limitless. The Alaska Supreme Court erred by failing to recognize that, apart from the specific “enforcement” and “conservation” expenditures discussed in Toomer, the Privileges and Immunities Clause does not sanction the expansive cost-shifting approved by the court below. When a state defends a facially discriminatory fee on the ground that it compensates for a variety of expenditures from general revenues that otherwise would be borne by state residents alone, this Court’s compensatory tax jurisprudence provides the appropriate analytical framework—and requires strict equality of treatment of residents and nonresidents. Ill. THE DECISION BELOW RAISES SIGNIFICANT CONSTITUTIONAL QUESTIONS WITH NATIONWIDE CONSEQUENCES Alaska’s commercial fishing industry is vital, both within the state and to the Nation as a whole. “The commercial fishing industry is a major component of [the] statewide economy and the economic backbone of Alaska’s fishing communities.” Commercial Fisheries Entry Commission, 2001 Annual Rpt. at 1 (“2001 Annual Report”). Beyond the state’s borders, fish caught in Alaska’s waters account for more than half of the Nation’s total commercial catch. In 2001, commercial landings—quantities of fish bought and 27 sold—at Alaskan ports slightly exceeded 5 billion pounds of fish, valued at $869.9 million; total commercial landings at all United States ports in 2001 were 9.5 billion pounds of fish with a value of $3.2 billion.° Thus, in 2001, commercial landings at Alaskan ports represented more than half of the total national catch of fish, in pounds, and almost 30 percent of the value of fish caught and landed at United States ports. Given the sheer size of the fish pool in Alaskan waters, it is not surprising that !arge numbers of nonresident commercial fishermen travel to Alaska to participate in its many fisheries. ’ Alaska’s prominent role in the Nation’s commercial fishing industry makes the constitutional issues presented by this case all the moie pressing: The state that controls many of the country’s most abundant and profitable commercial fisheries has erected barriers to entry that favor local commercial fishermen over nonresidents. And the discriminatory fee challenged here is hardly Alaska’s first attempt to favor state residents over nonresidents. See, e.g., Anderson v. Mullaney, 191 F.2d 123, 125 (9th Cir. 1951), aff'd, 342 US. 415 (1952) (striking down Alaska’s imposition of $5 commercial-fishing-license fee on resident fishermen and $50 license fee on nonresidents): Hicklin, 437 U.S. at 533-34 (challenge to hiring preference law requiring the employment of Alaska residents in connection with oil and gas projects within the state); Sheley v. Alaska Bar Ass'n, 620 P.2d 640 (Alaska 1980) (striking down Alaska’s rule requiring applicant for the Alaska bar to establish domicile in the state at least 30 days before bar examination National Oceanic and Atmospheric Administration, Fisheries of the United States, at iv, vii, 6 (2001). The state with the next highest level of commercial landings in 2001 was Louisiana, with }.? billion pounds, less than one-fourth of the Alaska landings. /d. . As of 2001, nonresidents held 4,910 of 23,339 permits issued by the State, a total of 21 percent. 2001 Annual Report, at 17. 28 under Privileges and Immunities Clause); cf. Zobel v. Williams, 457 U.S. 55 (1982) (Equal Protection challenge to Alaska Permanent Fund dividend distribution plan, which calculated amount of dividend based on length of time an individual resided in Alaska). Although the Alaska legislature has been historically aggressive in acting to protect the state’s residents against competition from outsiders, it is not alone: At present, 34 states (aside from Alaska) discriminate against nonresidents by imposing additional fees on them or by banning their access to commercial fishing altogether." Allowing the 5 See Ala. Code § 9-12-80 (non-residents charged at least as much as their state charges non-residents but not less than twice as much as Alabama residents, unless the non-resident’s state has entered into a reciprocity agreement with Alabama); Ark. Code Ann. § 002 00 001 41.13 (excluding nonresidents from commercial fishing activities, with exceptions for residents of Mississippi, Missouri and Tennessee, according to reciprocal agreements); Cal. Fish & Game Code § 7852 (non-resident crew members charged three times as much as residents; non-resident vessel operators charged sixty-six percent more than residents); Conn. Gen. Stat. § 26-142a (c} (non-residents charged fees ranging from thirty-three percent more to five times more than residents, depending on devices used); Del. Code Ann. tit. 7 § 914 (non-residents charged ten times more than residents, with exceptions for New Jersey residents fishing certain portions of Delaware River); Fla. Stat. Ann. § 370.06(2) (non-residents charged four times as much as residents for standard license and five times as much for special activity license); Ga. Code Ann. § 27-2-23 (non-residents charged more than ten times as much as residents); Idaho Code § 36-416 (non-residents charged twice as much as residents); 515 Ill. Comp. Stat. 5/20-45, 5/20-55 (non-residents charged more than four times as much as residents for licenses and twice as much as residents for each 100 yards of seine and each line, trap, or net device); Ind. Code Ann. § 14-22-14-6 (excluding non-resident individuals and corporations with non-resident shareholders); lowa Code § 482.4 (non-residents charged twice as much as residents for licenses and each unit of gear; non-resident mussel fishers and mussel helpers charged twenty-five times and four times more, respectively, than residents); Kan. Admin. Regs. § 115-2-1 (non-residents charged more than twelve times as much as residents for commercial mussel fishing times as much as residents); La. Rev. Stat. Ann. § 56:303 (non-residents charged more than eight times as much as residents); Me. Rev. Stat. Ann. tit. 12, § 6501 (non-residents charged ten times as much as residents); Md. Code Ann., Natural Resources § 4-701 (non-residents charged twice as much as residents as well as surcharge of either $350 or the difference between total fees charged Maryland residents for like activities in applicant’s domicile state and toval fees charged applicant in Maryland, whichever is greater); Mich. Conip. Laws § 324.47330(2) (non-residents charged five times as much as residents); Minn. Stat. Ann. §§ 97A.461, 475 (nonresidents excluded from commercial fishing); Miss. Code Ann. §§ 49-15-80, 49-15-30 (non-residents charged four times as much as residents, except that residents of other states bordering on Gulf of Mexico charged same fees as their domicile states charge Mississippi residents in order to promote reciprocal arrangements); Mo. Code Regs. tit. 3, § 10-10.720 (non-residents charged eight times as much as residents); Neb. Rev. Stat. § 37-4, 104 (non-residents charged two times as much as residents); N.J. Stat. Ann. § 23:5-24.2 (non-residents charged ten times as much as residents, unless their domicile state charges New Jersey residents the same amount as residents for a similar license); N.Y. Comp. Codes R. & Regs tit. 6, § 35.1 (d) (non-residents charged ten times as much as residents); N.C. Gen. Stat. § 113-168.2 (non-residents charged four times as much es residents or amount equal to the non- resident fee charged by non-resident’s state, whichever is less, but in no event less than North Carolina resident’s fee); N.D. Cent. Code, § 20.1- 03-12 (non-residents charged four times more than residents for commercial frog licenses and ten times more for commercial clam licenses); Okla. Stat. Ann. tit. 29, § 4-103 (non-residents charged more than twice as much as residents); Or. Rev. Stat. § 508.285 (non-residents charged twice as much as residents); 30 Pa. Cons. Stat. § 2903 (b) (5) (non-residents charged two times as much as residents); R.I. Gen. Laws §§ 20-2.1-5, 20-2.1-6 (non-residents charged four times as much as residents); S.C. Code Ann. §§ 50-5-300, 50-5-310 (non-residents charged twelve times as much as residents); Tenn. Code Ann. § 70-2-205 (non- residents charged four times as much as residents for fishing only and six times as much for mussels only); 31 Tex. Admin. Code § 53.6 (non- residents charged four times as much as residents); 4 Va. Admin. Code §§ 20-730-20, 20-920-30 (non-residents charged additional $350 per vessel); Wash. Rev. Code Ann. §§ 77.65.160, 77.65.200 (non-residents charged eighty percent more than residents for limited entry salmon 30 decision below to stand will only encourage states to engage in impermissible economic protectionism. * * * * * “In its negative aspect, the Commerce Clause prohibits economic protectionism-that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” Fulton Corp., 516 U.S. at 330. Alaska’s discriminatory nonresident commercial-fishing fee does just that: It ensures that state residents who make their living as commercial fishermen need not face the degree of competition from nonresidents engaged in the same commercial endeavors that would prevail in a completely free market. That Alaska expressly bases its surcharge on residency makes undeniable the state’s intent to protect its residents from out-of-state competition. Such a facially discriminatory law should be held unconstitutional under both the Commerce and the Privileges and Immunities Clauses. CONCLUSION For these reasons, the petition for writ of certiorari should be granted. licenses and fifty to sixty percent more for other species, gear, or area licenses); Wis. Stat. §§ 29.523-537 (nonresidents excluded from commercial fishing). LOREN DOMKE LOREN DOMKE, P.C. 2201 North Jordan Avenue Juneau, Alaska 99801 (907) 790-2844 July 11, 2003 31 . Respectfully submitted, BETH HEIFETZ GREGORY A. CASTANIAS (Counsel of Record) JULIA C. AMBROSE JONES DAY 51 Louisiana Avenue, N.W. Washington, D.C. 20001 (202) 879-3939 Counsel for Petitioners | ek Re OTS nate inns BRINE eA RINT RE RAISES ALRITE A? SST SARNIA REITE 5 REREN WHAT GIS TP PORES A EERE TT PE. RE ORS TRE APPENDIX la 65 P.3d 851 Supreme Court of Alaska. STATE 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. Nos. S-10091, S-10101. March 14, 2003. 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 2a 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.' 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” 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 ' Carlson v. State, Commercial Fisheries Entry Comm'n (Carlson 1), 798 P.2d 1269, 1270 (Alaska 1990). “Crewmember fishing license” and “commercial fishing license” are used interchangeably in AS 16.05.480 with no apparent distinction made between the two. A “commercial fisherman” is elsewhere defined to include crewmembers. AS 16.05.940(4). 3a which nonresidents can be charged, but rather allows this amow t to be set at the maximum legal amount.° 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.’ However, in 2001 the fees for nonresidents were three times the amount for residents.” Crewmembers are not required to have * This amount is to be set by the Alaska Commercial Fisheries Entry Commission. AS 16.43.100(16) (authorizing commission to “establish reasonable user fees for services”). * See generally AS 16.43.200-225. * The relevant sections of former 20 Alaska Administrative Code (AAC) 05.240(a) (1), (2), (4) (2002) provide: (a) For 2001, the commission will determine the annual fee for the issuance or renewal of an entry permit or interim-use permit according to the following: (1) the resident annual fee for the issuance or renewal of an entry permit or interim-use permit in a limited fishery is .25 percent of the estimated value of the entry permit, rounded to the nearest fee class amount established in (4) of this subsection; the non-resident annual fee is three times this amount, as set out in (4) of this subsection; ... (2) the resident annual fee for the issuance or renewal of an interim-use permit in an unlimited fishery is .25 percent of the estimated average gross earings per permit in the most recent three years for which data are available, rounded to the nearest fee class amount established in (4) of this subsection; the non-resident fee is three times this amount, as set out in (4) of this subsection; (4) the resident and non-resident annual fees are: FEE CLASS ANNUAL FEE Resident Non-resident 4a entry or interim-use permits, although they are required to have a commercial (crewmember) fishing permit to work on a permit vessel.° 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 I $250 $750 II 200 600 Il 150 450 IV 100 300 Vv 50 150 ° See AS 16.43.140(b) (“A permit is not required of a crewmember or other person assisting in the operation of a unit of gear engaged in the commercial taking of fishery resources as long as the holder of the entry permit or the interim-use permit for that particular unit of gear is at all times present and actively engaged in the operation of the gear.”); AS 16.05.480(a) (2001) (“A person engaged in commercial fishing shall obtain a commercial fishing license and shall retain the license in possession and readily available for inspection during fishing operations. An entry permit or interim-use permit entitles the holder to participate as a gear operator in the fishery for which the permit is issued and to participate as a crewmember in any fishery.”); AS 16.05.940(4) (“ ‘[C]ommercial fisherman’ means an individual who fishes commercially for, takes, or attempts to take fish, shellfish, or other fishery resources of the state by any means, and includes every individual aboard a boat operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, whether participation is on shares or as an employee or otherwise.”); AS 16.05.940(5) (“* ‘{C]ommercial fishing’ means the taking, fishing for, or possession of fish, shellfish, or other fishery resources with the intent of disposing of them for profit, or by sale, barter, trade, or in commercial channels.”). 1h ERE ER SE NOU GO Tae oie mes nen Osta oh i te “3 EA ALN RE OPAL RE RTL Sa State for commercial or gear licenses or permits.” 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." We noted that “[I]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)fit] is not Closely related to the advancement of a substantial state interest.” 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.”'° 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 ” Carlson I, 798 P.2d at 1270. 8 Id. at 1274-78. ° Id. at 1274 (quoting Supreme Court of Virginia v. Friedman, 487 US. 59, 64-65 (1988) (citations omitted)). © Carlson I, 798 P.2d at 1274. 6a which only residents pay.”'' 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.’ 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,”'? 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.”* We held that the superior court improperly relied upon Salorio v. Glaser'> in granting summary judgment to the State.'° We determined that applying Salorio, in which New Jersey imposed additional fees on nonresidents to pay for transportation facilities,'’ 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.”"* However, because the majority of the state revenues are derived from petroleum production, a source to which '! Id. at 1274-75 (quoting Toomer v. Witsell, 334 U.S. 385, 399 (1948)). Carlson I, 798 P.2d at 1276, 1278. '? Id. at 1277 (quoting Maine v. Taylor, 477 US. 131, 137 (1986)). '* Carlson I, 798 P.2d at 1277 (quoting Maine v. Taylor, 477 U.S. at 138). '® 82 N.J. 482, 414 A.2d 943, cert. denied, 449 U.S. 874 (1980). '® Carlson I, 798 P.2d at 1278. '7 414 A.2d at 953. '§ Carlson I, 798 P.2d at 1278. 7a nonresident fishers make no contribution, we ruled that the State could recoup conservation expenditures from nonresidents in the form of differential fees.'? 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.””° 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! 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.” 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.” ; 9 Id. ” Id. q "Id. ' a ‘ * Id. We made two other rulings in Carlson I: We held that the Commercial Fisheries Entry Commission was authorized by statute to impose different commercial fishing fees, assuming that the ratio itself was constitutional. /d. at 1278-79. We also remanded on the issue of whether the protest requirement in AS 43.15.010(a) had been met. /d. at 1279-80. We further noted on this issue that a two-year statute of limitations from the time the tax was paid governed instead of the six-year limit assume¢ by the superior court. /d. at 1280. EE is 8a In Carlson II, we addressed the question of what would be an acceptable fee differential for nonresidents to pay.** We first affirmed our decision in Carlson J that neither the Commerce Clause nor the Privileges and Immunities Clause prevented the imposition of an increased fee for nonresident commercial fishers. 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.”° We distinguished these two cases by holding that the facts in the present case did not involve the “interstate flow of - articles of commerce.”*’ 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.”* 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 * Carlson v. State, Commercial Fisheries Entry Comm'n (Carlson II ), 919 P.2d 1337 (Alaska 1996). Certiorari was subsequently requested but denied. 519 U.S. 1101 (1997). 25 Id. at 1340-42. © Carlson II, 919 P.2d at 1340 (citing Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 U.S. 93, 99 (1994); Chemical Waste Mgmt., Inc. v. Hunt, 504 U.S. 334, 340-41, (1992)). 27 Carlson II, 919 P.2d at 1340 (citing Oregon Waste Sys., 511 U.S. at 98). 8 Carlson II, 919 P.2d at 1340. AA The ALES GA ANAEES. LA IEG OM EA I PINEAL AMIE RAT PROSCAR: Rares 9a 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).”” We rejected the State’s proposed formula?” 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?! 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 which must be equivalent to the fee differential for the fees to be constitutional under the Carlson I analysis.** We remanded the case to the superior court to determine if, under the formula adopted, the nonresident fee differential exceeded the resident contribution, including the forgone oil 2 Id. at 1342-43. * The State had advocated the following pro rata formula: “(1) calculate the expenditures or costs of the commercial fisheries (enforcement and conservation); (2) determine the resident and nonresident commercial fishers’ respective pro rata shares of those expenditures; and (3) compare the percentage of its respective pro rata share each group is paying.” /d. at 1343. *' A similar plan was rejected by the Fourth Circuit, which overturned a Virginia law that required all fishers to pay a fee determined by dividing the state costs of fishing funded by all taxpayers by the number of fishers in the state, requiring as a result that nonresident fishers pay an additional $1,150 fee. Tangier Sound Waterman's Ags’n v. Pruitt, 4 F.3d 264, 268 (4th Cir.1993). ® Carlson II, 919 P.2d at 1343. 10a revenues of the average Alaska resident.’ The superior court on remand was also to address what budget figures should be included in executing the formula.* On the issues of refunds to the class and prejudgment interest, we recognized that “the record indicates that the State agrees that those fees which were paid after June 22, 1984, were paid under protest sufficient to permit a refund under AS 43.10.210.”*° The class admitted that it could not have satisfied the protest requirement before then and thus would not seek a refund for any fees prior to that date.°° We remanded the case to determine if the action of filing suit constitutes sufficient notice to satisfy the requirements of AS 43.10.210(a)*’ and to determine whether, if the class ultimately prevails, prejudgment interest is due.** B. Recent Case History After Remand to the Alaska Superior Court On July 17, 1998, Superior Court Judge Peter A. Michalski issued an opinion addressing class decertification and prejudgment interest. Judge Michalski denied the State’s motion ® Id. at 1344. Id. 8 Id. * Id. ” The statute provides: The Department of Administration shall, with the approval of the attorney general and the Department of Revenue, refund to a taxpayer the amount of a tax paid to the Department of Revenue under protest and deposited in the treasury if (1) the taxpayer recovers judgment against the Department of Revenue for the return of the tax; or (2) in the absence of a judgment, it is obvious to the Department of Revenue that the taxpayer would obtain judgment if legal proceedings were prosecuted by the taxpayer. 8 Carlson II, 919 P.2d at 1344. SILT 61 DERM RMR si ass BY lla for class decertification because all four components of class certification— numerosity, commonality, typicality, and adequacy of representation—were met. The State had argued that because the class shifted its legal theory from common law theories of assumpsit to a statutory argument, the original class certification under Alaska Civil Rule 23(b) (2) must be reexamined. The State further argued that numerosity did not exist because only the named parties actually protested the fee differential; conceded that commonality existed; asserted that because different permits and fees were involved, there was no typicality of claims; and contended that the variety of remedies that the legislature could adopt if the fees were found to be unconstitutional rendered it impossible for there to be adequacy of representation. The superior court held that the State did not provide a sufficient change in circumstances to justify decertifying the class and noted that speculation as to how the legislature might react to a ruling was also not grounds for decertification. Judge Michalski further tuled that the status of a class as a “unified legal entity” overrode the State’s interest in making distinctions between class members. Consequently, the superior court concluded that “no distinctions will be made among class members when determining whether the state waived the protest requirement or whether the class met the protest requirement.” In addition, the superior court held that notice to the State existed as of December 13, 1984. The State had argued that every member of the class was required to protest to obtain any refund. However, Judge Michalski, quoting Principal Mutual Life Insurance v. State, Division of Insurance,” stated that the purpose of the protest requirement was to provide the State “with notice of the claimed tax illegality, the grounds advanced in support of the claimed illegality, and [to] afford[ ] the state the *” 780 P.2d 1023, 1030-31 (Alaska 1989). 12a opportunity to fashion budget appropriations, or expenditures, taking into account the magnitude of the claimed tax illegality.” Because the class was defined extensively enough to include all commercial license and permit holders, Judge Michalski held that the State should have known the magnitude of the potential claims and budgeted appropriately. It was therefore not necessary for each class member to protest the fee differential because to impose such a requirement would be a mere technicality. Judge Michalski thus held that the protest requirement of AS 43.10.210(a) was satisfied by the certification of the class in the suit. As to prejudgment interest, the State asserted that AS 45.45.010, which had been invoked in Carlson II as the basis for a determination of whether prejudgment interest was due,” only set the maximum interest rate and did not specifically authorize prejudgment interest. The superior court conceded that the State’s interpretation of AS 45.45.010 was correct, but concluded that this court intended the superior court to look beyond just that statute in addressing the issue of prejudgment interest. Looking to AS 43.05.280, the superior court determined that interest was allowed on an overpayment of taxes. Because we held in Carlson I that Title 43 applied to the present case even though fees, and not taxes, were involved,*' Judge Michalski held that the class could recover prejudgment interest on their overpaid commercial fishing fees were they ultimately to prevail on their claim. Left undecided was the issue of what comprised the different components of the formula derived in Carlson II. This was resolved by the superior court at an evidentiary hearing held 919 P.2d at 1344. 4! 798 P.2d at 1280. piaaete Dai eter a cece Pate a DMN NE MS RES a acts RSPR DPE Rg re) — se 13a June 12-14, 2000. The court adopted the State’s methodology for computing the fisheries budget with regard to both direct and indirect operating expenditures, but agreed with the class that general government costs, capital costs, the hatcheries loan fund subsidy, and forgone revenue from fishery resources could not be included when computing the fisheries- budget. The resulting fisheries budget for fiscal year 1996 was $127,289,000. Both sides agreed on the methodology for determining Alaska’s population, namely the yearly estimate made by the Alaska Department of Labor, yielding a state population of 605,212 in fiscal year 1996. The superior court agreed with the State that the oil revenues component should “include general fund petroleum revenues, the draw on the constitutional budget reserve, and the net income from the Alaska Permanent Fund appropriated each year.” In fiscal year 1996 this resulted in a calculation that seventy-four percent of the state budget came from oil revenues. From these figures, a maximum fee differential of $155.64 was calculated for fiscal year 1996. The parties were then ordered to use the methodologies adopted by the superior court to calculate the allowable fee differential back to December 13, 1984 and any corresponding refund that may be necessary. This accounting has not yet been made. The State appealed and Carlson cross-appealed. fil. STANDARD OF REVIEW The constitutionality of a statute and matters of constitutional or statutory interpretation are questions of law to which we apply our independent judgment.*” We adopt the rule of law “that is most persuasive in light of precedent, reason, and policy.”? “ Tesoro Petroleum Corp. v. State, 42 P.3d 531, 535 (Alaska 2002); Sampson v. State, 31 P.3d 88, 91 (Alaska 2001). “’ State v. Planned Parenthood of Alaska, 35 P.3d 30, 34 (Alaska 2001) (quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)). ~ 14a Findings of fact are reviewed for clear error, a standard that requires that great deference be given to the findings of the superior court.*° IV. DISCUSSION A. We Decline To Readdress the Constitutional Issues Already Raised and Resolved in Carlson II. The constitutionality of charging nonresidents more for commercial fishing licenses and permits has already been addressed, first in Carlson I° and then reaffirmed in Carlson 11.“’ Whether we should readdress the issue here is a threshold question. In Pratt & Whitney Canada, Inc. v. Sheehan, we noted the importance of stare decisis but also recognized the “ See Vezey v. Green, 35 P.3d 14, 19-20 (Alaska 2001) (citations omitted) (“We review the trial court’s findings of fact under the clearly erroneous standard. Under this standard, we will reject a factual finding only if we are ‘left with the definite and firm conviction on the entire record that a mistake has been committed.’ In addition, we have stated that ‘[w]hen a trial court’s decision of a factual issue depends largely on conflicting oral testimony, the trial court’s competence to judge credibility of witnesses provides even a stronger basis for deference by the reviewing court.’”); see also Rockstad v. Global Fin. & Inv. Co., Inc., 41 P.3d 583, 586 (Alaska 2002) (“[W]hen the trial court relies on extrinsic testimonial evidence to provide a factual basis for its interpretation of a contract, we apply the clearly erroneous standard in reviewing the court’s background findings of fact.”). *° See Matanuska Elec. Ass'n, Inc. v. Rewire the Bd., 36 P.3d 685, 700-01 (Alaska 2001) (noting that use of clearly erroneous standard of review for factual findings in contempt proceedings “is consistent with the deferential review used by courts in other jurisdictions”). 4© 798 P.2d at 1274-78. 47 919 P.2d at 1340-42. PRENSA RE A ONS EEE DE a eee lSa need occasionally to deviate from existing precedent*® We Stated that we “will overrule a prior decision only when ‘clearly convinced that the rule was originally erroneous or is no longer sound because of changed conditions, and that more good than harm would result from a departure from precedent”? A prior ruling may be “originally erroneous” if it proves to be “unworkable in practice.”*° Changed conditions exist where “related principles of law have so far developed as to have left the old rule no more than a remnant of abandoned doctrine, [or] facts have so changed or come to be seen so differently, as to have robbed the old rule of significant application.”*' This law of the case doctrine™’ maintains that issues previously adjudicated can only be reconsidered where there exist “exceptional circumstances”? presenting a “clear error constituting a manifest “8 852 P.2d 1 173, 1175 (Alaska 1993) (“When a common ‘law court is asked to overrule one of its prior decisions, the principle of stare decisis is implicated. . . . [S]tare decisis is a practical, flexible command that balances our Community’s competing interests in the stability of legal norms and the need to adapt those norms to society’s changing demands.”). ® Id. at 1176 (quoting State v. Dunlop, 721 P.2d 604, 610 (Alaska 1986)). ” Pratt & Whitney Canada, 852 P.2d at 1176. *' Id. (quoting Planned Parenthood v. Casey, 505 U.S. 833, 855 (1992)). ” Wolff v. Arctic Bowl, Inc., 560 P.2d 758, 763 (Alaska 1977) (“The doctrine of the law of the case prohibits the reconsideration of issues which have been adjudicated in a previous appeal in the same case. Even issues not explicitly discussed in the first appellate opinion, but directly involved with or ‘necessarily inhering’ in the decision will be considered the law of the case. This doctrine is akin to the doctrine of res judicata, in that it requires that a final judgment be rendered with respect to the issues at hand.”) (citations omitted). *® Patrick v. Sedwick, 413 P.2d 169, 173-74 (Alaska 1966). l6a injustice.”* Once a case has been heard,” there are strong policy reasons for refusing to rehear it.”° The State accuses the class of rearguing the same case they brought in 1996, particularly with regard to the class’s interpretation of Oregon Waste Systems, Inc. v. Department of Environmental Quality, which the United States Supreme Court decided in 1994.°’ The State dismisses the only two post- Carlson II cases cited by the class— Fulton Corp. v. Faulkner’® and Camps Newfound/Owatonna, Inc. v. Town of Harrison, Maine®-as inapplicable to the present case. © The class counters that there is no final judgment necessary to invoke ** Alaska Diversified Contractors, Inc. v. Lower Kuskokwim Sch. Dist., 778 P.2d 581, 583 (Alaska 1989). °° US. v. Hatter, 532 U.S. 557, 566 (2001) (“The law of the case doctrine _ presumes a hearing on the merits.”). °° See Pratt & Whitney Canada, 852 P.2d at 1175 (“[N]o judicial system could do society’s work if it eyed each issue afresh in every case that raised it.”) (quoting Planned Parenthood, 505 U'S. at 854). 7 511 US. 93 (1994). 8 516 US. 325 (1996). *° 520 U.S. 564 (1997). © The State further argues that if there were anything questionable about the constitutionality of the fee differentials, the United States Supreme Court could have taken the case on certiorari but refused to do so. 519 U.S. 1101 (1997). However, the United States Supreme Court can deny certiorari for a variety of reasons. Therefore, denial of certiorari should not be taken as a judgment on the merits of the case. See Bridgers v. Texas, 532 U.S. 1034 (2001). It is easily conceivable that the Court refused certiorari because Carlson II was partially remanded and the Court wanted to wait to see what the final resolution of that case would be. 17a the law of the case doctrine as delineated in Wolff-°' The class further asserts that the law of the case doctrine is only a general principle and not an unyielding prohibition on revisiting prior decisions.” We agree with the State that our previous decisions on this issue preclude its reconsideration. The question before us is whether any legal precedent has arisen subsequent to Carlson II to indicate that that decision was somehow in error. A. United States Supreme Court decision ee ee ome tae ye ie ct 3 contradicting our holding in Carlson II would indicate a clear : error and require us to revisit the issue of the constitutionality of : the fee differentials. We interpret Fulton and Camps Newfound : as Clarifying the Supreme Court’s position in Oregon Waste ° Systems; these two cases do not, however, alter the law in a way i that would cause us to rethink our decision in Carison I We Hq therefore do not believe that such a contradiction exists, nor do i we find any other reason to revisit our holding in Carlson II. *' The class asserts that the law of the case doctrine is meant primarily as a restraint on trial courts. While this may be one of the functions, it is certainly not the exclusive purpose of the doctrine. See Smith v. Cleary, 24 P.3d 1245, 1248 (Alaska 2001) (“The doctrine of the law of the case is a matter of judicial policy and describes ‘the practice of courts generally to refuse to reopen what has been decided,’ but does not limit their power to do so.”) (quoting West v. Buchanan, 981 P.2d 1065, 1067 (Alaska 1999)) (citations omitted). * See Smith, 24 P.3d at 1248 (“[T]he policy against reconsidering issues adjudicated in a prior appeal or issues ‘directly involved with or necessarily inhering’ in a prior decision applies only if there has been ‘a final judgment ... with respect to the issues at hand.’”) (citations omitted); Brandon v. State, 839 P.2d 400, 403-04 (Alaska App. 1992) (“The doctrine of the law of the case prohibits the reconsideration of issues that this court has adjudicated in a previous appeal in the same case.”). ee ee 18a 1. Fulton Corp. v. Faulkner ™ Fulton Corp. v. Faulkner addressed an intangibles tax by the state of North Carolina on corporate stock. The tax was assessed on the fair market value of corporate stock owned by North Carolina residents.©° However, residents were allowed to take a tax deduction equal to the percentage of the corporation‘s income that was subject to tax in North Carolina.” This resulted in an inverse relationship between the tax that North Carolina residents were required to pay and the extent to which the company did its business in North Carolina, such that, for example, if the company did all of its business within the state, a resident owning its stock would not be required to pay any intangibles tax on that stock.°’ The Court rejected this tax as a violation of the Commerce Clause.“ The Court explicitly recognized the applicability of the dormant Commerce Clause-to the case,” but further acknowledged that a tax that facially discriminates against interstate commerce may be constitutional if the effect on interstate commerce is incidental” or if the tax is * 516 US. 325 (1996). ® Td. at 327. © Id. at 328. ®7 Id. $8 Id. at 346. ® Jd. at 330 (“In its negative aspect, the Commerce Clause prohibits economic protectionism—that is, regulatory measures designed to benefit in-state economic interests by burdening out- of-state competitors.”) (internal quotations omitted). ” Id. at 331 (“In evaluating state regulatory measures under the dormant Commerce Clause, we have held that the first step .. . is to determine whether it regulates evenhandedly with only incidental effects on interstate commerce, or discriminates against interstate commerce.”) ee ee 1 . . TT Ore sarees EE Tn ‘t ‘ EEOSRO AOR care ilihiihCietiicisehlceat lbh dha ic tina Uda cy bdemeomiiaeaann dane cee meer ene cece : 19a designed to make those engaged in interstate commerce bear the same economic burden as_ those engaged in_ intrastate commerce.’' The Court then outlined a three-part test for determining if a compensatory tax was constitutional: (1) the State must identify the intrastate tax burden being compensated; (2) the tax must be shown to approximate but not exceed the burden on intrastate commerce; and (3) the events which are being taxed must be shown to be substantially equivalent between interstate and intrastate commerce.” Although Fulton will be relevant in our analysis of what expenses can be included in the “fisheries budget,” it has no bearing on the basic allowability of fee differentials for (quoting Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 US. 93, 99 (1994) (internal quotations and citation omitted)). ” Fulton, 516 U.S. at 331 (“[A] facially discriminatory tax may still survive Commerce Clause scrutiny if it is a truly compensatory tax designed simply to make interstate commerce bear a burden already borne by intrastate commerce.”) (internal quotations and citation omitted). ” Id. at 333. The Court, however, found that none of these conditions was satisfied by North Carolina’s intangibles tax. Jd. at 333-44. North Carolina attempted to argue that the intangibles tax “compensates for the burden of the general corporate income tax paid by corporations doing business in North Carolina.” /d. at 334. North Carolina further argued that one of the services supported through a general corporate income tax “is the maintenance of a capital market for corporations wishing to sell stock to North Carolina residents.” Jd. at 335. The Court found this argument to be “unconvincing.” Jd. Drawing on Oregon Waste Systems, the Court found the use of a tax on interstate commerce to compensate for general revenues to be an “expansive loophole.” Jd. (quoting Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 US. 93, 105 n.8 (1994)). The Court proceeded to reject the specific application of the intangibles tax because of doubts that North Carolina used the tax proceeds to maintain an intrastate capital market, and the state’s failure to detail the proportion of the corporate income tax used to support the capital market, as well as a lack of equivalence between out-of-state corporations and resident shareholders. Fulton, 516 U.S. at 336-40. 20a nonresidents because commercial fishing licenses are not objects of interstate commerce. We held in Carlson II that “{ujnlike 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.”’* Consequently, we held that the negative or dormant Commerce Clause did not apply to the present case, but rather that the fee differentials were properly analyzed under the Privileges and Immunities Clause.”” Nothing in Fulton causes us to abandon this position. The tax in Fulton was tied directly to whether the corporation in question engaged in interstate or intrastate commerce.’° It was therefore clearly “predicated upon the movement of articles of commerce across state lines.””’ No similar situation exists here, with the fee differential for nonresident commercial fishers relating not to commerce but 3 Chemical Waste Mgmt., Inc. v. Hunt, 504 U.S. 334 (1992). 919 P.2d at 1340. 75 Id. at 1340-41. The Privileges and Immunities Clause does allow for nonresidents to be taxed on their business enterprises within a state. See Shaffer v. Carter, 252 U.S. 37, 52-53 (1920) (“That a state, consistently with the federal Constitution, may not prohibit the citizens of other states from carrying on legitimate business within its borders like its own citizens, of course is granted; but it does not follow that the business of nonresidents may not be required to make a ratable contribution in taxes for the support of the government. On the contrary, the very fact that a citizen of one state has the right to hold property or carry on an occupation or business in another is a very reasonable ground for subjecting such nonresident, although not personally, yet to the extent of his property held, or his occupation or business carried on therein, to a duty to pay taxes not more onerous in effect than those imposed under like circumstances upon citizens of the latter state.”). Fulton, 516 U.S. at 327-28. ” Carlson II, 919 P.2d at 1340. - 2la rather to the Opportunity to utilize Alaska’s natural resources. Consequently, Fulton does not provide a reason to revisit an issue decided in Carlson I/.”8 2. Camps Newfound/Owatonna, Inc. y. T, own of Harrison, Maine” In Camps Newfound, the United States Supreme Court stuck down a local Maine Property tax exemption for a ATOR GES EME Te AN TREE BY ORONO NI TEs" t charitable camp that primarily served state residents, ® -A Maine : town had attempted to argue that the business of the camp did H not involve articles of commerce because the services of the ; camp were “delivered and ‘consumed’ entirely within Maine.”*! The Court noted that “[t]he attendance of these campers necessarily generates the transportation of persons across state ” Even if we were to reach this issue, the fee differential would fall under the exception listed in Fulton whereby states can impose a facially discriminatory tax as long as it “make[s] interstate commerce bear a burden already borne by intrastate commerce.” 516 U.S. at 331. We reached this conclusion in Carlson J, where we stated that “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.” 798 P.2d at 1278. We affirmed this decision in Carlson II. 919 P.2d at 1341-42. Furthermore, the fee differential Satisfies the three-part test laid out in Fulton: (1) the fee differential is compensating for a clearly defined intrastate burden: (2) the fee differential is limited such that it does not exceed the burden borne by State residents; and (3) the event being taxed, namely the license to use State fisheries, is the same for residents and nonresidents. See Fulton, 516 U.S. at 333, Carlson II, 919 P.2d at 1342-44. Therefore, even if the fee differential were held to bear on interstate commerce, it would fall under one of the exceptions to the negative Commerce Clause. ” 520 US. 564 (1997). *° Id. at 568-95. *! Td. at 572. 22a lines that has long been recognized as a form of ‘commerce.””*” We find there to be no direct analogy between the campers in Camps Newfound and the movement of commercial fishers into Alaska. The Court in Camps Newfound drew a comparison of the summer camps to hotels.*’ This comparison indicates a sufficient distinction from commercial fishing licenses and permits to allay concerns about the constitutionality of the fee differential. The Court in Camps Newfound further compared the summer camps to a natural resource.’ The Court pointed out that there is a long history of allowing residents and nonresidents alike equal access to natural resources in a state.** Quoting from New England Power Co. v. New Hampshire,” a case in which the Court struck down a New Hampshire law attempting to place restrictions on a public utility’s sales of hydroelectric energy generated in the state to out-of-state consumers, the Court stated that “w]e have ‘consistently . . . held that the Commerce Clause . . . precludes a state from mandating that its residents be given a preferred right of access, over out-of-state consumers, to natural resources located within its borders or to the products derived therefrom.””’ The Court considered the two situations analogous because in both cases “the burden fell on out-of-state ®2 Id. at 573. 83 Id. at 573. * Id. at 576-77: see also Hughes v. Oklahoma, 441 U.S. 322, 337-38 (1979) (striking down as violation of Commerce Clause Oklahoma law that placed no limits on number of minnows that could be caught and used within state but prohibited transportation of minnows out of state for sale because regulation of natural resources does not allow state to circumvent Commerce Clause). *° Camps Newfound, 520 U.S. at 576. * 455 U.S. 331, 338 (1982). *’ Camps Newfound, 520 U.S. at 576. Be tte. ey int, Hb Ys 4 23a access both to a natural resource, and to related services provided by state residents.”*® The Court explained that “[bly encouraging economic isolationism, prohibitions on out-of-state access to in-state resources serve the very evil that the dormant Commerce Clause was designed to prevent.”®° The law in the present case, however, does not hinder or deny access to Alaska’s natural resources, which in this case are the fisheries. Rather, the law merely allows the State to recoup from nonresidents the amount spent on maintaining the natural resource of the fisheries that it would be able to recover from nonresidents were they instead residents of Alaska. Nonresidents are being provided with equal access to the resource on the condition that they make a contribution to the maintenance of the resource equal to that made by state residents.” The situation in the present *8 Td. at 577. ®° Id. at 578. 7 Oregon Waste Systems y. Department of Environmental Quality specifically distinguishes the situation in that case, where a higher fee was charged for the disposal of out-of-state waste than for in-state waste even though the cost of disposal of waste was the same no matter where the waste was generated, from a Situation such as the present one where, absent a higher nonresident fee, the use of the fisheries and the cost of maintaining them imposes a higher cost on residents than on nonresidents. 511 U.S. 93, 101 (1994). Because the present case is properly analyzed as a Privileges and Immunities ease, the primary concern is “to insure to a citizen of State A who ventures into State B the same privileges which the citizens of State B enjoy.” Toomer vy. Witsell, 334 U.S. 385, 395 ( 1948). While nonresidents cannot be disadvantaged by their movement across state lines, there is nothing requiring that they benefit by such movement either. Nonresidents can therefore be required to compensate the state for the state resources they use. Complete Auto Transit, Inc. v. Brady, 430 US. 274, 281 (1977) (“[T]he Court consistently has indicated that ‘interstate commerce may be made to pay its way,” and has moved toward a standard of permissibility of state taxation based upon its actual effect rather than its legal terminology.”). The holding in 24a case can therefore be distinguished from that in Camps Newfound. Thus, there is no reason to revisit our decision in Carlson II. B. The Formula for Calculating the Allowable Fee Differential for Nonresident Commercial Fishing Fees In Carlson II, we held the per capita formula advanced by the class to be, in comparison to the pro rata formula proposed by the State, “the correct method for calculating the contribution made by residents.”' The formula calculates the per capita resident contribution to the cost of fisheries management, regardless of whether this person is a fisher, as follows: (Fisheries Budget/Alaska Population) X (percentage of State Budget from oil revenues/1.0).”” The figure determined by this formula for any given year is then compared to the actual fee differential charged. If the fee differential paid by the nonresident commercial fishers, i.e., the nonresident fee minus the resident fee for the same access, exceeds the resident contribution as calculated by the formula, then “the State will have failed to demonstrate that the means employed by its statute have a substantial enough relationship to the legitimate interest of the statute to survive Privileges and Immunities Clause review.””° It should be noted that the formula advanced by the class and adopted in Carlson II is not the only conceivable means for calculating an allowable fee differential for nonresidents. The United States Supreme Court requires only a “reasonable relation Carlson II accomplishes this by limiting the fee differential to the per capita resident contribution. Carlson II, 919 P.2d at 1343. *! 919 P.2d at 1342. * Id. at 1343. % Id. at 1344. 25a between the higher fees and the higher cost.” In Carlson II, we found the per capita formula advanced by the class to be an acceptable method for calculating the resident contribution to fisheries management and hence the allowable nonresident fee differential.” We continue to uphold the applicability of this formula. We should clarify, however, that a refund will only be necessary if the difference between the actual fees charged to ** Mullaney v. Anderson, 342 US. 415, 418 (1952). It is worth noting in passing that a multitude of other states allow nonresident commercial fishers to be charged higher fees than resident commercial fishers without any apparent reliance upon a formula to calculate the allowable fee differential. Delaware charges $150 for a resident commercial food fishing license and $1,500 for a comparable nonresident license. Del. Code Ann. tit. 7, § 914 (2001). Florida requires residents to pay $50 for a saltwater products license for an individual and $100 for a boat. Nonresidents are required to pay twice these amounts. Fla. Stat. 370.06(2) (a) (West 2001). Georgia charges $12 for a resident commercial fishing or crabbing license and $118 for a nonresident fishing or crabbing license. Ga. Code § 27-2-23 (2001). Maine establishes a fee of $89 for a commercial fishing license for a resident operator and all crewmembers and $334 for a commercial fishing license for a nonresident operator and all crewmembers. Me. Rev. Stat. Ann. tit. 12, § 6501 (West 2001). Michigan charges nonresidents five times the amount charged a resident for the same license. Mich. Comp. Laws Ann. § 324.47330 (West 2001). For commercial eel fishing licenses New Jersey charges nonresidents the greater of the New Jersey fee or the amount that the nonresident would pay in their state of residence. N.J. Stat. Ann. § 23:3-72 (West 2001). In Oregon, a resident commercial fishing license costs $50 and a nonresident commercial [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1821%3A1. Public record. Not legal advice.