Reply Brief — Carlson, Individually and on Behalf of All Others Similarly Situated v. Alaska Commercial Fisheries Entry Commission

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SEP 2 2 2003 |

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No. 03-73 |_OFFICE OF THE CLERK

IN THE

Supreme Court of the Gnited 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,

STATE OF ALASKA, COMMERCIAL

FISHERIES ENTRY COMMISSION,

Respondent.

On Petition for Writ of Certiorari

to the Supreme Court of Alaska

REPLY FOR PETITIONERS

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

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TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Case

Am. Trucking Ass’ns v. Scheiner, 483 U.S. 266 (1987)......... 7

C&A Carbone, Inc. v. Clarkstown, 511 U.S. 383 (1994)...... 4

Camps Newfound/Owatonna v. Town of Harrison,

ae Eas POE ee Ei iccccrw recs eeceeniin 4

Commonwealth Edison Co. v. Montana, 453 U.S.

I Ca Nissi ssechtsetinssesnchdececieacaniapcnanatigantien tactile intake talline 3,4

Cox Broad. Corp. v. Cohn, 420 U.S. 469 (1975).....cccceeeee 2

Edwards v. California, 314 U.S. 160 (1941) wu... eeeeeeeeee 4

Evansville-Vanderburgh Airport Auth. Dist. v. Delta

Airlines, Trac. ; BIS U.S. TOT OUD TZY cccevcciyessevecvonsesescevevesesees 7

Foster-Fountain Packing Co. v. Haydel, 278 U.S. |

(FEED vs vcsnsies:inneehcsnenaitjertaaieneniatcaeidaticae iaainaiaiitala tliat aiden 3

Fulton Corp. v. Faulkner, 516 U.S. 325 (1996).........c:ccccesees 6

Geer v. Connecticut, 161 U.S. 519 (1896), overruled by

Hughes v. Oklahoma, 441 U.S. 322 (1979) wou... eee 3,4

Hicklin v. Orbeck, 437 U.S. 518 (1978). .....ccccccccccccesseeceseeeeees 6

Hillside Dairy, Inc. v. Lyons, 123 S. Ct. 2142 (2003)............ 5

Hughes v. Oklahoma, 441 U.S. 322 (1979) ...cccccceceseeseeeseees 3

Oregon Waste Sys., Inc. v. Dep’t of Envtl. Quality,

SEE ULB. Fe Cr iiscsvinscctatecteaaenaeasandieennle 6,7

Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1868), overruled

in part on other grounds, United States v. South-Eastern

Underwriters Ass'n, 322 U.S. 533 (1944)......cccceeseeeeseeeee 5

Radio Station WOW v. Johnson, 326 U.S. 120 (1945).......... 2

Toomer v. Witsell, 334 U.S. 385 (1948).........cccceeceeeeeeeeeeeee 3, 6

ili

TABLE OF AUTHORITIES

(Continued)

STATUTES

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REPLY FOR THE PETITIONER

The State of Alaska does not dispute Petitioners’ showing

(Pet. 11-26) that the decision below raises important and far-

reaching questions about the constitutionality of the Alaska

commercial-fishing-license-fee scheme, which provides a

naked preference to local commercial fishermen who seek to

fish in Alaska’s bountiful waters. Instead, the State (i) urges

that the constitutional rulings are insufficiently final to be

reviewed (despite the Alaska Supreme Court’s unequivocal

statements that these constitutional questions have been

“addressed” and “reaffirmed,” and would not’ be

“revisit{ed],” Pet. App. 14a, 24a); (ii) endorses the Alaska

court’s rulings that the Commerce Clause has no application

whatsoever to a fee admittedly imposed, disproportionately,

on out-of-state commercial fishermen; and (iii) proclaims

that the Alaska court properly devised a formula for

calculating a constitutionally permissible fee differential

based on fisheries-related expenditures from state oil

revenues “attributable” to state residents. The State is wrong

on every count.

1. The constitutional questions presented are final.

Alaska suggests (Opp. 8) that the constitutional rulings made

by the Alaska court do not reflect a “final judgment” under

28 U.S.C. § 1257, because Carlson III “did not finally rule

on the ultimate question the case raises—the constitutionality

of the state’s resident-nonresident fee differential.”

Unqualified language in the Alaska court’s opinion directly

contradicts the State’s position: “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 II.” Pet. App. 14a. And,

despite Petitioners’ efforts to convince the Alaska Supreme

Court of its prior errors, the court in Carlson III found “no

reason to revisit [the] decision in Carlson II.” Pet. App. 24a.

It would be remarkable indeed if the Alaska Supreme Court

had not reached a final decision on these constitutional issues

after nearly 20 years of litigation and three opportunities for

review by that court.

All that is left for the state trial court is the calculation of

damages. See Pet. App. 25a-26a (“We leave to the superior

court on remand to determine whether proportionality exists

in any particular instance and whether a refund is due.”’).

Contrary to Alaska’s suggestion (Opp. 10), that refund

calculation will have no bearing on the constitutional

questions presented by the petition: Even if application of

the Carlson II formula were to result in a finding that the fee

differential was unconstitutional in part under the Privileges

and Immunities Clause (and that a refund was due the class

members), Petitioners’ claims that the fee differential should

be invalidated altogether under the Commerce Clause, and

that the Alaska court’s formula for determining compliance

with the Privileges and Immunities Clause is constitutionally

flawed, would ‘remain. Thus, this is a case “in which the

federal issue, finally decided by the highest court in the

State, will survive and require decision regardless of the

outcome of future state-court proceedings.” Cox Broad.

Corp. v. Cohn, 420 U.S. 469, 480 (1975); see also, e.g.,

Radio Station WOW v. Johnson, 326 U.S. 120 (1945).

2. Whether the Commerce Clause applies to the

Alaska commercial-fishing-license scheme warrants this

Court’s review. Petitioners showed (Pet. 11-17) that there

is no justifiable basis for the Alaska court’s holding that

discriminatory fees for commercial fishing licenses issued to

out-of-state fishermen are not limited by the Interstate

Commerce Clause. The State nonetheless defends the

Alaska court’s judgment by drawing an artificial and

untenable line between “the selling of fish” on the one hand,

which the State concedes is restricted by the Commerce

Clause, and the harvesting of fish by commercial fishermen

in Alaska’s waters—which the State says does not even

implicate the Commerce Clause (Opp. 11), despite the fact

that out-of-state fishermen cannot engage in that activity

absent the payment of a discriminatory surcharge.

The State’s position strains credulity: For one, it is

difficult to imagine a nonresident commercial fisherman

whose commercial endeavors are unaffected by Alaska’s

requirement that he pay a significantly higher fishing license

fee than his in-state competitors simply because he is a

nonresident. Indeed, the brief submitted by amicus curiae

The Tangier Sound Waterman’s Association makes clear that

discriminatory nonresident surcharges like Alaska’s “are a

common burden and often a total barrier for [nonresident]

commercial fishermen.” Amicus Br. at 3.

For another, the State’s argument (Opp. 13-14) that the

Commerce Clause does not apply until the fish are removed

from the ocean is, like the Alaska court’s ruling, based on

discredited precedent. The State fails to address Petitioners’

showing (Pet. 13) that the Alaska court’s repeated reliance

(Pet. App. 103 n.4; see also Pet. App. 60a n.8) upon the

statement in Toomer v. Witsell, 334 U.S. 385, 394-95 (1948),

that the Commerce Clause is not violated when “the taxable

event . . . occurs before the [article] can be said to have

entered the flow of interstate commerce,” is no longer good

law, because the authorities it relied upon to reach that

holding “ha[ve] been undermined by more recent cases.”

Commonwealth Edison Co. v. Montana, 453 U.S. 609, 614

(1981). Instead, the State leans on language in Foster-

Fountain Packing Co. v. Haydel, 278 U.S. | (1928), a case

involving shrimping in Louisiana, for the proposition that

“the protection of the commerce clause attaches at the time

of the taking” and not until then. Jd at 13. But that

proposition—expressed only slightly differently than in

Toomer—was interred by Commonwealth Edison, as

explained in the petition (Pet. at 13). Nor is the Opposition’s

reliance on the dissent in Geer v. Connecticut, 161 U.S. 519

(1896), availing. Hughes v. Oklahoma, 441 U.S. 322 (1979),

overruled Geer and laid to rest the fiction that the state owns

the natural resources within its borders in its sovereign

capacity, and thus can condition the possession of wildlife on

its remaining within the state. Jd. at 327. Hughes’ approval

of the dissent in Geer extended only to the proposition that

the state could not limit interstate commerce in a natural

resource even after it had been reduced to possession. Id. at

329. The question whether the Commerce Clause applies to a

natural resource found within the state before its reduction to

possession was not at issue in Geer: that question was

answered in the affirmative by Commonwealth Edison, as

even the State appears to recognize (Opp. 15).

Most fundamentally, though, the State’s argument simply

misconstrues Petitioners’ Commerce Clause claim—the

“commerce” involved here is fishing, not fish, and the

Commerce Clause protects the interstate provision of both

“goods” like fish, and “services” like fishing. The Court has

“long noted the applicability of [its] dormant Commerce

Clause jurisprudence to service industries.” Camps

Newfound/Owatonna v. Town of Harrison, 520 U.S. 564,

577 n.10 (1997) (citing cases); see also. e.g.. C&A Carbone,

Inc. v. Clarkstewn, 511 U.S. 383, 391 (1994) (“the article of

commerce is not so much the solid waste itself, but rather the

service of processing and disposing of it”). The Commerce

Clause is applicable to the Alaska license-fee scheme not

because “nonresident fishers eventually engage in

commercial activity” by selling harvested fish (Opp. 13), but

because the activity of fishing is itself an _ interstate

commercial activity: Nonresident fishers cross state lines to

pursue a commercial activity in Alaska, and that interstate

movement in pursuit of commercial ends renders the

Commerce Clause fully applicable—and highly relevant-to

the Alaska license-fee scheme. Compare Camps

Newfound/Owatonna, 520 U.S. at 573 (interstate movement

of out-of-state campers who sought to attend Maine

charitable camp constitutes commerce); Edwards v.

California, 314 U.S. 160, 172 (1941) (“[I]t is settled beyond

question that the transportation of persons is ‘commerce’

within the meaning” of the Commerce Clause). The

movement of nonresident commercial fishermen into Alaska

to harvest fish is at least as “commercial” as the movement

of nonresident campers attending Camps

Newfound/Owatonna into Maine.

That said, the State does not even address the central

question presented by the petition—whether discrimination

based on residency is cognizable under the Privileges and

Immunities Clause alone, and not the Commerce Clause, as

the Alaska court held. Pet. App. 62a-63a. Petitioners

showed (Pet. 16) that this Court has already suggested, just

last Term, that a challenge by nonresidents to California’s

milk pricing and pooling regulations is cognizable under

both Clauses. Hillside Dairy, Inc. v. Lyons, 123 S. Ct. 2142

(2003). The State does not even mention Hillside Dairy,

much less try to distinguish it, and it cites no authority for

the remarkable proposition that a state law that discriminates

against nonresidents who seek to engage in commerce within

the state implicates only the Privileges and Immunities

Clause.

Alaska similarly fails to address the implications of the

Alaska court’s ruling for out-of-state corporations that

purchase commercial fishing licenses on behalf of

employees.. See Pet. 17. Because the Privileges and

Immunities Clause provides no _ protection § against

discrimination for corporations, see 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), the Alaska Supreme Court’s holding

would leave nonresident corporations constitutionally

defenseless against patent local protectionism. The State’s

inability to answer this question demonstrates both the

constitutional error and the need for this Court’s review.

3. The Alaska Supreme Court’s Privileges and

Immunities Clause holding warrants this Court’s review.

The Alaska Supreme Court’s conclusion that a

discriminatory fee can be justified under the Privileges and

Immunities Clause so long as the discrimination satisfies a

prolix mathematical formula—which in turn depends upon

an ongoing calculation of the State’s budget generated by the

State and given almost complete deference by the courts—

flies in the face of established jurisprudence. This Court has

repeatedly held that expenditures from a state’s general

revenues cannot be used to justify discrimination against

nonresidents under the Commerce Clause. See, e.g., Oregon

Waste Sys., Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93, 105

n.8 (1994); Fulton Corp. v. Faulkner, 516 U.S. 325, 335

(1996).

The State does not dispute this principle; instead, it asserts

that the rule of Fulton Corp. and Oregon Waste Systems is

strictly confined to discriminatory taxes challenged under the

Commerce Clause. A discriminatory fee analyzed under the

Privileges and Immunities Clause, the State insists, is

allowable so long as it does nothing more than equalize the

burdens otherwise borne by state residents via expenditures

from the state’s (here, oil-derived) revenues, based on

dictum (which the State erroneously describes as a

“holding,” Opp. at 15) in Toomer, 334 U.S. at 398-99. But

the State offers no principled reason—much less any

authority—for the rigid distinction it draws between the two

Clauses, and it pays only lip service to this Court’s

longstanding recognition that the Clauses share a “common

origin” and enjoy a “mutually reinforcing relationship.”

Hicklin v. Orbeck, 437 U.S. 518, 531-32 (1978). Nothing in

the State’s Opposition explains, or justifies, the Alaska

court’s decision to authorize a discriminatory fee under the

Privileges and Immunities Clause that could not possibly

survive scrutiny under this Court’s “compensatory tax”

Commerce Clause jurisprudence.

Here again, the State studiously avoids the sienitvcone

issues raised by the petition, including the questions whether

the Alaska Supreme Court overreached when it treated

expenditures from the State’s oil revenues’ as

“analytically ...equivalent” (Pet. App. 106a) to “taxes

which only residents pay,” Toomer, 334 U.S. at 399, see Pet.

22; whether the narrow category of enforcement and

~ :

conservation costs that the Toomer dictum suggested could

be taken into account in assessing differential fees against

nonresidents should be read so broadly as to include the

generalized costs of state government encompassed by the

Carlson III calculation of the State’s fisheries budget, see

Pet. 24-25; and whether the leeway given the State to

calculate and submit for the court’s exceedingly deferential

review its own “fisheries budget” provides an open invitation

to state governments to favor in-state commercial interests at

the expense of out-of-state competitors, see Pet. 26.

Alaska’s refusal to confront these questions highlights rather

than minimizes the need for this Court’s intervention.

In a last-ditch effort to avoid review, the State claims

(Opp. 19) that the nonresident differential should not be

considered analogous to a tax, but rather is more akin to a

“user fee” imposed by the State for access to the State’s

fishing waters. Even assuming that the Alaska license

charge could be considered a “user fee,” a theory not adopted

by the Alaska Supreme Court, that would not save the

Alaska scheme. For one, user fees are reviewable under the

Commerce Clause. For another, this Court has repeatedly

held that user fees are constitutionally permissible only so

long as they are nondiscriminatory: “[E]ven if [a] surcharge

could somehow be viewed as a user fee, it {cannot] be

sustained [if] it discriminates against interstate commerce.”

Oregon Waste, 511 U.S. at 103-04 n.6. Even a case cited by

the State (Opp. 19 nn.10 & 11), Evansville-Vanderburgh

Airport Auth. Dist. v. Delta Airlines, Inc., 405 U.S. 707, 717

(1972), held that a one-dollar airplane boarding fee was

allowable under the Commerce Clause only because the fee

did not “discriminate[] against interstate commerce and

travel”: “both interstate and intrastate flights are subject to

the same charges.” See also Am. Trucking Ass’ns v.

Scheiner, 483 U.S. 266, 290 (1987) (finding Pennsylvania

marker fee and axle tax invalid in part because taxes

“discriminate[d] against out-of-state vehicles by subjecting

them to a much higher charge per mile traveled in the

State”). Because the Alaska fishing-license-fee scheme

discriminates, on its face, against nonresidents, it cannot be

sustained even under the rubric of a “user fee.”

7 CONCLUSION

For these reasons, as well as those stated in the petition,

certiorari should be granted.

Respectfully submitted,