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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State, Commercial Fisheries Entry Commission v. Carlson (04/11/2008) sp-6250

State, Commercial Fisheries Entry Commission v. Carlson (04/11/2008) sp-6250, 191 P3d 137

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Superior Court No.
Appellant, ) 3AN-84-5790 CI
v. )
) O P I N I O N
HART, GERARD HASKINS, ) No. 6250 - April 11, 2008
and LYLA C. WEESE, Individually )
and as Class Representatives on Behalf )
of All Persons Similarly Situated, )
Appellees. )

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances:  Robert  C.  Nauheim,  Assistant
          Attorney  General, Anchorage,  and  David  W.
          M rquez,   Attorney  General,   Juneau,   for
          Appellant.    Loren   Domke,   Juneau,    for

          Before:     Matthews,  Eastaugh,  Fabe,   and
          Carpeneti, Justices.  [Bryner, Chief Justice,
          not participating.]

          CARPENETI, Justice.

          To what extent may Alaska charge nonresident commercial
fishermen  higher  license  and  permit  fees  than  it   charges
residents?  In order to comply with the Privileges and Immunities
Clause  of  the  United  States  Constitution,  the  differential
between  individual resident and nonresident permit fees must  be
substantially  equal   but need not be precisely  equal   to  the
contribution  of  each  Alaska resident to fisheries  management.
Because in ordering the state to pay refunds to nonresidents  who
paid  more  than  their  fair contribution to  Alaskas  fisheries
budget  the  superior  court held the  state  to  a  standard  of
precise, rather than substantial, equality, we vacate the portion
of the superior courts order pertaining to refunds and remand the
case  to the superior court to determine the legitimate variation
between actual nonresident fee differentials and those calculated
to  reflect  nonresidents  fair burden  of  fisheries  management
          This  is the fourth time this case has been before  us.
In  1984  appellees  sued the state and the Commercial  Fisheries
Entry  Commission  (CFEC)  on behalf of  all  nonresident  Alaska
commercial  fishermen.   (The  class  includes  all  persons  who
participated  in one or more Alaska commercial fisheries  at  any
time   who  paid  non-resident  assessments  to  the  State   for
commercial or gear licenses or permits.1)  The class argued  that
the  state  unfairly charged nonresidents more  than  it  charged
residents  for commercial fishing permits and licenses,  and  the
class demanded a refund of the difference between what they  paid
and  what  the residents paid.  Between 1984 and 2002 nonresident
commercial  fishermen  paid  three  times  as  much  as  resident
fishermen  for  licenses and permits.2  A brief  summary  of  our
previous rulings in this case follows.

          In  Carlson I,3 which involved a scheme under  which  a
nonresident  paid  three  times as  much  as  a  resident  for  a
commercial  fishing  permit,  we held  that  the  Privileges  and
Immunities  Clause  of  the United States Constitution4  requires
substantial  equality  of treatment of residents  of  Alaska  and
similarly situated nonresidents.5  Therefore, license fees  which
discriminate against nonresidents are prima facie a violation  of
the  clause.6  However, when setting nonresident fees, the  state
may take into account residents pro rata shares of state revenues
to which nonresidents make no contribution.7  Thus, the state may
legally  charge nonresidents more than residents as long  as  the
fee  differential bears a sufficiently close relationship to  the
goal  of  equalizing the economic burden of fisheries  management
between   residents   and  nonresidents.8   On   the   relatively
undeveloped  record  before  us  in  Carlson  I  we  declined  to
determine whether the higher fees were excessive and remanded the
case  to the superior court for further proceedings; we indicated
that  the  class would be entitled to a refund unless  the  state
could carry its burden of showing that there was a fairly precise
          fit between remedy and classification.9  On remand, the superior
court ruled that the fee differential did not violate either  the
Commerce Clause10 or the Privileges and Immunities Clause, and the
class appealed.11
          In   Carlson   II   we   determined   the   permissible
differential  between  fees  paid by residents  and  nonresidents
under  the  Privileges and Immunities Clause.12   We  found  this
permissible  differential to be the total of the state  fisheries
budget  divided by the number of Alaska residents, multiplied  by
the percentage of the state budget funded by Alaska oil revenue.13
We  remanded the case to the superior court to apply this formula
and  to  consider additional budget figures put  forward  by  the
state.14  In the midst of the proceedings on remand from  Carlson
II,  the  parties  signed a stipulation  on  February  12,   2001
establishing terms for payment of any refunds and the method  for
calculating nonresident fees in the future.  The stipulation  was
adopted by the superior court.  The parties also agreed to  adopt
a    per-person   approach   to   calculating   the   permissible
differential: only one differential would be charged or  assessed
against  a  person, no matter how many permits the  person  held.
Additionally, the state waived any right to seek recapture of the
differential from any fisher who historically had paid less  than
the permissible differential.
          In  Carlson III15 the parties disputed which components
of   Alaskas  fisheries  budget  would  be  factored   into   the
permissible fee differential.  We determined that it  was  proper
to  include  direct and indirect fisheries costs,  capital  costs
directly  supporting  fisheries,  and  the  hatchery  loan   fund
subsidy.16    We  disallowed  inclusion  of  general   government
expenditures  in  calculating the permissible fee differential.17
We  again remanded the case to the superior court, this  time  to
determine  whether fee proportionality existed in any  particular
instance  and whether the state owed a refund to any  members  of
the class.18
          On remand from Carlson III, the superior court directed
the  state to calculate the annual permissible differential  from
1984 to 2002.  But the parties disputed the accounting method for
historical  nonresident  fees.   The  state  moved  for   summary
judgment, arguing that nonresident fees should be averaged across
permit   and   license   types  to  yield  a   collective   class
differential; the class cross-moved for summary judgment, arguing
that  each  class   members  historical  fee  should  be  treated
individually.   The superior court adopted the classs  individual
accounting  method  and  ordered the  state  to  pay  refunds  to
nonresident commercial fishermen who paid cumulatively more  than
the permissible differential.  The state appeals.
          We  review  an award of damages for abuse of discretion
and independently review the law applied by the superior court.19
Whether  the superior court correctly applied the law   that  is,
whether  it complied with our mandate in Carlson III  whether  it
supported  its order with findings sufficient to permit appellate
review,  whether it incorrectly ruled that the states  theory  of
collective accounting was waived, and whether the historical  3:1
          fee differential for nonresident fees is constitutional are all
questions of law, to which we apply our independent judgment.20
     A.   Carlson  II  and III Require Individual  Accounting  of
          Nonresident Fees.
          The  state  first argues that the formula for complying
with the Privileges and Immunities Clause has not been completely
determined,  and  therefore, that it is  entitled  to  argue  for
collective  accounting  of  nonresident  fees.   We  reject  this
          Our   previous  Carlson  decisions  make   clear   that
nonresident   fees  should  be  compared  individually   to   the
permissible  differential.  For instance, when we calculated  the
individual Alaska residents annual contribution to the  fisheries
budget   in  Carlson  II,   we  anticipated  that  an  individual
accounting  of  nonresident  fees  would  determine  the   states
liability:  [I]n  1982  the difference  between  a  resident  and
nonresident  permit could not substantially exceed $48.14,  while
in  1986  the difference could not substantially exceed $59.34.21
In  Carlson  III  we  further explained  that  a  Privileges  and
Immunities   violation   turns  on   individual   accounting   of
nonresident fees:
          The   formula   [derived   in   Carlson   II]
          calculates    the    per   capita    resident
          contribution   to  the  cost   of   fisheries
          management, regardless of whether this person
          is  a fisher . . . . 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.[22]
          By comparing nonresident and resident fees for the same
access,  we  clearly indicated that the relevant comparisons  are
between  individual  permit holders.  The various  permits  grant
access   to  different  fisheries,  whose  profitability,  permit
prices,  and hence permit fees, vary widely.23  When we  remanded
the  case  to the superior court in Carlson III, we directed  the
court to consider individual rather than collective differentials
paid by nonresidents: We leave to the superior court on remand to
determine   whether  proportionality  exists  in  any  particular
instance. . . .24  In order to compare fees paid by residents and
nonresidents,  the  superior court must differentiate  among  the
various fee classes.
          In  light  of  our previous holdings in this  case,  we
          decline to consider the states arguments that the fees paid by
nonresidents should be averaged for comparison
to  the per capita resident contribution to fisheries management.
In advancing this argument, the state is attempting to resucitate
an  issue  previously decided.  Furthermore, if  the  state  were
allowed  to  balance its books retrospectively by  averaging  the
nonresident  differential  across fee  classes,  this  would  not
necessarily  bring  the  3:1  scheme  into  compliance  with  the
Privileges  and  Immunities Clause.  Under the  states  proffered
averaging  method,  nonresident  permit  holders  in  higher  fee
classes   would   in  effect  pay  the  differential   due   from
nonresidents  in  lower  fee  classes,  but  similarly   situated
resident  permit holders would bear no such burden.25  Thus,  the
fee schedule would continue unconstitutionally to favor residents
over nonresidents.
     B.   The  Superior Court Correctly Determined that the State
          Violated the Privileges and Immunities Clause.
          The  state  next  argues that the constitutional  issue
(i.e.,  its  liability) has not yet been determined, because  the
superior  court  did  not explicitly rule that  nonresident  fees
substantially  exceed resident fees.  The state  here  makes  two
related  arguments:  First, it implies that  there  has  been  no
ruling  yet  on  its  liability.  Second, it argues  that  it  is
impossible to infer the superior courts reasoning supporting  its
judgment  that  the state violated the Privileges and  Immunities
Clause.  We reject both arguments.
          1.   Liability vs. damages
          In  the  context  of this case, the states  distinction
between  liability and damages is artificial.  In three  previous
decisions, as noted above, we have clearly
established that nonresident fees should be compared to  resident
fees  plus  the  permissible differential  on  an  individualized
basis.   It  is  past the time that the state  may  argue  for  a
collective approach to determining whether the amounts charged to
non-residents violate the Privileges and Immunities Clause.
          2.    Sufficiency of the superior courts findings
          According  to  the  state,  [n]othing  in  the   record
provides a sufficiently clear rationale supporting the conclusion
that  the nonresident fees lack a reasonable relationship to  the
allowable  differentials,  regardless of  whether  the  allowable
differentials  are  applied individually or collectively  to  the
class.  We disagree.
          In  Alaska  Wildlife Alliance v. State26  we  upheld  a
superior  court  order  dismissing  Alaska  Wildlifes  complaint,
despite  the  lack  of findings of fact and  conclusions  of  law
accompanying  the  superior  courts  order,  since   the   courts
rationale could be inferred from the record.27  We noted that [i]n
most  cases involving dismissal or summary judgment, the  grounds
for  the superior courts ruling can be discerned from the parties
motion  papers.28  Furthermore, Alaska Civil Rule 52(a)  provides
that  [f]indings  of fact and conclusions of law are  unnecessary
on decisions of motions [for summary judgment].
          Applying  these  standards  to  the  present  case,  we
          conclude that the superior court found the state liable to those
class  members  who paid more than the permissible  differential.
As  indicated  above, we have already determined in  our  earlier
decisions  in this case that nonresident fees should be  compared
individually rather than collectively to resident fees  plus  the
permissible differential.  The superior court applied  this  rule
when it denied the states motion for summary judgment and granted
the  classs  cross-motion.   In  its  order,  which  attempts  to
implement  our  earlier  Carlson decisions  and  to  enforce  the
stipulation between the parties,29 the court implicitly held  the
state  liable  in  every  case where an  individual  nonresidents
cumulative  payments  exceeded the  relevant  resident  fee  plus
permissible differential.  The superior court directed the  state
to  calculate  and  pay  refunds  for  past  overcharges  in  the
following  way:  The  State shall . . .  summariz[e]  each  class
members   refund   with  interest,  using   the   allowable   fee
differential  each  year  .  . . The individual  refund  will  be
calculated as provided in . . . the February 12, 2001 Stipulation
and Order.  In the February 12, 2001 Stipulation and Order, which
the  parties signed after Carlson II and before Carlson III,  the
state  agreed that it would set off an individuals refund by  any
underpayment, but agreed that it would not otherwise  attempt  to
recapture  previous  underpayments  by  nonresident  fishermen.30
Thus,  it is clear that the superior court was both applying  our
earlier  Carlson decisions and holding the state to  its  earlier
stipulation  when  it  held  that  the  state  had  violated  the
Privileges  and  Immunities Clause and for  that  reason  granted
summary  judgment  to class members who had paid  more  than  the
permissible differential.
     C.   The  State  Has  Failed To Demonstrate  Proportionality
          Between Means and End.
          1.   The  discriminatory  measure  must  be  rationally
               related to a valid purpose.
          The  Supreme  Court  has  held that  states  should  be
granted considerable leeway in enacting taxes.31  However, when a
tax implicates a federal right, and in the case of discrimination
against  nonresidents, implicates federalism itself, courts  will
hold the taxing scheme to a higher standard.  As Justice Marshall
wrote for the majority in Austin v. New Hampshire:32
               In  resolving constitutional  challenges
          to  state tax measures this Court has made it
          clear  that  in taxation, even more  than  in
          other   fields,  legislatures   possess   the
          greatest  freedom  in  classification.    Our
          review  of  tax classifications has generally
          been concomitantly narrow, therefore, to  fit
          the  broad  discretion vested  in  the  state
          legislatures.    When  a   tax   measure   is
          challenged as an undue burden on an  activity
          granted  special constitutional  recognition,
          however, the appropriate degree of inquiry is
          that   necessary  to  protect  the  competing
               constitutional value from erosion.
               .  .  .  . The Privileges and Immunities
          Clause,    by   making   noncitizenship    or
          nonresidence an improper basis for locating a
          special  burden,  implicates  not  only   the
          individuals    right   to   nondiscriminatory
          treatment  but  also, perhaps  more  so,  the
          structural  balance essential to the  concept
          of  federalism.  Since nonresidents  are  not
          represented  in the taxing States legislative
          halls . . . judicial acquiescence in taxation
          schemes  that burden them particularly  would
          remit  them  to  such redress as  they  could
          secure  through  their  own  State;  but   to
          prevent  (retaliation) was one of  the  chief
          ends   sought  to  be  accomplished  by   the
          adoption  of  the  Constitution.   Our  prior
          cases,  therefore, reflect  an  appropriately
          heightened concern for the integrity  of  the
          Privileges and Immunities Clause by  erecting
          a   standard  of  review  substantially  more
          rigorous  than  that  applied  to  state  tax
          distinctions  among, say, forms  of  business
          organizations   or   different   trades   and
          As  we  have stated previously in Carlson I and Carlson
II,  the  state  may charge nonresidents more than  residents  in
order  to  equalize  the burden of fisheries  management  between
them.34   However,  the  state must  also  demonstrate  that  the
discriminatory fee system bears a substantial relationship to its
goal.35   The  state should meet this burden by  calculating  the
resident  contribution to fisheries management and  comparing  it
with the challenged differentials charged to nonresidents.36   We
indicated that these two quantities must be equivalent  in  order
for the fee differential to be constitutional.37  That is, if the
fee differential substantially exceeds the resident contribution,
the  state will have failed to demonstrate that the fees  have  a
substantial  enough  relationship  to  the  goal  of   equalizing
economic  burdens  to comply with the Privileges  and  Immunities
Clause.38  Thus something less than strict equality is allowable;
the  nonresident fees will comply with the clause if they are not
substantially in excess of the allowable differential.  That  is,
the discriminatory measure must bear a reasonable relationship to
a valid state objective.39  It is enough if the state achieves a a
reasonably[  ]  fair  distribution of burdens,40  since  absolute
equality is impracticable in taxation.41
          In  examining the challenged statutory scheme,  we  may
consider  the availability of less restrictive means  to  achieve
the states valid objective.
          2.   The  3:1  fee scheme is not rationally related  to
               the  goal  of  equalizing the burden of  fisheries
               management between nonresidents and residents.
          In  Carlson III we stated: The record must support  the
          belief that a rational relationship exists between the [actual
nonresident]  fee differential and the average cost of  fisheries
management to the resident.42  The challenged 3:1 formula is  not
rationally  related  to  the  goal of  equalizing  the  fisheries
management  burden.   If  in  a given year  the  nonresident  fee
differential for a particular fee class equals or falls below the
permissible  differential,  this  is  pure  chance,   since   the
challenged differential is not tied to Alaskas fisheries  budget.
Under former AS 16.43.160(b) and 20 AAC 05.240(a), fees are based
on  permit  price  and fishing profits.  Under this  regime,  the
ratio   between   actual   nonresident  differentials   and   the
permissible  differential is a matter  of  fortuity  and  nothing
else.  When fishing profits and permit values are on the decline,
nonresidents  may pay less than the permissible differential;  in
good years they may pay more.43
          The  Supreme  Court  has indicated  that  an  arbitrary
taxing  scheme may implicate the Privileges and Immunities Clause
even  if  it  should accidentally have no more than a de  minimis
effect in a given year.  For instance, in Lunding v. New York Tax
Appeals  Tribunal,  the  challenged  New  York  tax  law   denied
nonresident  taxpayers a state income tax deduction  for  alimony
payments.44  A Connecticut resident who worked in New York claimed
that the law violated the Privileges and Immunities Clause.45  On
behalf of the state, it was argued that the challenged law  could
not have any more than a de minimis effect on the run-of-the-mill
taxpayer or comity among the States, since the nonresidents  home
state would likely provide a deduction or credit for income taxes
paid to other states.46  The Court rejected this argument, noting
that  such  a  credit was unavailable to the  petitioner  in  the
relevant year since Connecticut did not impose an income  tax  on
the  petitioners earned income.47  Additionally, the nonresidents
enjoyment  of the privileges and immunities afforded to residents
could  not depend upon mere chance.48  As noted previously, there
may be a legitimate justification for the discrimination, but the
degree must be proportional to the justification.49
     D.   Incidental Inequality Is Permissible Within a  Rational
          Where   a   tax  or  fee  that  differentiates  between
residents and nonresidents is rationally related to a valid state
purpose,  mere  inequality in a given year will  not  necessarily
implicate  the  Privileges and Immunities Clause.   In  Travelers
Insurance  Co. v. Connecticut,50 for instance, the Supreme  Court
stated  that  the  mere  fact that in a  given  year  the  actual
workings  of  the  system may result in a larger  burden  on  the
nonresident  [does  not necessarily] vitiate the  system,  for  a
different result might obtain in a succeeding year . . . .51   It
is  in  this  sense, in terms of unavoidable anomalies  within  a
rational  system,  that the state is required to  guarantee  only
substantial, rather than precise, equality.52  As we made clear in
Carlson  III, precise equality in taxation between residents  and
non-residents is not required.53
          This is clearly the case with the prospective method of
calculating  the  permissible differential to which  the  parties
agreed and which the superior court approved.  Under this scheme,
          the state determines the permissible differential to be charged
nonresidents over the next three years by averaging the  resident
contribution  to  fisheries management  over  the  previous  five
years.   Under  this  scheme,  the  nonresident  differential  is
directly related to the fisheries budget, although exact equality
is  not guaranteed.  Since the state is not required to guarantee
precise equality prospectively, we conclude that it should not be
required to provide it retrospectively, either.  We see no reason
why  the  superior  court may not apply a rational  retrospective
scheme,  similar to that stipulated by the parties going  forward
in  their  February 2001 stipulation, in order to  determine  the
legitimate   variation  between  actual  nonresident   fees   and
permissible nonresident fees and the amount of any refunds.   The
problem is to determine the extent to which fee differentials may
depart  from  perfect  equality  and  still  pass  constitutional
          In determining whether the inequality between residents
and  nonresidents exceeds substantial equality of treatment  that
is,  in determining whether the variation between nonresident fee
differentials  and  the  nonresidents fair  burden  of  fisheries
management  costs  is  permissible   the  superior  court  should
determine whether the difference falls within a reasonable margin
of  error.  We have been unable to locate cases that analyze  the
appropriate  margin  of error in the context of  the  substantial
equality  of treatment standard.  But in the parallel context  of
tax  apportionment,  which examines the constitutionality,  under
due  process,  of  allowable margins  of  error  for  determining
taxation  for  corporations that conduct  business  across  state
lines, there is helpful precedent.
          In  such cases the Supreme Court has held that in order
to  show  that a formula is unconstitutional, the taxpayer  [must
prove] by clear and cogent evidence that the income attributed to
the  State (analogous in this case to the permissible nonresident
fees),  is  out  of all appropriate proportion  to  the  business
transacted54 (analogous to the actual nonresident fees),  or  has
led  to a grossly distorted result. 55  While the cases establish
no  bright  line for determining what qualifies  as  out  of  all
appropriate  proportion,  we consider  it  significant  that  the
Supreme   Court   has  only  twice  found  a  variation   to   be
unconstitutional.  In Hans Rees Sons, Inc. v. North  Carolina  ex
rel.   Maxwell,56   the   Court  found  the   statutory   formula
unconstitutional  when  there  was  more  than  a   250   percent
difference57  between the statutory formulas calculation  of  the
amount  of in-state taxpayer income and the actual amount of  in-
state taxpayer income.  Likewise, in Norfolk & Western Railway v.
Missouri State Tax Commission,58 the Court held unconstitutional a
formula with a margin of error of approximately 163 percent.   In
all  other  cases  to come before it, the Court  has  upheld  all
margins of error that fell below those at issue in Hans Rees Sons
and  Norfolk & Western Railway.  Thus, for example, in  Container
Corporation of America v. Franchise Tax Board, the Court upheld a
fourteen  percent difference between alternative tax  formulas.59
In  Moorman Manufacturing Company v. Bair, the Court held that  a
forty-eight  percent difference between the alternative  formulas
          was constitutional.60  State appellate courts, following these
cases, have consistently held differences under 100 percent to be
          These  cases demonstrate that the search for  precision
is  illusory  and  that  there  are  constitutionally  acceptable
variations from mathematical equality in the structuring  of  tax
regimes.   The  same is true for the structuring of resident  and
nonresident  fishing fees.  From this case law, we conclude  that
an  allowable  margin of error may be found in the  range  up  to
fifty percent.62
       Because  the  superior  court  required  precise  equality
between the burdens shouldered by residents and nonresidents,  we
vacate  the  superior courts order pertaining to  calculation  of
refunds.   We remand for the superior court to determine  whether
any  inequality between residents and nonresidents was incidental
and  therefore  constitutionally tolerable  or  substantial   and
thus unconstitutional.63
          When  historical  commercial fishing fee  differentials
are  compared  to permissible differentials, it is apparent  that
the 3:1 fee schedule is not rationally related to the states goal
of   equalizing  the  burden  of  fisheries  management   between
nonresidents  and residents.  A fee scheme substantially  related
to  the  states  goal  will  guarantee substantial,  rather  than
precise,  equality.  Because the state should  be  held  to  this
standard retrospectively as well as prospectively, we VACATE  the
portion of the superior courts order requiring the state  to  pay
refunds  based on strict equality and REMAND the case for further
proceedings consistent with this opinion.

     1      Carlson  v. State, Commercial Fisheries Entry  Commn,
798 P.2d 1269, 1270 (Alaska 1990) (Carlson I).

     2    From 1977 to 2001 AS 16.43.160(b) stated:

          Annual  fees  established under this  section
          shall  be  no less than $10 and no more  than
          $750   and   shall  reasonably  reflect   the
          different   rates  of  economic  return   for
          different fisheries. The amount of an  annual
          fee  for  a nonresident shall be three  times
          the amount of the annual fee for a resident.
 (Emphasis added.)

          The legislature repealed this section in 2001 and added
a  new  section on nonresident fees.  Ch. 27,  5,  7,  SLA  2001.
Effective 2002, nonresident fees were covered by AS 16.43.160(e):

          For  an entry permit or an interim-use permit
          issued  for calendar year 2002 and  following
          years,  the annual base fee may not  be  less
          than  $10 or more than $300.  The annual base
          fee  must  reasonably reflect  the  different
          rates   of   economic  return  for  different
          fisheries.   The fee for a nonresident  entry
          permit  or  a nonresident interim-use  permit
          shall  be higher than the annual base fee  by
          an  amount, established by the commission  by
          regulation,   that  is   as   close   as   is
          practicable  to the maximum allowed  by  law.
          The amount of the fee for a nonresident entry
          permit  or  a nonresident interim-use  permit
          may  reflect  [various costs associated  with
          fisheries management].
Ch. 27,  5, SLA 2001 (emphasis added).

          In 2005 the statute was amended to provide:

          In   addition   to   the  annual   base   fee
          established  by  the  commission  under  this
          subsection, a nonresident shall pay an annual
          nonresident  surcharge for  the  issuance  or
          renewal  of  one  or more  entry  permits  or
          interim-use  permits.  The annual nonresident
          surcharge   shall  be  established   by   the
          commission by regulation at an amount that is
          as  close  as  is practicable to the  maximum
          allowed by law.
AS  16.43.160(c) (Temporary and Special Acts and Resolves  2005);
Ch. 16,  3, SLA 2005.

     3    798 P.2d at 1269.

          All persons born or naturalized in the United
          States,   and  subject  to  the  jurisdiction
          thereof,  are  citizens of the United  States
          and  of  the  state wherein they  reside.  No
          state  shall  make or enforce any  law  which
          shall abridge the privileges or immunities of
          citizens of the United States; nor shall  any
          state deprive any person of life, liberty, or
          property,  without due process  of  law;  nor
          deny  to  any  person within its jurisdiction
          the equal protection of the laws.
U.S. Const. amend. XIV,  1 (emphasis added).

     5    Carlson I, 798 P.2d at 1278.

     6     Id.  at 1274 (citing Toomer v. Witsell, 334 U.S.  385,
397 (1948)).

     7    Id. at 1278.

     8    Id.

     9     Id. (quoting Taylor v. Conta, 316 N.W.2d 814, 823 n.17
(Wis. 1982)).

     10    U.S. Const. art. I,  8, cl. 3.

     11    See Carlson v. State, Commercial Fisheries Entry Commn,
919 P.2d 1337, 1338 (Alaska 1996) (Carlson II).

     12     Id.  at  1343.   We also upheld the  superior  courts
conclusion  that  the fee schedule did not violate  the  Commerce
Clause.  Id. at 1340-41.

     13    Id. at 1343.  After Carlson II, the legislature amended
the  permit  schedule to reflect our decisions in Carlson  I  and
Carlson II.; see note 2 supra.

     14    Id. at 1344-45.

     15    State, Commercial Fisheries Entry Commn v. Carlson, 65
P.3d 851 (Alaska 2003) (Carlson III).

     16    Id. at 865-66, 867-68.

     17    Id. at 866-67.

     18    Id. at 864.

     19    Breck v. Moore, 910 P.2d 599, 606 (Alaska 1996).

     20    Carlson III, 65 P.3d at 858.

     21     Carlson  II, 919 P.2d at 1345 (Appendix A)  (emphasis
added).   During  this period, former 20 AAC 05.240(a)  (repealed
12/21/2002, Register 164) provided in part:

          (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 . . .
          the  non-resident annual fee is  three  times
          this amount . . . .
          (2) the resident annual
                              al of
                              t  in
                              ry is
                              nt of
                              t  in
                              ed to
                              t . .
                              . the
                              t . .
                              . .
          . . . .
          (4) the resident and non-resident annual fees
          FEE CLASS                     ANNUAL FEE
                        I                          $250
                 II                                 200
                 III                                150
                 IV                                 100
                  V                                  50
     22      Carlson III,  65 P.3d at 863 (citing Carlson II, 919
P.2d at 1344) (emphasis added).

     23    See note 43 infra.

     24    Carlson III, 65 P.3d at 864 (emphasis added).

     25    We note that disparity of treatment based on fee class,
applying   equally  to  residents  and  nonresidents,  does   not
implicate the Privileges and Immunities Clause.  Any challenge to
this  sort of disparity would likely fail, given the legislatures
broad taxing power and the considerably more lenient standards of
review  under the Equal Protection and Due Process Clauses;  see,
e.g., Baldwin v. Fish & Game Commn of Montana, 436 U.S. 371, 389-
90 (1978).

     26    74 P.3d 201 (Alaska 2003).

     27     Id.  at  205-07 (superior court may  be  affirmed  if
grounds  for ruling discernible sufficiently from the  record  to
permit appellate review).

     28    Id. at 206.

     29     The  parties had previously agreed on the method  for
determining fees in the future, which the superior court included
in the same order:

          Beginning  with the 2005 licensing year,  and
          for   the  foreseeable  future,  the   annual
          nonresident  [fee]  will  be  calculated   as
          follows:   Once   every  three   years,   the
          Commercial Fisheries Entry Commission .  .  .
          will  calculate  an  average  of  the  annual
          differentials for the five most recent fiscal
          years for which the Office of Management  and
          Budget . . . has provided the Commission with
          differentials.  The Commission will round the
          calculated   average  to  the  nearest   five
          dollars.   This rounded average will  be  the
          differential that the Commission will  impose
          on  a  nonresident permit holder for each  of
          the  next three years.  It will also  be  the
          differential  that the Alaska  Department  of
          Fish  and  Game will impose on a  nonresident
          crewmember  license holder for  each  of  the
          next three years.
     30     According  to  the February 12, 2001 Stipulation  and

          The refunds will incorporate a setoff for fee
          and  license  underpayments on an  individual
          basis.    That   is,   if   the   permissible
          differential  exceeds the actual differential
          for  a  permit  held  by an  individual,  the
          difference   will   be  deducted   from   the
          cumulative  overpayments that  are  due  that
          individual.    Underpayments   will   include
          interest  at  the same rate as  overpayments.
          If a member has cumulative underpayments that
          exceed  the  members cumulative overpayments,
          the  State  will  not assess  or  attempt  to
          collect the difference from the member.
     31    Lunding v. New York Tax Appeals Tribunal, 522 U.S. 287,
297 (1998).

     32     420  U.S.  656,  662-63  (1975)  (internal  citations

     33    Id. at 661-63 (striking down nonresident commuter tax)
(citations omitted).

     34     Carlson I, 798 P.2d 1269, 1278 (Alaska 1990); Carlson
II,  919  P.2d 1337, 1342 (Alaska 1996).  Even more recently,  in
State  v. Dupier, 118 P.3d 1039, 1053-54 (Alaska 2005), we  again
affirmed  the  states  right  to charge  nonresidents  more  than
residents  for access to commercial fisheries in Alaska,  subject
to the limits enunciated in our Carlson decisions.

     35    Supreme Court of New Hampshire v. Piper, 470 U.S. 274,
284 (1985).

     36      Carlson  II,  919  P.2d  at  1342  ([T]he   resident
contribution  can be compared to the difference in fees  paid  by
nonresidents   to   determine  if   the   fee   differential   is

     37    Id.

     38    Id. at 1344.

     39    Carlson III, 65 P.3d 851, 864 (Alaska 2003).

     40     Travelers Ins. Co. v. Connecticut, 185 U.S. 364,  371

     41    Lunding v. New York Tax Appeals Tribunal, 522 U.S. 287,
297   (1998)  ([A]s  a  practical  matter,  the  Privileges   and
Immunities  Clause  affords no assurance of precise  equality  in
taxation  between  residents  and nonresidents  of  a  particular

     42     Carlson  III, 65 P.3d at 864; see also Tangier  Sound
Watermans Assn v. Pruitt, 4 F.3d 264, 267 (4th Cir. 1993).

     43     In  Carlson  II  we noted the large profit  variation
between  various fisheries and within the same fishery from  year
to year:

          The profitability of the different fisheries,
          and   hence  the  value  of  permits,  varies
          dramatically.  For example, the average gross
          earnings  per  permit for the Chignik  salmon
          seine fishery ranged from $88,709 to $265,525
          for  the years 1983 through 1993.  The permit
          fee  for  this fishery is $250 for  residents
          and  $750 for nonresidents.  During the  same
          time  period  the average gross earnings  per
          permit  for the Bristol Bay herring spawn  on
          kelp fishery ranged from $847 to $1613.   The
          permit  fee  for  this  fishery  is  $50  for
          residents and $150 for nonresidents.
919  P.2d  at 1338 n.4.  The state has not argued, nor  does  the
record  indicate,  that costs of fisheries  management  bear  any
relation to fishing profits.

     44    522 U.S. 287, 291-92 (1998).

     45    Id. at 293.

     46    Id. at 313.

     47    Id. at 313-14.

     48     Nor,  we  may add, can the constitutionality  of  one
States  statutes affecting nonresidents depend upon  the  present
configuration  of  the statutes of another  State.   Id.  at  314
(quoting Austin v. New Hampshire, 420 U.S. 656, 668 (1975));  see
also  Travis  v. Yale & Towne Mfg. Co., 252 U.S.  60,  81  (1920)
(striking  down  another  New  York  tax  law  which  denied  tax
exemptions  to nonresidents working in New York, and noting  that
it  would be rash to assume that nonresidents have untaxed income
from sources other than New York employment which compensate  for
exemptions denied them in New York).

     49      Under  the  Supreme  Courts  comparatively  stricter
Commerce Clause jurisprudence, a tax which facially discriminates
against interstate commerce is almost per se a violation  of  the
Commerce  Clause,  regardless of the  degree  of  discrimination.
Fulton Corp. v. Faulkner, 516 U.S. 325, 334 n.3 (1996) (There  is
no  de  minimis  defense  to a charge of discriminatory  taxation
under  the Commerce Clause.); Wyoming v. Oklahoma, 502 U.S.  437,
455  (1992)  (The degree of a differential burden  on  interstate
commerce measures only the extent of the discrimination and is of
no   relevance  to  the  determination  whether   a   State   has
discriminated   against   interstate  commerce.);   Maryland   v.
Louisiana, 451 U.S. 725, 760 (1981) (We need not know how unequal
[a]   [t]ax  is  before  concluding  that  it  unconstitutionally
discriminates.);  see  also  Jerome  R.  Hellerstein   &   Walter
Hellerstein,  State Taxation  4.13[1][a], at 4-71 &   4.13[1][d],
at 4-72 (3d ed. 2005).

     50     185 U.S. 364 (1902); see also Maxwell v. Bugbee,  250
U.S. 525, 543 (1919) ([I]nequalities that result not from hostile
discrimination,   but  occasionally  and  incidentally   in   the
application   of   a  system  that  is  not  arbitrary   in   its
classification, are not sufficient to defeat the law.).

     51    Travelers Ins. Co., 185 U.S. at 369.

     52    See id. at 371 (It is enough that the State has secured
a reasonably fair distribution of burdens. . . .).

     53    65 P.3d at 864 n.96 (quoting Lunding, 522 U.S. at 293).

     54     Moorman  Mfg. Co. v. Bair, 437 U.S. 267,  274  (1978)
(quoting  Hans Rees Sons, Inc. v. North Carolina ex rel. Maxwell,
283 U.S. 123, 135 (1931)).

     55     Id.  (quoting Norfolk & W. Ry. v. Missouri State  Tax
Commn, 390 U.S. 317, 326 (1968)).

     56    283 U.S. at 132-36.

     57     A  leading treatise on taxation has noted  that  bare
percentages   without   explanation  are   not   helpful   to   a
determination  of the issues at hand. 1 Jerome R.  Hellerstein  &
Walter  Hellerstein, State Taxation  8.15 (3d ed. 1998)  (quoting
Citizens Utils. Co. v. Department of Revenue, 488 N.E.2d 984, 993
(Ill.  1986)).  Our review of the tax apportionment  cases  shows
that  courts  do  not  use  universally accepted  terminology  to
describe  variations (or disparities) between the result obtained
by applying the states assessment formula and the result obtained
by  the  taxpayers  approach  (or  between  the  states  and  the
taxpayers valuation of property).  Some courts simply compare the
states  tax assessment to the taxpayers assessment under its  own
desired formula and express the difference as a percentage; e.g.,
Stonebridge  Life  Ins. Co. v. Department  of  Revenue,  2006  WL
448682,  1, 5 n.16 (Or. T.C. 2006).  Thus, if the states  formula
yields  a tax of $200 and the taxpayers formula yields a  tax  of
$100, there is said to be a 200% variance. As a pure mathematical
proposition, this seems clearly wrong to us.  (If the governments
assessment  yielded  a tax of $100 and the taxpayers  methodology
yielded a tax of $100, it would make no sense to speak of a  100%
variance.)  Accordingly,  we use the methodology  used  by  other
courts:  we  determine  the  dollar differences  in  the  results
obtained  by  each methodology and then express the  relationship
between  that difference and the taxpayers result as a percentage
variance; e.g., Container Corporation of America v. Franchise Tax
Board,  463  U.S.  159,  181 (1983).  Thus,  if  the  governments
assessment is $150 and the taxpayers is $100, we would  say  that
there is a 50% variance.
          In  this  opinion we have cited only to cases that  use
the methodology we believe to be correct.

     58    390 U.S. at 326.

     59    463 U.S. at 184

     60    437 U.S. at 275.

     61    See, e.g., Unisys Corp. v. Pennsylvania., 726 A.2d 1096
(Pa.  1999) (holding that forty-five percent disparity in  states
apportionment  taxation  formula was not  outside  constitutional
margin  of  error); General Dynamics Corp. v. Sharp,  919  S.W.2d
861,  869  (Tex. App. 1996) (holding that a twenty-eight  percent
difference  between  formulas  was  constitutional  because   the
Supreme  Court has upheld percentage disparities ranging  between

     62     Even though greater margins of error have been upheld
in  some  of  the taxation allocation cases discussed above,  the
constitutional  analysis is not resolved by mere reference  to  a
universally applicable maximum margin of error.  While we do  not
require  mathematical precision, an acceptable  margin  of  error
should be based on the accuracy that is reasonably attainable  in
individual  cases.   In  this case, the state  seems  capable  of
relatively greater accuracy in its measurements than in  many  of
the  tax  allocation cases cited above.  Importantly,  the  state
possesses much of the data relevant to assessing the extra  costs
associated   with   non-resident  commercial  fishing   licenses.
Bearing  in  mind  that  the  state should  set  the  added  cost
associated with a non-resident commercial fishing license fee  at
a  rate  that is substantially equal to the amount that residents
pay  (and  non-residents  do  not  pay)  in  support  of  Alaskas
fisheries,  we  recognize nonetheless that  there  is  no  single
correct  method of allocation and that uncertainties  exist  with
respect   to  any  formula.   We  therefore  accord   the   state
considerable  leeway  in  its calculations.   The  fifty  percent
margin of error is intended to reflect this leeway.

     63     The  class argues that the years 2003 and 2004  merit
refunds  as  well, since the parties agreed that each nonresident
would  pay only one differential, regardless of how many  permits
that  nonresident held, but, they allege, the CFEC did not  adopt
this  one  differential  per person  approach  until  2005.   The
superior court should determine this factual question on remand.

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