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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State, Dept. of Natural Resources v. Alaska Riverways, Inc. (5/21/2010) sp-6479

State, Dept. of Natural Resources v. Alaska Riverways, Inc. (5/21/2010) sp-6479, 232 P3d 1203

     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,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

STATE OF ALASKA, )
DEPARTMENT OF NATURAL ) Supreme Court Nos. S- 13249/13269
RESOURCES, )
) Superior Court No. 4FA-07-00855 CI
Appellant and )
Cross-Appellee, )
) O P I N I O N
v. )
) No. 6479 May 21, 2010
ALASKA RIVERWAYS, INC., and )
TANANA RIVER PROPERTIES, )
L.L.C., )
)
Appellees and )
Cross-Appellants. )
)
          Appeal  from the Superior Court of the  State
          of    Alaska,   Fourth   Judicial   District,
          Fairbanks, Douglas Blankenship, Judge.

          Appearances: Cameron M. Leonard and Mary  Ann
          Lundquist,    Senior   Assistant    Attorneys
          General,  Fairbanks, and  Talis  J.  Colberg,
          Attorney General, Juneau, for Appellant/Cross-
          Appellees.    Susan E. Reeves  and  Brian  J.
          Stibitz,  Reeves Amodio, LLC, Anchorage,  and
          Alexander  O.  Bryner,  Feldman  Orlansky   &
          Sanders,   Anchorage,  for   Appellees/Cross-
          Appellants.

          Before:   Fabe,   Christen,   Justices,   and
          Matthews,    Senior   Justice,   pro    tem.*
          [Carpeneti,  Chief  Justice,  Eastaugh,   and
          Winfree, Justices, not participating.]

          FABE, Justice.

I.   INTRODUCTION
          We are called upon today to decide whether the State of
Alaska has the authority to require private parties who construct
wharves into adjacent navigable waters to enter into leases.  The
answer  to this question depends on whether the common law  right
to  construct  a  wharf  in  front of ones  property,  which  was
recognized in territorial days, has given way to the right of the
state  to  require  a  lease on behalf of all  Alaskans  for  the
exclusive use of state-owned land.
          We conclude that the Alaska Constitution and the Alaska
Land  Act  have  modified the common-law right to  wharf  out  by
granting  authority  to  the  state to  enter  into  leases  with
landowners  who build wharves over state-owned land  adjacent  to
their property.  We therefore uphold the exercise of authority by
the  Alaska  Department  of Natural Resources  (DNR)  to  require
Alaska Riverways, Inc., a longtime paddlewheel tour boat operator
on  the  Chena  River, to enter into a lease.  But  DNRs  leasing
decision,  issued in 2006, required Alaska Riverways to  pay  the
greater of $1,000 per year or $0.25 per paying passenger for  its
use of approximately one acre of state riverbed.  Because the per-
passenger fee violates federal law, we vacate that portion of the
leasing decision.
II.  FACTS AND PROCEEDINGS
     A.   Facts
          The  basic  facts of this case are undisputed.   Alaska
Riverways,  Inc.  and Tanana River Properties, LLC  (collectively
Alaska  Riverways) operate paddlewheel tour boats  on  the  Chena
River  in Fairbanks.1  Alaska Riverways was incorporated in  1953
and  has owned the riverside property that is the subject of  the
current  dispute  since  1972.  In about 1980,  Alaska  Riverways
built  a  system of floating docks and bulwarks secured  to  this
riverside  property  for  mooring boats and  loading  passengers.
Alaska Riverways docks and moored boats together occupy about one-
third of the width of the Chena River.
          Because  the  Chena River is navigable,  the  State  of
Alaska  owns  the riverbed below the ordinary high  water  mark.2
This  riverbed land is referred to as shoreland,3 and  one  whose
property  borders  on a stream or river is known  as  a  riparian
landowner.4  Alaska Riverways docks and moored boats float  above
state  shoreland, but Alaska Riverways has never held a lease  or
permit from DNR.
          In  1979  Alaska Riverways filed an application seeking
to  obtain  a  lease  for use of state shoreland.   DNR  did  not
immediately  process Alaska Riverways 1979 lease application  due
to  an insufficient description of the subject property.  In 1989
DNR  began sending letters to Alaska Riverways requesting further
information regarding Alaska Riverways 1979 lease application and
seeking  to  require  Alaska Riverways to  enter  into  a  lease.
Alaska  Riverways submitted a new lease application in 1990,  and
DNR  issued  a preliminary decision approving it.   In  1991  DNR
issued  a  final  decision offering Alaska Riverways  a  ten-year
lease.   DNR  instructed Alaska Riverways to have the lease  area
          surveyed and appraised to determine the lease fee, but Alaska
Riverways did not do so and no lease was issued.5
          Another  fifteen  years of fruitless lease  discussions
went  by,  during which DNR periodically renewed its  efforts  to
require  Alaska  Riverways  to enter  into  a  lease  and  Alaska
Riverways  questioned the authority behind and fairness  of  DNRs
shoreland  leasing  program.  Subjects  of  negotiation  included
whether  Alaska Riverways should be charged back rent and whether
the  lease fee should be a fixed amount based on appraised  value
or  a  variable amount based on Alaska Riverways passenger count.
Further   details  of  the  nearly  three  decades   of   leasing
discussions between Alaska Riverways and DNR are not relevant  to
the legal issues now before us.
          In   April  2006  DNR  issued  a  preliminary  decision
proposing a twenty-five year lease of approximately one  acre  of
shoreland  to  Alaska Riverways for $1000 per year  or  $.25  per
paying  passenger, whichever is greater. (Emphasis in  original.)
Because  Alaska Riverways owned the adjoining riparian land,  the
proposed   lease   was  a  preference  right   lease   under   AS
38.05.075(c), which provides that [t]he owner or lessee  of  land
that  fronts on shoreland, tideland,6 or submerged land7  of  the
state  may  be  granted a preference right to  a  lease  for  the
shoreland,   tideland,  or  submerged  land  without  competitive
bidding.
          DNR  gave  public  notice  of its  preliminary  leasing
decision  and received public comment.  Alaska Riverways objected
to the proposed leasing arrangement, opposing the imposition of a
tax  on its gross business revenues and questioning the authority
of  the  state  to  impose a permit or lease  fee  in  the  first
instance.  Alaska Riverways also objected to DNRs policy of  only
requiring leases from commercial users of shoreland.  Despite its
doubts  regarding  DNRs  authority to  require  a  lease,  Alaska
Riverways  indicated that it had no objection to  a  fixed  lease
amount as opposed to one based on its passenger count.
          In  August 2006 DNR issued a final finding and decision
approving  the  leasing arrangement proposed in  its  preliminary
decision  and  responding to comments from Alaska  Riverways  and
others.   Countering  Alaska Riverways  various  objections,  DNR
asserted  that  [a]  riparian owner does not have  the  right  to
occupy  state  shoreland to support commercial uses  without  any
authorization or fee and that [r]egardless of whether any part of
[the  docks]  physically  touches state shorelands,  the  [Alaska
Riverways] docks have removed a portion of the state-owned bed of
the  Chena  River  from  public use.  DNR  also  maintained  that
commercial  and  non-commercial  riparian  landowners   are   not
similarly  situated such that DNR must treat them  the  same  and
that 33 U.S.C. 5(b), which prohibits the state from levying a tax
for  the use of navigable waters, is inapplicable because DNR  is
not  charging Alaska Riverways to navigate vessels on  the  Chena
River.   Alaska Riverways appealed the August 2006 final  finding
and decision to the commissioner of DNR, who affirmed it.
     B.   Proceedings
          Alaska Riverways then appealed the commissioners  final
decision  to  the superior court.  In August 2008 Superior  Court
          Judge Douglas Blankenship issued an opinion reversing DNRs
leasing decision, concluding that DNR does not have the authority
to  require  [Alaska  Riverways] to enter a  lease  in  order  to
exercise  its riparian right to wharf out.  Although it  reversed
DNRs  leasing  decision,  [f]or  the  sake  of  completeness  the
superior court went on to hold that if DNR could require a lease,
the  proposed lease would not violate Alaska Riverways  right  to
equal protection and the proposed fee structure would not violate
federal law or otherwise be inappropriate.
          DNR  appeals from the superior courts reversal  of  its
leasing  decision,  and Alaska Riverways cross-appeals  from  the
superior  courts  conclusion that if DNR could require  a  lease,
DNRs  proposed  leasing  arrangement  would  be  consistent  with
federal and state law.
III. STANDARDS OF REVIEW
          Where  the  superior court acts as an  appellate  court
reviewing   a   decision   by   an  administrative   agency,   we
independently review the underlying administrative  decision  and
give no deference to the superior courts decision.8  We apply one
of  four standards in performing this review: (1) the substantial
evidence  test  applies to questions of fact; (2) the  reasonable
basis  test  applies  to  questions of law  that  involve  agency
expertise;  (3)  the  substitution of judgment  test  applies  to
questions  of  law  that do not involve expertise;  and  (4)  the
reasonable  and  not  arbitrary test applies to  questions  about
agency  regulations  and  the  agencys  interpretation  of  those
regulations.9   The  questions posed  in  this  appeal  regarding
whether  the state may require Alaska Riverways to enter  into  a
lease  and the legality of the lease terms are questions  of  law
not  involving agency expertise.  In considering these questions,
we  will  therefore  substitute our judgment  for  that  of  DNR,
adopting  the  rule of law that is most persuasive  in  light  of
precedent, reason, and policy.10
IV.  DISCUSSION
     A.   Decision of the Superior Court
          In  reaching its decision in favor of Alaska Riverways,
the  superior  court held that under the common  law  in  Alaska,
Alaska Riverways had a riparian right of access that included the
right  to construct a wharf or dock when . . . necessary to enjoy
access  with  boats  or ships to navigable water.   The  superior
court  determined  that  in  Alaska Riverways  case,  [p]ractical
access  to  the point of navigability would include the  area  of
deep  water necessary to moor Alaska Riverways riverboats to  its
docks  as  well  as the dock space necessary to load  passengers.
Therefore,  the superior court reasoned, if riparian  common  law
rights  of  access still exist, the States decision to require  a
lease would be equivalent to charging [Alaska Riverways] rent for
what [Alaska Riverways] already had a right to use.
          The  superior  court  then went on to  examine  whether
riparian  common  law rights of access still exist  in  light  of
various  sections  of the Alaska Land Act11 that  delineate  DNRs
power  to  lease state shoreland.  The superior court focused  on
AS  38.05.075(c),  which was enacted in  198412  and  amended  in
199713  and  which grants a non-competitive preference  right  to
          landowners who wish to lease the state-owned shoreland, tideland,
or  submerged land adjoining their property.  The superior  court
noted  that  AS  38.05.075(c) is inconsistent with  a  common-law
wharfage  privilege  because a riparian  landowner  possessing  a
common-law  right to wharf out would have no use for a  shoreland
lease  from  the  state at all, let alone a preference  right  in
obtaining  such a lease.  The superior court thus  reasoned  that
AS  38.05.075(c) could be interpreted to abolish riparian  owners
common law right to wharf out over state-owned riverbed.  But the
superior  court  held that AS 38.05.075(c) could not  be  applied
retroactively  to  abolish Alaska Riverways right  to  wharf  out
because Alaska Riverways built its floating docks in 1980,  prior
to the enactment of that subsection.
          DNR  now appeals the superior courts decision in  favor
of  Alaska Riverways, arguing that under Alaska law, there is  no
common  law wharfage privilege that would permit Alaska Riverways
to  construct  and maintain its dock over state  land  free  from
state   regulation,  and  that  [t]he  Alaska   Legislature   has
authorized  DNR  . . . to undertake regulation  of  wharves  over
shoreland through leases.
     B.   Under  Common  Law,  Alaskan  Riparian  Owners  Have  a
          Qualified Right to Wharf Out.
          
          The existence, nature, and extent of the riparian right
to wharf out is a matter of state law.14  We therefore begin with
an examination of the nature of the common-law right to wharf out
in Alaska.
          1.   Pre-statehood judicial decisions
          The  right  to  wharf out in Alaska  was  addressed  by
courts prior to statehood in the context of actions by littoral15
owners  against  private  parties  preventing  their  access   to
adjacent  tidelands and submerged lands.  While we are not  bound
by  federal  judicial  rulings  entered  prior  to  the  date  of
statehood,16 these decisions help to define the context in  which
our constitutional framers and the first Alaska state legislature
acted.
          In  Dalton  v.  Hazelet, decided  in  1910,  the  Ninth
Circuit  held: while in a territory a grant of land bordering  on
or bounded by navigable waters conveys to the grantee no right or
title  to  the  shore or soil below high-water mark, nevertheless
such a grantee has the right to a free and unobstructed access to
such  waters.17  This right to access includes the right to erect
structures  over waters too shoal [i.e. shallow] to be navigable,
but  only up to the point of navigability where the necessity for
such  erections  ordinarily ceases.18  The court noted,  however,
that  a  riparian owners right of access by means of a  wharf  or
other  structure is subject to  the right of [a future state]  to
regulate the use  of  tide lands and beds of any of its navigable
waters. 19
          The   district  court  for  the  Territory  of   Alaska
considered the right to wharf out in detail several years  later.
In  Alaska  Juneau Gold Mining Co. v. Northern Lumber Mills,  the
court explained that a riparian owner may construct a wharf
          because he has a right of access to the  deep
          water,  and he cannot enjoy that right except
          by  means  of a wharf. The right to  build  a
          wharf in such cases is not a major right, not
          an  independent  right, not an all-sufficient
          right.  It  is a qualified right,  having  no
          potency whatsoever except in so far as it  is
          referable and appurtenant to, and is  a  part
          of,  that  other right, called the  right  of
          access.[20]
The  court  defined the right of access as an  easement,  and  as
such, the extent of a wharf built to exercise that right must  be
reasonable.21  Reasonableness is dependent upon the  purpose  for
which such access is desired, with reference to the size and kind
of  vessels  which navigate the stream, and the kind of  business
done  upon it.22  The court found the proposed wharf in question,
which  could  accommodate large vessels carrying coal  and  heavy
mining  machinery,  to be necessary and reasonable  for  a  large
quartz  mining  operation.23  Finally, the court noted  that  the
right  of  access is one of which, when once it  is  vested,  the
owner  can  only  be deprived in accordance with the  established
law,  and if necessary that it be taken for the public good, upon
due compensation.24
          Shortly  before statehood, the territorial court  again
addressed  the rights of a littoral owner, enjoining a  defendant
from  removing  gravel  from tidelands where  the  removal  would
prevent  plaintiff sawmill operator who owned adjacent  tidelands
from constructing a wharf to load lumber on barges and vessels.25
Relying on Alaska Juneau Gold Mining Co., the court stated: It is
well  established that a right of access such as claimed  by  the
plaintiff,   is  a  property  right  and  may  be  exercised   by
constructing  a  wharf, pier or dock over  the  intervening  tide
lands to the navigable waters.26  As a legal right, the right  of
access may not be impaired without compensation.27
          These  cases  make  clear that prior  to  statehood,  a
riparian owner in the Territory of Alaska, while having no  right
or  title to the soil below, had a common-law right to wharf  out
that, once vested, could not be taken without compensation.   But
the  exercise of this right had to be reasonable; the wharf could
be  constructed  only to the extent necessary to reach  navigable
waters, with reference to its intended use.
          2.   Wernberg v. State
          In  Wernberg  v.  State,  the only  Alaska  case  since
statehood relevant to the case before us, we referred to the many
and  varied  rights of riparian owners that, generally  speaking,
include the right to build wharves and piers out to deep water if
this  can  be  done  without interfering with navigation.28   DNR
characterizes this mention of the right to wharf out as a passing
reference  and  classic  obiter dictum,  while  Alaska  Riverways
argues that Wernberg firmly establishe[d] the right to wharf  out
in  Alaska.  The riparian rights listed in Wernberg were  derived
from a law review article published several years earlier,29  and
were  not specific to Alaska nor, apart from the right of  access
to  navigable waters, discussed in any detail in the opinion.  It
does  not  appear  that the plaintiff in Wernberg  had  built  or
          maintained a wharf.
          Wernberg   involved   a   challenge   to   the   states
construction of a highway preventing plaintiffs historical access
to  the  Cook  Inlet  with his fishing boats via  the  creek  and
tidewaters  adjacent to his property.  Confirming the  importance
of  the  common-law right of access in Alaska, we held that  this
interference  could constitute a taking requiring compensation.30
We  expressed  a  concern that a contrary holding  might  devalue
riparian property:
          Alaska has a seacoast longer than that of the
          entire  United  States.  A  large  number  of
          Alaskan communities are located on the shores
          of  bays  and inlets in order to  gain  water
          access  for  transportation and shipping,  or
          easy access to the fertile fishing grounds of
          Alaska.   A substantial amount of development
          in these cities is along the waterfront. .  .
          . [A] declaration that littoral access may be
          taken   for   any   public  purpose   without
          compensation    will   immediately    devalue
          property   in  such  areas  and   limit   the
          development   of  many  isolated  communities
          whose only means of access is by water.[31]
          
          While recognizing the importance of the right of access
in  Alaska, we also noted that the rights of riparian owners  are
not absolute, but are subject to those general regulations, which
are  necessary to the common good and general welfare,  exercised
pursuant  to  the states police power.32  We concluded  that  the
Alaska   Constitution,  while  authorizing  the  state  to   take
plaintiffs  right  of  access  to  construct  a  highway,33  also
required it to compensate plaintiff for his loss of access.34
          While  Wernberg made a generalized statement  that  the
right  to  wharf out was included among the rights of a  riparian
owner,  it did not specifically address the scope and limitations
of  this  right, nor whether it had been altered  by  the  Alaska
Constitution  or  by  statute.   Rather,  Wernberg  addressed   a
riparian owners right of access, holding that the state  may  not
take  a  riparian  owners  right of access  to  navigable  waters
without  compensation.  It does not necessarily follow from  this
holding  that  the state may not require an owner  who  builds  a
wharf  over state land to enter into a lease.  For these reasons,
Wernberg is not controlling.
          We next consider to what extent the common-law right to
wharf  out  that  was  recognized in territorial  days  has  been
limited  by  the public trust doctrine, the Alaska  Constitution,
and  actions by the Alaska Legislature, and whether any of  these
sources  authorize DNR to require a riparian owner that builds  a
wharf over state land to enter into a lease.
     C.   The  Public  Trust Doctrine Does Not Support  Requiring
          Riparian  Owners Who Exercise Their Right To Wharf  Out
          To Enter into a Lease.
          
          DNR argues that its attempt to require Alaska Riverways
          to enter into a lease is a proper exercise of its general
authority to regulate the use of state waterways under the public
trust  doctrine.35   DNR thus believes that this  case  pits  the
common-law  right to wharf out against the public trust  doctrine
and  that  the former must accommodate the latter.   We  conclude
that  DNRs  authority to require riparian owners  to  enter  into
leases for the use of shoreland arises, if at all, independent of
the public trust doctrine.
          Under  the public trust doctrine, the state holds title
to  the  beds of navigable waters in trust for the people of  the
State that they may enjoy the navigation of the waters, carry  on
commerce  over  them, and have liberty of fishing  therein  freed
from  the  obstruction or interference of private parties.36   It
may  therefore  subject a riparian owner  to  general  rules  and
regulations  .  .  .  for the protection of  the  rights  of  the
public.37   The right to wharf out, like all riparian rights,  is
not  absolute,  but  is  limited by the states  exercise  of  its
authority under the public trust doctrine.38
          The   common-law   public  trust  doctrine   has   been
incorporated  into  the  constitution  and  statutes  of  Alaska.
Article VIII, section 14 of the Alaska Constitution provides that
[f]ree access to the navigable or public waters of the State .  .
.  shall not be denied . . . except that the legislature  may  by
general  law regulate and limit such access for other  beneficial
uses  or public purposes.39  The legislature codified the  public
trust doctrine as applied to riparian and littoral landowners  in
AS 38.05.126(c), enacted in 1999:
          Ownership  of  land  bordering  navigable  or
          public  water  does  not grant  an  exclusive
          right to the use of the water and a right  of
          title  to  the  land below the ordinary  high
          water  mark is subject to the rights  of  the
          people of the state to use and have access to
          the  water for recreational purposes or other
          public  purposes for which the water is  used
          or  capable of being used consistent with the
          public trust.
          
Under  the  public  trust  doctrine, the  state  can  regulate  a
riparian  owners  use of adjacent state-owned  lands  to  protect
recreational  and other public purposes, including the  right  to
fish,   hunt,  bathe,  swim,  to  use  for  boating  and  general
recreation purposes the navigable waters of the state, and to use
the  bottom  of the navigable waters for anchoring, standing,  or
other purposes.40
          None  of these public trust uses are implicated in this
case.   In  its preliminary decision, DNR explicitly  found  that
restricting public access to [Alaska Riverways] lease parcel will
not   substantially   impair  the  publics  interest   in   trust
resources.41   Instead, DNR sought a lease with Alaska  Riverways
for its exclusive use of state land in order that all Alaskans []
receive  a return from any commercial use of their public  lands.
Even  construing the public trust doctrine broadly, it  does  not
permit the state to regulate riparian owners by requiring them to
          pay rent for the use of state lands.  The collection of rent is
simply  not a public purpose that the state has an obligation  to
protect under the public trust doctrine.
          The  public trust doctrine, as expressed in the  common
law,  the  Alaska  Constitution, and Alaska  statutes,  does  not
support  DNRs  efforts to require riparian owners to  enter  into
leases.   It  does, on the other hand, support the regulation  of
the  exercise  of riparian rights, including the right  to  wharf
out.   DNR  may use its leasing program, or any other  regulatory
program   authorized  by  the  legislature,   to   regulate   the
construction and maintenance of wharves over state-owned land  to
protect  public  uses of the waterways, but it has  not  done  so
here.
     D.   Under  the Alaska Constitution,  a Riparian Owner  Does
          Not Obtain a Protected Property Interest in State Lands
          by Constructing a Wharf.
          
          Article  VIII of the Alaska Constitution,  the  natural
resources  section, places all state lands under the  control  of
the  legislature.42   Tidal  and submerged  lands  are  expressly
included  in  the  state public domain.43   The  legislature  has
plenary  authority to provide for the utilization of state  lands
by   providing  for  facilities  and  improvements,44  sales  and
grants,45  and,  most relevant here, leasing.46  No  disposal  of
state  lands  or  interests in state lands can  be  made  without
public  notice  and  other safeguards of the  public  interest.47
Article VIII permits rights to be established by appropriation in
only  two  instances,  neither of which  includes  the  right  to
appropriate  an interest in state shoreland by building  a  wharf
over such land.48
          Alaska  Riverways  argues that by  virtue  of  being  a
riparian  owner, it has a protected property right to  wharf  out
over  state land, and that DNRs requirement that Alaska Riverways
enter  into a lease is an attempt to generate revenue by charging
[Alaska  Riverways] for a property right [it] already  possesses.
Yet,  article  VIIIs prohibition on disposal of  state  lands  or
interests  in  state  lands  without  public  notice  and   other
safeguards  is  inconsistent with the  creation  of  a  protected
property  interest  in state lands simply  by  being  a  riparian
owner,  or by constructing a wharf over state lands.  So  too  is
article  VIIIs strict limitation on instances in which  a  person
can obtain an interest in Alaska lands by appropriation.
          In  arguing  that  it  possesses a  protected  property
interest,  Alaska  Riverways relies  heavily  on  section  16  of
article  VIII,49 which it claims recognized the common-law  right
to  wharf  out as it existed in territorial days.  The commentary
prepared   by  the  Resources  Committee  of  the  Constitutional
Convention with respect to this section states:
          This  section,  protecting  any  person  from
          involuntary divestment of property rights and
          interests,  is  generally applicable  to  any
          established right and might be relied upon to
          protect  persons who claim possessory  rights
          to   tidelands   in   coastal   areas   where
          substantial  improvements have been  made  in
          docks, wharves or other waterfront facilities
          and homes.[50]
          A  proper understanding of section 16 and the committee
commentary requires that it be viewed in historical context.   At
the   time   of  the  constitutional  convention  much   of   the
infrastructure of the territory was built over tidelands owned by
the  United States.51   This included docks, warehouses, streets,
hotels,  stores,  schools, private residences, and  much  of  the
commercial sections of Juneau, Ketchikan, Cordova, and  Valdez.52
The United States took the position that most of these facilities
were  trespasses, though it had no desire to abate  them.53   The
reference  to  improvements in section 16  as  explained  in  the
commentary  was  intended to address this problem by  recognizing
that  where substantial improvements have been made on  tidelands
as  of  the  time of statehood, a protected property right  would
arise.   Yet  as  to  unimproved tidelands,  the  delegates  were
advised  that the state legislature would have full power insofar
as  the disposition of surface rights for the building of .  .  .
docks [and] wharves . . . is concerned; the legislature may  sell
the  lands in these cases, should it desire to do so.54  Properly
understood,  section 16 establishes that substantial improvements
on  tidelands  that existed at the time of statehood  would  give
rise  to  protected  property rights while  tidelands  that  were
unimproved at the time of statehood would be state property  that
could be disposed of only in accordance with the other provisions
of article VIII.
          In  summary, article VIII placed control of  all  state
land,  including shoreland, in the legislature.  After statehood,
a  riparian owner could not obtain a protected property  interest
in  state shoreland through the purchase of the riparian land  or
by  constructing  a  wharf.  While article  VIII  authorized  the
legislature to provide for the leasing of . . . any part  of  the
public  domain,  including submerged land,55 it  did  not  itself
grant  DNR  authority  to require riparian owners  who  construct
wharves  to  enter into leases for their use of state  shoreland.
We  now  examine whether the state legislature granted  DNR  such
authority, and in doing so determined that the private common-law
right to wharf out should yield to the public interest in earning
revenue from the exclusive use of state land by a riparian owner.
     E.   The  Legislature Has Expressly Granted Authority to DNR
          To  Require  Upland Owners Who Wharf Out To Enter  into
          Leases.
          The  first Alaska state legislature enacted the  Alaska
Land Act56 pursuant to the mandate of article VIII, section 2  of
the  Alaska  Constitution that the legislature  provide  for  the
utilization,  development, and conservation of  all  state  land.
Alaska  Riverways  argues  that  the  Alaska  Land  Act  and  its
subsequent  amendments  do not grant DNR statutory  authority  to
lease  shorelands to riparian owners.  We disagree  and  conclude
that the Alaska Land Act as first enacted in 1959 authorized  DNR
to  require  riparian owners to enter into leases for  exercising
their common-law right to wharf out.
          1.   Alaska Statute 38.05.070
          DNR argues that AS 38.05.070, which was enacted as part
of the Alaska Land Act,57 authorized it to charge riparian owners
rent  and abolished any common law right to wharf out.58   Alaska
Riverways   argues  that  this  statute  instead  grant[ed]   DNR
authority   to   lease   shorelands  to   anyone   but   riparian
landowners.59  (Emphasis in original.)
          When  it  was  enacted  upon  statehood  in  1959,   AS
38.05.070 provided:
          All  lands, including any tide, submerged  or
          shore  lands, to which Alaska holds title  or
          to  which Alaska may become entitled, may  be
          leased  . . . in the manner provided in  this
          Article.
The lands to be leased would be determined by the director of the
Division  of Lands of DNR, along with limitations and  conditions
that shall attach to the lands and the terms that shall accompany
the lease.60  The leasing would be conducted at public auction to
the highest qualified bidder unless the total appraised value  of
the  transaction  was $250 or less per year, in  which  case  DNR
could negotiate the lease directly without advertisement.61
          The   text  of  AS  38.05.070  and  the  other  leasing
provisions  make  no  reference to  riparian  owners,  let  alone
explicitly  state  that DNR cannot lease shorelands  to  riparian
owners.  The statute authorizes DNR to negotiate leases of up  to
five  years whose total appraised value is $250 or less per year,
imposing  no  limitation  on the identity  of  the  lessee.   The
statute  further authorizes DNR to hold public auctions to  lease
lands  it  has  selected.  There is nothing in the  statute  that
prevents  a  riparian owner from submitting a  bid  for  adjacent
shoreland.  If AS 38.05.070 did not grant DNR authority to  lease
shoreland to riparian owners, as argued by Alaska Riverways,  DNR
would either have to reject such a bid, or else be unable to  put
any  shoreland  (or tide or submerged land) adjacent  to  private
property  up  for  auction in the first place.  Alaska  Riverways
construction of AS 38.05.070 would thus exclude the  parties  who
would  be  most  interested  in leasing  state-owned  lands,  the
adjacent  land  owners, from the leasing program or substantially
undercut  DNRs  ability to exercise its statutory authority.   We
find this construction to be untenable.
          Consistent with article VIII, section 16 of the  Alaska
Constitution, the Alaska Land Act also granted explicit rights to
those  who had constructed wharves or other substantial permanent
improvements  on  tide  and submerged  lands  for  any  business,
residential  or  other beneficial purpose prior  to  statehood.62
Such  occupants were given a preference right to acquire the tide
and  submerged land either from a municipality, if such land  was
transferred from the state, or directly from the state.63  If the
improvements  were constructed prior to September  7,  1957,  the
occupant  could  acquire the land for the cost of  surveying  and
transferring  title; if the improvements were  constructed  after
that date and prior to statehood, the occupant could acquire  the
land for its appraised value, plus appraisal, administrative, and
transfer  costs.64   Occupants had two years from  the  date  the
municipality  or DNR began accepting applications  to  apply  for
          preference rights, or else they would be lost.65  The provision
did not differentiate between occupants who owned adjacent upland
property,  nor  did  it  grant any rights to  those  constructing
improvements after statehood, whether owners of adjacent land  or
not.
          Reading  these  two provisions together, a  legislative
framework  emerges.  Persons who had constructed improvements  on
tide  and submerged land prior to statehood were granted  special
preference rights to purchase or lease these occupied lands,  but
those rights would expire if unused.  DNR was authorized to enter
into leases with all other parties, including upland owners,  for
their  occupancy of state lands either directly if the lease  was
appraised  at  $250 or less, or after public  auction.   To  this
extent, AS 38.05.070 restricted the common-law right to wharf out
when it was passed in 1959.66
          The   DNR  lease  application  forms  used  by   Alaska
Riverways in 1979 are consistent with this statutory construction
and suggest that DNR since at least that time has interpreted its
statutory  authority to include leasing to upland  owners.67   If
the applicant was not the upland owner, the application requested
the  names  and  addresses of the upland owners  in  addition  to
adjacent land owners.  The application further gave notice to the
applicant  that the applicant may have to provide  a  deposit  to
cover  the cost of advertising a public auction, which  would  be
returned [i]f advertisement of this land is required and the land
is  leased  to  another party.  The application thus contemplated
the  possibility that DNR would conduct a public auction to lease
shoreland, tideland, and submerged land adjacent to upland owners
and  ensured that DNR had the names of the landowners most likely
to be interested in participating or otherwise affected.
          2.   Alaska Statute 38.05.075(c)
          The  Alaska Land Act was substantially revised in 1984,
including  changes  to the leasing program.68   A  provision  was
added under which an upland owner would be entitled to acquire  a
lease   for  the  [adjacent]  tide  and  submerged  land  without
competitive bidding regardless of the value of the lease  if  DNR
made  certain determinations.69  This modification to the leasing
program  was  proposed  by an executive of  the  Sealaska  Native
Corporation   who   testified   before   the   Senate   Resources
Committee.70   After  noting that the  development  of  Sealaskas
1,000 miles of coastal property was dependent on access to state-
owned  tidelands, the witness suggested that the creation  of  an
upland  owners  preference would facilitat[e] transportation  and
commerce from adjacent uplands, which is vital to upland economic
development.71   The provision was presented and adopted  at  the
next  meeting  of  the  Resources  Committee.72   The  provision,
proposed by an owner of a large amount of land bordering tideland
and  submerged land, was meant to expand the rights  of  littoral
owners  by  entitling them to noncompetitive leases for  adjacent
property,  not  to  restrict their rights by authorizing  DNR  to
lease tideland and submerged land to them when they could not  do
so before.
          Support for this interpretation of AS 38.05.075(c)  and
DNRs authority  to enter into leases with upland owners prior  to
          its enactment can be found in the Senate Resources Committee
files.   The  text  of the provision proposed by Sealaska,  which
specifically related to upland owner leases, was circulated among
committee  members prior to its adoption with the following  note
from  committee staff:  Leases for tide and submerged  lands  are
currently  available  through  the competitive  bidding  process.
Under  current statute, any lease for a term of less than 5 years
and valued at less than $250 annually may be negotiated.73  After
the  amendment had been adopted by the committee,  a  summary  of
major  provisions  of  the amendments  to  the  Alaska  Land  Act
described  it  as [p]rovid[ing] a mechanism for DNR to  negotiate
leases  for  tide  and submerged lands with  upland  land  owners
without  competitive bidding, whereas under  the  former  leasing
procedures, [l]easing is made at auction to the highest qualified
bidder.74
          In  1997, AS 38.05.075(c) was amended to authorize  DNR
to  grant  preference rights to riparian owners leasing  adjacent
shorelands  in addition to owners leasing adjacent tidelands  and
submerged  lands.75  In its current form, the  provision  states:
The  owner  or lessee of land that fronts on shoreland, tideland,
or  submerged land of the state may be granted a preference right
to a lease for the shoreland, tideland, or submerged land without
competitive bidding if the director makes certain determinations.
Alaska  Statute 38.05.075(c) clearly authorizes DNR  to  directly
negotiate  leases of any value with upland owners  who  construct
wharves.76   We  therefore reject Alaska Riverways argument  that
DNR  is  not authorized by statute to require it to enter into  a
lease for its exclusive use of state-owned shoreland.
     F.   Alaska Riverways Challenge to DNRs Requirement that  It
          Enter Into a Lease for Wharfing Out over State Land
          In  addition  to challenging DNRs statutory  authority,
Alaska  Riverways advances several arguments for why DNR may  not
require  it,  as  a  riparian owner, to enter into  a  lease  for
wharfing  out  over  state land.  First, it  contends  that  DNRs
leasing  decision  constitutes  an  impermissible  taking   under
article VIII, section 16 of the Alaska Constitution.  Second,  it
contends  that DNRs application of AS 38.05.075(c) to require  it
to  enter into a lease for its maintenance of a dock built  prior
to  the  passage  of  that statute would constitute  an  improper
retroactive  application  of law.  Third,  it  argues  that  DNRs
leasing  decision violates its equal protection rights under  the
state and federal constitutions.77  We consider each argument  in
turn, and find them to be without merit.
          1.   DNRs  leasing  decision does not  violate  article
               VIII, section 16 of the Alaska Constitution.
               
          Alaska  Riverways  argues that DNRs application  of  AS
38.05.075(c) to require it to enter into a lease for  maintaining
its  docks  violates  article VIII,  section  16  of  the  Alaska
Constitution.   As  discussed above,  section  16  only  protects
property  rights  in  wharves  that  were  constructed  prior  to
statehood.   Riparian owners who have constructed  wharves  since
statehood  gained no protected property interest by  doing  so.78
Alaska  Riverways did not construct the wharf at  issue  in  this
          case until around 1980 or even acquire its current property until
the early 1970s, well after statehood.
          Alaska  Riverways  argues that  the  date  on  which  a
riparian  landowner purchased the property or  built  a  dock  is
irrelevant to obtaining a protected property interest because the
right  to  wharf  out attach[es] to the land.  To  the  contrary,
under  territorial  common  law, riparian  owners  had  to  first
exercise  their right to wharf out before they acquired protected
property rights that could be divested; they could not make  this
showing based on the existence of an abstract riparian right they
acquired through purchase of the land.79  Having built its  wharf
well  after  statehood, Alaska Riverways therefore  cannot  claim
that it acquired any property interest protected by section 16.80
          The legislature is free to balance the private right to
wharf  out with the public interest in recognizing a return  from
the exclusive use of state-owned lands.  The legislature has done
so  by  permitting, but not requiring, DNR to enter  into  leases
with  upland  owners.   DNR  has  exercised  this  discretion  by
categorically  exempting upland owners who  construct  docks  for
personal,  non-commercial use from lease requirements.81   Should
the  legislature  determine in the future that an  upland  owners
right  to  wharf out should not be limited by the states interest
in  collecting revenue for the use of state-owned lands,  it  may
change the law accordingly.
          2.   DNRs  leasing  decision  does  not  constitute  an
               improper    retroactive    application    of    AS
               38.05.075(c).
               
          While  AS  38.05.070, enacted in 1959, first authorized
DNR  to  enter  into  leases  with riparian  owners,  it  was  AS
38.05.075(c), as amended in 1997, under which DNR actually issued
the preference-right lease to Alaska Riverways.  We must consider
Alaska Riverways argument that DNRs issuance of a lease under the
current version of AS 38.05.075(c) for a dock built prior to  its
enactment  constitutes a retroactive application of the statutory
provision.   Statutes are not to be applied retroactively  unless
the  legislature  expressly declares them  to  be  retroactive.82
This court has explained retroactivity as follows:
          A  statute  will  be  considered  retroactive
          insofar  as it gives to pre-enactment conduct
          a  different legal effect from that which  it
          would   have  had  without  passage  of   the
          statute.   A  statute creates this  different
          legal  effect  if  it would impair  rights  a
          party  had when he acted, increase  a  partys
          liability  for  past conduct, or  impose  new
          duties  with respect to transactions  already
          completed.[83]
          
          The superior court found that the 1997 amendment to  AS
38.05.075(c) first authorized DNR to require Alaska Riverways  to
enter  into  a  lease and that such authorization  could  not  be
applied retroactively to abolish Alaska Riverways right to  wharf
out.   As  we hold above, it was instead AS 38.05.070 that  first
          authorized DNR to enter into leases with riparian owners for the
adjacent  shoreland if the appraised per annum  value  was  under
$250  or  put the land up for public auction.  The 1997 amendment
simply gave DNR another leasing option under which it could grant
Alaska  Riverways  a  preference  right  and  negotiate  a  lease
directly.  Rather than impairing Alaska Riverways right to  wharf
out,  it  strengthened this right as it provided Alaska Riverways
with a preference right to lease adjacent shorelands and made  it
less  likely these shorelands would be put up for public auction.
Nor  was Alaska Riverways subject to new duties  both before  and
after the amendment, Alaska Riverways could be forced to pay rent
to DNR if it entered into a lease with DNR.
          Alaska Riverways has also failed to demonstrate that AS
38.05.075(c) increased Alaska Riverways liability for maintaining
its  docks by authorizing DNR to charge a greater lease fee  than
it  could have charged for years prior to the statutes enactment.
From  the  date Alaska Riverways constructed the dock  until  the
1984  amendments to the leasing program, DNR would  have  had  to
place  the lease up for public auction if the appraised per annum
value  of  the  lease was greater than $250.   But  in  1984,  AS
38.05.070(b)  was  amended  to  allow  DNR  to  negotiate  leases
directly if their appraised per annum value was $5,000 or less.84
In  1994,  the per annum value of the Alaska Riverways lease  was
appraised at $925, well under $5,000.  More than ten years later,
DNR  estimated  the fair market value of the  lease  to  be  only
slightly  more, $1,000 per year.  Therefore, beginning  in  1984,
DNR   could  have  negotiated  the  lease  directly  with  Alaska
Riverways  on  the limitations, conditions and  terms  that  [it]
considers  are  in the best interests of the state after  1984.85
Under  the  leasing decision, DNR seeks to collect back  rent  of
$1,000  per year from 1991.  This does not represent an  increase
in  Alaska Riverways liability for maintaining its docks prior to
the  1997  amendment to AS 38.05.075(c) and is therefore  not  an
improper retroactive application of that provision.
          3.   DNRs  leasing  decision does  not  violate  Alaska
               Riverways equal protection rights.
               
          Alaska Riverways contends that DNRs requirement that it
enter  into  a  lease violates its equal protection rights  under
both  the  federal and state constitutions because  DNR  has  not
required  all  upland  owners who build  wharves  to  enter  into
leases.86   Alaska  Riverways argues that there  is  no  rational
basis  for  DNR  to  treat  commercial and  non-commercial  users
differently  because  [a]nyone that physically  occupies  surface
waters  is  equally  effective  at  excluding  others.   Even  if
commercial  and  non-commercial users are not similarly  situated
for equal protection purposes, Alaska Riverways continues, DNR is
improperly treating it differently than other similarly  situated
commercial users of surface waters.
          The  superior  court  rejected Alaska  Riverways  equal
protection  arguments.   First, it found  that  DNRs  distinction
between non-commercial and commercial users of state shoreland is
rationally  related to the permissible government objective  that
commercial users should pay for the privilege of using state land
          in  aid of making a profit.  Second, it found that DNRs
distinction between large and small [commercial] operations is []
rationally related to prudent management of state land in that it
is  common  sense  that the larger businesses  generally  require
larger docks, which occupy more state shoreland.
               a.   Commercial vs. non-commercial users
          The  Uniform  Application Clause and  equal  protection
clauses  of  the  United States and Alaska Constitutions  require
equal treatment only of persons similarly situated.87  Concluding
that  two classes are not similarly situated necessarily  implies
that  the  different  legal  treatment  of  the  two  classes  is
justified  by  the  differences between the two  classes.88   DNR
argues   that  commercial  and  non-commercial  users  of   state
shoreland are not similarly situated.  We agree.  We have already
held  in  various  contexts  that people  using  state  land  and
resources  for different purposes are not similarly situated  for
purposes   of  constitutional  analysis,  including   sport   and
commercial  fishermen,89 residential and recreational  purchasers
of state land,90 and Alaska resident and non-resident hunters.91
          Similarly, we hold that riparian landowners using state
land  to  construct  wharves for private use  are  not  similarly
situated  to  those  using state land to  construct  wharves  for
commercial use.  The legislature has expressed an intention  that
DNR  maximize  the return on the leasing of state  land.92   Only
commercial users earn revenue from their use of state  lands  and
have  this  revenue  available to compensate Alaskans  for  their
exclusive  use  of state land.93  Because they are not  similarly
situated,  DNR may treat commercial and private users differently
without  implicating the equal protection clauses of the  federal
and state constitutions and the Uniform Application Clause.

               b.    Differences  in treatment  among  commercial
users
          Even  if  DNR  is justified in treating commercial  and
private  users differently, Alaska Riverways argues that  DNR  is
treating it differently from other commercial users who  are  not
necessarily  tourist  operations by  not  requiring  these  other
commercial operations to enter into a lease.  Instead  of  citing
specific  examples,  Alaska Riverways asks us  whether  DNR  [is]
requiring  a lease of every marina, port, fish processing  plant,
freight  hauler,  hunting or fishing lodge, or  other  commercial
operation,  suggesting  that if not, DNRs  lease  decision  would
violate  Alaska  Riverways equal protection rights.   But  it  is
Alaska  Riverways, not DNR or this court, that bears the  initial
burden of identifying specific similarly situated users of  state
land  that are not being required to enter into a lease.   Alaska
Riverways  did not identify to the superior court any  commercial
operations  similar in size that have not entered  into  a  lease
with DNR.
          Nor would such evidence alone be sufficient to make out
an  equal  protection claim.  Alaska Riverways further bears  the
burden of demonstrating that DNRs [s]elective enforcement of  the
leasing  statute is part of a deliberate and intentional plan  to
discriminate    based   on   an   arbitrary   or    unjustifiable
          classification.94  It failed to present any such evidence.  DNR,
while  acknowledging that historically [it]  has  not  authorized
every  commercial business with a dock, contends  that  this  has
been  due to insufficient resources to address all uses occurring
on  state land rather than purposeful discrimination.  An  agency
need not  indeed, often cannot  apply a statute simultaneously to
all  similarly  situated  parties to avoid  violating  the  equal
protection   clause   so   long  as  it  is   not   intentionally
discriminating against any party.
          Because Alaska Riverways has failed to produce evidence
showing  that  DNR  does not require leases  of  other  similarly
situated  commercial  users and suggesting  that  DNRs  selective
application   of   the  leasing  statute  to   Alaska   Riverways
constitutes  intentional  discrimination,  we  hold  that  Alaska
Riverways  has  failed  to establish a  violation  of  its  equal
protection rights.95
     G.   Alaska  Riverways  Challenge to DNRs Calculation  of  a
          Lease Fee Based on Passenger Count
          
          Alaska Riverways argues in its cross-appeal that,  even
assuming DNR could require it to enter into a lease, DNR may  not
base  the  lease  fee  on  the number of its  paying  passengers.
First,  Alaska Riverways contends that such a lease fee  violates
federal law prohibiting states from levying a tax for the use  of
navigable waters.  Second, Alaska Riverways contends that DNR  is
not  authorized by statute to charge such a lease fee.96  We hold
that  DNRs  calculation of a lease fee based on  passenger  count
violates federal law and, consequently, need not consider  Alaska
Riverways  alternative   argument that DNR  lacks  the  statutory
authority to charge such a fee.  We therefore vacate that portion
of  the DNR leasing decision but leave in place the lease fee  in
the amount of $1,000 per year.
          Alaska  Riverways argues that requiring  it  to  pay  a
lease  fee  based on its passenger count would violate 33  U.S.C.
5(b), which provides with some exceptions:
          No  taxes, tolls, operating charges, fees, or
          any  other  impositions  whatever  shall   be
          levied  upon or collected from any vessel  or
          other water craft, or from its passengers  or
          crew,  by  any non-Federal interest,  if  the
          vessel  or  water craft is operating  on  any
          navigable waters subject to the authority  of
          the  United  States, or under  the  right  to
          freedom of navigation on those waters.[97]

DNR  argues that 33 U.S.C.  5(b) does not apply because it is not
charging  vessels or passengers for use of the Chena  River,  but
rather  charging Alaska Riverways rent for its exclusive use  and
occupancy  of  state-owned  shoreland  in  its  capacity   as   a
landowner. DNR cites Brusco Towboat v. State in support, in which
the Oregon Supreme Court held that a lease fee did not violate an
Oregon statute similar to 33 U.S.C.  5(b) because the fee was not
a  charge  for the use of navigable waters, but rather  a  charge
upon  those  who  wish  to occupy, to the  exclusion  of  others,
portions  of  the states lands in pursuit of their  own  business
activities.98  DNR ignores a crucial difference between this case
and Brusco Towboat:  In Brusco Towboat, the administrative agency
did  not  attempt to calculate the lease fee based  on  passenger
count  but  instead based the lease fee on the  amount  of  water
surface area occupied.99
          The  question here is whether the assessment of a lease
fee  based  on  passenger count for exclusive use of  state  land
implicates 33 U.S.C.  5(b).  We hold that it does and reject DNRs
argument that the fact that it calculates the rent . . . based on
the  number of [Alaska Riverways] customers does not convert  the
rental  amount  into a passenger fee or user fee.  DNRs  proposed
assessment  on  Alaska Riverways, however labeled,  is  a  charge
exacted  specifically for the use of navigable  waters   in  this
case,  $0.25  for  each paying passenger   and  33  U.S.C.   5(b)
therefore applies.
          The  Ninth  Circuit  reached a  similar  conclusion  in
Western  Oil  and  Gas Association v. Cory, where  it  held  that
Californias  practice  of  basing the lease  fee  for  running  a
pipeline  over  unimproved state tidelands on the volume  of  oil
passing through the pipeline violated the Commerce Clause of  the
United States Constitution.100  In rejecting the argument by  the
State of California that it was only charging rent for the use of
state-owned lands, the court stated:
          Although  the volumetric rates are designated
          as  rent  by  the State, it is the  practical
          effect of an exaction, not its label that  is
          the  focus  of  analysis under  the  Commerce
          Clause.   The volumetric charges are  exacted
          specifically  in return for the  use  of  the
          coastal property.  The present case therefore
          falls  within the bounds of the Supreme Court
          cases  that have reviewed challenges to  user
          fees or taxes that were designed and defended
          as a specific charge imposed by the State for
          the  use of state-owned . . . facilities  and
          services.[101]
          
Similarly,  in  reversing a decision by this  court  rejecting  a
challenge  to a port citys property tax on large vessels  brought
under  the  Tonnage Clause, the United States Supreme Court  made
clear that a state may not impose  taxes and duties regardless of
their name or form . . . which operate to impose a charge  on the
use of navigable waters.102
          While  Alaska  Riverways contends that  the  lease  fee
based on passenger count violates 33 U.S.C.  5(b) rather than the
Commerce or Tonnage Clauses,  33 U.S.C.  5(b) codified the common
law  concerning  these constitutional provisions.103   33  U.S.C.
5(b),  like  the Commerce and Tonnage Clauses, prohibits  levying
fees  on  the  use of navigable waters unless those fees  do  not
impose  a significant burden on interstate commerce and represent
a fair approximation of the benefit conferred or cost incurred by
the   charging  authority.104   DNR  does  not  argue  that  this
exception  applies,  but rather that 33  U.S.C.   5(b)  (and  the
          Commerce and Tonnage Clauses) are inapplicable because the
assessment is not a user fee.  For the reasons stated  above,  we
disagree.
          Having determined 33 U.S.C.  5(b) to be applicable, the
proposed   lease  fee  based  on  passenger  count   is   clearly
impermissible  because  it  does  not  approximate  the   benefit
conferred or cost incurred by the State of Alaska.105  The  State
has  not argued that it provides facilities or services to Alaska
Riverways  or  its passengers.  Nor has the State shown  that  it
incurs  costs  in  leasing the unimproved  shorelands  to  Alaska
Riverways106  above the administrative costs  of  processing  the
lease application and issuing the lease, and the litigation costs
associated with this lawsuit.107  The State does confer a benefit
on  Alaska  Riverways   and indirectly on  its  passengers:   the
exclusive  use  of  state-owned shorelands.  And  the  State  may
charge  for  this benefit.  Importantly, however, a per-passenger
lease fee is not a fair approximation of this benefit; indeed, it
has  no  relation to this benefit.  Whether Alaska Riverways  has
100 or 100,000 passengers, the benefit conferred by the State  is
the  same.  Although DNR has authority to require commercial tour
operations  to  enter  into  leases  for  the  exclusive  use  of
unimproved  state-owned shorelands, it is prohibited  by  federal
law  from  basing  that charge on the number of passengers  using
navigable waters.
V.   CONCLUSION
          We  hold  that  DNR  has authority  to  require  Alaska
Riverways  to enter into a lease for its exclusive use of  state-
owned  shorelands but that DNRs choice of a lease  fee  based  on
passenger  count violates federal law.  We therefore REVERSE  the
superior courts decision and VACATE the portion of the lease  fee
based  on  passenger count, leaving in place the lease amount  of
$1,000 per year.
_______________________________
     *    Sitting by assignment under article IV, section  11  of
the Alaska Constitution and Administrative Rule 23(a).

1     Specifically,  Alaska  Riverways, Inc.  operates  the  tour
boats, and Tanana River Properties, LLC owns the property used by
the enterprise.

     2    See Dept of Natural Res. v. Pankratz, 538 P.2d 984, 988
&  n.4 (Alaska 1975) (recognizing that the state has title to the
bed of its navigable rivers, including the Chena River).

     3     Shoreland  is defined by statute as land belonging  to
the  state  which is covered by nontidal water that is  navigable
under  the  laws of the United States up to ordinary  high  water
mark   as   modified   by  accretion,  erosion,   or   reliction.
AS 38.05.965(20).

     4    See Blacks Law Dictionary 1352 (8th ed. 2004).

5      Eventually,   in   1994,   Alaska   Riverways   hired   an
appraiser who determined that the fair market value for an annual
lease  of  the  land  underneath the wharves  was  $925.   Alaska
Riverways did not enter into a lease following this appraisal.

     6     Tideland is land that is periodically covered by tidal
water  between  the  elevation of mean high water  and  mean  low
water.  AS 38.05.965(23).

     7     Submerged land is land covered by tidal water  between
the  line  of mean low water and seaward to a distance  of  three
geographical miles.  AS 38.05.965(22).

8     Nelson  v.  State, Commercial Fisheries  Entry  Commn,  186
P.3d 582, 585 (Alaska 2008).

     9     Lakloey, Inc. v. Univ. of Alaska, 157 P.3d 1041,  1045
(Alaska 2007).

     10   Premera Blue Cross v. State, Dept of Commerce, Cmty.  &
Econ.  Dev.,  Div.  of Ins., 171 P.3d 1110,  1115  (Alaska  2007)
(quoting  Alyeska Pipeline Serv. Co. v. DeShong,  77  P.3d  1227,
1231 (Alaska 2003)).

     11   AS 38.05.005.990.

     12   Ch. 152,  30, SLA 1984.

     13   Ch. 91,  18, SLA 1997.

14    See  Fox  River  Paper  Co. v.  Railroad  Commn,  274  U.S.
651,  655  (1927) ([T]he nature and extent of the rights  of  the
state and of riparian owners in navigable waters within the state
and to the soil beneath are matters of state law to be determined
by  the statutes and judicial decisions of the state.); see  also
Oregon ex rel. State Land Bd. v. Corvallis Sand & Gravel Co., 429
U.S.  363, 370-71 (1977).  State law in this field is subject  to
paramount  federal  regulation regarding navigability  under  the
Commerce Clause of the United States Constitution.  United States
v. River Rouge Improvement Co., 269 U.S. 411, 419 (1926).

     15    Littoral means [o]f or relating to the coast or  shore
of  an  ocean, sea, or lake.  Blacks Law Dictionary 952 (8th  ed.
2004).

     16    Dresser Indus., Inc. v. Alaska Dept of Labor, 633 P.2d
998, 1002 (Alaska 1981).

     17     182  F.  561, 573 (9th Cir. 1910); see also  Columbia
Canning  Co. v. Hampton, 161 Fed. 60, 64 (9th Cir. 1908) (holding
that  riparian owner is entitled to free access to the  navigable
waters of canal in front of property in Alaska Territory).

     18    Dalton,  182 F. at 573 (quoting Dutton v.  Strong,  66
U.S. 23, 32 (1861)).

     19   Id. (quoting Act of May 14, 1898, ch. 299,  2, 30 Stat.
409, 413 (1901)).

20   5 Alaska 269, 271 (D. Alaska Terr. 1915).

     21   Id. at 274.

     22    Id.  at 271-72 (internal quotation marks and  citation
omitted).

     23   Id. at 279-81.

     24    Id.  at 273 (quoting Yates v. Milwaukee, 77 U.S.  497,
504 (1870)).

     25    Ketchikan Spruce Mills v. Alaska Concrete Prods.  Co.,
14 Alaska 375, 380 (D. Alaska Terr. 1953).

     26   Id. at 378.

     27   Id. at 379.

     28   516 P.2d 1191, 1194-95 (Alaska 1973).

     29   Id. at 1194 (citing Richard Harnsberger, Eminent Domain
and Water Law, 48 Neb. L. Rev. 325, 381-82 (1969)).

30     Id.  at  1201;  see  also  id.  at  1194-95  (noting  that
riparian  rights are valuable property, and ordinarily cannot  be
taken  for public use by the federal or state governments without
payment of just compensation to the landowner).

     31   Id. at 1200-01 (footnote omitted).

     32   Id. at 1195.

     33    See id. at 1198 ([T]he Alaska Constitution does indeed
allow the state to take riparian or littoral property rights  for
beneficial   or  public  uses  other  than  in   aid   of   water
navigation.).

     34   Id. at 1199, 1201.

35    In  fact,  DNR claims that [t]he only way  that  the  state
can  effectively  manage  its shoreland and  know  what  riparian
landowners  like Alaska Riverways are planning to build,  and  so
fulfill its trust duties, is to require riparian landowners to go
through  an  approval process, which takes the  form  of  leasing
procedures. (Emphasis added.)

     36    CWC  Fisheries, Inc. v. Bunker, 755 P.2d 1115, 1117-18
(Alaska  1988) (quoting Illinois Cent. R.R. Co. v. Illinois,  146
U.S.  387,  452  (1892)).   In both CWC  Fisheries  and  Illinois
Central  Railroad, the courts relied on the public trust doctrine
to  condition or set aside a states conveyance of submerged  land
to  a  private  party where the conveyance failed to  accommodate
certain  public uses of the land.  Since there has been no  state
conveyance here, this particular application of the public  trust
doctrine is not relevant.  Rather, DNR relies on the public trust
doctrine  more  broadly  to  support  the  states  authority   as
sovereign  to exercise a continuous supervision and control  over
navigable waters of the state and the land underlying the waters.

     37   Illinois Cent. R.R. Co., 146 U.S. at 446.  The power to
pass  these regulations has also been described as deriving  from
the  states  police power to regulate for the common  good.   See
Wernberg,  516 P.2d at 1195; A. Dan Tarlock, Law of Water  Rights
and  Resources  3:74 (1988) (The right to wharf  out  .  .  .  is
subject to police regulation . . . .).

     38    Wernberg,  516 P.2d at 1195; see also  New  Jersey  v.
Delaware, 128 S. Ct. 1410, 1421 (2008) ([T]he right of a riparian
owner to wharf out is subject to state regulation.); 78 Am.  Jur.
2d  Waters   43  (While a riparian landowner has  certain  rights
which  inhere  in the ownership of land adjacent  to  a  body  of
water,  these rights are subject to reasonable regulation by  the
state  in  the  exercise  of public trust  rights.);  Herbert  T.
Tiffany and Basil Jones, 2 Tiffany Real Property  666 (2009) (The
exercise  of the right is subject to the proviso that it  be  not
exercised  in  such  a  way as substantially  to  interfere  with
navigation, and it is subject to any restrictions in this  behalf
imposed by the state or by authority of the state.).

     39    See Wernberg, 519 P.2d at 803 (the Alaska Constitution
does indeed allow the state to take riparian or littoral property
rights  for beneficial or public uses ); see also AS 38.05.126(b)
(The state has full power and control of all of the navigable  or
public  water  of the state, both meandered and unmeandered,  and
the  state  holds and controls all navigable or public  water  in
trust for the use of the people of the state.).

     40    Hayes  v.  A.J. Assocs., Inc., 846 P.2d 131,  133  n.6
(Alaska 1993).

     41    Alaska  Riverways  suggests  that  if  DNR  found  any
impairment  of  public trust uses, then it could  not  issue  the
lease,  further evidence that DNR is not acting pursuant  to  its
authority  under the public trust doctrine.  This  is  incorrect.
DNR  can  impose limitations, conditions and terms on a lease  to
protect  the public interest, such as requiring a public easement
allowing  the  public  to  use the wharf,  rather  than  outright
denying a lease.  AS 38.05.070(b).

42   Article VIII, section 2 provides:

               The  legislature shall provide  for  the
          utilization, development, and conservation of
          all natural resources belonging to the State,
          including  land and waters, for  the  maximum
          benefit of its people.
          
     43   Article VIII, section 6 provides:

               Lands  and  interests therein, including
          submerged  and  tidal  lands,  possessed   or
          acquired  by  the  State,  and  not  used  or
          intended exclusively for government purposes,
          constitute  the  state  public  domain.   The
          legislature  shall provide for the  selection
          of  lands granted to the State by the  United
          States,  and  for the administration  of  the
          state public domain.
          
     44   Alaska Const. art. VIII,  5.

     45   Alaska Const. art. VIII,  9.

     46   Article VIII, section 8 provides:

               The  legislature  may  provide  for  the
          leasing  of, and the issuance of permits  for
          exploration of, any part of the public domain
          or  interest  therein, subject to  reasonable
          concurrent  uses.  Leases and  permits  shall
          provide, among other conditions, for  payment
          by  the  party at fault for damage or  injury
          arising   from   noncompliance   with   terms
          governing  concurrent use, and for forfeiture
          in the event of breach of conditions.
          
     47   Article VIII, section 10 provides:

               No  disposals or leases of state  lands,
          or  interests therein, shall be made  without
          prior  public notice and other safeguards  of
          the  public interest as may be prescribed  by
          law.
          
     48     The  permitted  instances  of  appropriation  concern
mineral  rights and rights to surface and subsurface water.   See
Alaska Const. art. VIII,  11, 13.

     49    Article  VIII,  section 16 of the Alaska  Constitution
provides:

               No   person   shall   be   involuntarily
          divested  of his right to the use of  waters,
          his   interests  in  lands,  or  improvements
          affecting  either,  except  for  a   superior
          beneficial  use  or public purpose  and  then
          only  with just compensation and by operation
          of law.
          
     50    Commentary  on  Article on  State  Lands  and  Natural
Resources, 6 Proceedings of the Alaska Constitutional Convention,
App. V at 103 (Jan. 16, 1956).

     51    S.  Rep.  No.  85-1045 (1957), as  reprinted  in  1957
U.S.C.C.A.N. 1933, 1935-37.

     52   Id. at 1936.

     53   Id.

     54    Alaska Statehood Committee, 1 Constitutional  Studies:
The  Alaskan  Constitution and the State Patrimony  71  (Nov.  8,
1955).

     55    Alaska  Const. art. VIII,  6, 8.  Even if  the  Alaska
Constitution  did  not explicitly authorize  the  legislature  to
provide  for  leasing of shoreland, the legislature  is  free  to
modify  the  common-law right to wharf out as long  as  doing  so
would  not conflict with any constitutional provision.  Evans  ex
rel.  Kutch v. State, 56 P.3d 1046, 1068-69 (Alaska 2002)  ([T]he
legislature  is  free  to modify or abolish common  law  rules.).
Counsel for Alaska Riverways conceded at oral argument before  us
that the legislature has the absolute right to change [the common-
law right to wharf out] when it wants to, its a common law rule.

     56   Ch. 169, SLA 1959.

57   Ch. 169, art. V,  1, SLA 1959.

     58    Alaska Riverways contends that DNR waived its argument
that  AS  38.05.070(a) authorized its leasing proposal by failing
to  raise  the  statute  in the proceedings  below,  and  instead
relying  solely  on  AS  38.05.075(c).   To  the  contrary,   DNR
specifically  mentioned  AS 38.05.070  as  a  source  of  leasing
authority  in its leasing decision and the commissioner  of  DNRs
appeals decision, which were reviewed by the superior court.   In
any  event,  DNRs  supposed  failure  to  cite  AS  38.05.070  as
statutory authority for Alaska Riverways proposed lease would not
preclude  us  from  considering whether  AS  38.05.070  generally
restricted the common-law right to wharf out as recognized by the
territorial courts.

     59    In  support  of this interpretation, Alaska  Riverways
relies  on common law from Alaskas territorial courts, the Alaska
Constitution,  [and] Wernberg.  Alaska Riverways also  cites  the
first  subsection of AS 38.05.070, which directs DNR to  preserve
reasonable  and  traditional access to state land  and  water  in
making  its leasing decisions.  But this language was  not  added
until  1984, as part of the amendments to Chapter 38  that  first
granted preference rights to littoral owners.  Ch. 152,  27,  SLA
1984.  It is therefore of no assistance in determining the intent
of the legislature in passing leasing provisions in 1959.

     60   Ch. 169, art. V,  1(1), SLA 1959.

     61   Id. art. V,  1(1), 2.

     62   Ch. 169, art. III,  5(2)(a), SLA 1959.

     63   Id. art. III,  5(2)(a), (3), (4).

     64   Id. art. III,  5(2)(e), (g).

65   Id. art. III,  5(3)(f), (4)(d).

     66    DNR  argues  that  the legislatures  passage  of  laws
inconsistent  with  this  common-law  right  reflects  that   the
legislature at that time did not recognize a common law right  to
wharf out and means that such a common law privilege simply  does
not  exist  in  Alaska.   This argument is  without  merit.   The
legislature has the power to abrogate common law rules  and  even
if the laws did reflect the opinion of the legislature that there
was   no  common-law  right  to  wharf  out,  it  would  not   be
controlling.

     67   Although we generally apply our independent judgment to
matters  of  statutory  interpretation,  we  will  apply  a  more
deferential standard of review where an agency interpretation  is
longstanding and continuous.  Premera Blue Cross v.  State,  Dept
of  Commerce,  Community  & Econ. Dev., 171  P.3d  1110,  1118-19
(Alaska 2007).

     68   Ch. 152, SLA 1984.

     69    Id.  30, SLA 1984.  In particular, DNR must  determine
that:  (1) the lease is necessary for a water-dependent  purpose,
(2) the proposed use is compatible with the classification of the
land  and with any applicable land use plan, and (3) issuance  of
the lease will not interfere with prior existing rights.  Id.

     70    An  Act  Relating  to  Land Disposal  and  Management:
Hearing  on  S.B.  375 Before the S. Resources Comm.,  1984  Leg.
(Alaska  February  20,  1984) (written  testimony  of  Robert  W.
Loescher, Vice President, Resource Management, Sealaska Corp.).

     71   Id.

     72    An  Act  Relating  to  Land Disposal  and  Management:
Hearing  on  S.B.  375 Before the S. Resources Comm.,  1984  Leg.
(Alaska February 27, 1984).

73   Id. (Amendment No. 9, Tideland Lease).

     74    S.  Resources  Comm., Summary of Major  Provisions  of
C.S.S.B. 375 (Res) (March 5, 1984).

     75   Ch. 91,  18, SLA 1997.

     76    While  DNR is authorized to require upland owners  who
wharf  out  to  enter  into leases, we note  that  DNR  issued  a
regulation in 2002 that expressly exempts upland owners who build
docks  for their personal, non-commercial use from any permitting
or  other  written  requirements,  which  would  include  leases.
11  Alaska Administrative Code (AAC) 96.020(a)(2)(B).  To qualify
for  this  exemption,  the dock must not  interfere  with  public
access or another public use.  Id.

     77    Alaska Riverways also argues that it does not actually
use  or occupy any state property because its docks float on  the
surface  of  the river without physically contacting  the  state-
owned riverbed and therefore DNR may not require it to enter into
a lease for use of state property.  We find no support for such a
narrow  reading  of  DNRs leasing authority.   As  DNR  correctly
notes,  exclusive occupancy of the river surface,  by  precluding
other  surface  uses, is effective occupancy  of  the  underlying
shoreland.   See Brusco Towboat Co. v. State, 589 P.2d  712,  719
(Or. 1978) (The owner of the bed of a river is certainly entitled
to prevent permanent structures on the surface of the water which
preclude other uses of the bed, whether or not they actually rest
on the bed itself.).

     78   See supra Part IV.D.

79    See  Alaska  Juneau Gold Mining Co. v. N. Lumber  Mills,  5
Alaska 269, 273 (D. Alaska Terr. 1915) (right of access is one of
which, when once it is vested, the owner can only be deprived  in
accordance with the established law, and if necessary that it  be
taken for the public good, upon due compensation (emphasis added)
(citing Yates v. Milwaukee, 77 U.S. (10 Wall.) 497, 504 (1870))).
Counsel  for  Alaska  Riverways  conceded  this  point  at   oral
argument, recognizing that to benefit from [article VIII, section
16],  the  right has to exist; you have to vest and  obtain  your
common  law right before the constitution entitles you to recover
for your improvement.

     80   We need not decide whether and to what extent the state
may  outright prohibit a riparian owner from constructing a wharf
or  require its removal where doing so would interfere  with  the
owners  access  to water.  Alaska Riverways has not  argued,  nor
could  it,  that  DNRs  proposed  lease  would  prevent  it  from
exercising its right of access.

     81   See supra, note 76.

     82   AS 01.10.090.

     83    Rush v. State, Dept of Natural Res., 98 P.3d 551,  555
(Alaska 2004) (internal quotation marks and footnote omitted).

84   Ch. 152,  27, SLA 1984.

     85   AS 38.05.070(b).

     86    Specifically,  Alaska Riverways relies  on  the  Equal
Protection  Clause  of  the Fourteenth Amendment  to  the  United
States Constitution, the Equal Rights and Opportunities Clause of
the  Alaska  Constitution, article I, section 1, and the  Uniform
Application  Clause  of  the Alaska Constitution,  article  VIII,
section 17.

87    City  of  Cleburne,  Tex.  v.  Cleburne  Living  Ctr.,  473
U.S.   432,  439  (1985)  (equal  protection  clause  of  federal
constitution); Shepherd v. State, Dept of Fish & Game,  897  P.2d
33,  44 (Alaska 1995) (Equal Rights and Opportunities Clause  and
Uniform Application Clause of state constitution).

     88   Shepherd, 897 P.2d at 44 n.12 (Alaska 1995).

     89    Tongass  Sport Fishing Assn v. State, 866  P.2d  1314,
1318 (Alaska 1994).

     90    Reichmann  v. State, Dept of Natural  Res.,  917  P.2d
1197, 1200 (Alaska 1996).

     91   Shepherd, 897 P.2d at 43-44.

     92    See,  e.g., AS 38.05.075(a) (stating that  for  public
auctions  of  leases,  DNR should select the  lease  compensation
method that maximize[s] the return on the lease to the state).

     93    Cf.  Fairbanks  N.  Star Borough Assessors  Office  v.
Golden  Heart,  13  P.3d 263, 273 (Alaska 2000) (concluding  that
lessees  of  low-value property are not similarly situated  to  a
lessee  of  high-value property for purposes  of  city  assessors
taxing policy).

94    Gates  v.  City  of  Tenakee Springs,  822  P.2d  455,  461
(Alaska   1991)   (noting   that   conclusory   accusations    of
discrimination are insufficient to make a prima facie case).

     95    Alaska  Riverways also argues that DNR is treating  it
differently  than  other commercial operations by  charging  rent
based  on  a per-passenger fee rather than based on the  area  of
state  land occupied.  Again, Alaska Riverways neither identifies
similarly situated commercial users being charged rent  based  on
other   calculations,   nor  presents  evidence   that   DNR   is
intentionally  discriminating against  Alaska  Riverways  in  the
selection  of  a  user  fee.   The  legislature  has  given   DNR
discretion  to calculate a lease fee using different methods  and
to maximize the return for the state.

     96   Alaska Riverways also asserts that DNRs choice of a per-
passenger  lease  fee, by forcing it to disclose  the  volume  of
business   it   conducts,  would  be   a   violation   of   [its]
constitutionally  protected  privacy  rights.   Alaska  Riverways
failed to include this argument in its points on appeal and makes
it in a single, conclusory sentence in its brief without citation
to legal authority.   It is therefore waived.  See, e.g., DeNardo
v. Maassen, 200 P.3d 305, 317 (Alaska 2009) ([A]n issue is waived
when  a party fails to raise it in the points on appeal and  then
inadequately briefs the argument.).

     97   33 U.S.C.  5(b) allows for reasonable fees charged on a
fair and equitable basis that (A) are used solely to pay the cost
of a service to the vessel or water craft; (B) enhance the safety
and efficiency of interstate and foreign commerce; and (C) do not
impose more than a small burden on interstate or foreign commerce
. . . .

98   589 P.2d 712, 724 (Or. 1978).

     99   Id. at 717-18.

     100  726 F.2d 1340, 1344-45 (9th Cir. 1984).

     101   Id.  at  1344  (quoting  Commonwealth  Edison  Co.  v.
Montana, 453 U.S. 609, 615 (1981)) (citations omitted).

     102  Polar Tankers, Inc. v. City of Valdez, 129 S. Ct. 2277,
2283  (2009)  (emphasis added) (quoting Clyde  Mallory  Lines  v.
Alabama, 296 U.S. 261, 265-66 (1935)).

     103   See  Bridgeport  &  Port Jefferson  Steamboat  Co.  v.
Bridgeport  Port Auth., 566 F. Supp. 2d 81, 102 (D.  Conn.  2008)
(the  requirements  [of  33  U.S.C.  5(b)]  closely  track[]  the
Commerce  Clause  and  Tonnage Clause  cases);  Moscheo  v.  Polk
County, No. E2008-01969-COA-R3-CV, 2009 WL 2868754, at *15 (Tenn.
App.  Sept. 2, 2009) ([t]he exception noted in 33 U.S.C.  5(b)(2)
tracks  [the]  language of the exception to  the  Tonnage  Clause
carved out by the Supreme Court).

     104   See Bridgeport & Port Jefferson Steamboat Co., 566  F.
Supp. 2d at 96, 101-02.

     105   Cf. W. Oil & Gas Assn, 726 F.2d at 1345 (We are of the
opinion that the volumetric rates are a disguised revenue raising
measure.  .  .  .   There  is  no  correlation  between  benefits
conferred by the State and the throughput charges.).

     106  See Keokuk N. Line Packet Co. v. Keokuk, 95 U.S. 80, 88-
89  (1877) (noting that under Tonnage Clause, city cannot collect
wharfage  .  .  . for the use of that which is not a  wharf,  but
merely the natural and unimproved shore of a navigable river); W.
Oil  &  Gas  Assn, 726 F.2d at 1345 (finding a violation  of  the
Commerce  Clause  where the state charged for use  of  unimproved
lands on which no services or facilities [were] provided).

     107   DNR  does not argue that the lease fee is intended  to
cover administrative costs.  DNR charged Alaska Riverways a small
filing  fee when it applied for the lease in question, presumably
to defray such costs.

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