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Media Alerts - Marilley v. Bonham
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March 8, 2017
  Marilley v. Bonham
Headline: The Ninth Circuit, sitting en banc, holds that California's differential fees imposed on nonresident commercial fishers do not violate the Privileges and Immunities Clause or Equal Protection Clause.
Areas of Law: Constitution, Privileges and Immunities, Equal Protection, Commercial Fishing
Issue Presented: Whether differential fees charged by California to nonresident commercial fishers violates the Privileges and Immunities Clause or Equal Protection Clause when California uses the differential fees to compensate the State for the annual shortfall of roughly $14 million suffered by the California Department of Fish and Game to manage its commercial fishery and that shortfall is paid by California taxpayers.
Brief Summary: California charges nonresident commercial fishers a differential fee for commercial fishing licenses. However, for many years, California has operated its commercial fishery at a substantial loss. In fiscal year 2010-11, California spent roughly $20 million in managing its commercial fishery, yet it only received about $5.8 million in fees - including fees by both residents and nonresidents. This approximately $14 million deficit was paid for by California tax payers.
The Ninth Circuit held that the differential fees charged to nonresidents are justified under the Privileges and Immunities Clause because the differential fees are closely related to a substantial state interest which is to recover the state's expenditures in managing its commercial fishery that is attributable to the nonresidents. This is a deficit that would otherwise be covered by California's taxpayers. The Court also held the differential fees do not violate the Equal Protection Clause.
Significance: A state may collect compensation from nonresidents or exclude the nonresidents from the benefits when the state makes expenditures from a fund to which nonresidents do not contribute and the state provides a benefit by that expenditure to both residents and nonresidents. A state may not exclude nonresidents from access to a natural resource, but may pursue reimbursement for funds spent on managing and preserving the resource.
Extended Summary: California charges nonresident commercial fishers a differential fee for commercial fishing licenses. Beginning in 1986, California has charged nonresidents a higher fee than its residents for commercial fishing licenses, registrations, and permits, and subsequently began charging nonresidents more than residents for herring gill net permits, commercial vessel registrations, and Dungeness crab permits.
However, for many years, California has operated its commercial fishery at a substantial loss. In 2010-11, California spent roughly $20 million in managing its commercial fishery, yet it only received about $5.8 million in fees - including fees paid by both residents and nonresidents. This approximately $14 million shortfall was covered by California tax payers.
The Plaintiffs are a class of nonresident commercial fishers who engage in commercial fishing in California. They brought a class action in the district court against the Director of California's Department of Fish and Game, challenging the differential fees it charges to nonresidents under the Privileges and Immunities Clause, the Dormant Commerce Clause, and the Equal Protection Clause of the United States Constitution. They later voluntarily withdrew their Dormant Commerce Clause claim. The district court granted summary judgment for the plaintiffs based on their Privileges and Immunities claim. The Ninth Circuit, sitting en banc, reversed.
The Ninth Circuit referred to Toomer v. Witsell, 334 U.S. 385 (1948) and Mullaney v. Anderson, 342 U.S. 415 (1952) as authority for holding, "a state may charge differential fees to nonresident commercial fishers in order to recover the state's expenditures in enforcement and conservation measures that are attributable to the nonresidents."
California operates its commercial fishery at an annual cost of approximately $20 million, and it receives only about $6 million in fees collected from both residents and nonresidents. This shortfall of roughly $14 million is a subsidy or benefit conferred to both resident and nonresident commercial fishers paid for by California taxpayers.
Because 12% of all commercial fishers in fiscal year 2010-11 were nonresidents, and 12% of the $5,341,000 subsidy that went to all commercial fishers is approximately $641,000, California could have charged nonresidents up to that amount as their proportionate benefit received from California's general fund. Because nonresident commercial fishers paid a total of $435,000 in fee differentials which is significantly less than their proportionate share of the subsidy or benefit provided to them by California, the Ninth Circuit held that the differential fees are justified by the state and therefore permitted under the Privileges and Immunities Clause.
The Ninth Circuit also dismissed the claim under the Equal Protection Clause by applying a rational basis standard because commercial fishing fee differentials do not warrant a higher level of scrutiny. The Court held that California's interest in receiving compensation for the benefits it provides to nonresidents is sufficiently a rational basis for the fee differentials.
Dissent: The dissenting opinions argued that there are unnamed class members that paid substantially more in California income taxes than the named plaintiffs, an argument raised by the plaintiffs for the first time during oral argument to the en banc panel. Based on this rationale, the dissenting opinions argued that the out-of-state commercial fishers should be protected under the Privileges and Immunities Clause from having to pay the differential fees.

To read the full opinion, please visit: https://cdn.ca9.uscourts.gov/datastore/opinions/2016/12/21/13-17358.pdf
En Banc Panel: Sidney R. Thomas, Chief Judge, and Stephen Reinhardt, Kim McLane Wardlaw, William A. Fletcher, Marsha S. Berzon, Milan D. Smith, Jr., Mary H. Murguia, Jacqueline H. Nguyen, Andrew D. Hurwitz, John B. Owens, and Michelle T. Friedland, Circuit Judges
Argument Date: June 21, 2016
Date of Issued Opinion: December 21, 2016
Docket Number: No. 13-17358
Decided: Reversed and Remanded
Case Alert Author: Steve Kim
Counsel: M. Elaine Meckenstock (argued) and Gary Alexander, Deputy Attorneys General; Annadel A. Almendras, Supervising Deputy Attorney General; Robert W. Byrne, Senior Assistant Attorney General; Kamala D. Harris, Attorney General; Office of the Attorney General, Oakland, California; for Defendant-Appellant
Stuart G. Gross (argued) and Jared M. Galanis, Gross Law, San Francisco, California; Todd R. Gregorian and Tyler A. Baker, Fenwick & West LLP, Mountain View, California; for Plaintiffs-Appellees
Author of Opinion: Judge Fletcher
Dissents: Judges Smith, Hurwitz, Owens, Reinhardt, and Berzon
Circuit: Ninth
Case Alert Supervisor: Philip L. Merkel

    Posted By: Glenn Koppel @ 03/08/2017 07:11 PM     9th Circuit  

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