June 24, 1997
Representative Jean Preston North Carolina General Assembly State Legislative Building Raleigh, North Carolina 27601
ADVISORY OPINION:Limitations on commercial fishing licenses available to
non-residents in House Bill 1097; U.S. Const., Article IV, Section 2.
Dear Representative Preston:
This responds to your request of June 16, 1997 for an opinion on the constitutionality of treating North Carolina residents and nonresidents differently in commercial fishing licensing, as currently proposed in House Bill 1097 (Fisheries Reform Act-2). Your questions and our answers are set forth below.
1.May the State treat North Carolina residents and nonresidents differently as to the eligibility for commercial licenses? More specifically, may the State treat North Carolina residents and nonresidents differently as to the eligibility for a shellfish license for the harvest and sale of shellfish?
Answer:Yes, if the differing treatment is consistent with the Privileges and Immunities Clause of the United States Constitution. However, for the following reasons, it is not possible to say with confidence that the existing statutory scheme carried forward in House Bill 1097, which bars non-residents from the commercial harvest and cultivation of shellfish, would survive a constitutional challenge.
House Bill 1097 allows issuance of shellfish licenses only to residents of North Carolina. Statutory schemes which limit non-resident access to the State’s resources are subject to scrutiny under the Privileges and Immunities Clause of the United States Constitution.[1] The Privileges and Immunities Clause, Article IV, Section 2 of the United States Constitution protects the right of a citizen to enter any other State to engage in lawful commerce, trade or business; acquire personal property; obtain real estate; bring actions in the courts of the State; and be exempt from higher taxes than the State imposes upon its own citizens. Ward v. Maryland, 79 U.S. 418, 429-30 (1870); Little v. Miles, 204 N.C. 646, 169 S.E. 273 (1933).
n1 The "Law of the Land" clause in the North Carolina Constitution, Art. I, Sec. 19 contains similar limitations; however, the analysis contained in this opinion is limited to United States’ Constitutional concerns.
Although the Clause does not preclude disparity of treatment of non-residents in situations where there are valid independent reasons for such action, it does bar "discrimination against citizens of other States where there is no substantial reason for the discrimination beyond the mere fact that they are citizens of other States." Toomer v. Witsell, 334 U.S. 385, 396 (1948). In Toomer, the Supreme Court invalidated a series of South Carolina statutes which required that non-resident commercial shrimp fishermen pay a license fee of $2500.00, one hundred times higher than resident fishermen for shrimping in the state’s territorial sea. Id.
Cases arising under the Privileges and Immunities Clause have set out a two-pronged analysis in determining whether a statutory scheme setting differing fees based on residency will pass constitutional muster. First, the court will determine whether the benefit or activity constitutes a privilege or immunity protected by the Clause. Second, the court will determine whether there is a substantial state interest served by the disparate treatment of non-residents. Rotunda, Novak & Young, Treatise on Constitutional Law: Substance and Procedure, Sec. 12.7(1986).
Upon review of the language of Ward v. Maryland and Little v. Miles, there is little doubt that commercial shellfishing licenses are privileges that are protected under the Privileges and Immunities Clause. These types of licenses are used for the purpose of engaging in lawful commerce or business, and may be the means to a non-resident’s livelihood. In Baldwin v. Montana, 436 U.S. 371 (1978), the Supreme Court held that Montana could charge non-residents substantially more for recreational elk-hunting licenses since recreational licenses are not a means to a livelihood, and thus are not protected. Conversely, the Court indicated that commercial licenses would be protected by the Privileges and Immunities Clause since these licenses are concerned with "the pursuit of common callings . . ." Baldwin v. Montana, 436 U.S. 371, 378 (citing Ward v. Maryland, 79 U.S. at 430).
Under the second prong of the test, North Carolina must be able to show that allocating commercial shellfishing licenses only to residents bears a substantial relationship to the peculiar "evil" that nonresidents present. Rotunda, supra. We are aware of no information demonstrating this. Assuming that the "evil" is depletion of the resource, a substantial relationship would be hard to show since resident commercial shellfishermen also contribute to this problem. While placing reasonable conditions on licenses or subjecting both residents and non-residents to the same restrictions is acceptable, a licensing statute that discriminates against a class of commercial fishermen solely on the basis of residency will probably not be found by a court to be rationally related to the State’s interest of conserving natural resources.
Existing N.C.G.S. § 113-154(c) and N.C.G.S. § 113-202 both discriminate against nonresidents by restricting the issuance of shellfish licenses and shellfish leases, respectively, only to residents of North Carolina. House Bill 1097 preserves this limitation. These statutes are based on the largely discredited nineteenth century legal fiction that the state "owned" the fish, oysters and wild game within its borders, and thus could reserve them solely for its citizens. McCready v. Virginia, 94 U.S. 391 (1877); Geer v. Connecticut, 161 U.S. 519 (1896), overruled by Hughes v. Oklahoma, 441 U.S. 322 (1979). Like many other States, North Carolina followed the "ownership" theory. State v. Gallop, 126 N.C. 979, 983-4, 35 S.E. 180, 181-2 (1900). However, modern courts which have addressed this question have uniformly rejected that theory as a basis for discriminating against non-residents. For example, Hughes v. Oklahoma, 441 U.S. 322 (1979), expressly overturned Geer v. Connecticut, an 1896 case which had relied on the ownership theory to uphold a Connecticut statute forbidding out-of-state shipment of wild game birds killed within the state. n2 Similarly, Tangier Sound Watermen’s Assoc. v. Douglas, 541 F. Supp. 1287 (E.D. Va. 1982), struck down a Virginia statute prohibiting commercial harvest of blue crabs by nonresidents as violative of the Privileges and Immunities Clause. The case noted that the "ownership" doctrine has been eroded in recent years by the U.S. Supreme Court, but remained a factor to be considered in determining whether discrimination against non-residents violates the Clause. Id. at 1300. See also, Douglas v. Seacoast Products, Inc., 431 U.S. 265, 284 (1977); Hicklin v. Orbeck, 437 U.S. 518, 528-29 (1978).
n2 Even though the Hughes case was decided under the Commerce Clause of the U.S. Constitution, its rejection of the ownership theory as basis for discrimination against non-residents renders the theory suspect. See Douglas v. Seacoast Products, Inc. 431 U.S. 265, 284 (questioning continued vitality of doctrine).
Unlike the Geer decision, McCready v. Virginia, an 1877 case which upheld discriminating against nonresidents in the harvest of shellfish, has not been overturned. It may be possible to justify the existing restrictions in N.C.G.S. § 113-154(c) and N.C.G.S. § 113-202 and the proposed restrictions in House Bill 1097 based on the distinction between shellfish, which are embedded in the soil, and mobile resources, such as crabs and finfish. The McCready court relied in part on the sedentary nature of shellfish in reaching its decision. However, given the uncertainty as to the continued viability of the McCready decision, it is not possible to say with confidence that the existing statutory scheme discriminating against non-residents in the harvest and cultivation of shellfish would survive a constitutional challenge under the Privileges and Immunities Clause. In the words of Mr. Justice Holmes, quoted by the Supreme Court in the 1977 Seacoast Products case, "To put the claim of the State upon title is to lean upon a slender reed." Id. at 284, quoting Missouri v. Holland, 252 U.S. 416, 434 (1920).
2.May the State treat North Carolina residents and nonresidents differently as to the fee required to obtain a particular license? More specifically, may the State treat North Carolina residents and nonresidents differently as to the fees required to obtain: (a) a Standard Commercial Fishing License and (b) a Recreational Commercial Gear License?
a. Standard Commercial Fishing License
Answer:Yes, if the fee structure is consistent with the Privileges and Immunities Clause. However, unless the State can show that the increased fee for non-residents bears a specific relationship to an "evil" peculiar to non-residents, a fee which is so high as to be discriminatory is not likely to survive scrutiny under the Privileges and Immunities Clause.
Under the line of cases discussed above, it is clear that commercial fishing licenses are privileges protected under the Privileges and Immunities Clause. Such licenses are typically used for the pursuit of business, trade and proprietary interests and are often crucial to the non-resident’s primary occupation. See Baldwin v. Montana, 436 U.S. 371 (1978). Because restrictions on a non-resident’s ability to obtain a commercial fishing license are subject to the Privileges and Immunities Clause, North Carolina must be able to show that the restriction bears a substantial relationship to the particular "evil" presented by non-residents. Toomer v. Witsell, supra. If the "evil" to be avoided is the depletion of the resource, a substantial relationship between the "evil" and non-resident’s increased fee would be difficult to show since residents also deplete the resource. However, reasonable restrictions can be placed on the activity so long as it can be shown that the particular harm caused by non-residents is directly addressed by the restriction.
b. Recreational Commercial Gear License
Answer: Yes. Generally, a State may treat residents and non-residents differently in the eligibility for recreational licenses without offending the Privileges and Immunities Clause.
In Baldwin v. Montana, 436 U.S. 371 (1978), the Supreme Court held that Montana could charge non-residents substantially more for recreational elk-hunting licenses (e.g., $9.00 for residents versus $225.00 for non-residents). Unlike the commercial license discussed above, recreational licenses do not concern a means of livelihood or "the pursuit of common callings…" Baldwin v. Montana, 436 U.S. 371, 378 (citing Ward v. Maryland, 79 U.S. at 430). Therefore, assuming a license is truly recreational and not affecting the livelihood of the non-resident, the Privileges and Immunities analysis does not apply. Because holders of the Recreational Commercial Gear License ("RCGL") proposed in House Bill 1097 are prohibited from selling their catch, the RCGL would likely be considered a recreational license for constitutional purposes.
It should be noted that even under a Baldwin analysis, the State must show under the Equal Protection Clause of the United States Constitution that the increased fee charged to non-residents is reasonably related to the preservation of the resource and to a substantial regulatory interest of the State. Id.
3. If the State may treat North Carolina residents and nonresidents differently as to the fee required to obtain a particular license, is there any limitation on the difference between the fee charged to a North Carolina resident and the fee charged to a nonresident?
Answer: Until a specific statute is challenged, it is impossible to know how large a fee disparity the courts will tolerate. There is no magic number. Ruling on a commercial licensing scheme, the Supreme Court struck down a $2500.00 non-resident commercial license which was 100 times greater than the $25.00 resident license. Toomer v. Witsell, 334 U.S. 385 (1948). Ruling on a recreational licensing scheme, the Supreme Court upheld a $225.00 nonresident license which was 25 times greater than the $9.00 resident license. Baldwin v. Montana, 436 U.S. 371 (1978).
Under existing law, non-residents seeking either commercial vessel licenses, or "land or sell" licenses, are charged $200.00 or the amount charged by the non-resident’s state to a North Carolina resident, whichever is greater. N.C.G.S. §§ 113-152(c)(4a); 113-153(b). House Bill 1097 provides the following fee schedule for a Standard Commercial Fishing License ("SCFL"): (e) Fees. — The annual SCFL fee for a North Carolina resident shall be two hundred dollars ($200.00). The annual SCFL fee for a person who is not a resident of North Carolina shall be two thousand dollars ($2,000) or the amount charged to a North Carolina resident in the nonresident’s state, whichever is lesser.
The non-resident fee is dependent on the amount charged North Carolina fishermen by the non-resident’s home state, with a ceiling of $2000.00. However, non-resident applicants (age 65 or older) for a Retired SCFL, which is also a commercial license, pay the only same $100.00 fee as a resident. Residents and non-residents pay the same for license endorsements allowing the use of a vessel. The bill retains the existing fee for an individual commercial crab license at $7.50 for a resident, and $100.00 for a non-resident (with an extra $22.50 to use a vessel, regardless of residency). Individual commercial shellfish licenses are available only to residents, for $25.00. The resident fee for the non-commercial RCGL is $35.00, while non-residents are to pay $250.00.
More important than the particular fee disparity is the ability to show that it is related to the preservation of the resource, or some other lawful state interest, such as increased law enforcement costs for checking conviction records in other states. As noted, the Supreme Court has held that increased commercial license fees for non-residents must be related to some "evil" that is peculiar to nonresidents.
An informal survey of several other southeastern coastal states revealed that all of the states surveyed treat non-residents somewhat differently than residents. These states generally have a variance in fees, but some also have enacted restrictions related to fees charged out-of-state fishermen.
South Carolina does not currently charge higher fees to non-residents. Rather, different groups are licensed, such as captains and trawlers, and these constitute the commercial license. South Carolina’s statutory scheme, however, is undergoing substantial amendment, which includes a proposal is to charge $25.00 for a resident license and $300.00 for a non-resident license.
The statutory scheme in Louisiana makes several distinctions between residents and non-residents for licensing purposes. Its scheme applies to the various kinds of license, including commercial and gear licenses. Generally, the non-resident’s license fee is three time higher than the resident’s.
Florida distinguishes between residents and non-residents for purposes of recreational licenses and commercial licenses. Commercial fishing licenses are $50.00 for a resident and $200.00 for a non-resident commercial license. Vessel licenses are also available which differentiate between resident, $100.00, and non-resident, $400.00. Likewise, recreational licenses are $12.00 per year for residents and $30.00 year for non-residents.
Alabama charges residents $200.00 and non-residents $400.00 for a basic commercial net fishing license. Commercial gill net licenses are $300.00 per year for residents and $1,500.00 per year for non-residents. If the fisherman is fishing with gill nets during certain specified seasons, the resident’s license fee is an additional $500.00 and the non-resident’s an additional $2,500.00. Commercial hook and line licenses are $100.00 for residents and $200.00 for non-residents.
Georgia’s statutory scheme for commercial licenses provides for a resident fee of $12.00 and $118.00 for a non-resident. Both must also purchase a vessel license (trawler or non-trawler). The fees are the same for the vessel license, although the non-resident has an additional $25.00 fee. In addition, the non-resident may be subject to a higher license fee if the Commissioner determines that the non-resident’s state of origin charges a substantially higher license fee. Georgia, however, no longer automatically sets the fees commensurate with the reciprocal state.
Although the fees vary considerably from state to state, only Alabama has a scheme that approaches the great fee disparity between residents and non-residents provided by House Bill 1097. Even the Alabama scheme only charges non-residents five times more than residents. While South Carolina’s proposed legislation sets a commercial non-resident fee which exceeds the resident fee by over ten times, the difference between the resident and non-resident fee is $275.00, as opposed to a maximum of $1800.00 in House Bill 1097.
Under the bill’s provision that a non-resident pays the lesser of $2,000.00 or the fee charged North Carolina fishermen by the non-resident’s state, a Georgia fishermen would pay only $143.00 for a SCFL (which is actually less than the SCFL fee for a North Carolina resident), while an Alabama fisherman could potentially be charged the full $2,000.00 maximum fee. Unless the State can show that the increased fee for non-residents bears a specific relationship to a problem uniquely caused by non-residents, the increased fee is not likely to survive scrutiny under the Privileges and Immunities Clause.
Thank you for your request. Please advise if we may be of further assistance.
Very truly yours,
Daniel C. Oakley Senior Deputy Attorney General
J. Allen Jernigan Special Deputy Attorney General