Stick to basics on passenger fees

Posted: Sunday, January 23, 2000

Whether you agree or disagree with the $5 passenger fee that was approved by voters in October is irrelevant. It was approved and we need to move on. What is important now, however, is to make sure that the city manager and assembly act responsibly and legally in the way they intend to collect and use the fee proceeds in ordinance. If not, a very long and expensive legal battle is certain to ensue.

With the assembly and school district facing an estimated budget shortfall of $3.8 million, there will be a real temptation to use money collected from passenger fees to balance the budget. Contrary to what some may want you to believe, there are definite restrictions on how the passenger fee proceeds can be used.

In a 10-page memo to the mayor and assembly, City Attorney John Corso addressed the various legal issues regarding the passenger fee. Obviously he was concerned about legal problems with the passenger fee and the potential for a lawsuit or he would not have taken the time to write a 10-page memorandum titled, ``Passenger fee litigation.'' In the memo Corso states, ``This memo is not an opinion on the fee initiative; it is too late for that. Instead, this suggests goals, strategies, and procedures for managing litigation to defend or enforce the fee.'' The following are direct quotes taken from his memo:

``The proposed fee raises some issues under the Commerce Clause of the U.S. Constitution because it contains exceptions that could be read to discriminate against interstate commerce. It may also have some trouble under the Tonnage Clause of the U.S. Constitution if the fee cannot be justified as payment for services rendered directly to the vessel.''

With regard to the commerce clause, Corso says:

``Merchants were unable to take cargo wagons from Boston to New York without paying duty at the Rhode Island and Connecticut borders. This was an untenable situation and it was addressed in the Constitution in Article I, Section 8, Clause 3 which empowers Congress to regulate commerce with foreign nations, and among the several states and with the Indian tribes. The Supreme Court has long read this to limit state and local interference with interstate commerce even when Congress has not regulated the issue in question.'' Further on in the memo, Corso goes on to say, ``We can expect to hear the industry claim that the fee discriminates against interstate commerce because it exempts small vessels, those without berths, those that are ``non-commercial,'' those holding a 501(c)(3) exemption from federal taxation, and those operated by the state. Were it not for these exemptions the fee would have a much better chance of surviving a discrimination claim.''

With regard to the tonnage clause, Corso writes:

``The second major constitutional argument I expect to encounter will be based on the Tonnage Clause, Article I, Section 10, Clause 3 of the Constitution, which says that ``No state shall, without the consent of Congress, lay any Duty of Tonnage.'' This prohibition on state meddling in commerce would appear to duplicate the restrictions imposed by the Commerce Clause.'' Further, ``It is fairly clear that in order to pass muster under the Tonnage Clause, the proposed passenger fee must be linked to services more closely connected with shipping than is required under the Commerce Clause.''

His memo also cites numerous legal cases and case laws which I have not included.

In an earlier article done by the Juneau Empire, Corso was quoted as saying ``The municipality would be well-advised to spend the money on nautical things.'' Corso went on to say that the mandate to spend on ``nautical things'' comes not from the initiative language but from the federal requirement that fees extracted from an industry be spent to mitigate industry-related impacts.

The assembly just recently gave Corso an outstanding evaluation along with a pay increase. That indicates to me that they have the utmost confidence in his professionalism and advice as their attorney. Therefore, I hope they closely follow his advice when adopting the ordinance relating to passenger fees. If not, we could all end up paying more in litigation costs than we will ever see in passenger fee revenue.

Rod Swope is a 30-year resident of Juneau, a former deputy commissioner and commissioner of the Department of Natural Resources, an assembly member for six years and chairman of the assembly finance committee.

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