Can North Carolina bar nonresidents from holding shellfish licenses, and how much higher can it set commercial-fishing license fees for out-of-state fishermen, without violating the U.S. Constitution?
Plain-English summary
Representative Jean Preston was carrying House Bill 1097, the Fisheries Reform Act-2, which would have set a $200 Standard Commercial Fishing License fee for North Carolina residents and a $2,000 fee for nonresidents (capped at whatever the nonresident's home state charged North Carolinians, whichever was lower). The bill also carried forward the existing flat ban on shellfish licenses for anyone but a North Carolina resident under NCGS 113-154(c) and the equivalent ban on shellfish leases under NCGS 113-202. Preston wanted to know whether either piece would survive a constitutional challenge.
Senior Deputy AG Daniel Oakley and Special Deputy AG J. Allen Jernigan, for AG Easley, said the recreational gear license disparity was constitutional, the shellfish bar was constitutionally doubtful, and the commercial license fee disparity probably could not be defended at $1,800.
On the shellfish ban: the U.S. Supreme Court's Privileges and Immunities Clause cases (Toomer v. Witsell, Baldwin v. Montana) require that any state law treating commercial licenses differently for nonresidents bear a substantial relationship to a specific "evil" that nonresidents uniquely cause. The historic justification for shellfish bans, that the state "owned" the shellfish under McCready v. Virginia (1877) and Geer v. Connecticut (1896), has been substantially eroded. Hughes v. Oklahoma (1979) overruled Geer. Douglas v. Seacoast Products (1977) quoted Justice Holmes calling the state-ownership claim "a slender reed." McCready itself was never expressly overruled, and there is an argument from the sedentary nature of shellfish that the state's interest is stronger here than for mobile fish, but the AG could not say with confidence that the flat resident-only bar would survive.
On the commercial fishing fee disparity: the AG identified the standard test from Toomer. Commercial licenses are protected privileges because they are tied to a livelihood (Baldwin held recreational elk-hunting licenses were not protected for the same reason). North Carolina would need to show the higher nonresident fee bears a substantial relationship to a particular harm nonresidents uniquely cause, like increased enforcement costs from cross-state conviction record checks. A bare 10:1 fee multiplier driven by a desire to reserve the resource for in-state fishermen would not pass scrutiny. The AG flagged that among surveyed southeastern coastal states, only Alabama approached this disparity, and even Alabama capped it at 5:1.
On the Recreational Commercial Gear License: because RCGL holders are prohibited from selling their catch, the license is recreational rather than commercial. Under Baldwin, recreational license fees can vary substantially between residents and nonresidents (Montana charged 25 times more for nonresident elk-hunting licenses and the Court upheld it). The proposed $35 resident / $250 nonresident RCGL disparity is acceptable.
On the size of permissible disparity: there is no magic number. Toomer struck down a 100:1 commercial fee multiplier. Baldwin upheld a 25:1 recreational fee multiplier. The question is not whether the resident pays less but whether the State can articulate a defensible reason why the gap exists. Without that articulation, HB 1097's nonresident commercial fee is exposed.
Currency note
This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. House Bill 1097 was the Fisheries Reform Act, eventually enacted in modified form. The current commercial and recreational fishing license statutes in NCGS Chapter 113 have been amended multiple times since 1997. The U.S. Supreme Court's modern Privileges and Immunities jurisprudence has continued to evolve. Anyone working with the current statutory scheme must read the current statutes, the federal cases since 1997, and any state cases applying them.
Background and statutory framework
North Carolina's commercial fisheries licensing scheme was, in 1997, a patchwork built up from decades of incremental amendments. NCGS 113-152 governed standard commercial fishing licenses and prescribed nonresident fees that piggy-backed on what the nonresident's home state charged North Carolinians, but with a $200 floor. NCGS 113-153 covered "land or sell" licenses with similar mechanics. NCGS 113-154(c) and NCGS 113-202 flatly excluded nonresidents from shellfish licenses and leases.
House Bill 1097 was the Fisheries Reform Act-2, an attempt to consolidate and modernize the licensing scheme. The bill kept the flat shellfish exclusion. The biggest change for nonresidents was the ceiling-raising of the standard commercial license fee from $200 to $2,000 (or the reciprocal state's fee, whichever was lower).
The constitutional doctrine the AG had to apply is the Privileges and Immunities Clause of Article IV, Section 2 of the U.S. Constitution. The Clause protects nonresidents from state laws that discriminate against them in matters tied to a livelihood: pursuing common callings, acquiring property, suing in state courts. Toomer v. Witsell (1948) is the foundational case: South Carolina charged nonresident commercial shrimp fishermen 100 times more than residents, and the Supreme Court invalidated the law because the State could not show the fee disparity bore a substantial relationship to a particular harm nonresidents caused.
The state-ownership doctrine that historically justified resident-only shellfish licenses traces to nineteenth-century cases. McCready v. Virginia (1877) held Virginia could exclude nonresidents from oyster planting because the State "owned" the oyster beds. Geer v. Connecticut (1896) extended the theory to wild game birds. The doctrine has been substantially undermined: Hughes v. Oklahoma (1979) expressly overruled Geer; Douglas v. Seacoast Products questioned the entire theory; Tangier Sound Watermen's Assoc. (E.D. Va. 1982) struck down a Virginia ban on nonresident commercial blue crab harvesting on Privileges and Immunities grounds.
McCready itself has not been formally overruled, and the AG noted that some courts continue to apply it to sedentary species like shellfish that are physically embedded in state-owned soil. That distinction gives North Carolina some defensible ground on the shellfish bar, but Oakley and Jernigan were unwilling to say the existing scheme would hold up.
Common questions
Could North Carolina charge nonresidents any extra fee at all for a commercial license?
Yes, but only enough to recover specific costs the State can document as caused by nonresident participation, such as the additional cost of running out-of-state criminal record checks before issuing the license. A defensible fee would track those costs. A fee set high enough to deter participation, or to subsidize resident fishermen, would not.
Did the AG say HB 1097 would definitely be struck down?
No. The AG said the bill's $2,000 nonresident SCFL fee would "not likely" survive scrutiny unless North Carolina could show the increased fee was tied to a specific harm uniquely caused by nonresidents. That is a constitutional risk assessment, not a guaranteed outcome. The Privileges and Immunities Clause is a balancing test, not a flat rule, and the analysis depends on the record the State can build.
What about Equal Protection?
The Privileges and Immunities Clause is the primary doctrine for resident-only restrictions on out-of-state economic activity, but the AG noted that even under Baldwin's analysis of recreational licenses, the State still has to show under the Equal Protection Clause that any increased nonresident fee is reasonably related to a substantial regulatory interest. So Equal Protection is the secondary backstop.
How does the McCready shellfish exception fit?
McCready (1877) upheld a Virginia oyster-planting ban as applied to nonresidents on the rationale that the State owned the oyster beds. The Supreme Court has not expressly overruled it. The AG flagged that there is an argument that shellfish, being sedentary and physically embedded in state-controlled tidal bottoms, sit closer to "real property" than to "wild animals" and so the McCready logic might still apply. But the broader erosion of state-ownership doctrine, especially after Hughes v. Oklahoma, makes that argument shaky. The AG's bottom line was that McCready's continued viability is uncertain.
Did the AG address the Commerce Clause separately?
Not extensively. The Privileges and Immunities Clause was the focus. The opinion notes that Hughes v. Oklahoma was decided on Commerce Clause grounds, and the AG cited Hicklin v. Orbeck (1978) and Douglas v. Seacoast Products (1977) for related propositions, but the analysis is Privileges-and-Immunities-anchored. A challenger to HB 1097 in court would likely raise both clauses; in 1997, the Privileges and Immunities theory was the stronger of the two.
Source
- Landing page: https://ncdoj.gov/opinions/limitations-on-commercial-fishing-licenses-available-to-non-residents-2/
Citations
- U.S. Const. art. IV, § 2
- N.C. Const. art. I, § 19
- N.C. Gen. Stat. §§ 113-152(c)(4a), 113-153(b), 113-154(c), 113-202
- House Bill 1097 (1997 session)
- Ward v. Maryland, 79 U.S. 418 (1870)
- Little v. Miles, 204 N.C. 646, 169 S.E. 273 (1933)
- Toomer v. Witsell, 334 U.S. 385 (1948)
- Baldwin v. Montana, 436 U.S. 371 (1978)
- Hughes v. Oklahoma, 441 U.S. 322 (1979)
- Hicklin v. Orbeck, 437 U.S. 518 (1978)
- Douglas v. Seacoast Products, Inc., 431 U.S. 265 (1977)
- Geer v. Connecticut, 161 U.S. 519 (1896)
- McCready v. Virginia, 94 U.S. 391 (1877)
- State v. Gallop, 126 N.C. 979, 35 S.E. 180 (1900)
- Tangier Sound Watermen's Assoc. v. Douglas, 541 F. Supp. 1287 (E.D. Va. 1982)
- Missouri v. Holland, 252 U.S. 416 (1920)
Original opinion text
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.
- 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. 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.
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 . . ."
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. 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. 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. See also Douglas v. Seacoast Products, Inc., 431 U.S. 265, 284 (1977); Hicklin v. Orbeck, 437 U.S. 518, 528-29 (1978).
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).
- 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.
- 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 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 times 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 per 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 fisherman 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