14. Which of the following is the strongest argument that can be made in support of a continued right of the fishing company to fish for oysters this year in the coastal waters of State A?

Although it had previously held a State A oyster permit, the fishing company did not obtain a permit in that state's lottery this year.

A large fishing company operates from a port in another state and is incorporated in that other state. Each of the boats of the fishing company has a federal shipping license that permits it «to engage in all aspects of the coastal trade, to fish and to carry cargo from place to place along the coast, and to engage in other lawful activities along the coast of the United States.» These shipping licenses are authorized by federal statute. Assume no other federal statutes or administrative rules apply.

State A spends several million dollars a year on an oyster conservation program. As part of that program, the state limits, by statute, oyster fishing in its coastal waters to persons who have state oyster permits. In order to promote conservation, it issues only a limited number of oyster permits each year. The permits are effective for only one year from the date of their issuance and are awarded on the basis of lottery, in which there is no differentiation between resident and nonresident applicants. However, each nonresident who obtains a permit is charged an annual permit fee that is $5 more than the fee charged residents.

Because the state law provides higher permit charges for nonresidents, it is an undue burden on interstate commerce
Because the state law provides higher permit charges for nonresidents, it denies the fishing company the privileges and immunities of state citizenship
Because it holds a federal shipping license, the fishing company has a right to fish for oysters in state waters despite the state law
Because the fishing company previously held a State A oyster permit and the state knows that the company is engaged in a continuing business operation, the refusal to grant the fishing company a permit this year is a taking of its property without due process of law

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The Supremacy Clause (Article VI, Section 1, Clause 2) invalidates any state action that is contrary to validly-enacted federal law. This Clause ensures that the U.S. Constitution, and federal laws made pursuant to it, constitute the supreme law of the land. It prohibits states from interfering with the federal government's exercise of legislative and constitutional powers.

When both a state and the federal government pass legislation in an area, the question of preemption arises. State laws can be preempted directly, such as when a federal law specifies that states may not pass laws in that area (called «express» preemption). State laws can also be preempted through implication, such as when: (i) Congress has legislated so significantly in that area that it preempts state law («field» preemption); (ii) state laws conflict with federal laws; or (iii) state laws interfere too significantly with federal goals.

Article I, Section 8, Clause 3 empowers Congress to «regulate commerce with foreign nations and among the several states, and with the Indian tribes.» Commerce is defined as «every species of commercial intercourse. .. which concerns more states than one» and including virtually every form of activity involving or affecting two or more states. Gibbons v. Ogden, 22 U.S. 1 (1824).

Article IV, Section 2, the Interstate Privileges and Immunities Clause, provides that «[t]he Citizens of each state shall be entitled to all Privileges and Immunities of citizens in the several states.» Thus, it prohibits discrimination by a state against non-residents.

The Fifth Amendment prohibits governmental taking of private property «for public use without just compensation.» As such, both state and federal governments have the right to take private property for public use as long as «just compensation» is paid. This power is known as the right of «eminent domain.»

C is correct. This is the strongest argument in support of the company's continued right to fish in the coastal waters of State A because the state statute is in conflict with the federal licensing law, and under the Supremacy Clause, the valid federal law will supersede the state law. Because the federal statute will prevail, the company will thus be able to continue its oyster fishing on that basis.

A is incorrect. Whether the state law imposes a higher permit charge on non-residents who have been granted a license is irrelevant to the company, who was denied a permit. As such, this would be an ineffective argument for the company's continued right to fish.

B is incorrect. As stated above, the higher charge for non-residents is irrelevant here, where the company was denied a permit and therefore is not subject to any charge. Moreover, the Article IV Privileges and Immunities Clause does not apply to corporations, but only to individuals.

D is incorrect. The permits issued by the state for oyster fishing always only last for one year, which means the property right itself was merely temporary. As such, there was no lasting property right that the state could have «taken» without just compensation.

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14. Which of the following is the strongest argument that can be made in support of a continued right of the fishing company to fish for oysters this year in the coastal waters of State A?

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