                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


JAMES COURTNEY and CLIFFORD              No. 12-35392
COURTNEY,
            Plaintiffs-Appellants,          D.C. No.
                                         2:11-cv-00401-
                 v.                           TOR

JEFFREY GOLTZ, chairman and
commissioner; PATRICK OSHIE,               OPINION
commissioner; PHILIP JONES,
commissioner, in their official
capacities as officers and members
of the Washington Utilities and
Transportation Commission; DAVID
DANNER, in his official capacity as
executive director of the Washington
Utilities and Transportation
Commission,
                Defendants-Appellees.


      Appeal from the United States District Court
        for the Eastern District of Washington
       Thomas O. Rice, District Judge, Presiding

                 Argued May 6, 2013
              Submitted December 2, 2013
                 Seattle, Washington

                Filed December 2, 2013
2                      COURTNEY V. GOLTZ

     Before: Michael Daly Hawkins, Sidney R. Thomas,
         and Jacqueline H. Nguyen, Circuit Judges.

                    Opinion by Judge Nguyen


                           SUMMARY*


                Civil Rights/Pullman Doctrine

   The panel affirmed in part and vacated in part the district
court’s dismissal of an action in which plaintiffs challenged
Washington statutes that require a certificate of “public
convenience and necessity” in order to operate a ferry on
Lake Chelan in central Washington state.

    Plaintiffs first alleged that the state laws abridged their
right to use the navigable waters of the United States, in
violation of the Privileges or Immunities Clause of the
Fourteenth Amendment. The panel held that the Privileges or
Immunities Clause of the Fourteenth Amendment does not
encompass a right to operate a public ferry on intrastate
navigable waterways and affirmed the district court’s
dismissal of this claim.

    Plaintiffs also challenged the certificate requirement as
applied to the provision of boat transportation services on
Lake Chelan solely for patrons of specific businesses. As to
this claim, the panel found that the district court properly
abstained from deciding the issue under the doctrine set forth

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                    COURTNEY V. GOLTZ                          3

in Railroad Commission of Texas v. Pullman Co., 312 U.S.
496 (1941), but that the district court should have retained
jurisdiction instead of dismissing the claim. Therefore, the
panel vacated and remanded the second claim with
instructions that the district court retain jurisdiction over the
constitutional challenge.



                         COUNSEL

Michael Eugene Bindas (argued) and Jeanette Motee
Petersen, Institute for Justice, Bellevue, Washington, for
Plaintiffs-Appellants.

Fronda Colleen Woods (argued), Assistant Attorney General,
Office of the Attorney General, Olympia, Washington, for
Defendants-Appellees.

David Wiley, Williams Kastner, Seattle, Washington, for
Amicus Curiae.


                          OPINION

NGUYEN, Circuit Judge:

    James and Clifford Courtney challenge Washington
statutes that require a certificate of “public convenience and
necessity” (“PCN”) in order to operate a ferry on Lake
Chelan in central Washington state. The Courtneys claim that
these state laws abridge their right to use the navigable waters
of the United States, in violation of the Privileges or
Immunities Clause of the Fourteenth Amendment. The
4                   COURTNEY V. GOLTZ

Washington Utilities and Transportation Commission and its
various officers and directors (collectively, “WUTC”)
successfully moved to dismiss the case and this appeal
followed.

    The Courtneys’ first claim for relief challenges the
constitutionality of the PCN requirement as applied to the
provision of public ferry service on Lake Chelan. We hold
that the Privileges or Immunities Clause of the Fourteenth
Amendment does not encompass a right to operate a public
ferry on intrastate navigable waterways and affirm the district
court’s dismissal of this claim. The Courtneys’ second claim
challenges the PCN requirement as applied to the provision
of boat transportation services on Lake Chelan solely for
patrons of specific businesses. As to this claim, we find that
the district court properly abstained from deciding the issue
under the Pullman doctrine, but that it should have retained
jurisdiction instead of dismissing the claim. Therefore, we
vacate and remand the second claim with instructions that the
district court retain jurisdiction over the constitutional
challenge.

                       BACKGROUND

                              I

    James and Clifford Courtney are fourth-generation
residents of Stehekin, a small unincorporated community on
the northwest end of Lake Chelan in central Washington
state. Lake Chelan is a narrow, fifty-five-mile long lake,
which has been designated by the Army Corps of Engineers
as a “navigable water of the United States.” The northwest
portion of Lake Chelan, including Stehekin, is part of the
Lake Chelan National Recreation Area. Although it is only
                         COURTNEY V. GOLTZ                                  5

accessible by boat, plane, or foot, Stehekin has long been a
summer destination for tourists.              See WUTC,
Appropriateness of Rate and Service Regulation of
Commercial Ferries Operating on Lake Chelan 3–4 (2010),
available at http://www.wutc.wa.gov/webimage.nsf/0/
d068a7290f85512a882576ac007e2d73/ (“Ferry Report”).
The Courtneys and their siblings own and operate several
businesses in Stehekin, which provide lodging and
recreational activities such as white water rafting tours and
horseback riding.

    Most tourists and residents reach Stehekin by way of a
public ferry operated by the Lake Chelan Boat Company.
The state has regulated ferry service on Lake Chelan since
1911. By the 1920s, there were at least four different ferry
companies offering services on Lake Chelan. Then, in 1927,
the Washington legislature enacted a law that conditioned the
right to operate a ferry service upon certification that such
service was required by “public convenience and necessity.”1




  1
    The Courtneys cite a 1927 Seattle Daily Times article in support of
their argument that the legislature’s goal in passing the PCN requirement
was to protect existing ferry owners from competition, and have asked that
we take judicial notice of this article. Because we do not rely upon the
article, we deny the motion.

     The Ferry Report describes the rationale for the regulation as follows:
for certain industries that “typically have very high capital costs, benefit
from economies of scale, and provide an indispensable service to the
public[,] . . . the legislature has made a judgment that the public’s interest
in reliable and affordable service is best served by a single, economically
regulated provider whose owners can make the sizeable investments
needed to initiate and maintain service without the threat of having
customers drawn away by a competing provider.” Ferry Report 11.
6                   COURTNEY V. GOLTZ

                               II

                               A

    In its current form, Washington Revenue Code
§ 81.84.010 dictates that a “commercial ferry may not operate
any vessel or ferry for the public use for hire between fixed
termini or over a regular route upon the waters within
[Washington] . . . without first applying for and obtaining
from the [WUTC] a certificate declaring that public
convenience and necessity require such operation.” Wash.
Rev. Code § 81.84.010(1). In order to obtain a PCN
certificate, a potential ferry operator must prove that its
proposed operation is required by “public convenience and
necessity,” and that it “has the financial resources to operate
the proposed service for at least twelve months.” Id.
§ 81.84.020(1)–(2). If the territory in which the applicant
desires to set up operation is already served by a commercial
ferry company, no PCN certificate may be granted unless the
applicant proves that the existing certificate holder: “[(a)] has
failed or refused to furnish reasonable and adequate service[;
(b)] has failed to provide the service described in its
certificate or tariffs after the time allowed to initiate service
has elapsed[;] or [(c)] has not objected to the issuance of the
certificate as prayed for.” Id. § 81.84.020(1).

                               B

     Since the statute’s enactment, only one PCN certificate
has been issued for providing ferry services on Lake Chelan.
It is now held by Lake Chelan Recreation, Inc. d/b/a Lake
                        COURTNEY V. GOLTZ                                 7

Chelan Boat Company.2 In 1997, James Courtney applied for
a PCN certificate to operate a commercial ferry out of
Stehekin. The Lake Chelan Boat Company objected, and the
WUTC denied Courtney’s application, finding that the Lake
Chelan Boat Company provided “reasonable and adequate
service,” the proposed service might “tak[e] business from”
the company, and Courtney failed to satisfy the financial
responsibility requirement. Courtney did not seek judicial
review of the WUTC’s decision. See Wash. Rev. Code
§§ 34.05.570, 34.05.574.

    In 2006, James Courtney explored the possibility of
starting an on-call boat service out of Stehekin, which he
thought might fall within the “charter service” exemption to
the PCN requirement. Because the proposed service would
need to utilize federally owned docks, Courtney applied to the
United States Forest Service for a special-use permit, which
required confirmation that the proposed service was actually
exempt from the PCN requirement. The WUTC initially
opined that a PCN certificate would not be needed for the
proposed on-call boat service, but changed its mind after the
Lake Chelan Boat Company objected to the proposal.
Several months later, the WUTC again reversed course,
indicating that the proposed service would be exempt from
the PCN requirement. However, no formal decision was ever
rendered. WUTC’s executive director, David Danner, did not
respond to the Forest Service’s request for an advisory
opinion on this issue.




   2
      At least four potential ferry operators have applied for a PCN
certificate over the last sixty years, but all were denied by the WUTC after
Lake Chelan Boat Company objected to the applications.
8                   COURTNEY V. GOLTZ

    In 2008, Clifford Courtney wrote to David Danner,
inquiring whether various other kinds of boat transportation
services (distinct from the proposed on-call service) would
require a PCN certificate. The suggested services included
(a) one in which Clifford would charter a boat and offer
transportation as part of a package for guests who intended to
stay at his ranch and go river rafting, and (b) a scenario in
which he would purchase his own vessel in order to transport
patrons of his various Stehekin-based businesses. Danner
responded that such services would require a certificate
because they would still be “for the public use for hire,” and
that it “[did] not matter whether the transportation [Clifford]
would provide [was] ‘incidental to’” other businesses.
However, Danner noted that his response merely reflected the
opinion of the WUTC staff and Courtney was free to pursue
a formal declaratory ruling by the commissioners provided
that “the existing certificate holder . . . agree[d] to
participate” in the proceeding. Were Courtney simply to
proceed with the proposed service, the WUTC could initiate
a “classification proceeding,” during which Clifford would be
required to testify and prove that his activities did not require
a PCN certificate. The WUTC also orally confirmed to
Courtney that his proposed services would likely require a
PCN certificate.

                               C

    In 2009, after Clifford Courtney wrote to the governor
and several state legislators regarding the PCN requirement,
the legislature directed the WUTC to conduct a study on the
regulation of commercial ferry services on Lake Chelan. The
report by the WUTC, which issued in January 2010,
concluded that Lake Chelan Boat Company was providing
satisfactory service and recommended that there be no change
                    COURTNEY V. GOLTZ                        9

to the existing laws and regulations. The WUTC noted that
there might be flexibility under the existing law to permit
some competition by exempting certain services from the
PCN certificate requirement, provided that any such service
would not “significantly threaten” the existing certificate
holder’s business.

                              D

    In October 2011, the Courtneys sued the WUTC and
various commissioners and directors in their official
capacities, seeking declaratory and injunctive relief pursuant
to 42 U.S.C. § 1983 and 28 U.S.C. § 2201. The Courtneys
claimed that the PCN requirement abridges their right to use
the navigable waters of the United States under the Privileges
or Immunities Clause of the Fourteenth Amendment, and is
therefore unconstitutional.

    The WUTC moved to dismiss the Courtneys’ complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6), and the
district court granted the motion. The district court dismissed
the Courtneys’ first claim—challenging the constitutionality
of the PCN requirement as applied to the provision of public
ferry service on Lake Chelan—with prejudice. The district
court concluded that it was unclear that the “right to use the
navigable waters of the United States” was “truly a
recognized Fourteenth Amendment right,” and that even if it
was, it did not extend to protect the right “to operate a ferry
service open to the public.” The district court dismissed the
Courtneys’ second claim—challenging the constitutionality
of the PCN requirement as applied to provision of boat
transportation services on Lake Chelan solely for patrons of
specific businesses—without prejudice. As to the second
claim, the court held that the Courtneys lacked standing; their
10                  COURTNEY V. GOLTZ

claim was unripe; and, notwithstanding its ripeness finding,
the court would abstain pursuant to Railroad Commission of
Texas v. Pullman Co., 312 U.S. 496 (1941).

                         DISCUSSION

                               I

     To state a claim for relief under 42 U.S.C. § 1983, the
Courtneys must allege facts that, if true, constitute a violation
of a right guaranteed by the United States Constitution.
Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th
Cir. 1990). Their claim for declaratory relief under 28 U.S.C.
§ 2201 similarly requires that the Courtneys allege facts that,
if true, would violate federal law. See Skelly Oil Co. v.
Phillips Petroleum Co., 339 U.S. 667, 672 (1950).

    “We review de novo a district court’s dismissal for failure
to state a claim under Federal [Rule of] Civil [Procedure]
12(b)(6).” Aguayo v. U.S. Bank, 653 F.3d 912, 917 (9th Cir.
2011). In doing so, we take all factual allegations in the
complaint as true and construe them in the light most
favorable to the Courtneys. See id.

                               II

                               A

    The Courtneys argue that the district court erred in
dismissing their first claim relating to the provision of public
ferry service because the Privileges or Immunities Clause of
the Fourteenth Amendment protects the right “to use the
                        COURTNEY V. GOLTZ                            11

navigable waters of the United States.”3 We agree with the
district court that even if the Privileges or Immunities Clause
recognizes a federal right “to use the navigable waters of the
United States,” the right does not extend to protect the
Courtneys’ use of Lake Chelan to operate a commercial
public ferry.

    In its seminal decision interpreting the Privileges or
Immunities Clause of the Fourteenth Amendment—the
Slaughter-House Cases, 83 U.S. 36 (1872)—the Supreme
Court upheld a Louisiana statute that granted a private
company the exclusive right to operate a slaughter-house on
the Mississippi River. Id. at 58–61, 83. In doing so, the
Court distinguished between rights that accompany state
citizenship and those that exist by virtue of United States
citizenship. Id. at 72–77. The Court explained that the
Fourteenth Amendment protects “the privileges or
immunities of citizens of the United States,” which are
distinct from those that exist by virtue of state citizenship. Id.
at 73–74 (emphasis in original).




 3
     Section I of the Fourteenth Amendment reads:

          All persons born or naturalized in the United States,
          and subject to the jurisdiction thereof, are citizens of
          the United States and of the state wherein they reside.
          No state shall make or enforce any law which shall
          abridge the privileges or immunities of citizens of the
          United States; nor shall any state deprive any person of
          liberty, or property, without due process of law; nor
          deny to any person within its jurisdiction the equal
          protection of the laws.

U.S. Const. amend. XIV, § 1 (emphasis added).
12                  COURTNEY V. GOLTZ

    The “privileges and immunities” referred to in Article IV
are conferred by state citizenship and consist of those rights
“which are fundamental; which belong of right to the citizens
of all free governments, and which have at all times been
enjoyed by citizens of the several States which compose this
Union, from the time of their becoming free, independent,
and sovereign.” Id. at 76 (first emphasis added, second
emphasis in original). They fall under “the following general
heads: protection by the government, with the right to acquire
and possess property of every kind, and to pursue and obtain
happiness and safety, subject, nevertheless, to such restraints
as the government may prescribe for the general good of the
whole.” Id. (internal quotation marks omitted).

    By contrast, the “privileges or immunities” discussed in
the Fourteenth Amendment consist of rights “which ow[e]
their existence to the Federal government, its National
character, its Constitution, or its laws.” Id. at 79 (emphasis
added). In analyzing the legislative history of the Thirteenth
and Fourteenth Amendments, the Court noted that “the one
pervading purpose” of the amendments was to ensure “the
freedom of the slave race, the security and firm establishment
of that freedom, and the protection of the newly-made
freeman and citizen from the oppressions of those who had
formerly exercised unlimited dominion over him.” Id. at 71.

                              B

    The Supreme Court in the Slaughter-House Cases
ultimately concluded that the rights asserted by the butchers
were rights “which belong to citizens of the States as such,”
and therefore the Court did not need to “defin[e] the
privileges and immunities of citizens of the United States
which no State can abridge, until some case involving those
                    COURTNEY V. GOLTZ                         13

privileges [made] it necessary to do so.” Id. at 78–79.
However, the Court suggested some examples of inherently
federal privileges, such as the right “to demand the care and
protection of the Federal government over his life, liberty,
and property when on the high seas . . .[,] [t]he right to
peaceably assemble and petition for redress of grievances, . . .
[and t]he right to use the navigable waters of the United
States, however they may penetrate the territory of the several
States.” Id. at 79 (emphasis added).

    The Courtneys’ case is predicated entirely on the Supreme
Court’s passing reference to a “right to use the navigable
waters of the United States”—a phrase that has yet to be
interpreted by a single federal appellate court in the privileges
or immunities context. As such, the boundaries of the term
“use” have not been established. Still, we are not faced with
an entirely blank slate. The historical backdrop upon which
the Supreme Court enunciated the navigable waterway right
strongly suggests that the Court did not intend a panoptic
definition of the term. Moreover, our Privileges or
Immunities Clause jurisprudence does not support an
interpretation that would foreclose states from regulating
public transportation upon their intrastate navigable
waterways. Thus, even if we assume that the examples of
rights deriving from national citizenship set forth by the
Supreme Court in the Slaughter-House Cases are not mere
dicta, we nevertheless find that the right “to use the navigable
waters of the United States” does not include a right to
operate a public ferry on Lake Chelan.

   Turning to the historical context, Article 4 of the
Northwest Ordinance of 1787 established navigable waters
within newly federal territory as “common highways” that
would be “forever free,” even in the event portions of the
14                       COURTNEY V. GOLTZ

Northwest Territory were incorporated into newly formed
States. Ordinance of 1787 art. IV; Econ. Light & Power Co.
v. United States, 256 U.S. 113, 118–19 (1921) (“The public
interest in navigable streams . . . does not arise from custom
or implication, but has a very definite origin[;] [b]y article 4
of the compact in the Ordinance of July 13, 1787 . . . it was
declared: ‘The navigable waters . . . shall be common
highways, and forever free . . . as to the citizens of the United
States . . . .’”).

    Cases interpreting the language in the Northwest
Ordinance emphasize the states’ responsibility to avoid
destroying navigable waters or rendering them unnavigable.4
The Supreme Court has explicitly held that the Ordinance did


 4
   See, e.g., Ill. River Packet Co. v. Peoria Bridge Ass’n, 38 Ill. 467, 479
(1865) (“The ordinance does not mean that the river and its navigation
shall be . . . free from all and every condition, but only that it shall be free
from obstruction . . . .”); Nedtweg v. Wallace, 237 Mich. 14, 20 (1926)
(“[T]he [1787] ordinance accomplished no more than to preserve the
rivers and lakes as common highways and in no sense prevents the state
from granting the soil under navigable waters to private owners. The state
is sovereign of the navigable waters within its boundaries, bound,
however, in trust, to do nothing in hindrance of the public right of
navigation, hunting, and fishing.” (citation omitted)); Sewers v.
Hacklander, 219 Mich. 143, 150 (1922) (holding that Article 4 of the
Northwest Ordinance has “no bearing upon riparian rights and ownership,
except [if] there is an interference with navigation”); Hogg v. Zanesville
Canal & Mfg. Co., 5 Ohio 410, 416 (1832) (“Every citizen of the United
States has a perfect right to its free navigation. A right derived, not from
the legislature of Ohio, but from a superior source. With this right the
legislature can not interfere. In other words, they can not, by any law
which they may pass, impede or obstruct the navigation of this river.”);
Spooner v. McConnell, 22 F. Cas. 939, 945 (Ohio C.C. 1838) (“[T]he
legislature may improve . . . the navigable rivers of the state, and authorize
the construction of any works on them which shall not materially obstruct
their navigableness.”).
                    COURTNEY V. GOLTZ                         15

not prevent states from granting exclusive ferry franchises, so
long as such franchises did not encroach on the federal
commerce power. See Fanning v. Gregoire, 16 How. (U.S.)
524, 534 (1853) (holding that “the free navigation of the
Mississippi river . . . does not . . . interfere with the police
power of the States, in granting ferry licenses”); Conway v.
Taylor, 66 U.S. 603, 635 (1861) (noting that “[since] before
the Constitution had its birth, the States have exercised the
power to establish and regulate ferries,” not Congress, and
that “the authority [to do so] lies within the scope of ‘that
immense mass’ of undelegated powers which ‘are reserved to
the States respectively[]’”).

    In light of the foregoing, a reasonable interpretation of the
right to “use the navigable waters of the United States,” and
the one we adopt, is that it is a right to navigate the navigable
waters of the United States. Here, it is clear that the
Courtneys wish to do more than simply navigate the waters
of Lake Chelan. Indeed, they are not restrained from doing
so in a general sense. Rather, they claim the right to utilize
those waters for a very specific professional venture. While
navigation of Lake Chelan is a necessary component of the
Courtneys’ proposed activity, it is neither sufficient to
achieve their purpose nor the cause of their dissatisfaction.
The Supreme Court in the Slaughter-House Cases declined to
define the plaintiffs’ asserted rights broadly, finding that the
statute did not prohibit the butchering of animals in general
because it was specifically “the slaughter-house privilege,
which [was] mainly relied on to justify the charges of gross
injustice to the public, and invasion of private right.”
Slaughter-House Cases, 83 U.S. at 61. Similarly here, the
district court correctly identified the actual privilege at stake
as a ferry operation privilege, not a broad navigation
privilege. Were navigation all the Courtneys wished to do,
16                   COURTNEY V. GOLTZ

they would not need the WUTC’s permission and this dispute
would never have arisen. We find it exceedingly unlikely
that the Supreme Court in the Slaughter-House Cases
contemplated operation of a public ferry as part of the right
“to use the navigable waters of the United States,” so as to
divest the states of their historic authority to regulate public
transportation on intrastate navigable waterways.

    Indeed, the Slaughter-House decision, itself, contains
suggestions that contradict such an understanding. In
discussing the nature of the states’ police power, the majority
noted that, with respect to “laws for regulating the internal
commerce of a State, and those which respect . . . ferries . . .
[, n]o direct general power . . . is granted to Congress; and
consequently they remain subject to State legislation.” Id. at
63 (quoting Gibbons v. Ogden, 22 U.S. (Wheaton) 1, 203
(1824)) (internal quotation marks omitted). Moreover, while
the dissenting minority disagreed with the majority’s
acceptance of a slaughter-house monopoly, it seemed to
approve of ferry franchises, stating that

        [i]t is the duty of the government to provide
        suitable roads, bridges, and ferries for the
        convenience of the public, and if it chooses to
        devolve this duty to any extent . . . upon
        particular individuals or corporations, it may
        of course stipulate for such exclusive
        privileges . . . as it may deem proper, without
        encroaching upon the freedom or the just
        rights of others.

Id. at 88 (Field, J., dissenting).
                        COURTNEY V. GOLTZ                               17

   Further, the driving force behind this litigation is the
Courtneys’ desire to operate a particular business using Lake
Chelan’s navigable waters—an activity driven by economic
concerns. We have narrowly construed the rights incident to
United States citizenship enunciated in the Slaughter-House
Cases, particularly with respect to regulation of intrastate
economic activities. See, e.g., Merrifield v. Lockyer,
547 F.3d 978, 983–84 (9th Cir. 2008).5

                                    C

    Finally, although the Slaughter-House Court
acknowledged that “the right to engage in one’s profession of
choice” was a “fundamental” privilege belonging to “citizens
of all free governments,” it “made it very clear” that such a
right “[was] not protected by the Privileges or Immunities
Clause if [it was] not of a ‘federal’ character.” Id. at 983
(emphasis added) (citations omitted). Operation of a ferry
service is not inherently “federal” in character. To the
contrary, the regulation of ferry operation has traditionally
been the prerogative of state and local authorities. See, e.g.,
Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 215–17


 5
   In Merrifield, we upheld a pest-control licensing requirement under the
Privileges or Immunities Clause, despite the appellant’s contention that the
license requirement “infringe[d] on his right to practice his chosen
profession.” 547 F.3d at 983. We noted that the Supreme Court’s
decision in Saenz v. Roe, 526 U.S. 489 (1999), “represents the Court’s
only decision qualifying the bar on Privileges or Immunities claims
against ‘the power of the State governments over the rights of [their] own
citizens,’” id. at 983 (quoting Slaughter-House Cases, 83 U.S. at 77); that
“[Saenz] was limited to the right to travel[,]” id. at 984; and that “[t]he
Court has not found other economic rights protected by [the Privileges or
Immunities C]lause,” id. We have made clear that this “limitation on the
Privileges or Immunities Clause” remains in effect. See id.
18                   COURTNEY V. GOLTZ

(1885) (recognizing that “[t]he power of the states to regulate
matters of internal police includes the establishment of
ferries” so long as regulations do not burden interstate
commerce); Can. Pac. Ry. Co. v. United States, 73 F.2d 831,
833 (9th Cir. 1934) (explaining that “[a]t common law a
franchise was necessary to the creation of a ferry and . . . an
integral part of the definition”); Kitsap Cnty. Transp. Co. v.
Manitou Beach-Agate Pass Ferry Ass’n, 30 P.2d 233,
234–35, 237 (Wash. 1934) (finding a state PCN requirement
to be within the state’s police power in order to serve “the
best interests of the traveling public at large”).

     In this case, the state of Washington has a vital interest in
regulating traffic on its navigable waterways. As the WUTC
noted in its Ferry Report, “[t]he combination of statutory
protection from competition, on the one hand, and stringent
regulation of rates and terms of service, on the other, has
historically been adopted for industries believed to have
characteristics of a ‘natural monopoly.’” Ferry Report 11
(citing Charles F. Phillips, Jr., The Regulation of Public
Utilities 49–73 (3d ed. 1993)). The PCN requirement creates
precisely the kind of ferry franchise that has existed with
approval since before the Slaughter-House Cases were
decided. See, e.g., Conway, 66 U.S. at 633–35.

    The Courtneys contend that ferry operation on Lake
Chelan is “nationalized” because of the “national character of
the forum in which such a ferry operates,” and that Lake
Chelan is “uniquely federal” due to its incorporation into “the
federal Lake Chelan National Recreation Area.” However,
the Courtneys provide no actual authority for the proposition
that the Lake Chelan National Recreation Area renders
unconstitutional state regulation of ferry service on wholly
intrastate waterways. The Lake Chelan National Recreation
                    COURTNEY V. GOLTZ                        19

Area does not appear to contemplate preemption of state ferry
regulations, and the federal government has in the past
refrained from exercising exclusive jurisdiction over its
National Recreation Areas. See 16 U.S.C. § 90a-1; see also
Silas Mason Co. v. Tax Comm’n of Wash., 302 U.S. 186, 244
(1937) (finding that “the evidence is clear that the Federal
Government contemplated the continued existence of state
jurisdiction consistent with federal functions” with respect to
the federal Grand Coulee Dam site in Lake Roosevelt);
36 C.F.R. § 7.55 (setting forth regulations for Lake Roosevelt
as a National Recreation Area).

                               D

    At the end of the day, the state legislation the Courtneys
challenge is narrow in scope, merely restricting the operation
of commercial public ferries to those who obtain a PCN
certificate. The PCN requirement does not constrain the
Courtneys from traversing Lake Chelan in a private boat for
private purposes. See Wash. Rev. Code § 81.84.010(1)
(restricting ferry operation “for the public use for hire”). Nor
does it affect their ability to operate a commercial freight
transportation service. See id. For that matter, the Courtneys
are free to operate a commercial ferry service so long as they
apply for and obtain a PCN certificate. See id. Although the
Courtneys have apparently found the PCN requirement to be
a difficult hurdle to surmount, “the hardship, impolicy, or
injustice of state laws is not necessarily an objection to their
constitutional validity.” Mo. Pac. Ry. Co. v. Humes, 115 U.S.
512, 520–21 (1885). Because we hold that the Privileges or
Immunities Clause of the Fourteenth Amendment does not
protect a right to operate a public ferry on Lake Chelan, we
affirm the district court’s dismissal of the Courtneys’ first
claim for relief.
20                      COURTNEY V. GOLTZ

                                    III

    The district court declined to express an opinion as to
whether the right to use the navigable waters of the United
States covers the use of such waters for private boat services
for patrons of specific businesses or groups of businesses.
Instead, it found that the Courtneys lacked standing, the claim
was unripe, and the issue was appropriate for abstention
under the doctrine enunciated in Railroad Commission of
Texas v. Pullman Co., 312 U.S. 496 (1941). We disagree as
to standing6 and need not reach the ripeness issue because we
find that the district court did not abuse its discretion in
abstaining from considering the claim under the Pullman
doctrine. However, we conclude that the district court should
have retained jurisdiction over the Courtneys’ case and vacate
and remand with instructions that it do so.

    The Pullman doctrine is “based on the avoidance of
needless friction between federal pronouncements and state
policies.” Reetz v. Bozanich, 397 U.S. 82, 87 (1970) (internal
quotation marks omitted). It vests federal courts with
discretion7 to abstain from adjudicating disputes that hinge on


  6
    Although a close question, the threat of a classification proceeding,
Washington Supreme Court precedent, and the economic loss the
Courtneys have already suffered from having to refrain from purchasing
a vessel for which they had negotiated favorable terms make their fear of
enforcement and injury sufficiently actual to confer standing here.
 7
    The district court incorrectly stated that a federal court “must abstain”
from considering a federal constitutional question if the Pullman
requirements are satisfied. To the contrary, its ultimate decision to abstain
is discretionary under such circumstances. See Potrero Hills Landfill, Inc.
v. Cnty. of Solano, 657 F.3d 876, 889 (9th Cir. 2011) (“Pullman is a
discretionary doctrine that flows from the court’s equity powers.”).
                    COURTNEY V. GOLTZ                         21

significant and unsettled questions of state law. See Pullman,
312 U.S. at 499–500.

    Abstention under Pullman is an appropriate course where

        (1) the case touches on a sensitive area of
        social policy upon which the federal courts
        ought not enter unless no alternative to its
        adjudication is open, (2) constitutional
        adjudication plainly can be avoided if a
        definite ruling on the state issue would
        terminate the controversy, and (3) the possible
        determinative issue of state law is uncertain.

Confederated Salish v. Simonich, 29 F.3d 1398, 1407 (9th
Cir. 1994). The court “has no discretion to abstain in cases
that do not meet the requirements.” Fireman’s Fund Ins. Co.
v. City of Lodi, 302 F.3d 928, 939 (9th Cir. 2002).

                               A

    The array of cases dealing with waterways and water-
based transportation in Washington state suggests that
regulation of water traffic is indeed a sensitive issue of social
policy in Washington. See Rancho Palos Verdes Corp. v.
City of Laguna Beach, 547 F.2d 1092, 1094 (9th Cir. 1976)
(pointing to the “array of state constitutional provisions and
statutes” involving land use planning as evidence that it is “a
sensitive area of social policy” in California). Given the
ubiquity of waterways in Washington, and the unique
importance of water navigation in the Lake Chelan area
specifically, it follows that regulation of water routes and
resources in the area would be of great concern to the state.
See Reetz, 397 U.S. at 87 (noting that “fish resources” was
22                  COURTNEY V. GOLTZ

“an asset unique in its abundance in Alaska,” and that “the
management [of fish resources was] a matter of great state
concern”).

                              B

    In addition, “[a] state court decision . . . could
conceivably avoid any decision under the Fourteenth
Amendment and would avoid any possible irritant in the
federal-state relationship.” Id. at 86–87. If, for example, the
WUTC issues a declaratory order that the “charter” boat
service proposed by the Courtneys is not “for the public use
for hire,” within the meaning of Washington Revised Code
§ 81.84.010(1), the PCN requirement would not apply to
them and the claim would be rendered moot. The Courtneys
have challenged the state statutory scheme as applied to their
proposed transportation services. A decision by the WUTC
that the Courtneys do not need a PCN certificate to operate
their proposed services would obviate the need for this
constitutional challenge.

    Moreover, even if the WUTC concludes that the PCN
requirement applies to the Courtneys’ proposed services, a
contrary ruling by the Washington Supreme Court could also
potentially render their constitutional challenge unnecessary.
See England v. La. State Bd. of Med. Examiners, 375 U.S.
411, 424 (1964) (Douglas, J., concurring) (“Where state
administrative action is challenged, a federal court will
normally not intervene where there is an adequate state court
review which is protective of any federal constitutional
claim.”).
                        COURTNEY V. GOLTZ                               23

                                    C

    Finally, as discussed above, it is not clear whether the
PCN requirement applies to the private boat transportation
services the Courtneys wish to provide. An issue of state law
is “uncertain” if “a federal court cannot predict with any
confidence how the state’s highest court would decide an
issue of state law.” Pearl Inv. Co. v. City and Cnty. of S.F.,
774 F.2d 1460, 1465 (9th Cir. 1985).

    The PCN requirement in Washington Revised Code
§ 81.84.010 only applies to vessels or ferries “for the public
use for hire.” That phrase has yet to be applied in a formal
agency opinion or by any state court to the services the
Courtneys propose. The WUTC’s 2010 Ferry Report
indicated that it “might reasonably conclude that a boat
service offered on Lake Chelan (and elsewhere) in
conjunction with lodging at a particular hotel or resort, and
which is not otherwise open to the public, does not require a
certificate under [Washington Revised Code § 81.84.010],”
but also that “the commission could . . . decide not to adopt
that interpretation.” Ferry Report 15. Notwithstanding
allegations in the Courtneys’ complaint that suggest the
WUTC would hold them subject to the PCN requirement, it
remains unclear how the Washington Supreme Court would
interpret the statutory provision at issue with respect to the
Courtneys’ proposed services.8

  8
     The Washington Supreme Court’s decision in Kitsap dealt with a
private club that initiated a boat transportation service reserved for its
members and their guests only. 30 P.2d at 235. The court concluded that
the service was still considered a “common carrier” and was subject to the
PCN requirement. Id. In doing so, the court emphasized that the “club
boat” was, in practice, essentially a competing public ferry service. Id. at
236. Kitsap is the only Washington case to have disapproved of a “private
24                      COURTNEY V. GOLTZ

                                    D

    In light of the foregoing, the district court did not abuse
its discretion in abstaining from adjudication of the
Courtneys’ second claim for relief. Nevertheless, the district
court should have retained jurisdiction over the case pending
resolution of the state law issues, rather than dismissing the
case without prejudice. We have generally considered
dismissal inappropriate following Pullman abstention. See
Fireman’s Fund Ins. Co., 302 F.3d at 940 (“If a court invokes
Pullman abstention, it should stay the federal constitutional
question until the matter has been sent to state court for a
determination of the uncertain state law issue.” (internal
quotation marks and citation omitted)); Columbia Basin Apt.
Ass’n v. City of Pasco, 268 F.3d 791, 802 (9th Cir. 2001)
(same); Int’l Bhd. of Elec. Workers, Loc. Union No. 1245 v.
Pub. Serv. Comm’n of Nev., 614 F.2d 206, 213 (9th Cir.
1980) (finding dismissal following Pullman abstention
improper pending Nevada courts’ resolution of state issues);
Santa Fe Land Improvement Co. v. City of Chula Vista,
596 F.2d 838, 841 (9th Cir. 1979) (“If the court abstains
under Pullman, retention of jurisdiction, and not dismissal of
the action, is the proper course.”).


charter” service, and the WUTC recognized that “a boat service offered
. . . in conjunction with lodging at a particular hotel or resort, and which
is not otherwise open to the public, [might] not require a certificate.”
Ferry Report 15. The “shuttle” and “charter” services proposed by the
Courtneys would be appurtenant to their Stehekin-based businesses and
presumably be operated solely for patrons of these businesses. However,
the Courtneys’ complaint does not provide specific details regarding their
proposed boat services, and it is therefore difficult to compare those
services to the “club boat” scenario. Thus, the Kitsap case does not help
us predict with any confidence how the Washington Supreme Court would
rule on this issue.
                    COURTNEY V. GOLTZ                        25

      The Supreme Court has found dismissal without
prejudice following Pullman abstention to be appropriate
where Texas law precluded a grant of state declaratory relief
if a federal court retained jurisdiction. See Harris Cnty.
Comm’rs Ct. v. Moore, 420 U.S. 77, 88 n.14 (1975). The
same does not appear to be true, however, in Washington.
See Rancho Palos Verdes Corp., 547 F.2d at 1096
(distinguishing California law from Texas law and the Harris
decision in holding that the district court should have retained
jurisdiction following Pullman abstention); Brown v. Vail,
623 F. Supp. 2d 1241, 1247 (W.D. Wash. 2009) (retaining
jurisdiction following exercise of Pullman abstention, citing,
inter alia, Columbia Basin, 268 F.3d at 802).

    Despite its proper invocation of the Pullman doctrine, the
district court erred in dismissing the Courtneys’ second claim.
Therefore, we vacate and remand the Courtneys’ second
claim with directions that the district court enter an order
retaining jurisdiction over the constitutional claim. See
Isthmus Landowners Ass’n, Inc. v. California, 601 F.2d 1087,
1090–91 (9th Cir. 1979) (finding failure to retain jurisdiction
after Pullman abstention to be reversible error).

                        CONCLUSION

    The district court’s dismissal of the Courtneys’ first claim
for relief is AFFIRMED. The dismissal of their second
claim for relief is AFFIRMED in part, VACATED in part,
and REMANDED with instructions that the district court
retain jurisdiction over the constitutional question.

   The parties shall bear their own costs of appeal.
