Legislature(2019 - 2020)BELTZ 105 (TSBldg)

02/13/2020 01:30 PM LABOR & COMMERCE

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Audio Topic
01:30:07 PM Start
01:30:54 PM Presentation: Alaska Hire in 2020: is It Unconstitutional?
02:14:42 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: TELECONFERENCED
"Alaska Hire Legal History" by Dan Wayne,
Legislative Legal
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 13, 2020                                                                                        
                           1:30 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Click Bishop, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Mia Costello                                                                                                            
Senator Joshua Revak                                                                                                            
Senator Elvi Gray-Jackson                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senator Cathy Giessel                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: ALASKA HIRE IN 2020: IS IT UNCONSTITUTIONAL?                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAN WAYNE, Legal Counsel                                                                                                        
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Delivered a PowerPoint on the history and                                                                 
constitutionality of Alaska hire.                                                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:30:07 PM                                                                                                                    
CHAIR CLICK BISHOP called the  Senate Labor and Commerce Standing                                                             
Committee meeting  to order at 1:30  p.m. Present at the  call to                                                               
order were Senators Stevens, Costello, Revak, and Chair Bishop.                                                                 
                                                                                                                                
^Presentation: ALASKA HIRE in 2020: Is it Unconstitutional?                                                                     
   Presentation: ALASKA HIRE in 2020: Is it Unconstitutional?                                                               
                                                                                                                                
1:30:54 PM                                                                                                                    
CHAIR  BISHOP announced  the only  order of  business would  be a                                                               
presentation  by Dan  Wayne on  the  constitutionality of  Alaska                                                               
Hire. He noted that Senator Giessel  was in attendance as was the                                                               
former commissioner of labor.                                                                                                   
                                                                                                                                
1:32:05 PM                                                                                                                    
SENATOR GRAY-JACKSON joined the meeting.                                                                                        
                                                                                                                                
DAN   WAYNE,   Legal   Counsel,   Legislative   Legal   Services,                                                               
Legislative  Affairs Agency,  Juneau, Alaska,  directed attention                                                               
to the  title of the  presentation and explained that  he decided                                                               
to  focus on  the controversial  moments in  the long  history of                                                               
Alaska Hire, most  of which are court cases. He  displayed a list                                                               
of  court  cases, starting  with  Hicklin  v. Orbeck,  which  was                                                               
decided by the U.S. Supreme Court in 1978.                                                                                      
                                                                                                                                
MR. WAYNE advised that he would  first look at the current Alaska                                                               
Hire controversial moment that came  up after a 30-year period of                                                               
quiet. This  case was  filed in  2019 alleging  that the  law was                                                               
unconstitutional.  The  State  of Alaska  made  the  decision  to                                                               
settle  the  case.  In  a letter  to  Senate  President  Giessel,                                                               
Attorney  General Clarkson  recounting the  reasons that  the law                                                               
could  not  be  defended.  He   displayed  a  slide  showing  the                                                               
following:                                                                                                                      
                                                                                                                                
     Based on  the department  of law's analysis  of numbers                                                                    
     reported   by  the   Dept.  of   Labor  and   Workforce                                                                    
     Development in  2017, the  department has  concluded as                                                                    
     follows:                                                                                                                   
                                                                                                                                
     "the  State   cannot  show  that  nonresidents   are  a                                                                    
     peculiar source of any  high unemployment of Alaskans."                                                                    
     Letter  from  Attorney   General  Clarkson  to  Senator                                                                    
     Giessel, page 2, October 29, 2019.                                                                                         
                                                                                                                                
     "there is no evidence to  support the idea that Alaskan                                                                    
     workers  with necessary  qualifications and  skills are                                                                    
     being passed  over for  permanent employment  in Alaska                                                                    
     in  any significant  numbers  in  favor of  nonresident                                                                    
       workers." Letter from Attorney General Clarkson to                                                                       
     Senator Giessel, page 3, October 29, 2019.                                                                                 
                                                                                                                                
     "Employers ... only hire  nonresidents when constrained                                                                    
     by the  realities of the  Alaska labor  market." Letter                                                                    
     from Attorney  General Clarkson   to   Senator Giessel,                                                                    
     page 3, October 29, 2019.                                                                                                  
                                                                                                                                
MR.WAYNE  said  Attorney  General  Clarkson  also  explained  the                                                               
decision  in  an  October  3,  2019  opinion.  He  displayed  the                                                               
following:                                                                                                                      
                                                                                                                                
       See, 2019 Op. Alaska Att'y Gen. (Oct. 3), and 2019                                                                       
     Letter from Alaska Att'y Gen.  to Senator Cathy Giessel                                                                    
     (Oct. 29). These opinions cite two main legal reasons:                                                                   
                                                                                                                                
          {1) Enserch, a 1989  Alaska Supreme Court decision                                                                  
          finding  that   160,  allowing   determination  of                                                                    
          "economically  distressed"  zones  in  the  state,                                                                    
          violated  equal  protection   provision  in  state                                                                    
          constitution.                                                                                                         
                                                                                                                                
          (2)  P&I Clause,  federal constitutional provision                                                                  
                        11                                                                                                      
          which reads:   The  Citizens  of each  State shall                                                                    
          be   entitled to all Privileges  and Immunities of                                                                    
          Citizens in the several States."                                                                                      
                                                                                                                                
1:34:50 PM                                                                                                                    
MR. WAYNE  reviewed the Enserch  case. He said it's  important to                                                               
understand  that  Enserch was  not  a  challenge to  the  current                                                               
version  of  Alaska  Hire  in  AS 36.10.150.  Rather,  it  was  a                                                               
challenge   to   AS   36.10.160,  a   statute   authorizing   the                                                               
commissioner of  labor to identify economically  distressed zones                                                               
and  require   a  hiring  preference  on   certain  projects  for                                                               
residents of those  zones. The Enserch Court focused  on how that                                                               
preferential   determination    caused   discrimination   between                                                               
residents in different regions of the state.                                                                                    
                                                                                                                                
The  Enserch Court  said that  discrimination  between groups  of                                                               
state  residents  based  on  region   violated  the  state  equal                                                               
protection clause  in art. I,  sec. 1, Constitution of  the State                                                               
of  Alaska. It  guarantees  that "...all  persons  are equal  and                                                               
entitled  to equal  rights, opportunities,  and protection  under                                                               
the law;".                                                                                                                      
                                                                                                                                
MR. WAYNE  said that guarantee  has been good  protection against                                                               
residential  preference  hiring  laws that  discriminate  between                                                               
groups of  state residents  since the  Enserch decision,  but the                                                               
voters  amended  the state  constitution  that  same year  in  an                                                               
effort to remove  the equal protection guarantee as  a barrier to                                                               
discrimination   against   non-residents.    Art   1,   sec   23,                                                               
Constitution of the State of Alaska was amended in 1988 to read:                                                                
                                                                                                                                
     This  constitution does  not  prohibit  the State  from                                                                    
     granting   preferences,   on   the  basis   of   Alaska                                                                    
     residence, to residents of  the State over nonresidents                                                                    
     to  the extent  permitted  by the  Constitution of  the                                                                    
     United States. [Amended 1988]                                                                                              
                                                                                                                                
MR. WAYNE  said this amendment  to the constitution  was designed                                                               
to create  a path around  the state's equal  protection guarantee                                                               
for  the current  version of  Alaska Hire  which is  AS 36.10.150                                                               
that was signed into law in 1986. It is in effect today.                                                                        
                                                                                                                                
MR. WAYNE  reminded the members that  Attorney General Clarkson's                                                               
recent conclusion  about Alaska  Hire relied heavily  on Enserch,                                                               
but that  decision invalidated just  AS 36.10.160 under  an equal                                                               
protection  argument.   It  did  not  invalidate   the  "zone  of                                                               
underemployment" provision in AS  36.10.150. He acknowledged that                                                               
it is difficult  to determine the impact that the  holding in the                                                               
Enserch  decision  might  have on  litigation  over  the  current                                                               
Alaska Hire in AS 36.10.150.                                                                                                    
                                                                                                                                
1:37:46 PM                                                                                                                    
MR.  WAYNE turned  to the  second legal  reason Attorney  General                                                               
Clarkson cited  in support of  his October decision. He  said the                                                               
Privileges and  Immunities Clause is  still a very  valid concern                                                               
for the current  version of Alaska Hire. That is  the clause that                                                               
bars  discrimination against  residents  of  other states  unless                                                               
there is  a substantial  reason for  the discrimination.  He said                                                               
the determination of  "substantial" in any given case  is left to                                                               
the court, depending on the circumstances brought before it.                                                                    
                                                                                                                                
In 1948  the U.S. Supreme Court  devised a test [based  on Toomer                                                               
v. Witsell]  for the kind  of residential preference law  a state                                                               
might enact that  would withstand a legal challenge  based on the                                                               
Privileges  and  Immunities Clause.  In  1978,  the U.S.  Supreme                                                               
Court applied  that test in  the first Alaska Hire  case, Hicklin                                                               
v.  Orbeck, which  wasn't anything  like the  current version  of                                                               
Alaska  Hire.  The  court  applied   it  to  a  broadly  reaching                                                               
statutory  provision  saying  that  any job  in  Alaska  remotely                                                               
connected to the  extraction of oil and gas from  the state would                                                               
be subject to a resident hire preference.                                                                                       
                                                                                                                                
1:39:31 PM                                                                                                                    
CHAIR  BISHOP said  that was  struck down  so the  current Alaska                                                               
Hire law doesn't capture oil and gas on the North Slope.                                                                        
                                                                                                                                
MR. WAYNE  replied it's difficult to  see how it could  since the                                                               
current  law applies  only to  public  construction projects.  He                                                               
added that  he supposes that if  the state were the  owner of oil                                                               
and gas and  intended to construct something related  to that, it                                                               
could be considered a public construction project.                                                                              
                                                                                                                                
CHAIR BISHOP  advised that  the history of  Alaska Hire  was just                                                               
the first  of several presentations  covering the  entire process                                                               
up to this point.                                                                                                               
                                                                                                                                
1:40:35 PM                                                                                                                    
SENATOR  STEVENS  asked if  the  "Toomer  test" (from  Toomer  v.                                                               
Witsell) was still in effect.                                                                                                   
                                                                                                                                
MR. WAYNE  directed attention  to the  slide that  summarizes key                                                               
points  of Hicklin  v.  Orbeck  and the  "Toomer  test" the  U.S.                                                               
Supreme Court created:                                                                                                          
                                                                                                                                
     The    Privileges    and   Immunities    Clause    bars                                                                    
     discrimination against  citizens of other  States where                                                                    
     there is no substantial reason for it.                                                                                     
                                                                                                                                
     There  is  no  substantial  reason  for  resident  hire                                                                    
     preference unless  there is evidence  that non-citizens                                                                    
     constitute a peculiar  source  of the  problem at which                                                                    
     the discriminatory statute is aimed.                                                                                       
                                                                                                                                
     Even  where  nonresidents   cause  or  exacerbate   the                                                                    
     problem  the  statute  is aimed  at,  there  must be  a                                                                    
     reasonable    relationship     between    the    danger                                                                    
     represented  by  non-citizens,  as  a  class,  and  the                                                                    
     discrimination  practiced upon  them.                                                                                      
                                                                                                                                
SENATOR STEVENS  thanked him  for the  explanation that  he found                                                               
"clear as mud."                                                                                                                 
                                                                                                                                
MR. WAYNE  responded that a  complicating factor is that  some of                                                               
the language in  the older cases talk about  "a particular source                                                               
of the  evil." He  said he  and other  lawyers interpret  evil to                                                               
mean problem. He displayed the following quote from Hicklin:                                                                    
                                                                                                                                
     Regarding  Alaska Hire:  although the  statute may  not                                                                  
     violate the  Clause if  the State  shows something   to                                                                  
     indicate  that   noncitizens  constitute  a    peculiar                                                                
     source  of the  evil at  which the  statute   is aimed,                                                                
     and,   beyond this,  the State has  no burden  to prove                                                                    
     that  its  laws    are not  violative  of  the  Clause,                                                                    
     certainly  no  showing was  made  on  this record  that                                                                
     nonresidents were a peculiar source of the evil                                                                        
                                                                                                                                
MR.  WAYNE continued  to explain  that when  the Toomer  test was                                                               
applied  in Hicklin  v. Orbeck,  the results  were not  good. The                                                               
U.S.  Supreme Court  was critical  of  the oil  and gas  industry                                                               
residential hiring  preference because  there was no  evidence on                                                               
the record  to support a  finding that the nonresidents  that the                                                               
law discriminated  against were the particular  cause of Alaska's                                                               
high  unemployment. That  court identified  high unemployment  as                                                               
the  evil (the  problem) that  the  law was  aimed at.  Requiring                                                               
resident hire addressed the problem of high unemployment.                                                                       
                                                                                                                                
MR.  WAYNE warned  that  the  next few  quotes  from the  Hicklin                                                               
decision  contained racist  language. He  explained that  he left                                                               
them intact  because they  illustrate some  thinking in  1978 and                                                               
that  the  U.S.   Supreme  Court  might  not  have   had  a  good                                                               
understanding of the culture of Alaska.                                                                                         
                                                                                                                                
     Alaska  Hire was  enacted to  remedy, namely,  Alaska's                                                                    
     uniquely high unemployment.   What evidence  the record                                                                    
     does  contain   indicates  that  the  major   cause  of                                                                    
     Alaska's  high  unemployment  was  not  the  influx  of                                                                    
     nonresidents  seeking employment,  but rather  the fact                                                                    
     that   a  substantial   number   of  Alaska's   jobless                                                                    
     residents- especially the unemployed    Eskimo      and                                                                    
     Indian  residents-were  unable   to  secure  employment                                                                
     either  because  of their  lack  of  education and  job                                                              
     training  or because  of their  geographical remoteness                                                                  
     from job opportunities: and that the employment of                                                                         
     nonresidents threatened, to   deny   jobs   to   Alaska                                                                    
     residents  only  to  the extent  that  jobs  for  which                                                                    
     untrained  residents  were   being  prepared  might  be                                                                    
     filled by  nonresidents before the  residents' training                                                                    
     was completed.                                                                                                             
                                                                                                                                
     "even if the State's  showing is accepted as sufficient                                                                    
     to indicate  that nonresidents  were a  peculiar source                                                                    
     of  evil,  Alaska  Hire   nevertheless  fails  to  pass                                                                    
     constitutional muster.  For the discrimination  the Act                                                                
     works against nonresidents does  not bear a substantial                                                                
     relationship to  the particular evil  they are  said to                                                                  
     present.  Alaska  Hire   simply  grants  all  Alaskans,                                                                
     regardless  of their  employment status,  education, or                                                                  
     training,  a flat  employment preference  for all  jobs                                                                    
     covered  by  the Act.  A  highly  skilled and  educated                                                                
     resident who  has never been unemployed  is entitled to                                                                
     precisely  the  same   preferential  treatment  as  the                                                                  
     unskilled,   habitually    unemployed   Arctic   Eskimo                                                            
     enrolled in a job-training program."                                                                                   
                                                                                                                                
                                                                                                                                
1:43:53 PM                                                                                                                    
CHAIR  BISHOP  asked  if  this   was  the  U.S.  Supreme  Court's                                                               
language.                                                                                                                       
                                                                                                                                
MR. WAYNE answered  yes, but the underlining was  his. He pointed                                                               
out that  the U.S. Supreme Court  was critical of the  absence of                                                               
evidence  in  the record  supporting  the  oil and  gas  industry                                                               
residential preference  law. He said  one way to  interpret their                                                               
unhappiness  is  that  it concluded  that  high  unemployment  in                                                               
Alaska was caused by resident  workers themselves who didn't have                                                               
the proper  training or live in  the right part of  the state. He                                                               
commented that the decision seems to blame the unemployed.                                                                      
                                                                                                                                
1:44:55 PM                                                                                                                    
CHAIR  BISHOP provided  an historical  perspective. He  said this                                                               
was  the  U.S. Supreme  Court  opinion  on  Alaska Hire  in  1978                                                               
relating to the  Trans Alaska Pipeline, but  this phenomenon goes                                                               
back to WWII and the buildup  of the military assets in the state                                                               
at  Ladd Field  in Fairbanks  and Fort  Richardson in  Anchorage.                                                               
Residents complained then  that they were the last  hired and the                                                               
first laid off of those projects.                                                                                               
                                                                                                                                
1:46:20 PM                                                                                                                    
MR. WAYNE said it seems that  employers in 1978 would follow that                                                               
sort  of policy  if  they  had the  same  poor  view of  resident                                                               
workers that the  U.S. Supreme Court had. But  it's possible that                                                               
in 2020  that same court would  lay less blame for  Alaska's high                                                               
unemployment on the unemployed themselves.  He said the important                                                               
takeaway  from  the  foregoing  slide is  not  the  racially  and                                                               
culturally  insensitive language,  it's that  for Alaska  Hire in                                                               
its current version  to withstand a court challenge  based on the                                                               
P&I Clause,  the state would need  to show a strong  link between                                                               
the  law's discrimination  against nonresidents  and the  problem                                                               
that nonresidents present.                                                                                                      
                                                                                                                                
     11                                                                                                                         
      lf Alaska is to attempt to ease its unemployment                                                                          
     problem  by  forcing  employers  within  the  State  to                                                                    
     discriminate   against  nonresidents-again,   a  policy                                                                    
     which may present  serious constitutional questions-the                                                                  
     means  by  which  it  does  so  must  be  more  closely                                                                
     tailored to aid the unemployed  the Act is intended  to                                                              
     benefit.  Even if   a  statute  granting an  employment                                                                  
     preference  to  unemployed  residents or  to  residents                                                                    
     enrolled    in   job-training    programs   might    be                                                                    
     permissible, Alaska  Hire's across-the- board  grant of                                                                    
     a job  preference to all  Alaskan residents  clearly is                                                                    
     not.                                                                                                                       
                                                                                                                                
1:48:20 PM                                                                                                                    
MR.  WAYNE moved  to the  1985 United  Building and  Construction                                                               
Trades  Council v.  City of  Camden resident  hire case  that the                                                               
U.S. Supreme Court took up and decided outside of Alaska.                                                                       
                                                                                                                                
     The  Camden  Court  found employment  on  public  works                                                                    
     projects is  protected by P&I  clause, but  said "Every                                                                  
     inquiry under the Privileges and   Immunities    Clause                                                                
     must  be conducted  with due  regard for  the principle                                                                
     that  the States  should  have  considerable leeway  in                                                                
     analyzing local evils and     in            prescribing                                                                  
     appropriate   cures.  This   caution  is   particularly                                                                
     appropriate when  a government  body is  merely setting                                                                    
     conditions on the expenditure of funds it controls."                                                                       
                                                                                                                                
MR.  WAYNE explained  that the  U.S. Supreme  Court considered  a                                                               
challenge of a  resident hiring preference for  city public works                                                               
jobs that  favored Camden residents  over residents  from outside                                                               
Camden. He  pointed out that  New Jersey is surrounded  by states                                                               
with qualified workers  who can drive to Camden to  work each day                                                               
and drive  back to  their state  of residence at  the end  of the                                                               
day, but that situation doesn't exist in Alaska.                                                                                
                                                                                                                                
The City  of Camden was  under assault from out-of-city  and out-                                                               
of-state workers  who wanted those  government jobs. He  said the                                                               
important takeaway from  the above quote is  underlined. It seems                                                               
to indicate that  in the right circumstances,  the Privileges and                                                               
Immunities Clause is not an  absolute bar to a residential hiring                                                               
preference.                                                                                                                     
                                                                                                                                
     "The Alaska Hire statute at  issue in Hicklin v. Orbeck                                                                    
     (U.S.1978)  swept   within  its  strictures   not  only                                                                    
     contractors  and subcontractors  dealing directly  with                                                                    
     the State's oil and gas:  it also covered suppliers who                                                                    
     provided goods  and services  to those  contractors and                                                                    
     subcontractors. We  invalidated   the Act as an attempt                                                                    
     to force virtually all businesses  that benefit in some                                                                    
     way  from  the  economic   ripple  effect  of  Alaska's                                                                    
     decision to develop  its oil and gas  resources to bias                                                                    
     their  employment practices  in  favor  of the  State's                                                                    
     residents.  No  similar  "ripple effect"  appears    to                                                                    
     infect the Camden ordinance. It  is limited in scope to                                                                  
     employees  working   directly  on  city   public  works                                                                
     projects."                                                                                                               
                                                                                                                                
MR. WAYNE  noted that in the  above quote the court  seems to say                                                               
that  one  of those  circumstances  is  a preference  limited  to                                                               
hiring for jobs on public works projects.                                                                                       
                                                                                                                                
1:51:39 PM                                                                                                                    
CHAIR  BISHOP  emphasized  that  in the  Camden  case,  the  U.S.                                                               
Supreme Court  said that states  should have  considerable leeway                                                               
in identifying the problem and finding a solution.                                                                              
                                                                                                                                
MR. WAYNE  pointed out that  it was  also the U.S.  Supreme Court                                                               
that  decided the  Hicklin  case in  1978 and  made  it sound  as                                                               
though  the  Privileges  and  Immunities  Clause  was  nearly  an                                                               
insurmountable barrier to a resident hire preference.                                                                           
                                                                                                                                
MR. WAYNE  noted that the  underlined sentence in the  last quote                                                               
seems to  show that the court  felt that was a  circumstance that                                                               
might make  a difference in  whether or not a  residential hiring                                                               
preference statute  is constitutional.  In the text  that appears                                                               
above the  underlined sentence,  the court  distinguishes between                                                               
Hicklin  v. Orbeck  (the  overly broad  oil  and gas  residential                                                               
preference hiring law)  and the Camden case that  only dealt with                                                               
city public works projects in Camden, New Jersey.                                                                               
                                                                                                                                
CHAIR  BISHOP   commented  that  Hicklin  v.   Orbeck  had  broad                                                               
application whereas the scope in  the Camden case was narrowed to                                                               
public works projects in Camden.                                                                                                
                                                                                                                                
MR. WAYNE  confirmed that the  oil and gas hiring  preference law                                                               
was very broad.                                                                                                                 
                                                                                                                                
1:54:14 PM                                                                                                                    
MR. WAYNE turned to the second  Alaska Hire case, the 1986 Alaska                                                               
Supreme  Court  case,  Robison  v.  Francis.  He  explained  that                                                               
Department of  Labor Commissioner  James Robison  was named  in a                                                               
suit over  the 1983  version of Alaska  Hire. That  version, like                                                               
the  current  version  of   Alaska  Hire,  discriminated  against                                                               
nonresidents by  giving Alaska residents  a hiring  preference on                                                               
public  construction projects.  The state  defended the  1983 law                                                               
and lost. He displayed a slide showing the following points:                                                                    
                                                                                                                                
     Employment  in construction  industry is  a fundamental                                                                  
     right protected by P&I clause.                                                                                           
                                                                                                                                
     Purpose of P&I clause is "to  prevent    states    from                                                                    
     enacting    measures    which   discriminate    against                                                                    
     non-residents for reasons of economic protectionism"                                                                     
                                                                                                                                
     Without  substantial   justification  for  it,   a  law                                                                  
     discriminating  against  hire  of  nonresident  workers                                                                    
     violates P&I clause.                                                                                                       
                                                                                                                                
MR.  WAYNE advised  that while  the term  "discrimination" has  a                                                               
pejorative connotation, it  is not all bad or illegal.  So when a                                                               
court  says a  law discriminates  against the  people outside  of                                                               
Camden,  that discrimination  is not  necessarily a  violation of                                                               
the  Privileges  and  Immunities   Clause.  He  posited  that  in                                                               
defending  Alaska  Hire,  one  would  not  say  the  law  doesn't                                                               
discriminate  because  it  does.  Rather, the  job  would  be  to                                                               
convince  the court  that the  law  measures up  and answers  the                                                               
concerns raised in  previous cases. He described that  as a large                                                               
but not impossible task.                                                                                                        
                                                                                                                                
MR. WAYNE  displayed the following  points that describe  more of                                                               
the Robison case:                                                                                                               
                                                                                                                                
     There is no    doubt  that Alaska  has an  unemployment                                                                    
     rate which  is higher  than the  national average   and                                                                    
     that   this   constitutes  a  serious problem.  What is                                                                  
     lacking  is   a  showing   that  non-residents  are   a                                                                
     11                                                                                                                         
     peculiar  source of  the evil"  of unemployment.   (p.                                                                   
     266).                                                                                                                      
                                                                                                                                
     The purpose  of the local  hire law is to  exclude non-                                                                
     residents from  public construction  jobs so  that more                                                                
     jobs will be available to Alaskans. In our view this is                                                                
     not  a  permissible  justification  for  discrimination                                                                    
     under  the privileges    and   immunities   clause.  To                                                                    
     state  the same  conclusion in  conventional privileges                                                                    
     and   immunities  terms,   the  justification   is  not                                                                  
     "substantial." (p. 266).                                                                                                 
                                                                                                                                
The Alaska  Supreme Court  said the 1983  version of  Alaska Hire                                                               
violated  the Privileges  and Immunities  Clause. The  ruling was                                                               
based on the "Toomer test"  that the U.S. Supreme Court developed                                                               
in 1948  and modified in 1978  in Hicklin v. Orbeck.  He said the                                                               
takeaway is that  a court will find that a  law aimed at lowering                                                               
unemployment by  hiring more residents is  unconstitutional. That                                                               
goal  by  itself  does not  justify  discriminating  against  the                                                               
fundamental  constitutional right  of  residents to  work in  any                                                               
state  they  choose.  That  is   the  right  the  Privileges  and                                                               
Immunities Clause guarantees.                                                                                                   
                                                                                                                                
1:58:03 PM                                                                                                                    
SENATOR  STEVENS asked  if there  were Robison  lawsuits in  both                                                               
1983 and 1986.                                                                                                                  
                                                                                                                                
MR. WAYNE  clarified that there was  just one court case  in 1986                                                               
involving  Commissioner Robison,  which  was a  challenge to  the                                                               
1983 version of Alaska Hire.                                                                                                    
                                                                                                                                
MR. WAYNE displayed the following quote from the Robison case:                                                                  
                                                                                                                                
     "The preferential hire statute  involved in Hicklin was                                                                    
     struck down because, among other  reasons, the  statute                                                                    
     was  too  broad.  It applied  not  only  to  unemployed                                                                  
     residents  or   residents  enrolled  in   job  training                                                                    
     programs,  but to  all  residents  whether employed  or                                                                    
     unemployed, well trained or   poorly trained. By giving                                                                  
     preferential  treatment to  residents who  do not  need                                                                
     it, the present statute  (adopted in 1983) suffers from                                                                  
     the same vice as that  struck down by the United States                                                                    
     Supreme Court in Hicklin."    (p. 268)                                                                                     
                                                                                                                                
     There is no    doubt  that Alaska  has an  unemployment                                                                    
     rate which  is higher  than the  national average   and                                                                    
     that   this   constitutes  a  serious problem.  What is                                                                  
     lacking  is   a  showing   that  non-residents   are  a                                                                
     11                                                                                                                         
      peculiar source of the evil" of unemployment. (p.                                                                       
     266).                                                                                                                      
                                                                                                                                
     The purpose  of the local  hire law is to  exclude non-                                                                
     residents from  public construction  jobs so  that more                                                                
     jobs will  be available to  Alaskans. In our  view this                                                                
     is not    a      permissible     justification      for                                                                    
     discrimination under  the privileges   and   immunities                                                                    
     clause. To  state the  same conclusion  in conventional                                                                    
     privileges  and immunities  terms, the justification is                                                                  
     not "substantial." (p. 266).                                                                                           
                                                                                                                                
     "The preferential hire statute  involved in Hicklin was                                                                    
     struck down because, among other  reasons, the  statute                                                                    
     was  too  broad.  It applied  not  only  to  unemployed                                                                  
     residents  or   residents  enrolled  in   job  training                                                                    
     programs,  but to  all  residents  whether employed  or                                                                    
     unemployed, well trained or   poorly trained. By giving                                                                  
     preferential  treatment to  residents who  do not  need                                                                
     it, the present statute  (adopted in 1983) suffers from                                                                  
     the same vice as that  struck down by the United States                                                                    
     Supreme Court in Hicklin."    (p. 268)                                                                                     
                                                                                                                                
                                                                                                                                
MR. WAYNE  said the court  is reconfirming that the  U.S. Supreme                                                               
Court struck down the oil  and gas industry hiring preference law                                                               
in  1978 for  being too  broad.  It also  underscores the  Alaska                                                               
Supreme Court's concern that the  1983 version of Alaska Hire was                                                               
too broad  when it  gave a  non-needs-based hiring  preference to                                                               
residents.                                                                                                                      
                                                                                                                                
MR.  WAYNE  recounted  that  the legislature  went  back  to  the                                                               
drawing board  following the Robison  decision. He  displayed the                                                               
following points:                                                                                                               
                                                                                                                                
     A new  version of Alaska  Hire became law in  1986. The                                                                    
     legislative record shows that                                                                                              
                                                                                                                                
     the  goal was  to narrow  the scope of  the preference,                                                                    
     and more  closely tailor it to  address social problems                                                                    
     like crime,  poverty, and addiction, instead  of simply                                                                    
     unemployment                                                                                                               
                                                                                                                                
     through testimony by  experts, the legislature gathered                                                                    
     much  evidence thought  to support  a substantial  need                                                                    
     for the new law                                                                                                            
                                                                                                                                
     the  state's then  attorney  general  helped craft  the                                                                    
     law, and  predicted it had  a good chance  of surviving                                                                    
     court challenges                                                                                                           
                                                                                                                                
MR. WAYNE said he reviewed the  1986 legislative record and it is                                                               
clear  that the  legislature  and the  Department  of Law  worked                                                               
together  to  try  to  fix   the  flaws  that  the  Robison  case                                                               
identified.  He highlighted  that an  electronic database  of the                                                               
bill files from the 1986 session was available online.                                                                          
                                                                                                                                
MR.  WAYNE said  the legislative  record supports  the conclusion                                                               
that the  Alaska Legislature  tried to  identify the  problems it                                                               
was trying to address with the  local hire law. There was lots of                                                               
expert testimony about the social  problems in different areas of                                                               
the state  that are  attributable to poverty.  He opined  that it                                                               
would  be difficult  for a  court  to say  the law  was aimed  at                                                               
economic protectionism,  which is  not allowed. The  record shows                                                               
that the legislature  also tried to construct  law that addressed                                                               
some of the  concerns raised by the courts such  as not too broad                                                               
and being need-based.                                                                                                           
                                                                                                                                
2:03:16 PM                                                                                                                    
CHAIR  BISHOP summarized  that the  legislature  worked with  the                                                               
Department of Law to craft the law that exists today.                                                                           
                                                                                                                                
MR.  WAYNE  replied  the  record  shows that  was  the  case.  He                                                               
recalled  that   then  Attorney   General  Lorenzen   helped  the                                                               
legislature identify the legal problems  that needed to be fixed,                                                               
offered  potential solutions,  commented on  the language  in the                                                               
various versions  that were considered  in the House  and Senate,                                                               
and ultimately  said the  law that  passed had  a good  chance of                                                               
withstanding  a   constitutional  challenge.  He   displayed  the                                                               
following points.                                                                                                               
                                                                                                                                
    If   commissioner   determines   two   year   zone   of                                                                     
       underemployment, residents of the zone who qualify                                                                       
     receive hiring preference for certain work on                                                                              
                                                                                                                                
          (1) public  construction  projects  in zone; and                                                                      
         (2) a "craft by craft or occupational basis";                                                                          
                                                                                                                                
      Commissioner determines amount of hiring preference                                                                       
     work based on                                                                                                              
                                                                                                                                
          (1) nature of the work                                                                                                
          (2) classification of workers                                                                                         
          (3) number of qualified residents available                                                                           
                                                                                                                                
     Residents must qualify (under AS 36.10.140) by                                                                             
                                                                                                                                
          (1) receiving unemployment benefits;                                                                                  
          (2) being eligible to receive unemployment but                                                                        
          benefits ran out;                                                                                                     
          (3) being unemployed but registered to find work;                                                                     
          (4) being underemployed or marginally employed;                                                                       
          or                                                                                                                    
          (5) completing approved job-training and still                                                                        
          being unemployed or underemployed                                                                                     
                                                                                                                                
MR. WAYNE said  AS 36.10.160 was struck  down as unconstitutional                                                               
in the Enserch  case but AS 36.10.150 has survived  for more than                                                               
30  years.  Under  that  law, several  Department  of  Labor  and                                                               
Workforce    Development    (DOLWD)   commissioners,    including                                                               
Commissioner  Ledbetter, have  issued determinations  that Alaska                                                               
is a zone of underemployment. He  said the fact that each zone of                                                               
underemployment lasts for just two  years might be important to a                                                               
court that is  trying to determine whether or not  Alaska Hire is                                                               
tied to  a specific  area and  set of circumstances  or a  law of                                                               
general  applicability.  He  pointed  out that  conditions  in  a                                                               
particular   zone    can   change   between    one   commissioner                                                               
determination and the next.                                                                                                     
                                                                                                                                
MR. WAYNE related  that except for the Enserch  case, the current                                                               
law was  not challenged until  2019. The state elected  to settle                                                               
the  case   without  waiting   for  a   court  decision   so  the                                                               
constitutionality of  the law  is an open  question. But  until a                                                               
court decides it's unconstitutional, it is the law.                                                                             
                                                                                                                                
CHAIR BISHOP thanked Mr. Wayne  for the presentation. He said the                                                               
jury is  still out,  but his takeaway  was that  the legislature,                                                               
the Department of Law, and  the Attorney General all collaborated                                                               
to craft the current law.                                                                                                       
                                                                                                                                
2:14:42 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair  Bishop adjourned  the Senate  Labor and  Commerce Standing                                                               
Committee meeting at 2:14 p.m.                                                                                                  

Document Name Date/Time Subjects
Alaska Hire Legal History 2-13-2020.pdf SL&C 2/13/2020 1:30:00 PM
Alaska Hire
Alaska Hire- Statutes.pdf SL&C 2/13/2020 1:30:00 PM
Alaska Hire
Alaska Hire- AG Clarkson Opinion 10-03-19.pdf SL&C 2/13/2020 1:30:00 PM
Alaska Hire
Alaska Hire- AG Clarkson letter to Sen. Giessel 10-29-19.pdf SL&C 2/13/2020 1:30:00 PM
Alaska Hire
Alaska Hire- Dan Wayne Legal Memo 10-25-19.pdf SL&C 2/13/2020 1:30:00 PM
Alaska Hire