Legislature(2019 - 2020)BELTZ 105 (TSBldg)
02/13/2020 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
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| Presentation: Alaska Hire in 2020: is It Unconstitutional? | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | 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 |