Warren E. Burger: We will hear arguments first this morning in Hicklin against Orbeck and others. Mr. Wagstaff, you may proceed whenever you are ready.
Robert H. Wagstaff: In 1972, the legislature of the State of Alaska adapted a law which gives a residents’ preference to all designated Alaska residents in any job having to do with oil and gas within the state. The exact mechanism is that the law requires that any person or party, who has a contract with the state in nature of a lease or right away permit or the like to preferentially hire Alaska residents and to first fire the residents of other states. It is an across the board preference to all Alaska residents. The scope or the swath that this cuts is quite broad. It applies not only to these contractors. It applies to their subcontractors and suppliers as well. It does not have to take place on state land. We believe that this is a direct violation of the privileges of the immunities clause of the constitution. The Supreme Court of Alaska split 3:2 on this issue. We are asserting before this court the dissents of Justices Bucci and Rabinovitz, and the Alaska Supreme Court which we feel articulates exactly our position. There is also a 14th Amendment claim presented as well. The use of the word “residents” in context of Alaska Hire means domiciliary.
Harry A. Blackmun: The Fourteenth Amendment claim passed on that?
Robert H. Wagstaff: Yes, it was. It was denied as well by the majority. The preference is given to all residents, who are defined under the statute as domiciliary. The purported legislative reasons or justification for what is called “Alaska Hire” is chronic unemployment within the State of Alaska. The Supreme Court of Alaska, it is our position I believe that appellees disagree, recognized that this was a transparency and that in fact, this was simply a broad‑based economic preference given to all Alaska residents in preference to the residents of other states. Additionally, Alaska Hire itself supports that position adapted by the Supreme Court.
Harry A. Blackmun: Mr. Wagstaff, would your position here be precisely the same if Alaska restricted its residency requirement to employment directly by the state?
Robert H. Wagstaff: That issue, of course, the state employment issue is much different than this case. Alaska does have a case State v. Lilly decided dealing with governmental employment. My personal belief is that I do not feel that it is proper to discriminate against the residents of other states even in state employment as well or public contracts. I realized that McCarthy versus Philadelphia Commission might indicate otherwise, but that issue, Mr. Justice Blackmun, is not really relevant to this case because we are talking about private employment here, not governmental employment or not public contract.
William H. Rehnquist: You are really talking just about pipeline or oil employment, are not you?
Robert H. Wagstaff: Oil and gas, as far as this law goes, is so far. The employment covered is all employment that results from such activities. The Supreme Court of Alaska has recognized that this includes distribution and refineries such as that they may be built in the State of Alaska.
William H. Rehnquist: But there is no reason why a nonresident cannot go up there and start manufacturing widgets. He would not violate this law.
Robert H. Wagstaff: Not this specific law. But in terms of the danger of the law, if the widgets came from a natural resource or had any sort of arguable natural resource nexus in Alaska, then it would be a violation of the concept of this law.
William H. Rehnquist: But Alaska has not prohibited that sort of thing?
Robert H. Wagstaff: Not at this time. Not yet.
Harry A. Blackmun: Mr. Wagstaff, suppose that Alaska set up a WPA project as we knew in the preparation. That is a little bit before your time maybe, but is designed specifically by the state to relieve the unemployment amongst state residents and restricted it to state residents, would you be here attacking that one too?
Robert H. Wagstaff: Mr. Justice Blackmun, those would be public works type projects working on public works.
Harry A. Blackmun: Building roads and this kind of thing.
Robert H. Wagstaff: Building roads actually employed by the state.
Harry A. Blackmun: Yes.
Robert H. Wagstaff: Of course, that is a different issue and we would not be here under Alaska Hire on that issue. I think that issue has been addressed in other cases. There are three levels of looking at it that particular issue. There is the direct government employment, the employment by private contractors on government projects and what we have here is strictly private activity, not taking place on state lands. The only nexus that the state asserts is that they own the resources involved here, oil and gas and therefore, they can do whatever they want to with them. They can make any requirements whatsoever with regard to their utilization. Of course, this is one step even beyond that. This has nothing to do with extraction. It is the jobs created as a result of the oil and gas development.
William H. Rehnquist: I am not sure I got your answer to Mr. Justice Blackmun’s question.
Robert H. Wagstaff: Yes, Mr. Justice Rehnquist.
William H. Rehnquist: I am not sure I have got it correct.
Robert H. Wagstaff: Yes.
William H. Rehnquist: What?
Robert H. Wagstaff: His question, as I recall, it would bézier if this was a WPA project.
William H. Rehnquist: And then Alaska had provided that only residents could work on the state-funded WPA project.
Robert H. Wagstaff: No, this is a different case than that. We would not bézier if that was what was going on.
William H. Rehnquist: I realized that, but would you feel that you had substantial constitutional grounds if Alaska had enacted such a law and your clients were excluded because of nonresidency?
Robert H. Wagstaff: Yes, I do. I do think that would be a constitutional violation on privileges and immunities if residents of other states were excluded from this.
William H. Rehnquist: So a state cannot use its own tax moneys to relieve unemployment among its own residents?
Robert H. Wagstaff: It can, just so long as it does not violate the constitution and specific other types of projects. For instance, the dissent in the Hicklin case in Alaska that said such things as job training, such things as the Alaska Native Claim Settlement Act were good bona fide ways of addressing this problem without discriminating.
William H. Rehnquist: Well, the Alaska Native Claim Settlement Act, a lot of people are not interesting in just sitting at home and getting a check every month to buy groceries, they want work.
Robert H. Wagstaff: That is correct. But, I do not think the state can discriminate against the residents of other states in such activities. And this is we are talking directly about public employment, as I understand the question. That is my belief and my position. Again, it is certainly not necessary to reach that in order to meet the issue in this case. The Alaska Supreme Court made it clear that they were deciding this as a broad economic preference, flatly stated, to Alaska residents. There is a real question, factually or functionally as to whether or not Alaska indeed owns the resources. The resources, oil and gas, are actually being extracted by private industry. The state has a claim to the subsurface resources where they are being extracted from. There also is a strong national interest that has been recognized by congress twice in Alaska Oil and Gas. Once in the Trans-Alaska Pipeline Act and more recently in the Alaska Gas Transportation Act of 1976, in which congress makes a specific finding of a national interest.
Warren E. Burger: What difference constitutionally do you see, if any, in a statute such as you have confine to natural resources of Alaska and all employment in Alaska, independent of the resource, the source of the material?
Robert H. Wagstaff: I do not think there really is that much difference, Mr. Chief Justice. The state, in Alaska and I am sure in other states, can usually find some sort of nexus or tangential relationship with the governmental activity or ownership or proprietary interest, so that it can offer this justification in other jobs as well. That is one of the things that the dissent noted. This would apply to agriculture in Alaska Lumber or anything else if the legislature wishes to expand it that far.
Warren E. Burger: It could be expanded on that theory to a salesman of Toyota automobiles, which as far as I know, do not draw any resources of Alaska to manufacture.
Robert H. Wagstaff: They do. They have some nexus. Most of the crates that they are shipped in come from Alaska Lumber. But, there would be some nexus possibly in that to that extent. The state can always find reason that it has a touch upon the particular job involved. That is one of the real dangers of Alaska Hire. It is how much further under this theory of state ownership of resources, can it be expanded? Of course, if Alaska does it, any other state can and I think, predictably, will. I think that Alaska’s problems are real, but they are not that much different than many other states at this time or any other time. I think that under some of the cases that we sited in our brief, the proper way of dealing with these types of problems is not by isolation and dealing with them separately that a state cannot insulate itself from what is termed in some commerce clause cases as a national welfare. The same national welfare has a legitimate national public interest in the resources themselves. Alaska is seeking really to isolate itself from the nation and from the Union in dealing with these particular problems.
John Paul Stevens: Mr. Wagstaff, would you help me with one thing? As I understand it, they held unconstitutional one year residency requirement.
Robert H. Wagstaff: That is correct.
John Paul Stevens: What exactly is it other than being in the state for 30 days that your clients must do in order to be eligible for work?
Robert H. Wagstaff: It is covered specifically by statute, Mr. Justice Stevens, and it appears on the definitional section within the Appendix. There is a definition of residents within there, what a resident is.
William H. Rehnquist: What page is that?
Robert H. Wagstaff: Page 12, he must maintain a place of residency within the state, most importantly, must show by all attending circumstances that his intent is to make Alaska his permanent residence. It is a clear domiciliary situation. Additionally, the Alaska Supreme Court, the majority spent some-five pages talking about the steps that a state can go to ensure that this is a person, who actually has made the commitment to Alaska, not simply just to come there in order to meet the 30-day requirement.
John Paul Stevens: You would not object to the residence, I suppose, because I guess he has got to live in Alaska during the work. The main objection is to the declaration of intent to make it a permanent residence.
Robert H. Wagstaff: That is correct. Actually, coming there is a different and habituating there at the time is different, although there is a position in our right to travel argument that if you actually have to go there before you qualify for a job, it discourages job applications from other states and people cannot make inquiries as they historically have done in Alaska by letter. They actually have to make a commitment to travel and spend considerable amount of money to get that far.
William H. Rehnquist: Your position then is that Alaska could not even prohibit hiring someone, say, from Kansas or Texas, who simply apply to an Alaska firm that they could not require the people even to show up in Alaska before they were hired.
Robert H. Wagstaff: That is correct. I can see no justification for that. The State of Alaska based its opinion, the ownership theory, strictly and exclusively on McCready versus Virginia, which if it has not been overruled and not been severely limited, should be today. The state feels, as I have stated, that because they believe that they own the resources, they can do with them as they see fit. McCready is highly distinguishable and it has been severely limited by the Toomer case, in which this court refused to expand it any further than it already was, which was very narrow and relates of course to the planning of oysters and the tidal waters of the Ware River and Virginia, and deals with access or planting of oysters to state property. It has nothing to do with resulting employment. Of course, in Alaska, the oil and gas is in commerce. We believe it falls directly under the Foster-Fountain v. Louisiana Shrimp holding that as the state relinquishes all ownership claims, such as they may even exist, when it places and permits the resources which it purports to own to go into commerce. That is typically what is happening here. That is the way Alaska makes money off oil and gases, having them sold in other states. The McCready case, of course, is limited as well to Fish and Game, in which there is a historical exception or public interest that the court talks about at length in Geer versus Connecticut which is totally different, we believe, than natural resources in general. It is talking about common property that is property that is owned jointly by all the people of the state which Fish and Game had historically been thought to be, which is different and distinguishable than property ownership in chief or in general. Also, McCready is a conservation case, as was Corfield versus Coryell and as was asserted in Geer versus Connecticut. This case has nothing to do with conservation whatsoever. It has to do with exploitation and development. The conservation argument was made in Toomer versus Witsell as well. McCready, as was recognized by the court in Toomer, is the only case that has ever been decided by this court, in which there are no persuasive independent reasons for the discrimination. The court then, in 1948, refused to expand McCready to encompass any other areas. I think this court should do the same thing today because there are no independent reasons for Alaska Hire, regardless of the purported legislative purposes. It is an across the board economic preference for all Alaska residents. The Supreme Court of Alaska recognized such, but said it was justified because the state owned the resources.
Potter Stewart: Is not the fact of unemployment among Alaska residents appropriately rational reason for this? It does not mean it is necessarily constitutional, but it is a reason.
Robert H. Wagstaff: It is a legitimate concern. I do not think it is properly addressed by Alaska Hire because if it is indeed the unemployed, who are going to be benefited, then it is those that should be given the preference. But, it is not just them. It is the employed. It is all Alaskans.
Potter Stewart: What if the person has a job somewhere else? He is not a beneficiary of this. If he is unemployed and looking for a job that he is the beneficiary, is not it?
Robert H. Wagstaff: These jobs that we are talking about, particularly are of extremely high-paying and extremely desirable. It is very common for people to quit other jobs including, actually several attorneys I have known who have gone to work on the pipeline. Of course, there will be another pipeline. The gas pipeline is going to be built probably in the next year or two. Of course, this will apply to any other gas exploration and development within oil and gas within the State, of which it is predicted, there will be a great --
Potter Stewart: I am still not sure that -- I understood your answer to my question which was prompted by your assertion that there was no reason whatsoever. My question was, is unemployment among Alaska residents a reason?
Robert H. Wagstaff: Yes, it is a reason and it does exist. Has it existed elsewhere? If you are talking about the lowest level of test that you could apply to it, you could say there is some possible reason here that the legislature may have articulated and that reason was rejected specifically by the Supreme Court of Alaska.
Potter Stewart: Which said what?
Robert H. Wagstaff: It said that this is simply an economic preference.
Potter Stewart: That is the same thing, is not it?
Robert H. Wagstaff: No. The Trial Judge found that these were legitimate needs and they had been addressed by statute. The Alaska Supreme Court rejected that reasoning and said, “We rather prefer and believe that the Alaska Hire is simply a preference.”
Potter Stewart: An economic preference, i.e. hiring residents before you hire a nonresident.
Robert H. Wagstaff: Yes, economic preference to all Alaskans, not just the unemployed.
William H. Rehnquist: But it would help the unemployed, even under the view that the Supreme Court of Alaska?
Robert H. Wagstaff: If they were unemployed Alaskans, yes. But, it was not the preference that is not restricted to them.
Potter Stewart: I am not sure I understand you. The whole point of this case is that it is restricted to Alaska residents.
Robert H. Wagstaff: That is correct. That is the whole point of the case and that it is impermissible to do so. The unemployed justification for it, first of all, was rejected by the Alaska Supreme Court. Secondly, it is not valid in it of itself because the states can always find reasons of that nature and this, of course, has been articulated.
Potter Stewart: The Alaska state legislature enacted this statute. Were they crazy when they did it? Did they not have some reason for doing it?
Robert H. Wagstaff: They enacted it.
Potter Stewart: There must have been a reason behind it.
Robert H. Wagstaff: Yes, they wanted to give preference to Alaska residents.
Potter Stewart: Precisely, that is what they did.
Robert H. Wagstaff: That is exactly what they have done and we believe, impermissibly so. The state does not have that power to give preference to its residents in resulting employment from oil and gas exploration in Alaska, particularly so, when the oil and gas is in commerce as it is here. That is how money is made.
Warren E. Burger: If this statute was sustained here and Alaska had another goal rush, could they extend the sweep of this statute to gold mining?
Robert H. Wagstaff: Yes, it could cover any state natural resource that it purportedly or believes that it owns like gold, coal, or anything of that nature. Of course, any state can do that as well.
Warren E. Burger: Only Alaskans could take gold out or non-Alaskans only after they had resided for one year. Would that be the case under the statute? The one year was the permanent residence.
Robert H. Wagstaff: Yes, they would have to establish permanent residency.
William H. Rehnquist: The one-year provision was struck down by the majority.
Robert H. Wagstaff: Yes, it was limited to 30 days. Of course, this is done by the enforcement procedure as you apply for a residency card. The burden is on the applicant. The residency card is good for two years and this entitles you to the preference of your cardholder. But as far, Mr. Chief Justices says, the gold situation is concerned, if that were considered a state resource which it would and the dissent clearly points out to how much further this law can go. It predictably would. Then, it would apply to gold as well and only in terms of employment. Not, we are talking about extraction. In terms of employment in the gold industry that residents would be preferred in all employment.
William H. Rehnquist: Can Alaska require that candidates for public office be residents of Alaska?
Robert H. Wagstaff: Yes, it can. It can and has, I think properly.
William H. Rehnquist: Why is that different from this?
Robert H. Wagstaff: There are some legitimate exceptions if they be deemed such to the privileges and immunities clause, and I believe that a state cannot discriminate against the citizen of another state unless there is a substantial compelling and legitimate interest that is being further thereby and the means chosen is the least drastic. Their voting is one such category.
William H. Rehnquist: Why?
Robert H. Wagstaff: That is how the state government is controlled.
William H. Rehnquist: But that is not much of an answer, is it?
Robert H. Wagstaff: I think, as far as the controlling of how state government is created, how the people choose the persons to govern that state, that it is legitimate in that context.
William H. Rehnquist: One would think though that would be quite illegitimate, there is a kind of self‑perpetuation scheme built in by the legislature to make sure that the people do not have a right to choose anybody but people who have been around Alaska for quite a while.
Robert H. Wagstaff: The legitimate state interest is to keep people, I suppose. I am not defending that position. I just recognizing that it exists.
William H. Rehnquist: Not only exists, it has been upheld by the court.
Robert H. Wagstaff: Yes, it has been upheld. It is to keep people from coming across state lines.
Thurgood Marshall: So, you would not have floating governments?
Robert H. Wagstaff: Excuse me, Justice White?
Thurgood Marshall: So you would not have floating government.
Robert H. Wagstaff: That is correct.
Thurgood Marshall: You would spend six months in Alaska and six months in Georgia, and the next six months in California. That is the reason of it.
Robert H. Wagstaff: Yes. There are some others too as well that have been recognized. For instance, tuition differentials in cases had been recognized as allowing a state who has created the institutions. The taxpayers of that state have paid for it to discriminate in differentials for tuition. But, that is the least drastic. In state students are not given preference as they are in Alaska Hire. I would like to reserve the rest for rebuttal, if I may.
Warren E. Burger: Very well. Mr. Lorensen.
Ronald W. Lorensen: Thank you, Mr. Chief Justice and may I please the court. I think, directly at the outset, it needs to be pointed out that what Alaska Hire effects is founded upon is state ownership of resources and not just state ownership in a more general usage of the fact that oil and gas may be found within Alaska. It is because this oil and gas was found on land below land which is owned by Alaska. In a true legal sense and despite what council for the appellants would indicate, I do not believe there is any power in congress to require that Alaska sell or dispose of its oil and gas as long as it sits in the ground and is not held under private leases by private individuals. What Alaska has said was that if we are going to lease this oil and gas which we, the state, own on behalf of our people, our residents, we are going to require certain conditions.
Byron R. White: I take it your argument would be the same if there was not a single unemployed person in Alaska?
Ronald W. Lorensen: Yes, it would with respect to the underlying justification of course.
Byron R. White: Supreme Court upheld the law on the basis you are submitting?
Ronald W. Lorensen: Yes.
Potter Stewart: General Lorensen, I have been curious. There are some differences of opinion in the briefs of these as to the scope of this statute. Is the scope measured by Section 38.40.050, appearing on page 8 of the Appendix?
Ronald W. Lorensen: It is repeated in two places, but Section 050 does contain a scope. I think Section 030A is really the underlying basis for it. That section states that in order to protect and preserve rights of Alaskans to employment, a certain provision shall be incorporated into oil and gas leases, pipeline rights of way where the state is a party to those leases and rights of way.
Potter Stewart: 050 seem to be a little broader. It must be performed directly for the person subject to this chapter or his contractor or a subcontractor of his contractor or a supplier of his contractor or a subcontractor.
Ronald W. Lorensen: Yes, what 050 requires is that a lessee, who leases the oil, agrees that he will see to it that his subcontractors do in fact also hire Alaska residents with a preference.
Potter Stewart: And suppliers of his subcontractors.
Ronald W. Lorensen: And suppliers. I would point out, your honor, that to this point, the supplier’s aspect has in fact not been enforced. We have had our hands full just enforcing it with respect to actual construction activity.
Thurgood Marshall: Would they supply the refineries?
Ronald W. Lorensen: It would depend on the nature, in which the refineries arose. If it is built on state land which is lease for that purpose, yes.
Thurgood Marshall: No, if this is a refinery built on public land, not state land, United States’ land. You are not taking over the United States’ land, are you?
Ronald W. Lorensen: No, we are not. Are you speaking of oil and gas which is being refined?
Thurgood Marshall: Yes.
Ronald W. Lorensen: Alaska oil and gas which is being refined?
Thurgood Marshall: Some of these pipelines are on the United States’ land, do not they?
Ronald W. Lorensen: Yes, they do.
Thurgood Marshall: Does this law apply to those?
Ronald W. Lorensen: It applies to the extent that there is employment taking place, yes.
Thurgood Marshall: Where do you get jurisdiction on United States’ land?
Ronald W. Lorensen: It is not the land, Mr. Justice Marshall.
Thurgood Marshall: The pipe is on the land.
Ronald W. Lorensen: Yes, but it is the employment activity which we are regulating.
Thurgood Marshall: You would go on to the United States’ land and enforce your state law?
Ronald W. Lorensen: Yes, and I think we have.
Lewis F. Powell, Jr.: What percentage of this state workforce would be affected by this Act? I think the brief said “roughly 6%”?
Ronald W. Lorensen: That is correct. At the height of pipeline employment, it represented only 6% of the entire workforce in the state.
Lewis F. Powell, Jr.: Would that be true if you had included suppliers, as well as contractors or subcontractors or lessees?
Ronald W. Lorensen: It may have been somewhat higher, Mr. Justice Powell, but, again, as I indicate, we have not in fact enforce it against suppliers at this point.
Lewis F. Powell, Jr.: But you could under the Act?
Ronald W. Lorensen: We could. We are limiting the scope of suppliers by regulations very stringently, however, to suppliers whose activity is 95% directly related to that activity. So, we do not grab a small supplier, who really does not have any direct contact with the pipeline.
William H. Rehnquist: When you say suppliers, the Act applies to our employees of suppliers, not to the supplier themselves, I take it.
Ronald W. Lorensen: It requires the supplier to hire employees, who are Alaska residents.
William H. Rehnquist: But the supplier himself or itself need not be an Alaska resident?
Ronald W. Lorensen: No, that is correct. We do not place any requirements in terms of who operates the business or who the business entity is. That is correct. So throughout your analysis of local hired, I urge you to keep in mind the fact that what we are talking about is the state disposing of resources which it really owns and disposing of them in a way which it sees would best benefit its own residents, the people on whose behalf it owns those resources.
John Paul Stevens: Mr. Lorensen, is it fair to analogize this to sort of a monopolist, who imposes a tying clause on its customers? If you want my product, you have got to accept this condition in order to get the product, namely, employ people I designate.
Ronald W. Lorensen: I suppose that analogy could be made. I am not experienced at all in the area you are speaking of, the anti-trust area, so it is difficult for me to justify.
Thurgood Marshall: But your natural gas, once it hits the pipeline.
Ronald W. Lorensen: Mr. Justice Marshall?
Thurgood Marshall: That gas does not belong to Alaska once it hits the pipeline.
Ronald W. Lorensen: No, that is correct. We do not attempt to regulate the gas itself in any way.
Thurgood Marshall: You regulate the line, the pipeline.
Ronald W. Lorensen: Only the construction before gas is ever put into it. It is also important to keep in mind that the jobs that we are talking about would not exist if the state had not granted these leases and pipeline rights of way in the first place.
Thurgood Marshall: But there is no question that Alaska can use that money?
Ronald W. Lorensen: There is no question that Alaska can use it and will be using the money that it receives. That is correct. But, very frequently, the money that the state receives, with respect to individual residents of the state, never has any real impact. A school may be built and an individual or a resident of the state says, “I do not have any children” or “my children are no longer in school.” He is a more direct benefit to himself by finding himself being employed in this type of activity which is the result of the exploitation of the resources which he owns, really he owns.
Warren E. Burger: Do you happen to have any idea of how many people in Alaska are on relief? Is it a substantial number?
Ronald W. Lorensen: It is a substantial number. I do not have any idea of the number of people on relief. I can tell you that we have the highest unemployment rate in the nation. We always have in any time of the year.
Warren E. Burger: At this time of year, it is approximately 12%. But people can come from another state and go on relief immediately in Alaska, can they not?
Ronald W. Lorensen: If they declare themselves residents, yes.
Warren E. Burger: That consumes a natural resource of Alaska, does it not?
Ronald W. Lorensen: Dollars, that is right.
Warren E. Burger: Tax revenues?
Ronald W. Lorensen: That is right.
Warren E. Burger: I suppose that is a research whether a natural or artificial.
Harry A. Blackmun: I can understand perhaps why you would prefer residents, but how about residence for a year? Why do you insist on a year?
Ronald W. Lorensen: That aspect of the law has now, of course, been struck by the State Supreme Court. We put forward what we thought was a very compelling justification and we showed by affidavit that it was necessary to provide this year cushion especially for undertrained individuals in the state who had undertaken training programs who, upon entering training, needed some assurance that they could in fact look for a job and that they would not be bypassed as soon as they go out of the training program by new residents who had come to the state with higher skills and higher qualifications at the outset. We put forward a number of other justifications. I do not think I need to go into them all.
William H. Rehnquist: The Supreme Court of Alaska threw it out on state constitutional grounds.
Ronald W. Lorensen: It threw it on both the State and the Federal Constitution. We have indicated in a footnote that we feel they may have erred in relying on the federal constitution analysis.
William H. Rehnquist: But that is not here because they also relied on state counts.
Ronald W. Lorensen: That is correct.
Potter Stewart: In any event, you did not cause petition.
Ronald W. Lorensen: That is correct. We sought a basis for it since it was thrown out.
Potter Stewart: You accepted the 30-day and, indeed, your brother on the other side does not quarrel with the 30 days as such as I understand it.
Ronald W. Lorensen: That is correct, Mr. Justice Stewart, yes. Now, both the appellants and the dissent in the State Supreme Court decision spoke in strident terms of the threat and vulcanization to our nation and parochial isolation, which would resolve if this law were in fact upheld. I think that if we just stop to think about it for a moment that those fears are more fears than practicality which will ever arise. For one thing, I doubt that there is any state which owns the quantity of developable resources and I guess, again, we are talking about state ownership of developable resources in the quantity that Alaska does. So, that is a practical matter and that would be the extent of any decision by this court upholding local hire. As a practical matter, the implementation by the various states would probably be minimal at best because they do not own a lot of land.
John Paul Stevens: Mr. Lorensen, is that a valid argument? If your position is correct, why could not another state that did not own the resources itself but just sought to regulate them and say that anybody who works in oil that comes out of Louisiana, say, shall be a Louisiana resident for the same reason that you want to protect your citizens from unemployment and the like. Why could Louisiana not do the same saying that in our regulatory power over resources that have their source in the state will exercise this kind of jurisdiction? Why would that not be equally reasonable?
Ronald W. Lorensen: That argument does not form the basis for our position at all.
John Paul Stevens: I understand that.
Ronald W. Lorensen: It may in fact be reasonable. I am not sure. I have not given that aspect a lot of thought. What you run into there is interference with interstate commerce problems, your West versus Kansas.
John Paul Stevens: But you have the same interference here. The only difference is that you happen to be the legal owner instead of just the sovereign that has the power to decide what happens to the resource. Should that make a difference when you are talking about the exercise of a governmental function?
Ronald W. Lorensen: In fact, there is no interference with interstate commerce. Here, the situation which you have propounded, it seems to me, would depend on precisely the facts as to whether or not there was an interference.
John Paul Stevens: It would be precisely the same statute, except that Louisiana might not say with respect to oil we own, but just the oil that the other oil companies own that comes out of Louisiana. It is a state resource and because it is a subject to our jurisdiction we will impose this kind of employment condition just as you have. Would they not have the same motivation and same justification for it?
Ronald W. Lorensen: They may have the same motivation. They do not have the same constitutional underpinnings to rely upon because they cannot point to McCready to say that this is the basis for our requiring that oil and gas employment be given to Alaska residents first. McCready looks to the ownership of the land.
John Paul Stevens: McCready does not deal with employment of other persons in using the resource, does it?
Ronald W. Lorensen: No, the fact of the situation, McCready did not. It seems to me that if you read McCready, I think this court have been presented with a law that said “not only must Virginia residents plant oysters, but also any individuals hired by Virginia residents to harvest those oysters must as well be Virginians. I think this court would have upheld that requirement as well, under the analysis provided in McCready.
Thurgood Marshall: What about Texas where the state does own the oil?
Ronald W. Lorensen: If Texas does in fact own the oil.
Thurgood Marshall: The University of Texas got more oil than anybody else in there.
Ronald W. Lorensen: I would certainly argue on behalf of Texas that they would have the same constitutional basis for requiring the Texas residents to be hired first.
John Paul Stevens: You were starting to say when we interrupted you that this would not have a broad impact in the other states because Alaska is peculiar in that it owns a great quantity of developable resources. But, it is true, is it not that any land anywhere is a developable resource either for farming or for building an office building or for whatever? Not that that weakens your basic argument but, certainly, the impact of this case would not be confined to the State of Alaska.
Ronald W. Lorensen: That is certainly true. My only point is that, with respect to other states who could use the same theory, the amount of land which another state owns in almost all cases is very minimal except perhaps for—
John Paul Stevens: The western states.
Ronald W. Lorensen: And parks. Most states have said that the property that states have so long set aside for parks and it is no longer developable.
John Paul Stevens: What percentage of the area of Alaska is owned by the state?
Ronald W. Lorensen: When transfer of all property to the state is finally completed, it would be about one-third of the property of the state.
John Paul Stevens: And about almost two-thirds by the United States.
Ronald W. Lorensen: Except for the transfer to the native corporations which is presently in the offing. I am not sure how the split would eventually break out. But, those will be the three largest landholders in the state.
John Paul Stevens: And individual private land owners?
Ronald W. Lorensen: They own about 1% of the land.
John Paul Stevens: Own 1% of the whole.
Ronald W. Lorensen: That is right. Private ownership in Alaska is very minimal on land. The other reason that we do not think that parochialization and balkanization is something to be feared, as we have pointed out in our brief, there are numerous states and we pointed it to 19 or 20 of them which currently have statutes which require that in public construction work done for those states or their political subdivisions that contractors performing network hire residents of those states first. In some cases, it is an absolute preference. In many cases, it requires a durational aspect. But, there are a great number of states which currently require similar kinds of employment preferences for residents in private employment.
John Paul Stevens: Federal government has at least one statute that imposes conditions with which those who contract with the Federal Government have to comply, is that not true, the Davis Bacon Act?
Ronald W. Lorensen: The Davis Bacon Act, I do not know how that applies to residency.
John Paul Stevens: It does require a certain level of compensation.
Ronald W. Lorensen: It does. That is the main aspect of the Davis Bacon Act. Of course, the Federal Government has now also adapted the 10% minority contractor requirement which, I assume, will eventually get to this court but that is, again, another subject.
John Paul Stevens: Would you argue that Alaska could provide that people who lease or buy its property as a condition of that lease have to employ only white people?
Ronald W. Lorensen: I would not argue that.
John Paul Stevens: So there is a limit on the conditions.
Ronald W. Lorensen: I think so, yes.
John Paul Stevens: Which the state, even as owner, can impose?
Ronald W. Lorensen: I think so, yes. The State Supreme Court has indicated some of the limitations. We have presented to this court and to the State Supreme Court an alternative argument based simply on the state’s power to contract without ever looking at the exercise of its police powers where the state is the owner, where the state wishes to be a purchaser that it may do so without the standard restrictions of due process and equal protection requirements. The State Supreme Court rejected that with respect to the one-year durational requirement. It did not address it with respect to the remainder of the law.
John Paul Stevens: You are relying on the state’s power as owner to contract with respect to the property which it owns?
Ronald W. Lorensen: That is right. There is no obligation on the part of the state.
John Paul Stevens: That is your sole reliance, is it not? That is your basic reliance. You begin with that premise.
Ronald W. Lorensen: We begin with the premise that the state owns the land. Then we say, if standard constitutional principles are applied to state’s action, privileges and immunities clause is satisfied and the equal protection clause is satisfied. If a state power to contract argument and analysis is applied, it still is valid under that absent the analysis under privileges and immunities.
John Paul Stevens: But you do concede clearly that there are limitations. You just have. You said that they could not require only white people be the part.
Ronald W. Lorensen: Yes. Not only that, but with respect to its power as a proprietor, it seems to me, it would be subject to the same anti-discrimination laws and any other private contractors.
John Paul Stevens: Is there any difference between its power as a contractor and its power as an owner?
Ronald W. Lorensen: That is an interesting question which I have been unable to resolve in terms of the research.
John Paul Stevens: It is basically the same, is it not?
Ronald W. Lorensen: It seems to me that it should be the same. The cases have always addressed the state’s power to contract as purchaser rather than its power to contract as seller.
Harry A. Blackmun: I would suppose that you would say then that certainly in the state’s own employment it could put on the same condition?
Ronald W. Lorensen: Yes, for state public employment.
William H. Rehnquist: But you would not say that the state could require that all the oil taken out of the lands it owns in Alaska be used only in Alaska?
Ronald W. Lorensen: No. It seems to me that that would be directly contrary to this court’s holdings in the West Virginia v. Pennsylvania case.
John Paul Stevens: The commerce clause.
Ronald W. Lorensen: That is right, commerce clause. That is one of our points. We are not affecting the product or its distribution in any way by local hire.
Harry A. Blackmun: General Lorensen, with respect to this one-third of the land in the state that is owned by Alaska, I take it your theory would justify a statute which said that any purchaser of any portion of that land must, as long as he owns the land, put preference in employment to Alaska residents and require his purchaser to do the same so that forever, for one-third of the state, the employment preference could be restricted to Alaska residents.
Ronald W. Lorensen: If we are going upon a state power to contract theory, yes, very definitely. In the same way, it would be my argument that the state has considered from time to time and we may find ourselves a position very soon of once again adopting a homestead provision. It seems to me, very clearly, the state can require that only Alaska residents participate in homesteading program.
John Paul Stevens: But historically, the homesteading was basically used to be a federal program and it was for new comers primarily, was it not?
Ronald W. Lorensen: It was to encourage people to settle the land, whether the federal program was for new comers or just to encourage settlement.
John Paul Stevens: Do you know, with respect to homesteading, whether historically there had been residential restrictions?
Ronald W. Lorensen: I really do not know that.
John Paul Stevens: I do not either. I was just asking for information.
Ronald W. Lorensen: No, I do not. The state has had a mini homesteading program in the past for recreational provision, but it cut that off not too long ago.
Byron R. White: Of course, your statute does not conclude employment of a resident-alien, does it?
Ronald W. Lorensen: No, it does not. That is a point that we have made. Mr. Wagstaff in his reply brief has somehow indicated that we do not permit aliens to participate in the program if they are residents. That is not in fact the case to the extent that he makes that argument. I am not sure what his basis for it is. I would point out as well that the Alaska legislature is charged with the duty under the Alaska constitution, Article 8 Section 2, to see to it that the resources of the State of Alaska are developed and utilized to the maximum benefit of its people. This provides an independent and a separate justification or a separate basis for the legislature enacting local hire. It is charged with the duty under the Alaska constitution to maximize benefits to residents. This maximizes those benefits.
William H. Rehnquist: How from a constitutional point of view, is that an independent basis as contrasted to a legislature simply deciding without any constitutional mandate that it wants to do that?
Ronald W. Lorensen: It seems to me that the constitutional requirement places a nature of a trust upon the legislature and its relationship with that land that may or may not exist in the absence of that kind of a constitutional requirement.
William H. Rehnquist: But in either case, you are being challenged on federal constitutional grounds.
Ronald W. Lorensen: That is correct. I certainly am not asserting that the Alaska Constitution can overwrite the Federal Constitution. There is some question as to what the Alaska Supreme Court did say about local hire and how it would characterize it. I would just like to read that to you to indicate that it did not say that local hire is simply an across the board economic preference to residents. The Supreme Court stated “we are hesitant to classify Alaska Hire.”
William H. Rehnquist: Where are you reading from?
Ronald W. Lorensen: I am reading from – this is the brief of the appellants in their footnote 7 on page 7. It can also be found in their jurisdictional statement in their Appendix 1 page 19A which contains the entire decision. “We are hesitant to clarify Alaska.” This is a miss typo. “We are hesitant to classify Alaska Hire as something other than an attempt to strengthen the Alaskan economy.” It is an attempt to strengthen the Alaskan economy, not simply some across the board preference for residents. “We believe the better alternative is to consider Alaska Hire an economic measure justified by the national resources exception.” Then, they go on into McCready. But, they do not reject the notion that Alaska Hire was adopted to promote either education or training in the state. We have presented numerous affidavits to the Superior Court indicating that training did, in fact, take place to qualify Alaska residents for these jobs as they became available. Training was a very integral part of the Alaska Hire Program. It did not operate in a vacuum.
Harry A. Blackmun: Under your view of the privileges and immunities clause, would it forbid the Alaska legislature from requiring all private employers to hire Alaskans first?
Ronald W. Lorensen: I would not say that it would forbid it. Such a requirement would not invoke the McCready principle. The question then would be whether or not there are, under your Toomer test for privileges and immunities analysis, valid independent reasons for the discrimination.
William H. Rehnquist: Assume the legislature invoked the same reasons that it did here with respect to employment on state property, namely that Alaska has a high employment rate and we intend to give an economic benefit to Alaska residents.
Ronald W. Lorensen: I would hate to express an opinion on behalf of the Attorney General’s Office at this point in time on that issue.
Harry A. Blackmun: Let me ask you something different, just short of that. What test do you think is applicable under the privileges and immunities clause to test a law like that?
Ronald W. Lorensen: A law such as the one you are proposing?
Harry A. Blackmun: Yes.
Ronald W. Lorensen: Your Toomer test, are there valid independent reasons for the discrimination? I could read it to you.
Harry A. Blackmun: Are there just any reasons?
Warren E. Burger: You mean whatever the court meant in Toomer?
Ronald W. Lorensen: Yes, sir. To state it very simply, in Toomer, you articulate a very specific test.
Harry A. Blackmun: I was not here.
Ronald W. Lorensen: The court articulated it.[Laughter] It was a two-pronged issue and the questions went as follows: are there valid independent reasons for the disparity of treatment? Does the degree of discrimination bear a close relation to those reasons? Coupled with that was a caveat added by the court that indicated that your inquiry must always be conducted with due regard for the principle that states should have considerable leeway in analyzing local evils and in prescribing appropriate cures for them. It is our position that if the court does not apply the McCready principle to local hire, that that test must still be satisfied. That is the applicable test for analyzing local hire and it is our position.
Harry A. Blackmun: Suppose we reject your McCready principle then we reach this, you still have to think the Toomer problem.
Ronald W. Lorensen: That is right, the Toomer test. I do not consider it a problem. We have addressed it in our brief.
Harry A. Blackmun: That is why I am asking you. If you rejected McCready principle, would there really be any difference between this law and a law which required a preference in all private employment?
Ronald W. Lorensen: Yes, and that is where the constitutional provision of the state constitution comes into play which directs the legislature to see to it that land, which the state owns, is utilized for the maximum benefit of residents. That constitutional mandate applies only to land which the state owns and does not apply to privately held land by the state.
Harry A. Blackmun: There is still a valid independent reason and, that is that the state seeks It is a bootleg reason, is it not? You just have a provision in your state constitution that says you may do this so you must do it.
Ronald W. Lorensen: The reason is that the state owns this land and desires to utilize; if it is to be utilized at all, if it is to be disposed of. It desires to see to it that it would be utilized in a manner which is most beneficial to Alaska residents. You cannot apply that test to private ownership, to land which is privately owned. The state does not have that same interest in private language. It has in language it owns on behalf of its people. I have only a couple of minutes left. I would just like to address briefly the equal protection issues raised by the appellants that this court should find that non-residency is either a suspect classification for purposes of equal protection analysis or that the resident-non-resident discrimination violates or impinges upon the fundamental right to travel, which this court has articulated in a number of recent cases. With respect to the suspect classification argument we have pointed out that this court has never held that non-residency falls into that suspect classification category. In fact, the underlying justification for suspect classifications, which this court has articulated in the San Antonio Independent School District case that suspect classifications are recognized where you are talking about a group which has no independent political power base essentially simply does not apply to non-residents who can, at any time, go to their congressional leaders here in Washington and seek to get congress to make discrimination by any state on the basis of residence illegal. So that non-residents do in that case have that kind of a political option which an alien would not.
Thurgood Marshall: It would be in the constitution, would it?
Ronald W. Lorensen: I beg your pardon, Mr. Justice Marshall?
Thurgood Marshall: You do not need the privileges and immunities clause. It is in the constitution. They can take care of themselves.
Ronald W. Lorensen: I am not going to take that position, certainly not. But it seems to me that with respect to your concerns that there are not be great many suspect classifications created, the concerns which you have articulated as justifying the creation. The recognition of suspect classification simply does not apply to the situation of resident versus non-resident discriminations. As to the right of travel argument, this court has recognized the right of travel only in the context of durational residency requirements where the discrimination is imposed between new residents and old residents. The right of travel which you have discussed in those cases is the right to migrate, the right to actually pick up and move one’s residence to one state to another. This court has yet to expand that right to travel notion to include the right to travel casually throughout the United States. As we have indicated in our brief that we do feel that there are, upon analyzing the cases, two different rights of travel which this court has recognized. One is the right of migration, the right to actually move one’s residence and take up residence in a new state. That is what this court has protected through its 14th Amendment analysis. The other right is protected by the privileges and immunities clause, Article 4 Section 2.With that, I will close. Thank you.
Warren E. Burger: Mr. Wagstaff, do you have anything further?
Robert H. Wagstaff: Yes, I do. Thank you, Mr. Chief Justice. There is a disagreement among the parties over what the Alaska Supreme Court has ruled. However, it is our position, as I have attempted to amplify to the court in the reply brief that the Alaska Court rejected the legislative findings as being any sort of justification or any sort of basis for Alaska Hire and rather found that it is simply an across the boards economic preference given to Alaska residents that the state has the right to do because it owns the resources. The independent reasons asserted, the independent reasons being high-end employment, were rejected by the Supreme Court. But, even if they are considered, they do not in and of themselves justify discrimination against residents of other states just because of unique problems, if they exist at all, in Alaska because as I have tried to argue with every state at least in its own eyes, has its own unique problems and unique attributes.
William H. Rehnquist: Mr. Wagstaff, do you think that the Alaska State Bar can impose a residency requirement?
Robert H. Wagstaff: It does impose a residency requirement. Of course, there are cases in this court, as I recall, affirming without opinion of the New Mexico case several years ago indicates that it is constitutionally valid. I personally, again, see no justification for a residency requirement for admission to the Bar because you do not have to remain a resident once you are admitted to practice law, at least in Alaska. The theory, as I understand it, is that it gives the State Board of Bar Examiners an opportunity to examine the person’s qualification, if they are actually there. I think a domiciliary requirement does not meet that particular need. It is not necessary that the person is physically present. I think that is adequate. But, again, that holding certainly is not necessary to this particular case.
William H. Rehnquist: You can see it as our cases hold that the residency requirement for admission to the State Bar is permissive.
Robert H. Wagstaff: Yes, that is one of the exceptions similar to the Boating Professional Licensing, Divorce, if you want to think it in those terms, possibly municipal employment under the McCarthy opinion, and the Receipt of Welfare. Exception is perhaps the wrong word. It is instances where a state is showing a substantial compelling and legitimate need which it has the burden to show. Of course, I believe as Mr. Justice Stevens has suggested that a state could justify a law like Alaska Hire under its general regulatory powers, not simply we own it.
Harry A. Blackmun: Maybe it could and maybe it could not. But in this case, the state does not seek to justify it under any such powers, but rather only on a limited foundation that in this case we are dealing with assets that are owned by the state as owner.
Robert H. Wagstaff: Yes, that it purports to own, that is correct.
Harry A. Blackmun: It does own. You do not quarrel with that, do you?
Robert H. Wagstaff: Own in the sense of being able to restrict it, I do not think you can.
Harry A. Blackmun: Own.
Robert H. Wagstaff: Yes, it does. It is entitled to the portion of the money from the sale of it. That is correct. The McCready case itself does not deal specifically with ownership because Fish and Game direct ownership. Fish and Game is owned by the people of the state and the state, in that case, was recognized as the trustee, the party having the proprietary interest to assert this. McCready is not directly helpful to them on that particular point.
Harry A. Blackmun: Is that an argument that it can prevail even if we do not overrule McCready?
Robert H. Wagstaff: Yes, it is because this is a different type of ownership. It is not a trustee representation of something that is owned collectively by the people.
John Paul Stevens: McCready did not involve transient, fugitive, why a wife would rather suddenly tear oysters or plant oysters?
Robert H. Wagstaff: Planting oysters in the tidelands of the Ware River, access to this had nothing to do with sale or jobs or anything else. It was just whether or not the state could restrict access to its own residents.
Lewis F. Powell, Jr.: Mr. Wagstaff.
Robert H. Wagstaff: Yes?
Lewis F. Powell, Jr.: Earlier in your arguments you emphasized the fact that the employment here was private. Assume that Alaska undertook to perform all of their functions that it now leashes out that is drilling the oil gas and constructing and operating a pipeline perhaps for refinery so that the people employed would be employees directly of the state. Would that make a difference to your position?
Robert H. Wagstaff: It is a different case. Of course, that is the state employment issue. I still believe that those circumstances would be a violation of privileges and immunities clause. I do not think the public employment – not the public employment but the public contracting, public works doctrine should be any longer valid. (Inaudible) theory of employment is on public works, I think, has been rejected by this Court. It seems to me, under the existing law, their contractors which the state has an interest for hiring directly, then under existing law, it would be a violation of privileges and immunities.
Lewis F. Powell, Jr.: In McCarthy, we were dealing with employees of the city of Philadelphia, as I recall.
Robert H. Wagstaff: That is correct.
Lewis F. Powell, Jr.: Would you draw a distinction between city employees, on one hand, performing public functions and employees of Alaska in an example I gave you?
Robert H. Wagstaff: Yes, I certainly do. McCarthy was involved, the fireman. It was a per curiam decision. There are other articulable reasons for municipal employment justifications such as knowing in the policeman’s case or the fireman’s case, knowing what the city is like, having a feel for the people in the city, and things of that nature that are different and additional reasons. With an oil company employee, those reasons simply do not exist.
William H. Rehnquist: You say McCarthy was per curiam opinion, is that one of the distinctions you would draw?
Robert H. Wagstaff: I said that in the sense that that was not fully analyzed as I recall in a particular opinion as to the specific reasons for uniqueness of municipal employment.
Harry A. Blackmun: I do not think it was an arguable case anyway, do you?
Robert H. Wagstaff: I do not believe it was.
Harry A. Blackmun: It was a summary disposition.
Robert H. Wagstaff: Yes.
Harry A. Blackmun: Which is why it was per curiam.
William H. Rehnquist: You feel, therefore, that it is less authoritative?
Robert H. Wagstaff: In my judgment, it is, in trying to seek guidance from it. The fact that it was not argued and it is a per curiam opinion, it does carry less weight with me as an attorney, yes.
Harry A. Blackmun: As a matter of fact, I think we have suggested that perhaps summary decisions are less authoritative even for us.
Robert H. Wagstaff: Yes, that is correct.
John Paul Stevens: Not even for us.
Robert H. Wagstaff: Especially for us.
Warren E. Burger: No, for us.[Laughter] Not for others.
Harry A. Blackmun: Exactly.
Robert H. Wagstaff: I see that my time is up. Thank you.
Warren E. Burger: Thank you, Gentlemen. The case is submitted.