Opinion ID: 1232173
Heading Depth: 3
Heading Rank: 1

Heading: What is the Nature of an Individual's Interest in a Permanent Fund Dividend?

Text: Appellees argue that a person's interest in a permanent fund dividend is entitled to enhanced protection under state equal protection analysis because the source of the dividend is property belonging to state residents. They argue that since the Alaska Constitution provides specifically for the permanent fund, an individual's interest in a dividend is a constitutional right entitled to enhanced scrutiny. They rely on the following three sections of the Alaska Constitution: The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people. Alaska Const. art. VIII, § 2. At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law. Alaska Const. art. IX, § 15. Laws and regulations governing the use or disposal of natural resources shall apply equally to all persons similarly situated with reference to the subject matter and purpose to be served by the law or regulation. Alaska Const. art. VIII, § 17. The essence of the appellees' argument is that a dividend is more than the right to receive a check each year. According to the inmates, the dividend represents a constitutionally protected interest in the natural resources of the state. The state counters that an inmate's interest in a dividend is less important than other interests which the court has held deserve only minimal scrutiny. It cites Sonneman, 790 P.2d 702, in which we held that the right to receive unemployment compensation benefits was entitled to review at the low end of the sliding scale. The state also cites State v. Ostrosky, 667 P.2d 1184, 1193 (Alaska 1983) (the interest in being able to fish as a gear license holder in a fishery is not of a high order), and Atlantic Richfield Co. v. State, 705 P.2d 418, 437 (Alaska 1985) (the interest in freedom from disparate taxation is at the low end of the continuum of interests protected by the equal protection clause). Previously we indicated that we will apply only minimum scrutiny to a statute affecting an individual's right to a permanent fund dividend. See Williams v. Zobel, 619 P.2d 448, 459 (Alaska 1980) (applying the fair and substantial relationship test, Alaska's substitute for the rational basis test), rev'd on other grounds, Zobel v. Williams, 457 U.S. 55, 102 S.Ct. 2309, 72 L.Ed.2d 672 (1982). We concluded that the right to a dividend is not analogous to any situation in which the federal courts have applied strict scrutiny. Williams v. Zobel, 619 P.2d at 457. We held that a dividend is not a basic necessity, id. at 455, nor is the right to receive it a fundamental right, id. at 457. The United States Supreme Court declined to decide whether enhanced scrutiny was required in analyzing the rights at issue in Zobel, since it held that the preference given to those who had resided in Alaska longer than others was not rationally related to the goals of the statute. 457 U.S. at 60-63, 102 S.Ct. at 2313-2314. A dividend is merely an economic interest and therefore is entitled only to minimum protection under our equal protection analysis. See Wilson v. Municipality of Anchorage, 669 P.2d 569, 572 (Alaska 1983). A dividend is not, generally, a source of income that individuals depend on to supply the basic necessities of life. Williams v. Zobel, 619 P.2d at 455. It is an annual lump sum payment and the recipients cannot know with certainty how much it will be in any given year. It is useful to compare a dividend to other interests that this court has found are not entitled to compelling interest scrutiny. In Sonneman, we rejected the argument that the right to receive unemployment compensation benefits is an inherent, fundamental right. 790 P.2d at 704-05. We have also held that an individual's interest in employment is not a fundamental right and therefore is not entitled to compelling interest scrutiny. Hilbers v. Municipality of Anchorage, 611 P.2d 31, 40 (Alaska 1980). But cf., State v. Enserch Alaska Constr., Inc., 787 P.2d 624, 632 (Alaska 1989) (right to engage in an economic endeavor within a particular industry is an `important' right for state equal protection purposes). We view an individual's interest in a permanent fund dividend as no more important than one's interest in employment or unemployment compensation benefits. We have indicated that article VIII, section 17, of the Alaska Constitution may require a more stringent review than minimum scrutiny of statutes affecting an individual's use of natural resources. Gilman v. Martin, 662 P.2d 120, 125-26 (Alaska 1983) (Kenai Peninsula Borough ordinance limiting participants in a land sale lottery to those who had resided in the borough for at least a year held unconstitutional). We did not decide this issue in Gilman because the Kenai ordinance did not even pass the lower standard of review. Id. at 126. In addition, Gilman is easily distinguished from this case. While the Kenai ordinance directly affected an individual's right to buy government land, the permanent fund dividend statute at issue here only affects an individual's right to a share of the income derived from the state's land. No constitutional provision elevates the status of a dividend entitlement to the level of a disposal of a state natural resource. While the existence of the permanent fund is protected under article VIII, section 2, of the Alaska Constitution, this constitutional provision does not entitle each resident of the state to a dividend from the fund.