Opinion ID: 2325341
Heading Depth: 2
Heading Rank: 3

Heading: Constitutionality of Resident Hiring Quotas for Local Public Works Projects.

Text: Appellant attacks the portion of the Camden affirmative action plan that requires that 40% of all persons hired for city public works projects be city residents, claiming violations of the Commerce Clause, the Privileges and Immunities Clause and the Equal Protection Clause. Conceding that municipalities can constitutionally require that their employees be city residents, see McCarthy v. Philadelphia Civil Service Comm'n, 424 U.S. 645, 96 S.Ct. 1154, 47 L.Ed. 2d 366 (1976) (upholding Philadelphia ordinance requiring city employees to be city residents); Detroit Police Officers Ass'n v. Detroit, 385 Mich. 519, 190 N.W. 2d 97 (1971), appeal dismissed for lack of substantial federal question, 405 U.S. 950, 92 S.Ct. 1173, 31 L.Ed. 2d 227 (1972) (upholding residency requirement for police officers); Abrahams v. Civil Service Comm'n, 65 N.J. 61 (1974) (upholding residency requirement for Newark city employees), appellants distinguish this case as involving the imposition of hiring quotas upon private contractors. While appellant's characterization of the Camden ordinance is accurate, we do not agree that the distinction deprives the ordinance of its constitutional validity.
Although the Commerce Clause speaks only in broad terms of giving Congress authority to regulate commerce ... among the several states, U.S.Const., Art. I, sec. 8, the Supreme Court has often invoked the clause to strike down state legislation that unreasonably impedes the flow of commerce across state lines. See, e.g., Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, 92 L.Ed. 1460 (1948) (invalidating a South Carolina requirement that shrimp boats fishing off its coast dock in the state and pay taxes on their catches before transporting them interstate); cases collected in Hughes v. Alexandria Scrap, 426 U.S. 794, 805-06, 96 S.Ct. 2488, 2495, 49 L.Ed. 2d 220, 229 (1976). The Supreme Court has applied the Commerce Clause to municipal enactments that unreasonably burdened interstate commerce. See Dean Milk Co. v. Madison, 340 U.S. 349, 71 S.Ct. 295, 95 L.Ed. 329 (1951) (striking down a city ordinance barring the sale of milk unless processed at an approved pasteurization plant within five miles of the city). All of the leading cases invalidating state and local legislation under the Commerce Clause, however, involve state taxes and regulatory measures impeding private trade in the national marketplace. See H.P. Hood & Sons v. Du Mond, 336 U.S. 525, 539, 69 S.Ct. 657, 665, 93 L.Ed. 865 (1949) (referring to state home embargoes, customs duties and regulations excluding imports). In this case, the City of Camden is not regulating the flow of commerce between private parties. The city is acting in the role of market participant, not market regulator. This distinction is crucial for purposes of Commerce Clause analysis. In Hughes v. Alexandria Scrap, supra , the United States Supreme Court determined that [n]othing in the purposes animating the Commerce Clause prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others. 426 U.S. at 810, 96 S.Ct. at 2498, 49 L.Ed. 2d at 231. Alexandria Scrap concerned a Maryland program designed to remove abandoned automobiles from the state's roadways and junkyards. The state's requirements for vehicle documentation made it effectively impossible for out-of-state processors to sell abandoned automobiles to the state. Nonetheless, the Court upheld the statute, stating that Maryland has not sought to prohibit the flow of hulks, or to regulate the conditions under which it may occur, id. at 806, 96 S.Ct. at 2492, but rather it has entered the market as a purchaser and restricted its trade to its own citizens or businesses within the State. Id. at 808, 96 S.Ct. at 2496. In Reeves, Inc. v. Stakes, 447 U.S. 429, 100 S.Ct. 2271, 65 L.Ed. 2d 244 (1980), the Court reaffirmed its approach giving the States broad power to prefer their own citizens when acting as market participants. The Court held that the South Dakota Cement Commission did not violate the Commerce Clause by its decision to give state buyers an absolute preference in fulfilling their requirements for cement in times of shortage. The Court noted, The basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators makes good sense and sound law.... Restraint in this area is also counseled by considerations of state sovereignty, the role of each State as guardian and trustee for its people, and the long recognized right of trader or manufacturer... to exercise his own independent discretion as to parties with whom he will deal. [447 U.S. at 436, 439, 100 S.Ct. at 2277 (citations and footnote omitted)] This Court has endorsed the principle that the state as market participant has freedom to favor its own citizens and choose the parties with whom it will deal. In K.S.B. Tech. Sales v. No. Jersey Dist. Water Supply, 75 N.J. 272, 298 (1977), Justice Schreiber, writing for a unanimous Court, noted that a state's purchase of goods and materials for its own end use ... is not subject to the usual Commerce Clause restrictions. The Court upheld a statute requiring contractors with state and local government to buy only American products. Cf. McGlynn v. N.J. Public Broadcasting Auth., 88 N.J. 112 (1981) (federal communications law does not preempt state rules ensuring candidate access to a state-owned television station where State is acting in its role as proprietor of the State's public stations). There is no question that if the City of Camden were engaged in its own public works construction, it could require that all employees on the job be city residents. When the government decides to purchase those services rather than perform them itself, it retains constitutional power to prefer its own citizens, at least to some extent. See McCarthy, supra ; Abrahams, supra . The decision of South Dakota to prefer its own citizens as purchasers in time of emergency shortage is particularly apposite to the instant case. We have recently described the severe economic plight that has befallen the City of Camden. City of Camden v. Skokowski, 88 N.J. 304 (1982). It is not the purpose of the United States Constitution to stifle the legitimate attempts of state and local governments to deal effectively with their social ills. We are aware of the recent decision of the Supreme Judicial Court of Massachusetts invalidating resident hiring quotas for Boston public works projects. Mass. Council of Construction Employers v. Mayor of Boston, ___ Mass. ___, 425 N.E. 2d 346 (1981), cert. granted sub nom. White v. Mass Council of Construction Employees, ___ U.S. ___, 102 S.Ct. 1273, 71 L.Ed. 2d 458 (1982). The Massachusetts court relied almost entirely on Hicklin v. Orbeck, 437 U.S. 518, 98 S.Ct. 2482, 57 L.Ed. 2d 397 (1978). Hicklin involved the Alaska Hire law, a state statute requiring that all Alaskan oil and gas leases, easements and other related agreements contain a requirement that qualified Alaska residents be given preference in hiring. Because the law applied to  all employment which is a result of oil and gas leases, it extend[ed] to employers who have no connection whatsoever with the State's oil and gas, perform no work on state land, have no contractual relationship with the State, and receive no payment from the State. 437 U.S. at 529-30, 98 S.Ct. at 2489, 57 L.Ed. 2d at 407 (emphasis in original). In short, the state in Hicklin was acting in its role as market regulator rather than market participant. We find unpersuasive the Massachusetts court's adaption of the reasoning of Hicklin to the context of the Commerce Clause, particularly in light of the Supreme Court holding in Reeves, Inc. v. State, supra. As the Supreme Court noted in Reeves, the competing considerations in cases involving state proprietary action often will be subtle, complex, politically charged, and difficult to assess under traditional Commerce Clause analysis. 447 U.S. at 439, 100 S.Ct. at 2279, 65 L.Ed. 2d at 253. Given these factors, the Court concluded, the adjustment of interests in this context is a task better suited for Congress than this Court. Id. We concur in the high Court's reasoning, and we uphold the constitutionality of the Camden resident quota, with the understanding that our Legislature is free to determine that the competing considerations militate against allowing municipalities to prefer their own residents for public works contracting.
Unlike the Commerce Clause, the Privileges and Immunities Clause speaks explicitly in terms of affording constitutional protection against the actions of other States. The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States. U.S.Const. Art. IV, sec. 2, par. 1. The purpose of the Privileges and Immunities Clause is to place the citizens of each State upon the same footing with citizens of other States, so far as the advantages resulting from citizenship in those States are concerned. Hicklin v. Orbeck, 437 U.S. at 524, 98 S.Ct. at 2486, 57 L.Ed. 2d at 403 quoting Paul v. Virginia, 8 Wall. (78 U.S. ) 168, 180, 19 L.Ed. 357 (1869). For this reason the clause is not invoked to strike down local ordinances that favor city residents. Clearly, the Camden affirmative action plan does not aim primarily at out-of-state residents. It almost certainly affects more New Jersey residents not living in Camden than it does out-of-state residents. Because the Camden ordinance does not affect the States ... treatment of each other's residents, Hicklin, 437 U.S. at 523, 98 S.Ct. at 2486, 57 L.Ed. 2d at 403, it does not violate any privilege of state citizenship. In Mass. Council of Employers, supra, the Massachusetts high Court rejected the privileges and immunities attack on Boston's resident quota in public works contracts because the discrimination adversely affects citizens of the Commonwealth as well. 425 N.E. 2d at 354. [8] This Court likewise declines to apply the Privileges and Immunities Clause in the context of a municipal ordinance that has identical effects upon out-of-state citizens and New Jersey citizens not residing in the locality.
Appellant contends that the Camden resident hiring quota offends the Equal Protection Clause by infringing upon the fundamental right to travel recognized in Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed. 2d 600 (1969). The Court rejects appellant's challenge for the same reasons that the Court has rejected equal protection attacks on the power of municipalities to hire only their own residents as city employees. Residency requirements for municipal employees have almost universally been upheld under the Equal Protection Clause as a rational means of furthering the city's public welfare. See McCarthy, supra ; Note, Municipal Residency Requirements and Equal Protection, 84 Yale L.J. 1684 (1975). In Kennedy v. City of Newark, 29 N.J. 178 (1959), Chief Justice Weintraub described the constitutional justification for residency requirements:    Government may well conclude that residence will supply a stake or incentive for better performance in office or employment and as well advance the economy of the locality which yields the tax revenues. [29 N.J. at 184] The Supreme Court's recognition of the right to travel as a fundamental right in Shapiro v. Thompson, supra , (striking down one-year residency requirements for welfare benefits), created doubts as to the validity of Kennedy v. City of Newark. But this Court explicitly rejected the right to travel argument in again upholding Newark's employee residence requirement in Abrahams v. City of Newark, supra. The right to employment on a local public works project, like the right to a city job, is not fundamental for purposes of equal protection analysis. Therefore, discrimination against non-residents of Camden does not offend the Equal Protection Clause if it has a rational basis. Allied Stores of Ohio v. Bowers, 358 U.S. 522, 528, 79 S.Ct. 437, 441, 3 L.Ed. 2d 480, 485-86 (1959). The rational reasons for a city's decision to hire its own residents in direct employment, discussed by Chief Justice Weintraub in Kennedy v. City of Newark, supra , apply just as forcefully in the context of city contracting for public works projects. The severe unemployment in Camden and the need for economic revitalization, noted by this Court in City of Camden v. Skokowski, supra, further support the rationality of resident hiring quotas. The 40% resident hiring quota for Camden public works thus does not offend the Equal Protection Clause.