Case 6.3

Standardization, Individuation, and Equal Protection: Zobel v. Williams (1982)

After Alaska amended its Constitution to establish a Permanent Fund into which the State must deposit at least 25% of its mineral income each year, the state legislature in 1980 enacted a dividend program to distribute annually a portion of the Fund’s earnings directly to the State’s adult residents. Under the plan, each adult resident receives on dividend unit for each year of residency subsequent to 1959, the first year of Alaska’s statehood. Appellants, residents of Alaska, since 1978 brought an action in an Alaska state court challenging the statutory dividend distribution plan as a violative of, inter alia, their right to equal protection guarantees. The trial court granted summary judgment in the appellants favor, but the Alaska Supreme Court reversed and upheld the statue.
Held. The Alaska dividend distribution plan violates the guarantees of the Equal protection Clause of the Fourteenth Amendment.
(a) Rather than imposing any threshold waiting period for entitlement to dividend benefits or establishing a test of bona fides of state residence, the dividends statues creates fixed, permanent distinctions between an ever-increasing number of classes of concededly bona fide residents based on how long they have lived in the State…..
When a state distributes benefits unequally, the distinction it makes is subject to scrutiny under the Equal Protection Clause, and generally a law will survive that scrutiny if the distinctions rationally further a legitimate state purpose…..
(b) Alaska has shown no valid state interest that are rationally served by the distinctions it makes between citizens who established residence before 1959 and those who have become residents since then. Neither the State’s claimed interest in creating a financial incentive for individuals to establish and maintain residence in Alaska nor is its claimed interest in assuring prudent management of the Permanent Fund rationally related to such distinctions. And the State’s interest in rewarding citizens for past contributions is not a legitimate state purpose. Alaska’s reasoning could open the door to state apportionment of other rights, benefits, and services according to length of residency, and would permit the states to divide citizens into expanding numbers of permanent classes. Such a result would be clearly impossible.
Opinion
Chief Justice Burger delivered the opinion of the Court.
The question presented on this appeal is whether a statutory scheme by which a State distributes income derived from its natural resources to the adult citizens of the State in varying amounts, based on the length of each citizen’s residence, violates the equal protection rights of newer state citizens.
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The 1967 discovery of large oil reserves on state-owned land in the Prudhoe Bay area of Alaska’s resulted in a windfall to the State. The State, which had a total budget of $124 million in 1969, before the oil revenues began to flow into the state coffers, received $3.7 billion in petroleum revenues during the 1981 fiscal year. This income will continue, and most likely grow for some years in the future. Recognizing that its mineral reserves, although large, are finite and that the resulting income will not continue in perpetuity, the State took steps to assure that its current good fortune will bring long-range benefits. To accomplish this, Alaska, in 1976 adopted a constitutional amendment establishing the Permanent Fund into which the State must deposit at least 25% of its mineral income each year. Alaska Const., Art IX ss 15. The amendment prohibits the legislature from appropriating any of the principal of the Fund by permits use of the Fund’s earning for general governmental purposes.
In 1980, the legislature enacted a dividend program to distribute annually a portion of the Fund’s earnings directly to the State’s adult residents. Under the plan, each citizen 18 years of age or older receives one dividend unit at $50 for the 1979 fiscal year; a one year resident thus would receive one unit, or $50, while a resident of Alaska since it became a State in 1959 would receive 21 units, or $1,050. The value of a dividend unit will vary each year depending on the income of the Permanent Fund and the amount of that income the State allocates for other purposes. The State now estimates that the 1985 fiscal year dividend will be nearly four times as large as that for 1979.
Appellants, residents of Alaska since 1978, brought this suit in 1980 challenging the dividend distribution plan as violative of their right to equal protection guarantees and their constitutional right to migrate to Alaska, to establish residency there and thereafter to enjoy the full rights of Alaska citizenship on the same terms as all other citizens of the States. The Superior Court of Alaska’s Third Judicial District granted summary judgment in appellants’ favor, holding that the plan violated the rights of interstate travel and equal protection. A divided Alaska Supreme Court reversed and upheld the statute.
[11]
A
The State advanced and the Alaska Supreme Court accepted three purposes justifying the distinctions made by the dividend program: (a) creation of a financial incentive for individuals to establish and maintain residence in Alaska: (b) encouragement of prudent management of the Permanent Fund: and (c) apportionment of benefits in recognition of undefined “contributions of various kinds, both tangible and intangible, which residents have made during their years of residency.”….
As the Alaska Supreme Court apparently realized, the first two state objectives-creating a financial incentive for individuals to establish and maintain Alaska residence, and assuring prudent management of the Permanent Fund and the State’s natural and mineral resources-are not rationally related to the distinctions Alaska seeks to make between newer residents and those who have been in the State since 1959.
Assuming, arguendo, that granting increased dividend benefits for each year of continued Alaska residence might give some residents an incentive to stay in the State in order to reap increased dividend benefits in the future, the State’s interest is not in any way served by granting greater dividends to persons for their residency during the 21 years prior to the enactment.
Nor does the State’s purpose of furthering the prudent management of the Permanent Fund and the State’s resources support retrospective application of its plan to the date of statehood.
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The last of the State’s objectives-to reward citizens for past contributions-alone was relied upon by the Alaska Supreme Court to support the retrospective application of the law to 1959. However, that objective is not a legitimate state purpose.
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If the states can make the amount of a cash dividend depend on length of residence, what would preclude varying university tuition on a sliding scale based on years of residence-or even limiting access to finite public facilities, eligibility for student loans, for civil service jobs, or for government contracts by length of domicile? Could states impose different taxes based on length of residence? Alaska’s reasoning could open the door to state apportionment of other rights, benefits, and services according to length of residency. It would permit the states to divide citizens into expanding numbers of permanent classes. Such a result would be clearly impermissible.
III
The only apparent justification for the retrospective aspect of the program, “favoring established residents over new residents,” is constitutionally unacceptable. …In our view Alaska has shown no valid state interests which are rationally served by the distinction it makes between citizens who established residence before 1959 and who have become since then.
We hold that the Alaska dividend distribution plan violates the guarantees of the Equal Protection Clause of the Fourteenth Amendment.
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JUSTICE BRENNAN, with whom JUSTICE MARSHALL, JUSTICE BLACKMUN, and JUSTICE POWELL join concurring.
I join the opinion of the Court, and agree with the Court, and agree with its conclusion that the retrospective aspects of Alaska’s dividend distribution law are not rationally related to a legitimate state purpose. I write separately on to emphasize that the pervasive discrimination embodies in the Alaska distribution scheme gives rise to constitutional concerns of somewhat larger proportion that may be evident on a cursory reading of the Court’s opinion.
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It is, of course, elementary that the Constitution does not bar the States from making reasoned distinctions between citizens. Insofar as those distinctions are rationally related to the legitimate ends of the State the present no constitutional difficulty, as our equal protection jurisprudence attest. But we have never suggested that duration of residence vel non provides a valid justification for discrimination.
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Permissible discriminations between persons must bear a rational relationship to their relevant characteristics. While some imprecision is unavoidable in the process of legislative classification, the ideal of equal protection requires attention to individual merit, to individual need. In almost all instance, the business of the State is not with the past, but with the present: to remedy continuing injustices, to fill current needs, to build on the present in order to better the future. The past actions of individual may be relevant in predicting current ability and future performance. In addition, to a limited extent, recognition and reward of past public service have independent utility for the State, for such recognition may encourage other people to engage in comparably meritorious service. But even the idea of rewarding past public service offers scarce support for the “past contribution” justification for durational-residence classification since length of residence has only the most tenuous relation to the actual service of individuals to the state.
Thus, the past-contribution rational proves much too little to provide a rational predicate for discrimination on the basis of length of residence. But it also proves far too much. For “it would permit the State to apportion all benefits and services according to the past… contributions of its citizens.”… In effect, then, the pat-contribution rationale is so far-reaching in its potential application, and the relationship between residence and contribution to the State so vague and insupportable, that it amounts to little more than a restatement of the criterion for discrimination that it purports to justify. But while duration of residence has minimal utility as a measure of things that are, in fact, constitutionally relevant, resort to duration of residence as the basis for a distribution of state largesse does closely track the constitutionally untenable position that the longer one’s residence, the worthier on is of the State’s favor. In my view, it is difficult to escape from the recognition that underlying any scheme of classification on the basis of duration of residence, we shall almost invariably find the unstated premise that “some citizens are more equal than others.” We rejected that premise and, I believe, implicitly rejected most forms of discrimination based upon length of residence, when we adopted the Equal Protection Clause.