State, By and Through Departments of Transp. and Labor v. Enserch Alaska Const., Inc.

Decision Date18 December 1989
Docket NumberS-2694,Nos. S-2693,S-2731 and S-2736,s. S-2693
Citation787 P.2d 624
PartiesSTATE of Alaska, acting By and Through its DEPARTMENTS OF TRANSPORTATION AND LABOR, and Alaska Industrial Developmental Authority, Appellant, v. ENSERCH ALASKA CONSTRUCTION, INC., Ralph C. LaRose, Jr.; Kenneth C. Opel; Nana Regional Corporation, Inc.; Daniel Harvey; Melvin Morena; and Northwest Arctic Borough, a Home Rule Municipality, Appellees. NANA REGIONAL CORPORATION, INC., Daniel Harvey, and Melvin Morena, Appellants, v. STATE of Alaska, acting By and Through its DEPARTMENTS OF TRANSPORTATION AND LABOR, and Alaska Industrial Developmental Authority; Enserch Alaska Construction, Inc.; Ralph C. LaRose, Jr.; Kenneth L. Opel; and Northwest Arctic Borough, a Home Rule Municipality, Appellees. ENSERCH ALASKA CONSTRUCTION, INC., Cross/Appellants, v. STATE of Alaska, acting By and Through its DEPARTMENTS OF TRANSPORTATION AND LABOR, and The Alaska Industrial Developmental Authority; Nana Regional Corporation, Inc.; Daniel Harvey; Melvin Morena; Northwest Arctic Borough, a Home Rule Municipality; Ralph C. LaRose, Jr.; and Kenneth L. Opel, Cross/Appellees. NORTHWEST ARCTIC BOROUGH, a Home Rule Municipality, Appellant, v. ENSERCH ALASKA CONSTRUCTION, INC.; Ralph C. LaRose, Jr.; Kenneth C. Opel; State of Alaska, acting By and Through its Departments of Transportation and Labor, and Alaska Industrial Developmental Authority; Nana Regional Corporation, Inc.; Daniel Harvey; and Melvin Morena, Appellees.
CourtAlaska Supreme Court

Jan Hart DeYoung, Asst. Atty. Gen., Anchorage, and Grace Berg Schaible, Atty. Gen., Juneau, for State of Alaska.

J.W. Sedwick, Burr, Pease & Kurtz, Anchorage, for Enserch Alaska Const., Inc., Ralph C. LaRose, Jr. and Kenneth L. Opel.

Robert M. Johnson, James R. Szender, Wohlforth, Argetsinger, Johnson & Brecht, Anchorage, for NANA Regional Corp., Inc., Daniel Harvey and Melvin Morena.

Richard H. Erlich, Kotzebue, for Northwest Arctic Borough.

Before MATTHEWS, C.J., and RABINOWITZ, BURKE, COMPTON and MOORE, JJ.

OPINION

MOORE, Justice.

This appeal involves the constitutionality of AS 36.10.160 which provides a hiring preference to residents of economically distressed zones for certain employment on public works projects. The superior court, Judge Douglas J. Serdahely, declared the law unconstitutional under Alaska's equal protection clause. We affirm the superior court's decision on the unconstitutionality of the regional preference law and its rulings concerning waiver, intervention, and standing. We reverse the superior court's ruling on the right to seek damages for the state's enforcement of the unconstitutional law.

I. FACTS

In January 1986, we held that the state's local hire law, AS 36.10.010, violated the privileges and immunities clause of article IV, section 2 of the United States Constitution. Robison v. Francis, 713 P.2d 259 (Alaska 1986). In May 1986, the Legislature enacted a new statute creating four hiring preferences on public works projects. 1 The first is a preference for eligible individuals residing within a zone of underemployment. AS 36.10.150. The second is a preference for eligible residents of an economically distressed zone. AS 36.10.160. This is the preference at issue in this appeal. The third is a preference for eligible economically disadvantaged minority residents of a zone. AS 36.10.170. The fourth is for eligible economically disadvantaged female residents of a zone. AS 36.10.175.

These employment preferences are not self-executing. To trigger application of the employment preference provisions, the Commissioner of the Department of Labor ("the Commissioner") must determine that a zone is economically distressed. AS 36.10.160(a). 2 An economically distressed zone is an area in which: (1) zone residents have per capita income less than 90 percent of the United States per capita income, or zone unemployment exceeds national unemployment by at least five percent; (2) the lack of employment opportunities substantially contributes to social or economic problems; and (3) employment of nonresident workers is a peculiar source of unemployment for resident workers. 3

In 1987, the state and Enserch Alaska Construction, Inc. ("Enserch") entered into a contract for the construction of a fifty-five mile road from the Bering Sea coast to the proposed Red Dog Mine in the Northwest Arctic Borough ("the Borough"). 4 The contract required Enserch to "comply with all applicable laws and regulations regarding the hiring of Alaska residents now in effect or that may subsequently take effect...."

When Enserch started work on the project, the Commissioner had not yet designated any area of the state as an economically distressed zone. However, in 1987, the Borough asked the Commissioner to declare the Borough an economically distressed zone. The Department of Labor ("DOL") gathered the information necessary to evaluate whether the Borough was eligible for such a designation. After reviewing this information, the Commissioner issued emergency regulations declaring the Borough an economically distressed zone. 5

As a result of the Borough's designation as an economically distressed zone, the road project was subject to the employment preference provisions. AS 36.10.160. Thus, Enserch was required to fill at least fifty percent of the positions available in certain designated crafts 6 with eligible, qualified Borough residents. After implementation of the preference, employment of the Borough residents on the project increased from fifteen percent to forty-two percent.

II. PROCEEDINGS

In November 1987, Enserch filed suit against the state seeking (1) a declaration that AS 36.10.160 violated state and federal equal protection guarantees and the federal privileges and immunities clause, and (2) damages for its increased costs in complying with the law. In December 1987, Enserch moved for partial summary judgment.

The superior court permitted the Borough, NANA Regional Corporation, Inc. ("NANA"), Daniel Harvey, and Melvin Morena to intervene as defendants. The court also allowed Kenneth L. Opel and Ralph C. LaRose, Jr. to intervene as plaintiffs. Enserch moved for partial summary judgment that the employment preference deprived it of equal protection of the laws and the privileges and immunities of national citizenship. The state cross-moved for summary judgment on the ground that Enserch expressly had waived its right to recover damages. NANA moved to dismiss the complaint on the grounds of standing, ripeness, waiver of Enserch's right to challenge the constitutionality of the law, and failure to state a claim upon which relief may be granted.

The superior court entered partial summary judgment for Enserch. The court held that Enserch did not waive its right to challenge the constitutionality of the regional preference law. The court held that Opel, LaRose, and Enserch had citizen-taxpayer standing to challenge the preference law on equal protection grounds; however, they lacked standing to assert a federal privileges and immunities challenge. 7 The court then concluded that the preference law violated the equal protection provision of the Alaska Constitution. Finally, the court ruled that the state was not entitled to summary judgment on the issue whether Enserch waived its right to seek damages for the state's enforcement of the law because evidence in the record presented genuine issues of material fact. The court entered partial final judgment pursuant to Civil Rule 54(b).

The state and NANA appeal. They argue that: (1) Enserch waived its right to challenge the constitutionality of the regional preference law; (2) the superior court abused its discretion in permitting LaRose and Opel to intervene as plaintiffs; (3) Enserch, LaRose, and Opel lack standing to raise an equal protection challenge; (4) the regional preference law does not deny equal protection; and (5) Enserch waived its right to recover damages for the state's enforcement of the law. The Borough appealed, arguing that AS 36.10.160 is constitutional. Enserch cross-appealed, arguing that it had not waived its right to recover damages as a matter of law.

III. WAIVER

As a threshold matter, the state and NANA argue that the superior court erred in concluding that Enserch did not waive its right to challenge the constitutionality of AS 36.10.160. Enserch contends that, as a matter of law, it did not waive its right to challenge the law.

The state relies on Section 17 of its contract with Enserch which provides in part, "The Contractor shall comply with all applicable laws and regulations regarding the hiring of Alaska residents now in effect or that may subsequently take effect during the term of this contract." Enserch argues that the contract provision only applies to constitutional laws. It asserts that the state's enforcement of a condition requiring compliance with an unconstitutional law would constitute a breach of the implied covenant of good faith and fair dealing. Thus, Enserch concludes that it was entitled to summary judgment because the provision is unenforceable as a matter of law.

We conclude that Enserch did not waive its right to challenge the constitutionality of the regional preference law. The superior court correctly held that Enserch could maintain its action for declaratory relief. In Salla v. County of Monroe, 64 A.D.2d 437, 409 N.Y.S.2d 903 (1978), aff'd, 48 N.Y.2d 514, 423 N.Y.S.2d 878, 399 N.E.2d 909 (1979), cert. denied, 446 U.S. 909, 100 S.Ct. 1836, 64 L.Ed.2d 262 (1980), a contractor accepted a county contract which required compliance with all local and state laws, including local hire provisions. 409 N.Y.S.2d at 905. The contractor sued the state, seeking a declaration that a local hire law violated the state constitution. The court held that a "public contract should not be conditioned on a waiver of constitutional rights." 409 N.Y.S.2d at 907. In a similar...

To continue reading

Request your trial
1 cases
  • Hudson Cty. Bldg. & Const. Trades Coun. v. Jersey City
    • United States
    • U.S. District Court — District of New Jersey
    • October 17, 1996
    ...equal protection argument is inappropriate. The Trades Council has referred the court to the case of Alaska v. Enserch Alaska Construction, Inc., 787 P.2d 624 (Alaska 1989) in support of its contention that the Equal Protection Clause is violated by City Ordinance 96-022. In that case, the ......
1 books & journal articles
  • Hiring locally in Alaska: rules and regulations for resident hire.
    • United States
    • Alaska Business Monthly Vol. 28 No. 5, May 2012
    • May 1, 2012
    ...currently enacted; a 1989 Alaska Supreme Court decision (known as State of Alaska, et al. v. Enserch Alaska Construction, Inc., et al., 787 P.2d 624 (Alaska 1989)) that declared a hiring preference to residents of economically distressed zones for certain employment on public works projects......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT