457 U.S. 55 (1982)
In 1967 large oil reserves were discovered on state-owned land in the Prudhoe Bay area of Alaska.1 This discovery produced a sharp increase in state revenues that reached $3.7 billion in petroleum income during fiscal year 1981.2
In 1976 Alaska adopted a constitutional amendment creating the Alaska Permanent Fund.3 The amendment required deposit of at least twenty-five percent of mineral income into the fund each year while prohibiting expenditure of the principal and permitting use of earnings for general governmental purposes.4 In 1980 the legislature enacted a dividend program that distributed a portion of those earnings annually to adult residents by awarding one dividend unit, valued at fifty dollars for the initial distribution, for each year of residency after 1959, the year of statehood.5
Appellants, who established residence in Alaska in 1978, brought suit in the Superior Court for Alaska's Third Judicial District challenging the dividend distribution plan.6 They alleged that the plan's allocation of benefits according to length of residency violated their rights under the Equal Protection Clause of the Fourteenth Amendment and their constitutional right to travel.7 The Superior Court granted summary judgment in favor of the appellants, but the Alaska Supreme Court reversed and upheld the statute in Williams v. Zobel, 619 P.2d 448 (1980).8 The Supreme Court of the United States noted probable jurisdiction, stayed distribution of the dividend funds, and after briefing and argument reversed the judgment of the Alaska Supreme Court, remanding the case for further proceedings.9
Whether Alaska's dividend distribution plan, which awards benefits to adult residents in amounts varying according to the length of each resident's period of residency since statehood, violates the Equal Protection Clause of the Fourteenth Amendment?10
When a state distributes benefits unequally, the distinctions it makes are subject to scrutiny under the Equal Protection Clause of the Fourteenth Amendment.11 Generally, a law will survive that scrutiny if the distinction it makes rationally furthers a legitimate state purpose.12 Some classifications, however, are more worrisome.13 When a classification adversely affects a fundamental right, this Court exercises a more exacting or strict scrutiny.14
Yes. The distinctions drawn by the Alaska dividend program between newer residents and more established residents are not supported by a sufficient state interest.15 The objective of rewarding citizens for past contributions is not a legitimate state purpose.16 The objective of encouraging prudent management of the dividend fund is not furthered by the plan's distinctions.17 Thus, the plan cannot survive the appropriate equal protection scrutiny.18
The distinctions drawn by the Alaska statute are not supported by a sufficient state interest. Alaska argues that the dividend program serves two purposes.19 Neither of these purposes is sufficient to sustain the distinctions drawn by the statute.20
The Alaska dividend distribution plan violates the guarantees of the Equal Protection Clause of the Fourteenth Amendment.21
Related opinions on this issue
Joined by Marshall, Blackmun, And Powell, Jj.
Justice Brennan joined the Court's opinion but wrote separately to emphasize that the Alaska dividend program violates the Equal Protection Clause because it discriminates among residents on the basis of the length of their residency.22 The Fourteenth Amendment protects the right of all citizens to be treated equally by the States in the distribution of benefits.23 A classification that discriminates on the basis of length of residency is inherently suspect and must be subjected to strict scrutiny.24
The State has not demonstrated that the distinctions drawn by the statute are necessary to further a compelling state interest.25
Justice O'Connor concurred in the judgment but argued that the Court misdirected its criticism by labeling Alaska's objective illegitimate under equal protection alone.26 She would measure the scheme against the Privileges and Immunities Clause of Article IV.27 The Clause guarantees citizens of each State all privileges and immunities of citizens in the several States.28
Alaska's plan denies non-Alaskans settling in the State the same privileges afforded longer term residents by creating fixed distinctions based on former residential status.29 The right to establish residence in a new State is fundamental.30 Alaska failed to show that new residents are the peculiar source of any evil addressed by the scheme or that the discrimination bears a substantial relationship to the asserted purposes.31
Joined by Stevens, J., As To Part I
Justice Rehnquist dissented, arguing that the Court today strikes down a statute enacted by the Alaska legislature that distributes a portion of the State's oil revenues to its residents on the basis of length of residency.32 The Alaska statute is a rational means of distributing the benefits of the State's oil wealth.33 Longer-term residents have contributed more to the State through payment of taxes and participation in civic life.34
The legislature could rationally conclude that they are entitled to a larger share of the dividend.35 The Court's decision unduly restricts the ability of the States to experiment with different methods of distributing public benefits.36 He would affirm the judgment of the Alaska Supreme Court.37
Whether the plan violates the constitutional right to travel by penalizing newer residents through distinctions based on length of residency?38
The nature of our Federal Union and our constitutional concepts of personal liberty unite to require that all citizens be free to travel throughout the length and breadth of our land uninhibited by statutes, rules, or regulations which unreasonably burden or restrict this movement.39 A State may not condition the receipt of benefits on a residency requirement that penalizes the exercise of the right to travel.40
Yes. The Alaska dividend program also fails to satisfy the standard of review required by the fundamental right to travel.41 In Shapiro v. Thompson, the Court held that a State may not condition the receipt of welfare benefits on one year's residency.42 The Alaska plan penalizes appellees for exercising their right to travel by imposing a residency requirement for the receipt of benefits.43
The plan is therefore subject to strict scrutiny.44 It cannot survive that scrutiny for the reasons already given under equal protection analysis.45
The Alaska dividend distribution plan violates the constitutional right to travel.46
Related opinions on this issue
Joined by Marshall, Blackmun, And Powell, Jj.
Justice Brennan agreed that the right to travel, or more precisely the federal interest in free interstate migration, is clearly though indirectly affected by the Alaska dividend-distribution law.47 This threat to free interstate migration provides an independent rationale for holding the law unconstitutional.48 A scheme of the sort adopted by Alaska is inconsistent with the federal structure even in its prospective operation.49
If each State were free to reward its citizens incrementally for their years of residence, the mobility essential to the economic progress of the Nation would not long survive.50
Justice O'Connor would have grounded the right-to-travel analysis explicitly in the Privileges and Immunities Clause of Article IV rather than equal protection.51 The Clause protects a citizen of one State who ventures into another State to settle there and establish a home.52 Alaska's distribution plan imposes disabilities of alienage on those who migrate after 1959 by denying them the same privileges afforded longer-term residents.53
The right to establish residence in a new State is fundamental. The scheme fails the two-part test requiring that nonresidents be shown as a peculiar source of the evil and that the discrimination bear a substantial relationship to the asserted interest.54
Joined by Stevens, J., As To Part I
Justice Rehnquist maintained that the distribution scheme at issue impedes no person's right to travel to and settle in Alaska.55 The prospect of receiving annual cash dividends would encourage immigration to Alaska.56 The State's justification of rewarding past contributions therefore cannot be dismissed by quoting language from right-to-travel cases that have no relevance to the question before the Court.57
The distribution scheme is in the nature of economic regulation.58 State economic regulations are presumptively valid and violate the Fourteenth Amendment only in the rarest of circumstances.59 The Court has long held that state economic regulations are presumptively valid.