The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5407

December 15, 1978

CONSTITUTIONAL LAW:

Residential preference in state contracts as violative of the privileges and immunities clause, the equal protection clause and the interstate commerce clause of United States Constitution.

STATES:

Residential preference in contracts

A statute providing that state money shall not be used to purchase studies by outstate persons or corporations does not violate the privileges and immunities clause, the equal protection clause or the interstate commerce clause of the United States Constitution.

The Honorable Keith Molin

Director

Department of Commerce

Law Building

Lansing, Michigan 48909

This is in response to your request for my opinion on the constitutionality of 1977 PA 100, Sec. 30, which states:

'State money shall not be used to purchase studies by outstate persons or corporations.'

You have raised this question because recently, in Hicklin v Orbeck, ---- US ----; 98 S Ct 2482; 57 L Ed 2d 397 (1978), the United States Supreme Court struck down an Alaskan statute that required all Alaskan oil and gas leases, easements, right-of-way permits for oil and gas, and utility agreements contain a requirement that qualified Alaska residents be hired in preference to non-residents. The Supreme Court, in striking down that statute as violative of the privileges and immunities clause of Art IV, Sec. 2, held that even if a state may discriminate against out-state residents for the purpose of alleviating unemployment within the state, the statute before the Court was invalid because the preference over non-residents was given to all Alaska residents, not just to those who are unemployed. The Court also ruled that the argument that the statute could withstand constitutional scrutiny due to the fact that the state owned the oil and gas, was insufficient justification because the act's coverage extended to activities unrelated to extraction of Alaska's oil and gas.

The 'Alaska Hire Rule' can be distinguished from out legislature's requirement that certain contracts involving the expenditure of state money be made with in-state persons or corporations. When the legislature passed 1977 PA 100, Sec. 30, it was exercising the state's proprietary or business power in much the same way an individual or corporation would transact business.

Prior to ruling on Hicklin v Orbeck, supra, the United States Supreme Court affirmed, without an opinion, a Federal District Court decision upholding a Florida statute which required that certain state printing be done within the state. American Yearbook Company, Inc v Askew, 339 F Supp 719 (Dist Ct, Fla 1972), aff'd 409 US 904; 93 S Ct 230; 34 L Ed 2d 168 (1972). In that case, Judge Tjoflat, writing for a three judge panel, stated:

'. . . In order to protect the rights and freedoms of private citizens from oppressive interference, the power of a state to govern is restricted by its own constitution and provisions of the federal constitution as well. When the state exercises its proprietary or business power, however, it is subject to no more limitation than a private individual or corporation would be in transacting the same business. While the line between governmental and proprietary function is none too sharply drawn and is subject to modification as concepts of government are changed to meet the demands of society, one principle remains fixed: the letting of public contracts, particularly those providing for internal needs of government, is a proprietary function. . . .'

And held:

'. . . in framing specifications for its printing work, the state performs a proprietary function and stands in the shoes of a private party who is entitled in most instances to choose where and by whom his printing will be done. In that posture the state is like a trustee; the citizens are the beneficiaries. It may be necessary for the state to adopt discriminatory purchasing policies, such as those questioned here, to insure that the interest of the people is best served. In fact it is conceivable that the failure to do so would constitute a breach of the state's duty to its residents. In a case such as this, it is not for the Court to question the wisdom of the Legislature in discharging that trust obligation.' 339 F Supp at 722-723

An affirmance of the result of the decision by the United States Supreme Court is a decision on the merits entitled to precedential weight. Meek v Pittenger, 421 US 349, 366; 95 S Ct 1753, 1764; 44 L Ed 2d 217, 232-233 (1975).

Therefore, it is my opinion that the legislature, in the exercise of its proprietary functions, may impose restrictions on the expenditure of state money such as those that appear in 1977 PA 100, Sec. 30.

Frank J. Kelley

Attorney General