Zobel v. Williams

Background

In 1967 Alaska found large oil reserves and created a Permanent Fund (1976) to hold at least 25% of mineral income. In 1980 the State passed a law to pay adults an annual cash dividend based on years lived since 1959. Each year of residence gave one "unit"; in 1979 each unit was $50, so someone resident since 1959 would have received 21 units ($1,050). People who moved to Alaska after 1959 received fewer units. Two residents who moved there in 1978 sued, saying the formula treated newer residents unfairly. A lower court sided with them, the Alaska Supreme Court upheld the law, and the U.S. Supreme Court agreed to decide.

Reasoning

The Court asked whether basing different cash payments on years of residence — including years before the law was passed — was a lawful way to divide benefits. Alaska said the plan encouraged people to stay, protected the Fund, and rewarded past contributions. The Court found the first two goals were not served by applying higher payments to years before the law and relied on earlier decisions to hold that rewarding past residence is not a legitimate reason to divide benefits. Because the retrospective distinctions were not rationally tied to a valid state interest, the Court concluded the law violated equal protection and reversed the Alaska Supreme Court.

Real world impact

The ruling bars the State from keeping the 1959‑based sliding scale as written and sends the case back to Alaska courts for further steps. It directly affects adult Alaska residents and newcomers by ending a formula that gave older residents larger cash payments. The statute’s severability clause means Alaska courts will decide whether the rest of the law can stand.

Dissents or concurrances

Justice Brennan (joined by three Justices) stressed the law also threatens free interstate migration. Justice O’Connor would test the law under the Privileges and Immunities framework. Justice Rehnquist dissented, arguing the payment scheme was a rational economic choice for the State.