This case raises questions of equal protection of law between airplane repair businesses who lease land at Anchorage International Airport, who feel they have been unfairly required to meet certain insurance and permitting requirements of the airport, and itinerant mechanics at the airport who are subject to no airport regulations. In their attempt to force the itinerant mechanics to comply with the airport regulations, and as a result incur the same regulatory costs, the lessees allege discriminatory enforcement of the regulations on the part of the airport. The lessees also allege the airport breached its lease agreement with them.
I. FACTUAL AND PROCEDURAL BACKGROUND
The State of Alaska owns the Anchorage International Airport and operates the facility through its Department of Transportation and Public Facilities (DOT). DOT leases property on the airport grounds to businesses supplying various aircraft and passenger services. The specific services provided by Herrick's Aero-Auto-Aqua Repair Service and the other appellants in this case (hereinafter lessees) are mechanical maintenance and airframe repair. According to provisions in their lease agreements the lessees must provide insurance against public liability for their business activity and indemnify the airport for any damages caused. The lease agreement also restricts the type of business the lessees can pursue on their leaseholds.
Another group of businesspeople also provides mechanical and airframe maintenance services at Anchorage International Airport. These people are mobile or itinerant mechanics who provide services from their vehicles at their customers' tie-downs and slips,
The lessees argue that these facts give rise to three causes of action. First, lessees allege that equal protection under law guaranteed by the Alaska constitution
After lessees filed their complaint, both sides moved for summary judgment on all issues. The trial court granted summary judgment to the lessees on the issue of the permit requirement, ordering DOT to enforce the requirement of 17 AAC 40.040 "to the extent that [DOT] is fiscally capable to enforce the statutes and regulations applicable to their activities consistent with [DOT's] other duties to the public." But the trial court refused to either order the regulations enforced against the itinerants or prohibit enforcement against the lessees. DOT does not appeal the summary judgment against it. However, the lessees do appeal the trial court's refusal to grant the relief requested. The trial court granted summary judgment to DOT on the breach of contract issue and the lessees appeal that ruling also.
A bench trial was held to determine whether the lessees had been denied equal protection under law by the insurance requirements of 17 AAC 40.360(20). The court applied the "rational basis test" articulated
A. EQUAL PROTECTION UNDER 17 AAC 40.040(f) and (h), and 17 AAC 40.360(20).
In reviewing equal protection claims under the Alaska constitution this court uses a "`uniform-balancing' test which place[s] a greater or lesser burden on the state to justify a classification depending on the importance of the individual right involved." Alaska Pacific Assur. Co. v. Brown, 687 P.2d 264, 269 (Alaska 1984) (citing State v. Erickson, 574 P.2d 1 (Alaska 1978)). See also Wise, Northern Lights — Equal Protection Analysis in Alaska, 3 Alaska L.Rev. 1, 29-35 (1986). The minimum burden the state must meet is the rational basis test described in Isakson v. Rickey, 550 P.2d 359 (Alaska 1976). Brown, 687 P.2d at 269. This rational basis test questions whether the classification is "reasonable, not arbitrary" and rests "upon some ground of difference having a fair and substantial relation to the object of the legislation." Isakson, 550 P.2d at 362. Under this test, we will not "hypothesize facts which will sustain otherwise questionable legislation."
The case at bar deals with legislation of economic and commercial interest. Such legislation is traditionally subject to the lowest level of scrutiny. See Isakson v. Rickey, 550 P.2d at 363 (right to a limited entry fishing permit analyzed against rational basis standard). See also Exxon Corp. v. Eagerton, 462 U.S. 176, 195-96, 103 S.Ct. 2296, 2308, 76 L.Ed.2d 497, 513 (1983); Minnesota v. Clover Leaf Creamery Co., 449 U.S. at 461-63, 101 S.Ct. at 722-23, 66 L.Ed.2d at 667-68. As a result of classifying the lessees' economic interest at the low end of this spectrum, DOT need only show that its objectives were legitimate. Brown, 687 P.2d at 269. With regard to the permit requirement of AS 17 AAC 40.040(f) and (h), DOT fails to meet this burden.
First, DOT argues that there was a sufficient showing of financial impact on the state to justify DOT's enforcement policy. However, in Brown we wrote:
687 P.2d at 272 (footnote omitted). Thus, cost savings alone are not sufficient government objectives under our equal protection analysis.
Second, DOT argues that the regulation is cumbersome to enforce because itinerant mechanics are difficult to identify and there are so many entrances to the airport
Finally, DOT argues that 17 AAC 40.070 (Eff. 4/27/79) allows it to make exceptions to the regulations on a showing of "good cause." This argument, however, begs the question of what constitutes "good cause." "Good cause" certainly cannot be defined as a standard in derogation of constitutional requirements, and the constitution requires a rational basis justification. If the actions of DOT fail to meet the rational basis test, then they must also fail to meet the "good cause" test.
Having concluded that DOT has shown no rational basis for discriminating between lessees and itinerant mechanics in its permit requirements, we turn to the question of DOT's insurance requirements. First we must determine whether DOT's construction of the regulation is reasonable. See Rose v. State, Commercial Fisheries Entry Comm'n, 647 P.2d 154, 161 (Alaska 1982) (where an agency interprets its own regulation, a deferential standard of review applies).
17 AAC 40.360 provides initially:
The term "where applicable" suggests a factual analysis. Subsection (20) of this section requires "lessees" to provide insurance against comprehensive public liability, products liability, and property damage.
Next we must determine whether enforcement of subsection (20) against lessees but not permittees violates equal protection. As stated above, DOT must demonstrate only a rational basis for discriminating between the two groups. The DOT's reasons for discriminating are: (1) a greater "risk of flow through liability deriving from the landlord-tenant relationship;" (2) the greater number of services offered by the lessees, including parts sales and flight training; and (3) the lessees are full time businesspeople, while the itinerants are individuals working only part-time, sometimes for payment in kind.
DOT's third argument is a mischaracterization of the record; one of the itinerant mechanics testified at trial that his occupation was owner of an aircraft maintenance and repair business.
We conclude that DOT's enforcement policies violated the equal protection due to the lessees, and thus uphold the trial court's grant of summary judgment to the lessees. We disagree with the trial court, however, on the issue of the remedy for this violation. As our discussion makes clear, the state's financial inability to enforce a regulation equally is not a valid defense to an equal protection violation. Nor is it a valid excuse for failing to provide a remedy for the equal protection violation. When a court finds that an administrative agency is enforcing its regulations in a way which violates equal protection, it should enjoin the offending activity. It is the agency's responsibility in the first instance to develop a valid means of enforcement.
B. THE LEASE COVENANT.
When extrinsic evidence is not in dispute, as in this case, this court may treat contract interpretation as a question of law. Norton v. Herron, 677 P.2d 877, 880 (Alaska 1984). Thus, the appropriate standard of review is substitution of judgment.
The lease covenant in question provides:
We construe this as a provision limiting the construction of the lease covenant to avoid conflict with DOT regulations and Alaska law. DOT does not expressly covenant by this clause to enforce its own regulations for the benefit of the lessee, as the lessees argue. The use of the phrase "subject to ... the laws and regulations ..." supports this reading by making the lease subordinate to existing laws and regulations. The state has a general duty to enforce its laws which this covenant neither adds to nor incorporates. Thus, we conclude that the trial court correctly granted summary judgment for DOT on this issue.
The lessees seek damages in both their contract and equal protection claims. Because we affirm the trial court's dismissal of the lessees' contract claim, we need not address contractual damages. In addition, we affirm the trial court's decision denying lessees' damages for violation of their right to equal protection of law.
In Brown we observed that an action for damages may lie for constitutional violations under an authorizing statute or some provisions of the United States Constitution. See Brown, 687 P.2d at 275. There is no authorizing statute in this case. The circumstances which would lead a court to award damages for a violation of a constitutional provision were discussed by the Supreme Court in Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). In that case the plaintiff suffered damages as the result of an unreasonable search and arrest by agents of the Federal Bureau of Narcotics. The Supreme Court allowed a damage claim because it was the only effective means of vindicating the constitutional violation. 403 U.S. at 396, 91 S.Ct. at 2004, 29 L.Ed.2d at 626. The case at bar does not involve fourth amendment guarantees. In addition, and unlike Bivens, injunctive relief is an available and appropriate remedy for righting any wrong done to the lessees. As a result, we hold the Bivens remedy of damages inapplicable to the case at bar.
D. ATTORNEY'S FEES.
The lessees claim that attorney's fees were improperly awarded to the state
For the reasons stated above, the decision of the trial court is AFFIRMED in part and REVERSED in part. The case is REMANDED to the trial court for further proceedings consistent with this opinion.
The lessees allege that in addition to the work performed by itinerant mechanics at customers' tie-downs, some repair work is also performed in the public areas at the airport. For example, there was testimony that floats were often removed and landing gear installed on the public ramps which provide access to Lake Hood. At times this activity prevented the leaseholders from using the public ramps for removal or launching of aircraft.
(Emphasis added). The "commissioner" is the Commissioner of the Department of Transportation and Public Facilities. 17 AAC 07.900(1) (Eff. 8/11/82).
Mr. Hron: "Sell aircraft, fly aircraft for charter and flight instruction. Repair aircraft and sell accessories, parts, things of that nature."
Mr. Heirston: "aircraft maintenance, float repairs, float changes, annual inspections, hundred hour inspections, ..." and a "flight school."
Mr. Herrick: "Aircraft maintenance and repair and general aviation." Mr. Herrick testified that he worked at his aircraft maintenance business only outside the hours of his full time job with the Air National Guard.
Mr. Gillette: "Just general aviation maintenance."