South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82 (1984)
A state may not be able to claim the market participant exception to the Dormant Commerce Clause doctrine when the state imposes conditions that have a substantial regulatory effect outside the market in which it participates.
Purchasers who were interested in processing state-owned timber sold by Alaska were required to process it within the state before shipping it outside the state. Alaska designed this law to protect its own timber processing industries and create additional revenue sources beyond the sale of the timber. South-Central Timber, which intended to purchase the timber and ship it to Japan for processing, argued that the Alaska rule violated the Commerce Clause. Alaska asserted the market participant doctrine, an exception to the Dormant Commerce Clause doctrine, as a defense. It prevailed in the lower courts.Opinions
- Byron Raymond White (Author)
- William Joseph Brennan, Jr.
- Harry Andrew Blackmun
- John Paul Stevens
The market participant exception is limited to the specific markets in which a state is a participant. It does not extend to permitting conditions that have a substantial effect on other markets, even if they are related. This exception must be narrowly defined to exclude markets that are "downstream" from the market in which the state is participating. While the state is a direct participant in the timber market, it does not participate in the processing market. This entitles it to grant preferences to its residents only in the area of sales, where it functions as a private trader in a transaction, but not in the area of processing once the timber has left its proprietary control. In general, commercial sellers do not have any influence over what happens to a product once it is sold.
- William Hubbs Rehnquist (Author)
- Sandra Day O'Connor
Participation in the market and regulation of downstream markets cannot be effectively distinguished. The state could have used other ways to require the timber to be processed within the state that would not have been found to violate the Commerce Clause under the plurality's analysis, but these would not be functionally different from the method that it used. For example, the state could have sold only processed timber or limited sales to companies that operated processing facilities in the state.
- William Joseph Brennan, Jr. (Author)
- Lewis Franklin Powell, Jr. (Author)
- Warren Earl Burger
- Thurgood Marshall (Author)
The market participant doctrine is commonly viewed as an exception to the Dormant Commerce Clause. However, the exception may not apply when natural resources are involved, the processing is not a simple transaction, and the requirement imposed by the state concerns action taken after the sale.
U.S. Supreme CourtSouth-Central Timber v. Wunnicke, 467 U.S. 82 (1984)
South-Central Timber Development, Inc. v. Wunnicke
Argued February 29, 1984
Decided May 22, 1984
467 U.S. 82
Pursuant to an Alaska statute, the Alaska Department of Natural Resources published a notice that it would sell certain timber from state lands under a contract requiring "primary manufacture" (partial processing) of the timber within Alaska before the successful bidder could ship it outside of the State. Petitioner, an Alaska corporation engaged in the business of purchasing timber and shipping the logs into foreign commerce, does not operate a mill in Alaska and customarily sells unprocessed logs. When it learned that the primary manufacture requirement was to be imposed on the sale of state-owned timber involved here, petitioner filed an action in Federal District Court seeking an injunction on the ground that the requirement violated the negative implications of the Commerce Clause under which States may not enact laws imposing substantial burdens on interstate and foreign commerce unless authorized by Congress. The District Court agreed and issued an injunction, but the Court of Appeals reversed. That court found it unnecessary to reach the question whether, standing alone, the requirement would violate the Commerce Clause, because it found implicit congressional authorization in the federal policy of imposing a primary manufacture requirement on timber taken from federal land in Alaska.
Held: The judgment is reversed, and the case is remanded.
693 F.2d 890, reversed and remanded.
JUSTICE WHITE delivered the opinion of the Court with respect to Parts I and II, concluding that the Court of Appeals erred in holding that Congress has authorized Alaska's primary manufacture requirement. Although there is a clearly delineated federal policy, endorsed by Congress, imposing primary manufacture requirements as to timber taken from federal lands in Alaska for export from the United States or for shipment to other States, in order for a state regulation to be removed from the reach of the dormant Commerce Clause as being authorized by Congress, congressional intent must be unmistakably clear. The requirement that Congress affirmatively contemplate otherwise invalid state legislation is mandated by the policies underlying dormant Commerce
Clause doctrine. The fact that Alaska's policy appears to be consistent with federal policy -- or even that state policy furthers the goals that Congress had in mind -- is an insufficient indicium of congressional intent. Congress acted only with respect to federal lands; it cannot be inferred from that fact that it intended to authorize a similar policy with respect to state lands. Pp. 467 U. S. 87-93.
WHITE, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I and II, in which BURGER, C.J., and BRENNAN, BLACKMUN, POWELL, and STEVENS, JJ., joined, and an opinion with respect to Parts III and IV, in which BRENNAN, BLACKMUN, and STEVENS, JJ., joined. BRENNAN, J., filed a concurring opinion, post, p. 467 U. S. 101. POWELL, J., filed an opinion concurring in part and concurring in the judgment, in which BURGER, C.J., joined, post, p. 467 U. S. 101. REHNQUIST, J., filed a dissenting opinion, in which O'CONNOR, J., joined, post, p. 467 U. S. 101. MARSHALL, J., took no part in the decision of the case.