South-Central Timber Development, Inc. v. Wunnicke

PETITIONER: South-Central Timber Development, Inc.
RESPONDENT: Wunnicke
LOCATION: The D&B Corporation

DOCKET NO.: 82-1608
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 467 US 82 (1984)
ARGUED: Feb 29, 1984
DECIDED: May 22, 1984

ADVOCATES:
Ms. Kathryn A. Oberly - on behalf of the united states as amicus curiae
Kathryn A. Obery - on behalf of the United States as amicus curiae
LeRoy Eugene DeVeaux - on behalf of Petitioner
Ronald W. Lorensen - on behalf of Respondents

Facts of the case

Question

Media for South-Central Timber Development, Inc. v. Wunnicke

Audio Transcription for Oral Argument - February 29, 1984 in South-Central Timber Development, Inc. v. Wunnicke

Warren E. Burger:

We will hear arguments next in South-Central Timber Development against LeResche.

Mr. DeVeaux, you may proceed whenever you're ready.

LeRoy Eugene DeVeaux:

Mr. Chief Justice and may it please the Court:

The issues in this case are basic commerce clause issues: Can a state, in selling natural resources to private parties, insist that those resources be processed before the resources can be shipped in interstate or foreign commerce?

Can Congress' consent to such a restraint be implied from a U.S. Forest Service policy governing federally owned natural resources?

The facts of this case are clear and they are not in dispute.

In 1980 the State of Alaska noticed, sent out prospectuses and sample contracts offering to sell 49 million board-feet of mixed spruce and hemlock in Icy Bay, Alaska.

A special condition to the contract in this case stated that before the logs out of this sale could be shipped in interstate or foreign commerce they must be primarily processed.

The State reason for primary processing is to encourage in-state construction of lumber mills and to support existing lumber mills within the state.

South-Central, a bidder and a potential bidder in this case, cuts, sells, and ships logs in interstate and foreign commerce, particularly, in fact virtually all of them, in foreign commerce to Japan, and that is noted even in the state's brief at page 34.

At the time of this sale, South-Central did not at that time have a functioning mill within the State of Alaska.

The first question that probably should be addressed is whether Congress has consented to state activity which would otherwise be a violation of the commerce clause.

The district court, United States Court of Appeals for the Ninth Circuit, and the State of Alaska in this Court have all conceded that Congress has not expressly consented to the primary manufacturing or primary processing requirement at issue in this case.

Instead, the Ninth Circuit created a novel doctrine of implied consent, saying in effect that federal consent can be implied from Forest Service policies governing only national forests.

With all due respect to the Ninth Circuit Court of Appeals, that is simply wrong and this Court has never so held.

The Solicitor General's office in this argument... in its argument will deal primarily with the consent question and with the foreign commerce question.

Under traditional commerce clause analysis, this case would be easily dealt with.

We have a case of requiring in-state processing or in-state manufacturing before an item of commerce can be shipped out of the state.

Traditionally this Court has held that those kinds of regulations, those kinds of requirements, are virtually per se unconstitutional and a violation of the commerce clause.

But the state raised an issue, and has continually raised that issue until this very time, that it fits within a narrow exception, a doctrine called the market participation exception to commerce clause scrutiny.

We must first look at what this case is not.

It is not a case of a state manufacturing a good.

It is not a state just concerned with interstate commerce, but predominantly foreign commerce.

It is not a simple refusal to deal or to choose who one is to deal with.

It is not a case where the state has taken any great risk, used its own industry or foresight, or expended any great labor or entered into a complex process.

It is not a case of police power for health, welfare, the safety of its citizens.

It is not a case of a traditional governmental function or state sovereignty.

It is not a case of cleaning up roads or building public projects.

And it's not a case where the state created any market.

The State of Alaska is simply not a market participant in any normal or theoretical sense of the word.