Brief Fact Summary. Defendant, the State of Alaska, acted as a market participant by including in a sales contract a provision requiring all purchasers of the state’s timber to partially process the timber in Alaska before shipping the timber out of the state. Plaintiff, South-Central Timber Development Inc., an Alaskan corporation, rightfully contends that the provision violates the commerce clause.
Synopsis of Rule of Law. This case demonstrates a limitation on the market-participant doctrine which permits a state to influence an identifiable class of economic activity in which the state is a major participant. Specifically, a state may not impose conditions, whether by statute, regulation or contract, that have a substantial regulatory effect outside of that particular market.
Facts. Defendant, the State of Alaska proposed to sell timber owned by the state. In the contracts of sale, Defendant included a provision requiring all timber purchasers to partially process the timber in Alaska. The provision was incorporated in order to protect Alaskan timber-processing industries and to derive revenue for the state. Plaintiff, an Alaskan corporation, purchases timber and ships it elsewhere for processing. Plaintiff claims that the contract provision violates the commerce clause. The Court of Appeals found that Congress had implicitly authorized Defendant’s processing requirement.
Issue. Whether Defendant’s restriction on processing was exempt from the commerce clause because of the “market-participant” doctrine.