## Facts

- Alaska, acting through its Department of Natural Resources, offered for sale timber harvested from state-owned lands.
- The sale contract required purchasers to perform “primary manufacture” (partial in-state processing) in Alaska before shipping the timber out of state.
- Alaska justified the requirement as supporting in-state timber-processing and increasing state revenue.
- South-Central Timber Development, an Alaska corporation, typically bought unprocessed logs and shipped them into interstate and foreign commerce for processing elsewhere; it did not operate an Alaska mill.
- South-Central sued in federal court, alleging the in-state processing condition violated the dormant Commerce Clause.
- The district court enjoined enforcement; the Ninth Circuit reversed, reasoning that federal policy regarding similar processing conditions for timber from federal lands in Alaska implicitly authorized Alaska’s requirement.
- The Supreme Court reversed and remanded.

## Issues

1. Whether Congress had “unmistakably” authorized Alaska to impose an in-state primary-manufacture requirement on purchasers of state-owned timber, thereby exempting the condition from dormant Commerce Clause limits.
2. Whether the market-participant doctrine insulated Alaska’s condition because Alaska was acting as a seller of timber rather than as a regulator, including whether the doctrine permits “downstream” conditions affecting timber processing.

## Decision

- The Supreme Court reversed the Ninth Circuit and remanded.
- The Court held Congress had not made an unmistakably clear statement authorizing Alaska’s in-state processing requirement for timber from state lands.
- A plurality concluded the market-participant doctrine did not protect Alaska’s condition because it attempted to control conduct in a separate downstream market (timber processing) beyond the market in which Alaska participated (timber sales).

## Legal Principles

- State measures that burden interstate or foreign commerce are invalid under the dormant Commerce Clause absent a constitutionally sufficient justification or valid congressional authorization.
- To exempt otherwise impermissible state action from dormant Commerce Clause scrutiny, Congress’s intent to authorize the state measure must be “unmistakably clear”; parallel federal policy or shared goals is insufficient.
- The market-participant doctrine allows a state, when acting as a buyer or seller, to favor its own citizens within the market in which it participates, but it does not permit the state to impose conditions with substantial regulatory effects outside that market.
- A state may not use leverage from participation in one market to impose contractual or statutory conditions that function as regulation of a separate downstream market.

## Conclusion

The Court invalidated Alaska’s requirement that purchasers of state-owned timber partially process it in-state before export, holding that Congress had not unmistakably authorized such a burden on commerce and that market-participant immunity does not extend to downstream conditions regulating separate markets.


South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82 (1984)