South-Central Timber Development, Inc. v. LeResche

• Decision Date: 01 December 1982
• Docket Number: Nos. 81-3053,SOUTH-CENTRAL,81-3081X,s. 81-3053
• Parties: TIMBER DEVELOPMENT, INC., Plaintiff-Appellee, v. Robert LeRESCHE, Commissioner of the Department of Natural Resources of the State of Alaska; et al., Defendants-Appellants, Kenai Lumber Company, Inc., Intervenor Defendant.TIMBER DEVELOPMENT, INC., Plaintiff-Appellee, v. Robert LeRESCHE, Commissioner of the Department of Natural Resources of the State of Alaska; et al., Defendants, Kenai Lumber Company, Inc., Intervenor Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 890

693 F.2d 890

SOUTH-CENTRAL TIMBER DEVELOPMENT, INC., Plaintiff-Appellee, v. Robert LeRESCHE, Commissioner of the Department of Natural

Resources of the State of Alaska; et al.,

Defendants-Appellants,

Kenai Lumber Company, Inc., Intervenor Defendant.

SOUTH-CENTRAL TIMBER DEVELOPMENT, INC., Plaintiff-Appellee, v. Robert LeRESCHE, Commissioner of the Department of Natural

Resources of the State of Alaska; et al., Defendants,

Kenai Lumber Company, Inc., Intervenor Defendant-Appellant.

Nos. 81-3053X, 81-3081X.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 10, 1981.

Decided Dec. 1, 1982.

LeRoy E. DeVeaux, Wanamaker, DeVeaux & Crabtree, Anchorage, Alaska, for South-Central.

Shelly J. Higgins, Asst. Atty. Gen., Anchorage, Alaska, for LeResche and State of Alaska.

Richard Helm, Burr, Pease & Kurt, Anchorage, Alaska, for Kenai Lumber Co.

Appeal from the United States District Court for the District of Alaska.

Before GOODWIN, KENNEDY, and SKOPIL, Circuit Judges.

KENNEDY, Circuit Judge:

The State of Alaska, by statute, authorizes the imposition of certain conditions on the sale of state-owned timber, conditions pointedly designed to favor its local timber processors. In an action brought by a prospective timber buyer challenging the constitutionality of the state's restrictions, the district court held the Alaska statute violates the commerce clause of the United States Constitution. We conclude there is implicit approval of the Alaska statute under congressional statutes which impose similar conditions on the sale of timber from federal lands. We reverse the district court's finding of invalidity, 511 F.Supp. 139.

The Commissioner of the Department of Natural Resources of Alaska is by law given discretion to condition particular sales of timber on primary manufacture in Alaska. ¹ In 1980 the Commissioner gave notice of a proposed sale of state-owned timber at Icy Cape and announced that Alaska would require primary manufacture within the state as a special provision of the contract. ² The Commissioner stated the requirement was necessary to insure "a continuing supply of timber for existing industry" during temporary shortages of timber from federal lands. Final Finding for Icy Bay/Cape Yakatuga Sale at 2 (Excerpt of Record (E.R.) 121, 122).

Appellee South-Central Timber Development, Inc. is an Alaska corporation engaged in purchasing timber and processing it for sale. It does not own an operating mill in Alaska, and its practice had been to process Alaskan timber outside the state. When it learned of the new requirement, South-Central brought this action for injunctive relief against various state officials. The company claimed it was prevented from bidding on the Icy Cape sale by the added expense of in-state processing. The district court granted a temporary restraining order, and when it expired the appellants agreed to postpone the sale until a final decision on the merits.

Kenai Lumber Company, Inc. intended to bid at the Icy Cape sale to obtain timber for its sawmill in Alaska. The district court allowed Kenai to intervene in the suit as a defendant. Upon cross-motions for summary judgment, the district court granted summary judgment for plaintiff-appellee, and concluded that the primary manufacture requirement put an impermissible burden on interstate commerce.

It long has been settled that states may regulate in some areas of commerce, absent congressional action to displace such laws, Cooley v. Board of Wardens of Port of Philadelphia, 53 U.S. 298 (12 How.), 13 L.Ed. 996 (1851); but state statutes which discriminate against interstate commerce for the purpose of local, economic protection are invalid in virtually every case. City of Philadelphia v. New Jersey, 437 U.S. 617, 627, 98 S.Ct. 2531, 2537, 57 L.Ed.2d 475 (1978). The rule has been invoked to invalidate state statutes which promote local processing industries by forbidding shipment of raw resources, Foster-Fountain Packing v. Haydel, 278 U.S. 1, 49 S.Ct. 1, 73 L.Ed. 147 (1928). The commerce clause by its own power invalidates such discriminatory statutes.

Despite the force of this rule, there are narrow exceptions, as in the case of a state proprietary activity. Reeves, Inc. v. Stake, 447 U.S. 429, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980). Alaska contends its statute is saved by that exception here. We need not reach the question, however. This is not a case where the courts must apply the commerce clause absent a declaration by Congress respecting the economic regulation at issue. Here, Congress has acted to validate the state policy.

While there may be some outer limits to its power, it is generally accepted that Congress is free to approve and thereby validate commercial regulations otherwise beyond a state's authority. Congress can "confer upon the States an ability to restrict the flow of interstate commerce that they would not otherwise enjoy." Lewis v BT Investment Managers, Inc., 447 U.S. 27 at 44, 100 S.Ct. 2009 at 2019, 64 L.Ed.2d 702.

The rule acknowledging congressional power to approve otherwise impermissible state regulation of interstate commerce usually is applied in cases where Congress has expressly authorized such regulation, see, e.g., Western & Southern Life Insurance Co. v. State Board of Equalization of California, 451 U.S. 648, 101 S.Ct. 2070, 68 L.Ed.2d 514 (1981). But such express authorization is not always necessary. There will be instances, like the case before us, where federal policy is so clearly delineated that a state may enact a parallel policy without explicit congressional approval, even if the purpose and effect of the state law is to favor local interests.

The federal government has consistently endorsed restrictions on the interstate shipment of timber to protect the local processing capability of isolated areas, evincing a general federal policy of promoting geographic dispersion in the timber industry. Since 1928 the Forest Service has limited the export of unprocessed logs from National Forests in Alaska under general authority granted by the Organic Administration Act of June 4, 1897 (16 U.S.C. Secs. 475, 551). In 1969 Congress set a quota on the unprocessed timber that could be exported from federal lands west of the 100th meridian (a line running south from the mid-point of the North Dakota-Canadian boundary, through central Texas). Lindell, Log Export Restrictions of the Western States and British Columbia, 7 (U.S. Dept. of Agriculture 1978) (E.R. 130). In 1973 Congress strengthened its policy...