U.S. Supreme Court South-Central Timber v. Wunnicke, 467 U.S.
82 (1984) South-Central Timber Development,
Inc. v. Wunnicke No. 82-1608 Argued February 29,
1984 Decided May 22, 1984 467 U.S.
82 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE NINTH CIRCUIT Syllabus 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 Page 467 U. S. 83 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.

															JUSTICE WHITE announced the judgment of the Court and delivered
the opinion of the Court with respect to Parts I and II, and an
opinion with respect to Parts III and IV, in which JUSTICE BRENNAN,
JUSTICE BLACKMUN, and JUSTICE STEVENS joined. Page 467 U. S. 84 We granted certiorari in this case to review a decision of the
Court of Appeals for the Ninth Circuit that held that Alaska's
requirement that timber taken from state lands be processed within
the State prior to export was "implicitly authorized" by Congress,
and therefore does not violate the Commerce Clause. 464 U.S. 890
(1983). We hold that it was not authorized, and reverse the
judgment of the Court of Appeals. I In September, 1980, the Alaska Department of Natural Resources
published a notice that it would sell approximately 49 million
board-feet of timber in the area of Icy Cape, Alaska, on October
23, 1980. The notice of sale, the prospectus, and the proposed
contract for the sale all provided, pursuant to 11 Alaska Admin.
Code § 76.130 (1974), that "[p]rimary manufacture within the State
of Alaska will be required as a special provision of the contract."
[ Footnote 1 ] App. 35a. Under
the primary manufacture requirement, the successful bidder must
partially process the timber prior to shipping it outside of the
State. [ Footnote 2 ] The
requirement is imposed by contract and Page 467 U. S. 85 does not limit the export of unprocessed timber not owned by the
State. The stated purpose of the requirement is to

															"protect existing industries, provide for the establishment of
new industries, derive revenue from all timber resources, and
manage the State's forests on a sustained yield basis."

															Governor's Policy Statement, App. 28a. When it imposes the
requirement, the State charges a significantly lower price for the
timber than it otherwise would. Brief for Respondents 6-7.

															The major method of complying with the primary manufacture
requirement is to convert the logs into cants, which are logs
slabbed on at least one side. In order to satisfy the Alaska
requirement, cants must be either sawed to a maximum thickness of
12 inches or squared on four sides along their entire length.
[ Footnote 3 ]

															Petitioner, South-Central Timber Development, Inc., is an Alaska
corporation engaged in the business of purchasing standing timber,
logging the timber, and shipping the logs into foreign commerce,
almost exclusively to Japan. [ Footnote 4 ] It Page 467 U. S. 86 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 Icy Cape sale, it brought an
action in Federal District Court seeking an injunction, arguing
that the requirement violated the negative implications of the
Commerce Clause. [ Footnote 5 ]
The District Court Page 467 U. S. 87 agreed and issued an injunction. South-Central Timber
Development, Inc. v. LeResche, 511 F.
Supp. 139 (Alaska 1981). The Court of Appeals for the Ninth
Circuit reversed, finding 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. South-Central Timber
Development, Inc. v. LeResche, 693 F.2d 890 (1982).

															We must first decide whether the court was correct in concluding
that Congress has authorized the challenged requirement. If
Congress has not, we must respond to respondents' submission that
we should affirm the judgment on two grounds not reached by the
Court of Appeals: (1) whether, in the absence of congressional
approval, Alaska's requirement is permissible because Alaska is
acting as a market participant, rather than as a market regulator;
and (2), if not, whether the local processing requirement is
forbidden by the Commerce Clause. II Although the Commerce Clause is by, its text, an affirmative
grant of power to Congress to regulate interstate and foreign
commerce, the Clause has long been recognized as a self-executing
limitation on the power of the States to enact laws imposing
substantial burdens on such commerce. See Lewis v. BT
Investment Managers, Inc., 447 U. S. 27 , 447 U. S. 35 (1980); Hughes v. Oklahoma, 441 U.
S. 322 , 441 U. S. 326 (1979); H. P. Hood & Sons, Inc. v. Du Mond, 336 U. S. 525 , 336 U. S.
534 -538 (1949); Cooley v. Board of
Wardens , 12 How. 299 (1852). It is equally clear
that Congress may "redefine the distribution of power over
interstate commerce" by "permit[ting] the Page 467 U. S. 88 states to regulate the commerce in a manner which would
otherwise not be permissible." Southern Pacific Co. v.
Arizona, 325 U. S. 761 , 325 U. S. 769 (1945). See also Sporhase v. Nebraska ex rel. Douglas, 458 U. S. 941 , 458 U. S.
958 -960 (1982); New England Power Co. v. New
Hampshire, 455 U. S. 331 (1982); Western & Southern Life Insurance Co. v. State
Board of Equalization, 451 U. S. 648 , 451 U. S.
652 -655 (1981); Prudential Insurance Co. v.
Benjamin, 328 U. S. 408 (1946). The Court of Appeals held that Congress had done just that
by consistently endorsing primary manufacture requirements on
timber taken from federal land. 693 F.2d at 893. Although the court
recognized that cases of this Court have spoken in terms of express
approval by Congress, it stated:

															"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." Ibid. We agree that federal policy with respect to
federal land is "clearly delineated," but the Court of Appeals was
incorrect in concluding either that there is a clearly delineated
federal policy approving Alaska's local processing requirement or
that Alaska's policy with respect to its timber lands is authorized
by the existence of a "parallel" federal policy with respect to
federal lands.

															Since 1928, the Secretary of Agriculture has restricted the
export of unprocessed timber cut from National Forest lands in
Alaska. The current regulation, upon which the State places heavy
reliance, provides:

															"Unprocessed timber from National Forest System lands in Alaska
may not be exported from the United States or shipped to other
States without prior approval of the Regional Forester. This
requirement is necessary Page 467 U. S. 89 to ensure the development and continued existence of adequate
wood processing capacity in that State for the sustained
utilization of timber from the National Forests which are
geographically isolated from other processing facilities."

															36 CFR § 223. 10(c) (1983).

															From 1969 to 1973, Congress imposed a maximum export limitation
of 350 million board-feet of unprocessed timber from federal lands
lying west of the 100th meridian (a line running from central North
Dakota through central Texas). 16 U.S.C. § 617(a). Beginning in
1973, Congress imposed, by way of a series of annual riders to
appropriation Acts, a complete ban on foreign exports of
unprocessed logs from western lands except those within Alaska. See, e.g., Pub.L. 96-126, Tit. III, § 301, 93 Stat. 979.
These riders limit only foreign exports, and do not require
in-state processing before the timber may be sold in domestic
interstate commerce. The export limitation with respect to federal
land in Alaska, rather than being imposed by statute, was imposed
by the above-quoted regulation, and applies to exports to other
States, as well as to foreign exports.

															Alaska argues that federal statutes and regulations demonstrate
an affirmative expression of approval of its primary manufacture
requirement for three reasons: (1) federal timber export policy
has, since 1928, treated federal timber land in Alaska differently
from that in other States; (2) the Federal Government has
specifically tailored its policies to ensure development of
wood-processing capacity for utilization of timber from the
National Forests; and (3) the regulation forbidding without prior
approval the export from Alaska of unprocessed timber or its
shipment to other States demonstrates that it is the Alaska
wood-processing industry in particular, not the domestic
wood-processing industry generally, that has been the object of
federal concern.

															Acceptance of Alaska's three factual propositions does not
mandate acceptance of its conclusion. Neither South-Central Page 467 U. S. 90 nor the United States [ Footnote
6 ] challenges the existence of a federal policy to restrict the
out-of-state shipment of unprocessed Alaska timber from federal
lands. They challenge only the derivation from that policy of an
affirmative expression of federal approval of a parallel policy
with respect to state timber. They argue that our cases dealing
with congressional authorization of otherwise impermissible state
interference with interstate commerce have required an "express"
statement of such authorization, and that no such authorization may
be implied.

															It is true that most of our cases have looked for an express
statement of congressional policy prior to finding that state
regulation is permissible. For example, in Sporhase v. Nebraska
e rel. Douglas, supra, the Court declined to find
congressional authorization for state-imposed burdens on interstate
commerce in ground water despite 37 federal statutes and a number
of interstate compacts that demonstrated Congress' deference to
state water law. We noted that, on those occasions in which consent
has been found, congressional intent and policy to insulate state
legislation from Commerce Clause attack have been "expressly
stated." 458 U.S. at 458 U. S. 960 .
Similarly, in New England Power Co. v. New Hampshire, 455 U. S. 331 (1982), we rejected a claim by the State of New Hampshire that its
restriction on the interstate flow of privately owned and produced
electricity was authorized by § 201(b) of the Federal Power Act.
That section provides that the Act

															"shall not . . . deprive a State or State commission of its
lawful authority now exercised over the exportation of
hydroelectric energy which is transmitted across a State line."

															16 U.S.C. § 824(b). We found nothing in the statute or
legislative history "evinc[ing] a congressional intent to alter
the limits of state power otherwise imposed by the Commerce
Clause.'" 455 U.S. at 455 U. S.
341 Page 467 U. S.
91 (quoting United States v. Public Utilities Comm'n of
California, 345 U. S. 295 , 345 U. S. 304 (1953)). Alaska relies in large part on this Court's recent opinion in White v. Massachusetts Council of Construction Employers,
Inc., 460 U. S. 204 (1983), for its "implicit approval" theory. At issue in White was an executive order issued by the Mayor of Boston
requiring all construction projects funded by the city or by funds
that the city had authority to administer to be performed by a
workforce consisting of at least 50% residents of the city. A
number of the projects were funded in part with federal Urban
Development Action Grants. The Court held that, insofar as the city
expended its own funds on the projects, it was a market participant
unconstrained by the dormant Commerce Clause; insofar as the city
expended federal funds, "the order was affirmatively sanctioned by
the pertinent regulations of those programs." Id. at 460 U. S. 215 .
Alaska relies on the Court's statements in White that the
federal regulations "affirmatively permit" and "affirmatively
sanctio[n]" the executive order, and that the order "sounds a
harmonious note" with the federal regulations, and it finds
significance in the fact that the Court did not use the words
"expressly stated."

															Rather than supporting the position of the State, we believe
that White undermines it. If approval of state burdens on
commerce could be implied from parallel federal policy, the Court
would have had no reason to rely upon the market participant
doctrine to uphold the executive order. Instead, the order could
have been upheld as being in harmony with federal policy as
expressed in regulations governing the expenditure of federal
funds.

															There is no talismanic significance to the phrase "expressly
stated," however; it merely states one way of meeting the
requirement that, for a state regulation to be removed from the
reach of the dormant Commerce Clause, congressional intent must be
unmistakably clear. The requirement that Congress affirmatively
contemplate otherwise invalid state legislation Page 467 U. S. 92 is mandated by the policies underlying dormant Commerce Clause
doctrine. It is not, as Alaska asserts, merely a wooden formalism.
The Commerce Clause was designed "to avoid the tendencies toward
economic Balkanization that had plagued relations among the
Colonies and later among the States under the Articles of
Confederation." Hughes v. Oklahoma, 441 U.
S. 322 , 441 U. S. 325 (1979). Unrepresented interests will often bear the brunt of
regulations imposed by one State having a significant effect on
persons or operations in other States. Thus,

															"when the regulation is of such a character that its burden
falls principally upon those without the state, legislative action
is not likely to be subjected to those political restraints which
are normally exerted on legislation where it affects adversely some
interests within the state." South Carolina State Highway Dept. v. Barnwell Brothers,
Inc., 303 U. S. 177 , 303 U. S. 185 ,
n. 2 (1938); see also Southern Pacific Co. v. Arizona, 325
U.S. at 325 U. S.
767 -768, n. 2. On the other hand, when Congress acts,
all segments of the country are represented, and there is
significantly less danger that one State will be in a position to
exploit others. Furthermore, if a State is in such a position, the
decision to allow it is a collective one. A rule requiring a clear
expression of approval by Congress ensures that there is, in fact,
such a collective decision and reduces significantly the risk that
unrepresented interests will be adversely affected by restraints on
commerce. [ Footnote 7 ] The fact
that the state policy in this case appears to be consistent with
federal policy -- or even that state policy furthers the goals we
might believe that Congress had in mind -- is an insufficient
indicium of congressional intent. Congress acted only with respect
to federal lands; we cannot infer from that fact that it intended
to authorize a similar policy with respect Page 467 U. S. 93 to state lands. [ Footnote 8 ]
Accordingly, we reverse the contrary judgment of the Court of
Appeals. III We now turn to the issues left unresolved by the Court of
Appeals. The first of these issues is whether Alaska's restrictions
on export of unprocessed timber from state-owned lands are exempt
from Commerce Clause scrutiny under the "market-participant
doctrine."

															Our cases make clear that, if a State is acting as a market
participant, rather than as a market regulator, the dormant
Commerce Clause places no limitation on its activities. See
White v. Massachusetts Council of Construction Employers,
Inc., 460 U.S. at 460 U. S.
206 -208; Reeves, Inc. v. Stake, 447 U.
S. 429 , 447 U. S.
436 -437 (1980); Hughes v. Alexandria Scrap
Corp., 426 U. S. 794 , 426 U. S. 810 (1976). The precise contours of the market participant doctrine
have yet to be established, however, the doctrine having been
applied in only three cases of this Court to date.

															The first of the cases, Hughes v. Alexandria Scrap Corp.,
supra, involved a Maryland program designed to reduce the
number of junked automobiles in the State. A "bounty" was
established on Maryland-licensed junk cars, and the State imposed
more stringent documentation requirements on out-of-state Page 467 U. S. 94 scrap processors than on in-state ones. The Court rejected a
Commerce Clause attack on the program, although it noted that,
under traditional Commerce Clause analysis, the program might well
be invalid because it had the effect of reducing the flow of goods
in interstate commerce. Id. at 426 U. S. 805 .
The Court concluded that Maryland's action was not "the kind of
action with which the Commerce Clause is concerned," ibid., because

															"[n]othing in the purposes animating the Commerce Clause
prohibits a State, in the absence of congressional action, from
participating in the market and exercising the right to favor its
own citizens over others." Id. at 426 U. S. 810 (footnote omitted).

															In Reeves, Inc. v. Stake, supra, the Court upheld a
South Dakota policy of restricting the sale of cement from a
state-owned plant to state residents, declaring that

															"[t]he basic distinction drawn in Alexandria Scrap between States as market participants and States as market
regulators makes good sense and sound law." Id. at 447 U. S. 436 .
The Court relied upon

															"'the long-recognized right of trader or manufacturer, engaged
in an entirely private business, freely to exercise his own
independent discretion as to parties with whom he will deal.'" Id. at 447 U. S.
438 -439 (quoting United States v. Colgate &
Co., 250 U. S. 300 , 250 U. S. 307 (1919)). In essence, the Court recognized the principle that the
Commerce Clause places no limitations on a State's refusal to deal
with particular parties when it is participating in the interstate
market in goods.

															The most recent of this Court's cases developing the market
participant doctrine is White v. Massachusetts Council of
Construction Employers, Inc., supra, in which the Court
sustained against a Commerce Clause challenge an executive order of
the Mayor of Boston that required all construction projects funded
in whole or in part by city funds or city-administered funds to be
performed by a workforce of at least 50% city residents. The Court
rejected the argument that the city was not entitled to the
protection of the doctrine because the order had the effect of
regulating employment contracts between public contractors and
their employees. Id. Page 467 U. S. 95 at 460 U. S. 211 ,
n. 7. Recognizing that

															"there are some limits on a state or local government's ability
to impose restrictions that reach beyond the immediate parties with
which the government transacts business,"

															the Court found it unnecessary to define those limits because
"[e]veryone affected by the order [was], in a substantial if
informal sense, working for the city.'" Ibid. The fact
that the employees were "working for the city" was "crucial" to the
market participant analysis in White. United Building
and Construction Trades Council v. Mayor of Camden, 465 U. S. 208 , 465 U. S. 219 (1984). The State of Alaska contends that its primary manufacture
requirement fits squarely within the market participant doctrine,
arguing that

															"Alaska's entry into the market may be viewed as precisely the
same type of subsidy to local interests that the Court found
unobjectionable in Alexandria Scrap. "

															Brief for Respondents 24. However, when Maryland became involved
in the scrap market, it was as a purchaser of scrap; Alaska, on the
other hand, participates in the timber market, but imposes
conditions downstream in the timber processing market. Alaska is
not merely subsidizing local timber processing in an amount

															"roughly equal to the difference between the price the timber
would fetch in the absence of such a requirement and the amount the
state actually receives." Ibid. If the State directly subsidized the timber
processing industry by such an amount, the purchaser would retain
the option of taking advantage of the subsidy by processing timber
in the State or forgoing the benefits of the subsidy and exporting
unprocessed timber. Under the Alaska requirement, however, the
choice is made for him: if he buys timber from the State, he is not
free to take the timber out of state prior to processing.

															The State also would have us find Reeves controlling.
It states that " Reeves made it clear that the Commerce
Clause imposes no limitation on Alaska's power to choose the terms
on which it will sell its timber." Brief for Respondents 25. Such
an unrestrained reading of Reeves is unwarranted. Although
the Court in Reeves did strongly endorse the right of Page 467 U. S. 96 a State to deal with whomever it chooses when it participates in
the market, it did not -- and did not purport to -- sanction the
imposition of any terms that the State might desire. For example,
the Court expressly noted in Reeves that "Commerce Clause
scrutiny may well be more rigorous when a restraint on foreign
commerce is alleged," 447 U.S. at 447 U. S. 438 ,
n. 9; that a natural resource "like coal, timber, wild game, or
minerals," was not involved, but instead the cement was "the end
product of a complex process whereby a costly physical plant and
human labor act on raw materials," id. at 447 U. S.
443 -444; and that South Dakota did not bar resale of
South Dakota cement to out-of-state purchasers, id. at 447 U. S. 444 ,
n. 17. In this case, all three of the elements that were not
present in Reeves -- foreign commerce, a natural resource,
and restrictions on resale -- are present.

															Finally, Alaska argues that, since the Court in White upheld a requirement that reached beyond "the boundary of formal
privity of contract," 460 U.S. at 460 U. S. 211 ,
n. 7, then, a fortiori, the primary manufacture
requirement is permissible, because the State is not regulating
contracts for resale of timber or regulating the buying and selling
of timber, but is instead "a seller of timber, pure and simple."
Brief for Respondents 28. Yet it is clear that the State is more
than merely a seller of timber. In the commercial context, the
seller usually has no say over, and no interest in, how the product
is to be used after sale; in this case, however, payment for the
timber does not end the obligations of the purchaser, for, despite
the fact that the purchaser has taken delivery of the timber and
has paid for it, he cannot do with it as he pleases. Instead, he is
obligated to deal with a stranger to the contract after completion
of the sale. [ Footnote 9 ] Page 467 U. S. 97 That privity of contract is not always the outer boundary of
permissible state activity does not necessarily mean that the
Commerce Clause has no application within the boundary of formal
privity. The market participant doctrine permits a State to
influence "a discrete, identifiable class of economic activity in
which [it] is a major participant." White v. Massachusetts
Council of Construction Workers, Inc., 460 U.S. at 460 U. S. 211 ,
n. 7. Contrary to the State's contention, the doctrine is not carte blanche to impose any conditions that the State has
the economic power to dictate, and does not validate any
requirement merely because the State imposes it upon someone with
whom it is in contractual privity. See Tr. of Oral Arg.
35.

															The limit of the market participant doctrine must be that it
allows a State to impose burdens on commerce within the market in
which it is a participant, but allows it to go no further. The
State may not impose conditions, whether by statute, regulation, or
contract, that have a substantial regulatory effect outside of that
particular market. [ Footnote
10 ] Unless the Page 467 U. S. 98 "market" is relatively narrowly defined, the doctrine has the
potential of swallowing up the rule that States may not impose
substantial burdens on interstate commerce even if they act with
the permissible state purpose of fostering local industry.

															At the heart of the dispute in this case is disagreement over
the definition of the market. Alaska contends that it is
participating in the processed timber market, although it
acknowledges that it participates in no way in the actual
processing. Id. at 34. South-Central argues, on the other
hand, that although the State may be a participant in the timber
market, it is using its leverage in that market to exert a
regulatory effect in the processing market, in which it is not a
participant. We agree with the latter position.

															There are sound reasons for distinguishing between a State's
preferring its own residents in the initial disposition of goods,
when it is a market participant, and a State's attachment of
restrictions on dispositions subsequent to the goods coming to rest
in private hands. First, simply as a matter of intuition, a state
market participant has a greater interest as a "private trader" in
the immediate transaction than it has in what its purchaser does
with the goods after the State no longer has an interest in them.
The common law recognized such a notion in the doctrine of
restraints on alienation. See Dr. Miles Medical Co. v. John D.
Park & Sons Co., 220 U. S. 373 , 220 U. S. 404 (1911); but cf. Continental T.V., Inc. v. GTE Sylvania
Inc., 433 U. S. 36 , 433 U. S. 53 , n.
21 (1977). Similarly, the antitrust laws place limits on vertical
restraints. It is no defense in an action charging vertical trade
restraints that the same end could be achieved through vertical
integration; if it were, there would be virtually no antitrust
scrutiny of vertical arrangements. We reject the contention that a
State's action as a market regulator may be upheld against Commerce
Clause challenge on the ground that the State could Page 467 U. S. 99 achieve the same end as a market participant. We therefore find
it unimportant for present purposes that the State could support
its processing industry by selling only to Alaska processors, by
vertical integration, or by direct subsidy. See Tr. of
Oral Arg. 34, 37, 45.

															Second, downstream restrictions have a greater regulatory effect
than do limitations on the immediate transaction. Instead of merely
choosing its own trading partners, the State is attempting to
govern the private, separate economic relationships of its trading
partners; that is, it restricts the post-purchase activity of the
purchaser, rather than merely the purchasing activity. In contrast
to the situation in White, this restriction on private
economic activity takes place after the completion of the parties'
direct commercial obligations, rather than during the course of an
ongoing commercial relationship in which the city retained a
continuing proprietary interest in the subject of the contract.
[ Footnote 11 ] In sum, the
State may not avail itself of the market participant doctrine to
immunize its downstream regulation of the timber processing market
in which it is not a participant. IV Finally, the State argues that, even if we find that Congress
did not authorize the processing restriction, and even if we
conclude that its actions do not qualify for the market participant
exception, the restriction does not substantially burden interstate
or foreign commerce under ordinary Commerce Clause principles. We
need not labor long over that contention.

															Viewed as a naked restraint on export of unprocessed logs, there
is little question that the processing requirement cannot survive
scrutiny under the precedents of the Court. For Page 467 U. S. 100 example, in Pike v. Bruce Church, Inc., 397 U.
S. 137 (1970), we invalidated a requirement of the State
of Arizona that all Arizona cantaloupes be packed within the State.
The Court noted that the State's purpose was "to protect and
enhance the reputation of growers within the State," a purpose we
described as "surely legitimate." Id. at 397 U. S. 143 .
We observed:

															"[T]he Court has viewed with particular suspicion state statutes
requiring business operations to be performed in the home State
that could more efficiently be performed elsewhere. Even where the
State is pursuing a clearly legitimate local interest, this
particular burden on commerce has been declared to be virtually per se illegal. Foster-Fountain Packing Co. v.
Haydel, 278 U. S. 1 ; Johnson v.
Haydel, 278 U. S. 1 6; Toomer v.
Witsell, 334 U. S. 385 ." Id. at 397 U. S. 145 .
We held that, if the Commerce Clause forbids a State to require
work to be done within the State for the purpose of promoting
employment, then, a fortiori, it forbids a State to impose
such a requirement to enhance the reputation of its producers.
Because of the protectionist nature of Alaska's local processing
requirement and the burden on commerce resulting therefrom, we
conclude that it falls within the rule of virtual per se invalidity of laws that "bloc[k] the flow of interstate commerce at
a State's borders." City of Philadelphia v. New Jersey, 437 U. S. 617 , 437 U. S. 624 (1978).

															We are buttressed in our conclusion that the restriction is
invalid by the fact that foreign commerce is burdened by the
restriction. It is a well-accepted rule that state restrictions
burdening foreign commerce are subjected to a more rigorous and
searching scrutiny. It is crucial to the efficient execution of the
Nation's foreign policy that "the Federal Government . . . speak
with one voice when regulating commercial relations with foreign
governments." Michelin Tire Corp. v. Wages, 423 U.
S. 276 , 423 U. S. 285 (1976); see also Japan Line, Ltd. v. County of Los
Angeles, 441 U. S. 434 (1979). In light of the substantial attention given by Congress to
the subject of Page 467 U. S. 101 export restrictions on unprocessed timber, it would be
peculiarly inappropriate to permit state regulation of the subject. See Prohibit Export of Unprocessed Timber: Hearing on H.R.
639 before the Subcommittee on Forests, Family Farms, and Energy of
the House Committee on Agriculture, 97th Cong., 1st Sess.
(1981).

															The judgment of the Court of Appeals is reversed, and the case
is remanded for proceedings consistent with the opinion of this
Court. It is so ordered. JUSTICE MARSHALL took no part in the decision of this case.

															[ Footnote 1 ]

															The proposed contract, which the successful bidder on the timber
sale would have been required to sign, provided:

															" Section 68. Primary Manufacture. Timber cut under this
contract shall not be transported for primary manufacture outside
the State of Alaska without written approval of the State."

															"Primary Manufacture is defined under 11 AAC 76.130 and the
Governor's policy statement of May 1974."

															[ Footnote 2 ]

															11 Alaska Admin. Code § 76.130 (1974) (repealed 1982), which
authorized the contractual provision in question, provided:

															" PRIMARY MANUFACTURE" "(a) The director may require that primary manufacture of logs,
cordwood, bolts or other similar products be accomplished within
the State of Alaska."

															"(b) The term primary manufacture means manufacture which is
first in order of time or development. When used in relation to
sawmilling, it means"

															"(1) the breakdown process wherein logs have been reduced in
size by a headsaw or gang saw to the extent that the residual
cants, slabs, or planks can be processed by resaw equipment of the
type customarily used in log processing plants; or"

															"(2) manufacture of a product for use without further
processing, such as structural timbers (subject to a firm showing
of an order or orders for this form of product)."

															"(c) Primary manufacture, when used in reference to pulp
ventures, means the breakdown process to a point where the wood
fibers have been separated. Chips made from timber processing
wastes shall be considered to have received primary manufacture.
With respect to veneer or plywood production, it means the
production of green veneer. Poles and piling, whether treated or
untreated, when manufactured to American National Institute
Standards specifications are considered to have received primary
manufacture."

															The local processing requirement is now authorized by Alaska
Admin.Code §§ 71.230, 71.910 (1982).

															[ Footnote 3 ]

															Current regulations require that the cants be no thicker than 8
3/4 inches unless slabs are taken from all four sides. 11 Alaska
Admin. Code § 71.910 (1982).

															[ Footnote 4 ]

															Apparently, there is virtually no interstate market in Alaska
timber because of the high shipping costs associated with shipment
between American ports. Consequently, over 90% of Alaska timber is
exported to Japan. Brief for Petitioner 14, n. 14.

															[ Footnote 5 ]

															Although it would appear at first blush that it would be
economically more efficient to have the primary processing take
place within Alaska, that is apparently not the case. Material
appearing in the record suggests that the slabs removed from the
log in the process of making cants are often quite valuable, but
apparently cannot be used, and are burned. Record, Exh. 11, p. 63.
It appears that, because of the wasted wood, cants are actually
worth less than the unprocessed logs. An affidavit of a
vice-president of South-Central states in part:

															"5. It is also my observation that, within Alaska, there is
absolutely no market for domestic resawing of 'cant' or 'square'
manufactured to State of Alaska specifications. In other words, a
cant or square manufactured in Alaska would be virtually unsaleable
within local Alaska sawmill markets. The reasons are:"

															"A. Any sawmill would prefer round logs for its sawmill
operations and the small volume of round logs required would be
readily available locally."

															"B. Round logs are preferable because they can be stored in the
water and moved in the water, whereas cants must be transported on
land."

															"C. Once a log is placed on the sawmill carriage and the costs
of getting it there have been incurred, it produces more lumber for
the costs involved than does a cant."

															"D. Also the round log is much less subject to deterioration
from weather and outside conditions."

															"6. South-Central had experience with attempting to make a sale
of cants inside the State of Alaska. We had some cants at Jakalof
Bay which were manufactured to State specifications, but which were
not loaded aboard ships during that season. We attempted to market
those cants to a sawmill in Anchorage, but found that just costs of
transporting the cants from Jakalof Bay to Anchorage exceeded the
highest possible sales price of the cants. Accordingly no sale was
made."

															"7. Based on the above statements and my observations of the
Alaska timber industry, it is my firm conclusion that a cant or a
square manufactured to State of Alaska primary manufacture
specifications is marketable only in foreign commerce, and cannot
be sold for use within Alaska. It is also my firm conclusion that
no sawmill in Alaska will manufacture a cant or square for any
domestic Alaska market."

															App. 121a-122a.

															[ Footnote 6 ]

															The United States appears as amicus curiae in support
of the position of South-Central.

															[ Footnote 7 ]

															The need for affirmative approval is heightened by the fact that
Alaska's policy has substantial ramifications beyond the Nation's
borders. The need for a consistent and coherent foreign policy,
which is the exclusive responsibility of the Federal Government,
enhances the necessity that congressional authorization not be
lightly implied.

															[ Footnote 8 ]

															It is for that reason that we need not resolve the dispute
between the parties about whether Congress' purpose in applying the
primary manufacture requirement to federal lands was for the
purpose of encouraging the Alaska wood-processing industry, or
whether it was merely to ensure adequate processing capacity to
deal with federal timber. In either event, no congressional intent
to permit a primary manufacture requirement by the State
appears.

															It is worthy of note, although we do not rely upon it, that
Congress has been requested to authorize the imposition by States
of in-state processing requirements, but has declined to do so.
Prohibit Export of Unprocessed Timber: Hearing on H.R. 639 before
the Subcommittee on Forests, Family Farms, and Energy of the House
Committee on Agriculture, 97th Cong., 1st Sess., 18-19 (1981).

															[ Footnote 9 ]

															The facts of the present case resemble closely the facts of Foster-Fountain Packing Co. v. Haydel, 278 U. S.
1 (1928), in which the Court struck down a Louisiana law
prohibiting export from the State of any shrimp from which the
heads and hulls had not been removed. The Court rejected the claim
that the fact that the shrimp were owned by the State authorized
the State to impose such limitations. Although not directly
controlling here, because of the Court's recognition that

															"the State owns, or has power to control, the game and fish
within its borders not absolutely or as proprietor or for its own
use or benefit, but in its sovereign capacity as representative of
the people," id. at 278 U. S. 11 , the
Court's reasoning is relevant. The Court noted that the State might
have retained the shrimp for consumption and use within its
borders, but,

															"by permitting its shrimp to be taken and all the products
thereof to be shipped and sold in interstate commerce, the State
necessarily releases its hold and, as to the shrimp so taken,
definitely terminates its control." Id. at 278 U. S. 13 .

															[ Footnote 10 ]

															The view of the market participant doctrine expressed by JUSTICE
REHNQUIST, post at 467 U. S.
102 -103, would validate under the Commerce Clause any
contractual condition that the State had the economic power to
impose, without regard to the relationship of the subject matter of
the contract and the condition imposed. If that were the law, it
would have been irrelevant that the employees in White v.
Massachusetts Council of Construction Workers, Inc., 460 U. S. 204 (1983), were in effect "working for the city." Id. at 460 U. S. 211 ,
n. 7. If the only question were whether the condition is imposed by
contract, a residency requirement could have been imposed with
respect to the workforce on all projects of any employer doing
business with the city.

															[ Footnote 11 ]

															This is not to say that the State could evade the reasoning of
this opinion by merely including a provision in its contract that
title does not pass until the processing is complete. It is the
substance of the transaction, rather than the label attached to it,
that governs Commerce Clause analysis.

															JUSTICE BRENNAN, concurring.

															I join JUSTICE WHITE's opinion in full because I believe
Alaska's in-state processing requirement constitutes market
regulation that is not authorized by Congress. In my view, JUSTICE
WHITE's treatment of the market participant doctrine and the
response of JUSTICE REHNQUIST point up the inherent weakness of the
doctrine. See Hughes v. Alexandria Scrap Corp., 426 U. S. 794 , 426 U. S. 817 (1976) (BRENNAN, J., dissenting).

															JUSTICE POWELL, with whom THE CHIEF JUSTICE joins, concurring in
part and concurring in the judgment.

															I join Parts I and II of JUSTICE WHITE's opinion. I would remand
the case to the Court of Appeals to allow that court to consider
whether Alaska was acting as a "market participant" and whether
Alaska's primary manufacture requirement substantially burdened
interstate commerce under the holding of Pike v. Bruce Church,
Inc., 397 U. S. 137 (1970).

															JUSTICE REHNQUIST, with whom JUSTICE O'CONNOR joins,
dissenting.

															In my view, the line of distinction drawn in the plurality
opinion between the State as market participant and the Page 467 U. S. 102 State as market regulator is both artificial and unconvincing.
The plurality draws this line "simply as a matter of intuition," ante at 467 U. S. 98 ,
but then seeks to bolster its intuition through a series of remarks
more appropriate to antitrust law than to the Commerce Clause. * For example, the
plurality complains that the State is using its "leverage" in the
timber market to distort consumer choice in the timber processing
market, ibid., a classic example of a tying arrangement. See, e.g., United States Steel Corp. v. Fortner Enterprises,
Inc., 429 U. S. 610 , 429 U. S.
619 -621 (1977). And the plurality cites the common law
doctrine of restraints on alienation and the antitrust limits on
vertical restraints in dismissing the State's claim that it could
accomplish exactly the same result in other ways. Ante at 467 U. S.
98 -99.

															Perhaps the State's actions do raise antitrust problems. But
what the plurality overlooks is that the antitrust laws apply to a
State only when it is acting as a market participant. See,
e.g., Jefferson County Pharmaceutical Assn., Inc. v. Abbott
Laboratories, 460 U. S. 150 , 460 U. S. 154 (1983) (state action immunity "does not apply where a State has
chosen to compete in the private retail market"). When the State
acts as a market regulator, it is immune from antitrust scrutiny. See Parker v. Brown, 317 U. S. 341 , 317 U. S.
350 -352 (1943). Of course, the line of distinction in
cases under the Commerce Clause need not necessarily parallel the
line drawn in antitrust Page 467 U. S. 103 law. But the plurality can hardly justify placing Alaska in the
market regulator category, in this Commerce Clause case, by relying
on antitrust cases that are relevant only if the State is a market
participant.

															The contractual term at issue here no more transforms Alaska's
sale of timber into "regulation" of the processing industry than
the resident hiring preference imposed by the city of Boston in White v. Massachusetts Council of Construction Employers,
Inc., 460 U. S. 204 (1983), constituted regulation of the construction industry. Alaska
is merely paying the buyer of the timber indirectly, by means of a
reduced price, to hire Alaska residents to process the timber.
Under existing precedent, the State could accomplish that same
result in any number of ways. For example, the State could choose
to sell its timber only to those companies that maintain active
primary processing plants in Alaska. Reeves, Inc. v.
Stake, 447 U. S. 429 (1980). Or the State could directly subsidize the primary
processing industry within the State. Hughes v. Alexandria
Scrap Corp., 426 U. S. 794 (1976). The State could even pay to have the logs processed and
then enter the market only to sell processed logs. See
ante at 467 U. S. 99 . It
seems to me unduly formalistic to conclude that the one path chosen
by the State as best suited to promote its concerns is the path
forbidden it by the Commerce Clause.

															For these reasons, I would affirm the judgment of the Court of
Appeals.

															* The plurality does offer one other reason for its demarcation
of the boundary between these two concepts.

															"[D]ownstream restrictions have a greater regulatory effect than
do limitations on the immediate transaction. Instead of merely
choosing its own trading partners, the State is attempting to
govern the private, separate economic relationships of its trading
partners; that is, it restricts the post-purchase activity of the
purchaser, rather than merely the purchasing activity." Ante at 467 U. S. 99 .
But, of course, this is not a "reason" at all, but merely a
restatement of the conclusion. The line between participation and
regulation is what we are trying to determine. To invoke that very
distinction in support of the line drawn is merely to fall back
again on intuition.

Summary: The Supreme Court reversed a Court of Appeals decision that allowed Alaska to require timber purchased from state lands to be partially processed within the state before shipment elsewhere. The Court held that, while Alaska could impose such a requirement for timber from federal lands, there was no clear congressional authorization for the same requirement on timber from state lands, which would violate the dormant Commerce Clause.


U.S. Supreme Court City of Philadelphia v. New Jersey, 437
U.S. 617 (1978) City of Philadelphia v. New
Jersey No. 77-404 Argued March 27, 1978 Decided June 23, 1978 437
U.S. 617 APPEAL FROM THE SUPREME COURT OF
NEW JERSEY Syllabus New Jersey statute (ch. 363) that prohibits the importation of
most "solid or liquid waste which originated or was collected
outside the territorial limits of the State . . ." held to violate
the Commerce Clause of the United States Constitution. Pp. 437 U. S.
621 -629.

															(a) All objects of interstate trade merit Commerce Clause
protection, and none is excluded from the definition of "commerce"
at the outset; hence, contrary to the suggestion of the court
below, there can be no doubt that the banning of "valueless"
out-of-state wastes by ch. 363 implicates constitutional
protection. Bowman v. Chicago & Northwestern R. Co., 125 U. S. 465 ,
distinguished. Pp. 437 U. S.
621 -623.

															(b) The crucial inquiry here must be directed to determining
whether ch. 363 is basically an economic protectionist measure, and
thus virtually per se invalid, or a law directed at
legitimate local concerns that has only incidental effects on
interstate commerce. Pike v. Bruce Church, Inc., 397 U. S. 137 , 397 U. S. 142 .
Pp. 437 U. S.
623 -624.

															(c) Since the evil of protectionism can reside in legislative
means as well as legislative ends, it is immaterial whether the
legislative purpose of ch. 363 is to protect New Jersey's
environment or its economy, for, whatever the purpose, it may not
be accomplished by discriminating against articles of commerce
coming from outside the State unless there is some reason, apart
from their origin, to treat them differently. Both on its face and
in its plain effect, ch. 363 violates this principle of
nondiscrimination. A State may not attempt to isolate itself from a
problem common to many by erecting a barrier against the movement
of interstate trade, as ch. 363 seeks to do by imposing on
out-of-state commercial interests the full burden of conserving New
Jersey's remaining landfill space. Pp. 437 U. S.
625 -628.

															(d) The New Jersey statute cannot be likened to a quarantine law
which bans importation of articles of commerce because of their
innate harmfulness, and not because of their origin. Though New
Jersey concedes that out-of-state waste is no different from
domestic waste, it has banned the former while leaving its landfill
sites open to the latter, thus trying to saddle those outside the
State with the entire burden of slowing the flow of wastes into New
Jersey's remaining landfill sites. Pp. 437 U. S.
628 -629.

															73 N.J. 562, 376 A.2d
888 , reversed. Page 437 U. S. 618 STEWART, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, POWELL, and STEVENS, JJ.,
joined. REHNQUIST, J., filed a dissenting opinion, in which BURGER,
C.J., joined, post, p. 437 U. S.
629 .

															MR. JUSTICE STEWART delivered the opinion of the Court.

															A New Jersey law prohibits the importation of most "solid or
liquid waste which originated or was collected outside the
territorial limits of the State. . . ." In this case, we are
require to decide whether this statutory prohibition violates the
Commerce Clause of the United States Constitution. I The statutory provision in question is ch. 363 of 1973 N.J.
Laws, which took effect in early 1974. In pertinent part it
provides:

															"No person shall bring into this State any solid or liquid waste
which originated or was collected outside the territorial limits of
the State, except garbage to be fed to swine in the State of New
Jersey, until the commissioner [of the State Department of
Environmental Protection] shall determine that such action can be
permitted without endangering the public health, safety and Page 437 U. S. 619 welfare and has promulgated regulations permitting and
regulating the treatment and disposal of such waste in this
State."

															N.J.Stat.Ann. § 13 I -10 (West Supp. 1978). [ Footnote 1 ] As authorized by ch. 363,
the Commissioner promulgated regulations permitting four categories
of waste to enter the State. [ Footnote 2 ] Apart from these narrow exceptions, however,
New Jersey closed its borders to all waste from other States.

															Immediately affected by these developments were the operators of
private landfills in New Jersey and several cities in other States
that had agreements with these operators for waste disposal. They
brought suit against New Jersey and its Department of Environmental
Protection in state court, attacking the statute and regulations on
a number of state and federal grounds. In an oral opinion granting
the plaintiffs' motion for summary judgment, the trial court
declared the law unconstitutional because it discriminated against
interstate commerce. The New Jersey Supreme Court consolidated this
case with another reaching the same conclusion, Page 437 U. S. 620 Hackensack Meadowlands Development Comm'n v. Municipal
Sanitary Landfill Auth., 127 N.J.Super. 160, 316 A.2d 711 , and reversed, 68 N.J. 451, 348 A.2d
505 . It found that ch. 363 advanced vital health and
environmental objectives with no economic discrimination against,
and with little burden upon, interstate commerce, and that the law
was therefore permissible under the Commerce Clause of the
Constitution. The court also found no congressional intent to
preempt ch. 363 by enacting in 1965 the Solid Waste Disposal Act,
79 Stat. 997, 42 U.S.C. § 3251 et seq., as amended by the
Resource Recovery Act of 1970, 84 Stat. 1227.

															The plaintiffs then appealed to this Court. [ Footnote 3 ] After noting probable jurisdiction,
425 U.S. 910, and hearing oral argument, we remanded for
reconsideration of the appellants' preemption claim in light of the
newly enacted Resource Conservation and Recovery Act of 1976, 90
Stat. 2795. 430 U. S. 141 .
Again, the New Jersey Supreme Court found no federal preemption of
the state law, 73 N.J. 562, 376 A.2d
888 , and again we noted probable jurisdiction, 434 U.S. 964. We
agree with the New Jersey court that the state law has not been
preempted by federal legislation. [ Footnote 4 ] The dispositive Page 437 U. S. 621 question, therefore, is whether the law is constitutionally
permissible in light of the Commerce Clause of the Constitution.
[ Footnote 5 ] II Before it addressed the merits of the appellants' claim, the New
Jersey Supreme Court questioned whether the interstate movement of
those wastes banned by ch. 363 is "commerce" at all within the
meaning of the Commerce Clause. Any doubts on that score should be
laid to rest at the outset.

															The state court expressed the view that there may be two
definitions of "commerce" for constitutional purposes. When relied
on "to support some exertion of federal control or regulation," the
Commerce Clause permits "a very sweeping concept" of commerce. 68
N.J. at 469, 348 A.2d at 514. But when relied on "to strike down or
restrict state legislation," that Clause and the term "commerce"
have a "much more confined . . . reach." Ibid. The state court reached this conclusion in an attempt to Page 437 U. S. 622 reconcile modern Commerce Clause concepts with several old cases
of this Court holding that States can prohibit the importation of
some objects because they "are not legitimate subjects of trade and
commerce." Bowman v. Chicago & Northwestern R. Co., 125 U. S. 465 , 125 U. S. 489 .
These articles include items

															"which, on account of their existing condition, would bring in
and spread disease, pestilence, and death, such as rags or other
substances infected with the germs of yellow fever or the virus of
small-pox, or cattle or meat or other provisions that are diseased
or decayed, or otherwise, from their condition and quality, unfit
for human use or consumption." Ibid. See also Baldwin v. G.A.F. Seelig, Inc., 294 U. S. 511 , 294 U. S. 525 ,
and cases cited therein. The state court found that ch. 363, as
narrowed by the state regulations, see n 2, supra, banned only "those wastes
which can[not] be put to effective use," and therefore those wastes
were not commerce at all, unless

															"the mere transportation and disposal of valueless waste between
states constitutes interstate commerce within the meaning of the
constitutional provision."

															68 N.J. at 468, 348 A.2d at 514.

															We think the state court misread our cases, and thus erred in
assuming that they require a two-tiered definition of commerce. In
saying that innately harmful articles "are not legitimate subjects
of trade and commerce," the Bowman Court was stating its
conclusion, not the starting point of its reasoning. All objects of
interstate trade merit Commerce Clause protection; none is excluded
by definition at the outset. In Bowman and similar cases,
the Court held simply that, because the articles' worth in
interstate commerce was far outweighed by the dangers inhering in
their very movement, States could prohibit their transportation
across state lines. Hence, we reject the state court's suggestion
that the banning of "valueless" out-of-state wastes by ch. 363
implicates no constitutional protection. Just as Congress has power
to regulate the interstate movement of these wastes, States are Page 437 U. S. 623 not free from constitutional scrutiny when they restrict that
movement. Cf. Hughes v. Alexandria Scrap Corp., 426 U. S. 794 , 426 U. S.
802 -814; Meat Drivers v. United States, 371 U. S. 94 . III A Although the Constitution gives Congress the power to regulate
commerce among the States, many subjects of potential federal
regulation under that power inevitably escape congressional
attention "because of their local character and their number and
diversity." South Carolina State Highway Dept. v. Barnwell
Bros., Inc., 303 U. S. 177 , 303 U. S. 185 .
In the absence of federal legislation, these subjects are open to
control by the States so long as they act within the restraints
imposed by the Commerce Clause itself. See Raymond Motor
Transportation, Inc. v. Rice, 434 U.
S. 429 , 434 U. S. 440 .
The bounds of these restraints appear nowhere in the words of the
Commerce Clause, but have emerged gradually in the decisions of
this Court giving effect to its basic purpose. That broad purpose
was well expressed by Mr. Justice Jackson in his opinion for the
Court in H. P. Hood & Sons, Inc. v. Du Mond, 336 U. S. 525 , 336 U. S.
537 -538:

															"This principle that our economic unit is the Nation, which
alone has the gamut of powers necessary to control of the economy,
including the vital power of erecting customs barriers against
foreign competition, has as its corollary that the states are not
separable economic units. As the Court said in Baldwin v.
Seelig , 294 U.S. [511], 294 U. S.
527 , 'what is ultimate is the principle that one state,
in its dealings with another, may not place itself in a position of
economic isolation.'"

															The opinions of the Court through the years have reflected an
alertness to the evils of "economic isolation" and protectionism,
while at the same time recognizing that incidental Page 437 U. S. 624 burdens on interstate commerce may be unavoidable when a State
legislates to safeguard the health and safety of its people. Thus,
where simple economic protectionism is effected by state
legislation, a virtually per se rule of invalidity has
been erected. See, e.g., H. P. Hood & Sons, Inc., v.
DuMond, supra; Toomer v. Witsell, 334 U.
S. 385 , 334 U. S.
403 -406; Baldwin v. G.A.F. Seelig, Inc., supra; Buck
v. Kuykendall, 267 U. S. 307 , 267 U. S.
315 -316. The clearest example of such legislation is a
law that overtly blocks the flow of interstate commerce at a
State's borders. Cf. Welton v. Missouri, 91 U. S.
275 . But where other legislative objectives are credibly
advanced and there is no patent discrimination against interstate
trade, the Court has adopted a much more flexible approach, the
general contours of which were outlined in Pike v. Bruce
Church, Inc., 397 U. S. 137 , 397 U. S.
142 :

															"Where the statute regulates evenhandedly to effectuate a
legitimate local public interest, and its effects on interstate
commerce are only incidental, it will be upheld unless the burden
imposed on such commerce is clearly excessive in relation to the
putative local benefits. If a legitimate local purpose is found,
then the question becomes one of degree. And the extent of the
burden that will be tolerated will, of course, depend on the nature
of the local interest involved, and on whether it could be promoted
as well with a lesser impact on interstate activities." See also Raymond Motor Transportation, Inc. v. Rice,
supra at 434 U. S.
441 -442; Hunt v. Washington Apple Advertising
Comm'n, 432 U. S. 333 , 432 U. S.
352 -354; Great A&P Tea Co. v. Cottrell, 424 U. S. 366 , 424 U. S.
371 -372.

															The crucial inquiry, therefore, must be directed to determining
whether ch. 363 is basically a protectionist measure, or whether it
can fairly be viewed as a law directed to legitimate local
concerns, with effects upon interstate commerce that are only
incidental. Page 437 U. S. 625 B The purpose of ch. 363 is set out in the statute itself as
follows:

															"The Legislature finds and determines that . . . the volume of
solid and liquid waste continues to rapidly increase, that the
treatment and disposal of these wastes continues to pose an even
greater threat to the quality of the environment of New Jersey,
that the available and appropriate land fill sites within the State
are being diminished, that the environment continues to be
threatened by the treatment and disposal of waste which originated
or was collected outside the State, and that the public health,
safety and welfare require that the treatment and disposal within
this State of all wastes generated outside of the State be
prohibited."

															The New Jersey Supreme Court accepted this statement of the
state legislature's purpose. The state court additionally found
that New Jersey's existing landfill sites will be exhausted within
a few years; that to go on using these sites or to develop new ones
will take a heavy environmental toll, both from pollution and from
loss of scarce open lands; that new techniques to divert waste from
landfills to other methods of disposal and resource recovery
processes are under development, but that these changes will
require time; and, finally, that

															"the extension of the lifespan of existing landfills, resulting
from the exclusion of out-of-state waste, may be of crucial
importance in preventing further virgin wetlands or other
undeveloped lands from being devoted to landfill purposes."

															68 N.J. at 460-465, 348 A.2d at 509-512. Based on these
findings, the court concluded that ch. 363 was designed to protect
not the State's economy, but its environment, and that its
substantial benefits outweigh its "slight" burden on interstate
commerce. Id. at 471-478, 348 A.2d at 515-519.

															The appellants strenuously contend that ch. 363,

															"while outwardly cloaked 'in the currently fashionable garb of
environmental Page 437 U. S. 626 protection,' . . . is actually no more than a legislative effort
to suppress competition and stabilize the cost of solid waste
disposal for New Jersey residents. . . ."

															They cite passages of legislative history suggesting that the
problem addressed by ch. 363 is primarily financial: stemming the
flow of out-of-state waste into certain landfill sites will extend
their lives, thus delaying the day when New Jersey cities must
transport their waste to more distant and expensive sites.

															The appellees, on the other hand, deny that ch. 363 was
motivated by financial concerns or economic protectionism. In the
words of their brief,

															"[n]o New Jersey commercial interests stand to gain advantage
over competitors from outside the state as a result of the ban on
dumping out-of-state waste."

															Noting that New Jersey landfill operators are among the
plaintiffs, the appellee's brief argues that

															"[t]he complaint is not that New Jersey has forged an economic
preference for its own commercial interests, but rather that it has
denied a small group of its entrepreneurs an economic opportunity
to traffic in waste in order to protect the health, safety and
welfare of the citizenry at large."

															This dispute about ultimate legislative purpose need not be
resolved, because its resolution would not be relevant to the
constitutional issue to be decided in this case. Contrary to the
evident assumption of the state court and the parties, the evil of
protectionism can reside in legislative means, as well as
legislative ends. Thus, it does not matter whether the ultimate aim
of ch. 363 is to reduce the waste disposal costs of New Jersey
residents or to save remaining open lands from pollution, for we
assume New Jersey has every right to protect its residents'
pocketbooks, as well as their environment. And it may be assumed as
well that New Jersey may pursue those ends by slowing the flow of
all waste into the State's remaining landfills, even though
interstate commerce may incidentally be affected. But whatever New
Jersey's ultimate purpose, it may not be accomplished by
discriminating against Page 437 U. S. 627 articles of commerce coming from outside the State unless there
is some reason, apart from their origin, to treat them differently.
Both on its face and in its plain effect, ch. 363 violates this
principle of nondiscrimination.

															The Court has consistently found parochial legislation of this
kind to be constitutionally invalid, whether the ultimate aim of
the legislation was to assure a steady supply of milk by erecting
barriers to allegedly ruinous outside competition, Baldwin v.
G.A.F. Seelig, Inc., 294 U.S. at 294 U. S.
522 -524; or to create jobs by keeping industry within
the State, Foster-Fountain Packing Co. v. Haydel, 278 U. S. 1 , 278 U. S. 10 ; Johnson v. Haydel, 278 U. S. 1 6; Toomer v. Witsell, 334 U.S. at 334 U. S.
403 -404; or to preserve the State's financial resources
from depletion by fencing out indigent immigrants, Edwards v.
California, 314 U. S. 160 , 314 U. S.
173 -174. In each of these cases, a presumably legitimate
goal was sought to be achieved by the illegitimate means of
isolating the State from the national economy.

															Also relevant here are the Court's decisions holding that a
State may not accord its own inhabitants a preferred right of
access over consumers in other States to natural resources located
within its borders. West v. Kansas Natural Gas Co., 221 U. S. 229 ; Pennsylvania v. West Virginia, 262 U.
S. 553 . These cases stand for the basic principle that
a

															"State is without power to prevent privately owned articles of
trade from being shipped and sold in interstate commerce on the
ground that they are required to satisfy local demands or because
they are needed by the people of the State. [ Footnote 6 ]" Foster-Fountain Packing Co. v. Haydel, supra, at 278 U. S. 10 . Page 437 U. S. 628 The New Jersey law at issue in this case falls squarely within
the area that the Commerce Clause puts off limits to state
regulation. On its face, it imposes on out-of-state commercial
interests the full burden of conserving the State's remaining
landfill space. It is true that, in our previous cases, the scarce
natural resource was itself the article of commerce, whereas here
the scarce resource and the article of commerce are distinct. But
that difference is without consequence. In both instances, the
State has overtly moved to slow or freeze the flow of commerce for
protectionist reasons. It does not matter that the State has shut
the article of commerce inside the State in one case, and outside
the State in the other. What is crucial is the attempt by one State
to isolate itself from a problem common to many by erecting a
barrier against the movement of interstate trade.

															The appellees argue that not all laws which facially
discriminate against out-of-state commerce are forbidden
protectionist regulations. In particular, they point to quarantine
laws, which this Court has repeatedly upheld even though they
appear to single out interstate commerce for special treatment. See Baldwin v. G.A.F. Seelig, Inc., supra at 294 U. S. 525 ; Bowman v. Chicago & Northwestern R. Co., 125 U.S. at 125 U. S. 489 .
In the appellees' view, ch. 363 is analogous to such
health-protective measures, since it reduces the exposure of New
Jersey residents to the allegedly harmful effects of landfill
sites.

															It is true that certain quarantine laws have not been considered
forbidden protectionist measures, even though they were directed
against out-of-state commerce. See Asbell v. Kansas, 209 U. S. 251 ; Reid v. Colorado, 187 U. S. 137 ; Bowman v. Chicago & Northwestern R. Co., supra at 125 U. S. 489 .
But those quarantine laws banned the importation of articles such
as diseased livestock that required destruction as soon Page 437 U. S. 629 as possible because their very movement risked contagion and
other evils. Those laws thus did not discriminate against
interstate commerce as such, but simply prevented traffic in
noxious articles, whatever their origin.

															The New Jersey statute is not such a quarantine law. There has
been no claim here that the very movement of waste into or through
New Jersey endangers health, or that waste must be disposed of as
soon and as close to its point of generation as possible. The harms
caused by waste are said to arise after its disposal in landfill
sites, and, at that point, as New Jersey concedes, there is no
basis to distinguish out-of-state waste from domestic waste. If one
is inherently harmful, so is the other. Yet New Jersey has banned
the former, while leaving its landfill sites open to the latter.
The New Jersey law blocks the importation of waste in an obvious
effort to saddle those outside the State with the entire burden of
slowing the flow of refuse into New Jersey's remaining landfill
sites. That legislative effort is clearly impermissible under the
Commerce Clause of the Constitution.

															Today, cities in Pennsylvania and New York find it expedient or
necessary to send their waste into New Jersey for disposal, and New
Jersey claims the right to close its borders to such traffic.
Tomorrow, cities in New Jersey may find it expedient or necessary
to send their waste into Pennsylvania or New York for disposal, and
those States might then claim the right to close their borders. The
Commerce Clause will protect New Jersey in the future, just as it
protects her neighbors now, from efforts by one State to isolate
itself in the stream of interstate commerce from a problem shared
by all. The judgment is

															Reversed.

															[ Footnote 1 ]

															New Jersey enacted a Waste Control Act, N.J.Stat.Ann. § 13 et seq. (West Supp. 1978), in early 1973. This Act
empowered the State Commissioner of Environmental Protection to
promulgate rules banning the movement of solid waste into the
State. Within a year, the state legislature enacted ch. 363, which
reversed the presumption and blocked the importation of all
categories of waste unless excepted by rules of the
Commissioner.

															[ Footnote 2 ]

															Effective as of February, 1974, these regulations provided as
follows:

															"(a) No person shall bring into this State, or accept for
disposal in this State, any solid or liquid waste which originated
or was collected outside the territorial limits of this State. This
Section shall not apply to:"

															"1. Garbage to be fed to swine in the State of New Jersey;"

															"2. Any separated waste material, including newsprint, paper,
glass and metals, that is free from putrescible materials and not
mixed with other solid or liquid waste that is intended for a
recycling or reclamation facility;"

															"3. Municipal solid waste to be separated or processed into
usable secondary materials, including fuel and heat, at a resource
recovery facility provided that not less than 70 per cent of the
thru-put of any such facility is to be separated or processed into
usable secondary materials; and"

															"4. Pesticides, hazardous waste, chemical waste, bulk liquid,
bulk semiliquid, which is to be treated, processed or recovered in
a solid waste disposal facility which is registered with the
Department for such treatment, processing or recovery, other than
by disposal on or in the lands of this State."

															N.J.Admin.Code 7:1-4.2 (Supp. 1977).

															[ Footnote 3 ]

															The decision of the New Jersey Supreme Court disposed of the
appellants' preemption and Commerce Clause claims, but remanded the
case to the trial court for further proceedings on the other
claims. The appellants then dismissed with prejudice the other
counts in their complaint so that there would be a final judgment
from which they could appeal to this Court.

															[ Footnote 4 ]

															The surviving provisions of the 1965 Solid Waste Disposal Act,
79 Stat. 997, the Resource Discovery Act of 1970, 84 Stat. 1227,
and the Resource Conservation and Recovery Act of 1976, 90 Stat.
2795, are now codified as the Solid Waste Disposal Act, found at 42
U.S.C. § 6901 et seq. (1976 ed.).

															From our review of this federal legislation, we find no "clear
and manifest purpose of Congress," Rice v. Santa Fe Elevator
Corp., 331 U. S. 218 , 331 U. S. 230 ,
to preempt the entire field of interstate waste management or
transportation, either by express statutory command, see Jones
v. Rath Packing Co., 430 U. S. 519 , 430 U. S.
530 -531, or by implicit legislative design, see City
of Burbank v. Lockheed Air Terminal, 411 U.
S. 624 , 411 U. S. 633 .
To the contrary, Congress expressly has provided that "the
collection and disposal of solid wastes should continue to be
primarily the function of State, regional, and local agencies. . .
." 42 U.S.C. § 6901(a)(4) (1976 ed.). Similarly, ch. 363 is not
preempted because of a square conflict with particular provisions
of federal law or because of general incompatibility with basic
federal objectives. See Ray v. Atlantic Richfield Co., 435 U. S. 151 , 435 U. S. 158 ; Jones v. Rath Packing Co., supra at 430 U. S.
540 -541. In short, we agree with the New Jersey Supreme
Court that ch. 363 can be enforced consistently with the program
goals and the respective federal-state roles intended by Congress
when it enacted the federal legislation.

															[ Footnote 5 ]

															U.S.Const., Art. I, § 8, cl. 3.

															[ Footnote 6 ]

															We express no opinion about New Jersey's power, consistent with
the Commerce Clause, to restrict to state residents access to
state-owned resources, compare Douglas v. Seacoast Products,
Inc., 431 U. S. 265 , 431 U. S.
283 -287, with id. at 431 U. S.
287 -290 (REHNQUIST, J., concurring and dissenting); Toomer v. Witsell, 334 U. S. 385 , 334 U. S. 404 ;
or New Jersey's power to spend state funds solely on behalf of
state residents and businesses, compare Hughes v. Alexandria
Scrap Corp., 426 U. S. 794 , 426 U. S.
805 -810; id. at 426 U. S. 815 (STEVENS, J., concurring), with id. at 426 U. S. 817 (BRENNAN, J., dissenting). Also compare South Carolina State
Highway Dept. v. Barnwell Bros., Inc., 303 U.
S. 177 , 303 U. S. 187 , with Southern Pacific Co. v. Arizona ex rel. Sullivan, 325 U. S. 761 , 325 U. S.
783 .

															MR. JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE joins,
dissenting.

															A growing problem in our Nation is the sanitary treatment and
disposal of solid waste. [ Footnote
2/1 ] For many years, solid waste was Page 437 U. S. 630 incinerated. Because of the significant environmental problems
attendant on incineration, however, this method of solid waste
disposal has declined in use in many localities, including New
Jersey. "Sanitary" landfills have replaced incineration as the
principal method of disposing of solid waste. In ch. 363 of the
1973 N.J.Laws, the State of New Jersey legislatively recognized the
unfortunate fact that landfills also present extremely serious
health and safety problems. First, in New Jersey,

															"virtually all sanitary landfills can be expected to produce
leachate, a noxious and highly polluted liquid which is seldom
visible and frequently pollutes . . . ground and surface
waters."

															App. 149. The natural decomposition process which occurs in
landfills also produces large quantities of methane, and thereby
presents a significant explosion hazard. Id. at 149,
156-157. Landfills can also generate "health hazards caused by
rodents, fires and scavenger birds" and, "needless to say, do not
help New Jersey's aesthetic appearance nor New Jersey's noise or
water or air pollution problems." Supp. App. 5

															The health and safety hazards associated with landfills present
appellees with a currently unsolvable dilemma. Other, hopefully
safer, methods of disposing of solid wastes are still in the
development stage, and cannot presently be used. But appellees
obviously cannot completely stop the tide of solid waste that its
citizens will produce in the interim. For the moment, therefore,
appellees must continue to use sanitary landfills to dispose of New
Jersey's own solid waste despite the critical environmental
problems thereby created. Page 437 U. S. 631 The question presented in this case is whether New Jersey must
also continue to receive and dispose of solid waste from
neighboring States, even though these will inexorably increase the
health problems discussed above. [ Footnote 2/2 ] The Court answers this question in the
affirmative. New Jersey must either prohibit all landfill
operations, leaving itself to cast about for a presently
nonexistent solution to the serious problem of disposing of the
waste generated within its own borders, or it must accept waste
from every portion of the United States, thereby multiplying the
health and safety problems which would result if it dealt only with
such wastes generated within the State. Because past precedents
establish that the Commerce Clause does not present appellees with
such a Hobson's choice, I dissent.

															The Court recognizes, ante at 437 U. S.
621 -622, that States can prohibit the importation of
items

															"'which, on account of their existing condition, would bring in
and spread disease, pestilence, and death, such as rags or other
substances infected with the germs of yellow fever or the virus of
small-pox, or cattle or meat or other provisions that are diseased
or decayed, or otherwise, from their condition and quality, unfit
for human use or consumption.'" Bowman v. Chicago Northwestern R. Co., 125 U.
S. 465 , 125 U. S. 489 (1888). See Baldwin v. G.A.F. Seelig, Inc., 294 U.
S. 511 , 294 U. S. 525 (1935); Sligh v. Kirkwood, 237 U. S.
52 , 237 U. S. 59 -60
(1915); Asbell v. Kansas, 209 U.
S. 251 (1908); Railroad Co. v. Husen, 95 U. S. 465 , 95 U. S. 472 (1878). As the Court points out, such "quarantine laws have not
been considered forbidden protectionist measures, even though
they were directed against out-of-state commerce. " Ante at 437 U. S. 628 (emphasis added). Page 437 U. S. 632 In my opinion, these cases are dispositive of the present one.
Under them, New Jersey may require germ-infected rags or diseased
meat to be disposed of as best as possible within the State, but at
the same time prohibit the importation of such items for disposal
at the facilities that are set up within New Jersey for disposal of
such material generated within the State. The physical fact of life
that New Jersey must somehow dispose of its own noxious items does
not mean that it must serve as a depository for those of every
other State. Similarly, New Jersey should be free under our past
precedents to prohibit the importation of solid waste because of
the health and safety problems that such waste poses to its
citizens. The fact that New Jersey continues to, and indeed must
continue to, dispose of its own solid waste does not mean that New
Jersey may not prohibit the importation of even more solid waste
into the State. I simply see no way to distinguish solid waste, on
the record of this case, from germ-infected rags, diseased meat,
and other noxious items.

															The Court's effort to distinguish these prior cases is
unconvincing. It first asserts that the quarantine laws which have
previously been upheld

															"banned the importation of articles such as diseased livestock
that required destruction as soon as possible because their very
movement risked contagion and other evils." Ante at 437 U. S.
628 -629. According to the Court, the New Jersey law is
distinguishable from these other laws, and invalid, because the
concern of New Jersey is not with the movement of solid waste, but
with the present inability to safely dispose of it once it reaches
its destination. But I think it far from clear that the State's law
has as limited a focus as the Court imputes to it: solid waste
which is a health hazard when it reaches its destination may, in
all likelihood, be an equally great health hazard in transit.

															Even if the Court is correct in its characterization of New
Jersey's concerns, I do not see why a State may ban the importation
of items whose movement risks contagion, but Page 437 U. S. 633 cannot ban the importation of items which, although they may be
transported into the State without undue hazard, will then simply
pile up in an ever increasing danger to the public's health and
safety. The Commerce Clause was not dawn with a view to having the
validity of state laws turn on such pointless distinctions.

															Second, the Court implies that the challenged laws must be
invalidated because New Jersey has left its landfills open to
domestic waste. But, as the Court notes, ante at 437 U. S. 628 ,
this Court has repeatedly upheld quarantine laws "even though they
appear to single out interstate commerce for special treatment."
The fact that New Jersey has left its landfill sites open for
domestic waste does not, of course, mean that solid waste is not
innately harmful. Nor does it mean that New Jersey prohibits
importation of solid waste for reasons other than the health and
safety of its population. New Jersey must, out of sheer necessity,
treat and dispose of its solid waste in some fashion, just as it
must treat New Jersey cattle suffering from hoof-and-mouth disease.
It does not follow that New Jersey must, under the Commerce Clause,
accept solid waste or diseased cattle from outside its borders, and
thereby exacerbate its problems.

															The Supreme Court of New Jersey expressly found that ch. 363 was
passed "to preserve the health of New Jersey residents by keeping
their exposure to solid waste and landfill areas to a minimum." 68
N.J. 451, 473, 348 A.2d
505 , 516. The Court points to absolutely no evidence that would
contradict this finding by the New Jersey Supreme Court. Because I
find no basis for distinguishing the laws under challenge here from
our past cases upholding state laws that prohibit the importation
of items that could endanger the population of the State, I
dissent.

															[ Footnote 2/1 ]

															Congress specifically recognized the substantial dangers to the
environment and public health that are posed by current methods of
disposing of solid waste in the Resource Conservation and Recovery
Act of 1976, 90 Stat. 2795. As the Court recognizes, ante at 437 U. S. 621 n. 4, the laws under challenge here "can be enforced consistently
with the program goals and the respective federal-state roles
intended by Congress when it enacted" this and other legislation,
and are thus not preempted by any federal statutes.

															[ Footnote 2/2 ]

															Regulations of the New Jersey Department of Environmental
Protection "except from the ban on out-of-state refuse those types
of solid waste which may have a value for recycling or for use as
fuel." App. 47. Thus, the ban under challenge would appear to be
strictly limited to that waste which will be disposed of in
sanitary landfills, and thereby pose health and safety dangers to
the citizens of New Jersey.

Summary:
The U.S. Supreme Court case, City of Philadelphia v. New Jersey (1978), concerned a New Jersey statute that prohibited the importation of waste from outside the state. The Court ruled that this statute violated the Commerce Clause of the U.S. Constitution, which protects all objects of interstate trade.

The Court found that the law was an economic protectionist measure, discriminating against out-of-state commercial interests by barring them from using New Jersey's landfill space. This discrimination was deemed unconstitutional, as a state cannot isolate itself from a common problem by erecting barriers against interstate trade.

New Jersey argued that the statute was akin to a quarantine law, banning harmful articles of commerce. However, the Court disagreed, noting that New Jersey treated out-of-state and domestic waste differently, despite conceding they were no different. Thus, the law was deemed invalid, as it imposed the burden of conserving landfill space solely on out-of-state interests.