Court Opinion

ID: 9611062
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:51:35.641644+00
Date Added: 2024-06-11T18:03:09.477852
License: Public Domain

RABINOWITZ, Chief Justice,
dissenting.
I do not agree with the court’s ruling that the state and South-Central were free to eliminate the primary manufacture requirement of their timber sale contract. In my view the court places its imprimatur upon precisely the kind of modification to a competitively bid contract that the judicially-imposed rule against material modifications is designed to prevent.
The Alaska legislature has decreed that an important state resource and asset, timber, is to be disposed of only by competitive bidding.1 This legislative mandate and its underlying policies are rendered ineffectual if the state and South-Central may discard their competitively bid contract and substitute in its stead a significantly different agreement. On the record presented in this case I must conclude that the primary manufacture requirement was an important term of the timber sale contract and that waiver of that requirement wrought an impermissible material change in the contract. I so conclude for several reasons. First, the primary manufacture requirement was an express condition of the state’s request for bids, and the state candidly admits that the requirement was “a significant part of the consideration for the State’s agreement to sell timber to South-Central.” Second, the administrative regulation authorizing a primary manufacture requirement in timber salé contracts2 and the governor’s policy statement urging primary manufacture,3 both of which were incorporated into the contract between the state and South-Cen*224tral, were undoubtedly designed to further the strong state interest in not exporting jobs in the often depressed forest products industry;4 this state policy is subverted by elimination of the primary manufacture requirement. Third, Kenai Lumber plausibly suggests that the timber sale might have attracted different bidders and bids had the primary manufacture requirement not been included in the state’s request for bids,5 and the court concedes that such a requirement affects the price that potential bidders are willing to pay for state-owned timber. In light of these factors I am unable to agree that the state and South-Central were at liberty to waive the primary manufacture requirement of their competitively bid contract.
I further disagree with the majority’s conclusion that the question of the materiality of the primary manufacture requirement need not be reached because the original contract authorized renegotiation of its terms after five years and at regular intervals thereafter. If the statutory competitive bidding requirements are to have any continuing viability, the parties to a competitive bid contract may not circumvent the legislature’s mandate by including in their contract a provision which authorizes any and all modifications.6 I recognize that the parties to a long-term contract for the sale of state-owned timber must be afforded a fair degree of latitude to make good faith modifications to their agreement in order to account for inevitable fluctuations in the market for timber and to respond to a myriad of factors which may not have been foreseeable at the time the timber was placed on bid. It does not follow, however, that the parties must be afforded unfettered license to rewrite their agreement; the judicially-imposed rule proscribing material modifications limits the power to alter a competitively bid contract and, in my view, that limit was exceeded when the state and South-Central removed the primary manufacture requirement from their contract.

. AS 38.05.115, .120.

. See Section 406.104 of the timber sale regulations, 11 AAC 76.130, the full text of which is reproduced at note 3 of the court’s opinion.

.This policy statement, which provides in part that “[r]ound logs may not be exported as a marketable commodity,” is set forth at note 3 of the court’s opinion.

. I note also that both California and Oregon prohibit the export of state-owned timber without primary manufacture. See Cal.Pub.Res. Code § 4650.1 (West Supp.1982); Or.Rev.Stat. § 526.805 (1979).

. South-Central was the only bidder on the contract in question.

.The court recognizes that “a clause authorizing modification may not be so broadly read as to negate the statutory requirement of competitive bidding” but in my view fails to apply this rule to the state’s and South-Central’s power to alter their competitively bid contract.