GDF Realty Invst Ltd v. Norton

326 F.3d 622

• Court: Court of Appeals for the Fifth Circuit
• Decided: March 25, 2004
• Docket: 01-51099
• Status: Published

Opinion

United States Court of Appeals Fifth Circuit F I L E D REVISED MARCH 25, 2004 February 27, 2004

Charles R. Fulbruge III UNITED STATES COURT OF APPEALS Clerk

FOR THE FIFTH CIRCUIT

____________________ No. 01-51099 ____________________

GDF REALTY INVESTMENTS, LTD; PARKE PROPERTIES I, LP; PARKE PROPERTIES II, LP

Plaintiffs - Appellants

v.

GALE A NORTON, Secretary, US Department of the Interior; MARSHALL P JONES, Director, US Fish & Wildlife Service

Defendants - Appellees

Appeal from the United States District Court for the Western District of Texas, Austin. ON PETITION FOR REHEARING AND REHEARING EN BANC (Opinion 3/26/03, 5 Cir.,_______, _______ F.3d ______) Before DAVIS, BARKSDALE, and DENNIS, Circuit Judges. PER CURIAM:

The Petition for Rehearing is DENIED and the court having been polled at the request of one of the members of the court and a majority of the judges who are in regular active service not having voted in favor, (FED. R. APP. P. and 5TH CIR. R. 35) the Petition for Rehearing En Banc is also DENIED.

1 EDITH H. JONES, Circuit Judge, joined by JOLLY, SMITH, DEMOSS, CLEMENT and PICKERING, Circuit Judges, dissenting from the denial of rehearing en banc: A majority of the court has refused to rehear this

significant Endangered Species Act case en banc. I respectfully

dissent. For the sake of species of 1/8-inch-long cave bugs,

which lack any known value in commerce, much less interstate

commerce, the panel crafted a constitutionally limitless theory

of federal protection. Their opinion lends new meaning to the

term reductio ad absurdum.

The panel holds that because “takes” of the Cave

Species ultimately threaten the “interdependent web” of all

species, their habitat is subject to federal regulation by the

Endangered Species Act. Such unsubstantiated reasoning offers

but a remote, speculative, attenuated, indeed more than

improbable connection to interstate commerce. Chief Justice

Marshall stated in Cohens v. Virginia, 19 U.S. 264 (1821), that

Congress has no general right to punish murder or felonies

generally. Surely, though, there is more force to an

“interdependence” analysis concerning humans, and thus a more

obvious series of links to interstate commerce, than there is to

“species.” Yet the panel’s “interdependent web” analysis of the

Endangered Species Act gives these subterranean bugs federal

protection that was denied the school children in Lopez and the rape victim in Morrison. The panel’s commerce clause analysis is

in error.

I. Background

To recap the facts, this case involves a 20-year effort

to develop a large tract of land west of Austin, Texas. This

once-rural property contains a cluster of limestone caves. After

obtaining all necessary state and local permits, the landowner-

appellants began commercial development. Between 1988 and 1993,

however, the United States Fish and Wildlife Service (“FWS”),

designated six species (“Cave Species”) of tiny bugs, which dwell

solely in the caves and never emerge on the surface of the land,

as endangered under section 4 of the ESA. See 16 U.S.C. §

33(a)(1). Pursuant to section 9(a)(1) of the ESA, it became

unlawful to take a member of the endangered species. A “take”

means to “harass, harm, pursue, hunt, shoot, wound, kill, trap,

capture or collect . . . .” 16 U.S.C. § 1532(19). The ESA

broadly defines “harm” as including significant modifications or

degradations of a habitat which kill or injure protected wildlife

“by significantly impairing essential behavioral patterns,

including breeding, feeding or sheltering.” 50 C.F.R. § 17.3.

After years of wrangling with and attempting to appease

the FWS, the landowners remained unable to commercially develop

their land. Accordingly, they sued on the theory that the ESA

3 “take” provision is unconstitutional as applied to these Cave

Species. The district court granted summary judgment to FWS,

finding that it would be “hard-pressed to find a more direct link

to interstate commerce than a Wal-Mart.” GDF Realty Investment,

Ltd. v. Norton, 169 F.Supp 2d 648, 662 (W.D. Tex. 2001). On

appeal, the panel affirmed the district court’s judgment on

wholly different grounds.

II. Discussion

Congress’s power “to regulate commerce . . . among the

several states . . .” is, like all enumerated powers, subject to

outer limits. See United States v. Lopez, 514 U.S. 549, 556-57

(1995); Solid Waste Agency of North Cook County v. U.S. Army

Corps of Engineers, 531 U.S. 159, 173 (2001) (reiterating that

“the grant of authority to Congress under the commerce clause,

though broad, is not unlimited”). The commerce clause “may not

be extended so as to embrace effects upon interstate commerce so

indirect and remote that to embrace them, in view of our complex

society, would effectually obliterate the distinction between

what is national and what is local and create a completely

centralized government.” NLRB v. Jones and Laughlin Steel, 301

U.S. 1, 37 (1937).

It is unnecessary to recapitulate the Supreme Court’s

Lopez and Morrison cases at any length. See, generally, United

4 States v. Morrison, 529 U.S. 598 (2000). Lopez defines three

categories of federal regulation that are consistent with the

commerce clause. Lopez 514 U.S. at 558. At issue here is

whether federal regulation of the Cave Species is permissible

under the third Lopez category — i.e., whether takes of the Cave

Species “substantially affect interstate commerce.” Lopez, 514

U.S. at 558-59.1

In Lopez, reiterated in Morrison, the Court outlined

four considerations in determining whether purely intrastate

activity substantially affects interstate commerce: (1) the

commercial or economic nature of the intrastate activity; (2) the

presence of a jurisdictional element in the statute; (3) the

existence of congressional findings or legislative history

demonstrating a link between the regulated activity and

interstate commerce; and (4) how attenuated is the link between

the intrastate activity and its effect on interstate commerce.

See Morrison, 529 U.S. 609-12 (2000).2

1 The panel found, and the parties do not dispute, that the first two Lopez categories, involving the channels or instrumentalities of interstate commerce, do not justify regulation of the Cave Species. GDF Realty, 326 F.3d at 629. 2 Pertinent parts of the Endangered Species Act contain no statutory jurisdictional link between federal regulation and interstate commerce. Likewise, legislative history and congressional findings fail to tie species protection to commerce. These parts of the analysis concerning federal regula- tion of intrastate activity do not favor FWS.

5 In certain instances, an intrastate activity alone may

substantially affect interstate commerce. See Jones and Laughlin

Steel, 301 U.S. at 22 (NLRB order concerning unfair labor

practices at a steel mill directly affected interstate commerce).

In other instances, “the regulation can reach intrastate

commercial activity that by itself is too trivial to have a

substantial effect on interstate commerce but which when

aggregated with similar and related activity, can substantially

affect interstate commerce.” United States v. Ho, 311 F.3d 589,

599 (5th Cir. 2002); see also Wickard v. Filburn, 317 U.S. 111,

127-28 (1942).

As an initial matter, the panel correctly determined,

unlike other courts, that the “regulated activity” under the ESA

is Cave Species takes, not the appellants’ planned commercial

development of the land. GDF Realty, 326 F.3d at 633-34

(recognizing that “looking beyond the regulated activity . . .

would ‘effectually obliterate’ the limiting purpose of the

Commerce Clause”) (citing Jones and Laughlin Steel, 301 U.S. at

37); Ho, 311 F.3d at 602 (recognizing that the regulated activity

at issue was asbestos removal, rather than the plaintiff’s

commercial enterprise); but see Rancho Viejo, LLC v. Norton, 323

F.3d 1062 (D.C. Cir. 2003) (finding that the regulated activity

6 was not the ESA take but rather the “construction of a commercial

housing development”).

Next the panel examined whether Cave Species takes,

alone, have a “direct relationship” with and substantial effect

on interstate commerce. GDF Realty, 326 F.3d at 637. FWS

offered two theories for such a “direct relationship:” (1) the

“substantial” scientific interest the Cave Species generate; and

(2) possible future commercial benefits. The panel properly

rejected each argument as speculative or too attenuated to

commerce.

The panel finally turned to FWS’s argument that Cave

Species takes, although intrastate and non-economic in

themselves, may be aggregated with all other endangered species,

permitting the entirety of the regulatory scheme to pass

constitutional muster.3 “At issue is what circumstances must be

present in order to justify aggregation when, as in this case,

intrastate activity has a de minimis effect on interstate

commerce.” GDF Realty, 326 F.3d at 638. The panel concluded

that this case warranted aggregation under Lopez and Morrison,

because FWS’s actions are essential to preserving an “economic”

3 The appellants concede that, if aggregated with all endangered species, the Cave Species takes would have a substantial effect on interstate commerce.

7 regulatory program. Id. at 639. I respectfully disagree. The

panel’s approval of aggregation in this case would not only

sustain every conceivable application of the ESA, but entirely

undercuts Lopez and Morrison.

To explain the problem, a brief historical review of

the aggregation principle is required. This court recognized in

Ho that the aggregation principle “reached its zenith in Wickard,

‘perhaps the most far-reaching example of commerce clause

authority over intrastate activity.’” Ho, 311 F.3d at 599

(quoting Lopez, 514 U.S. at 560). In Wickard, the Supreme Court

upheld regulation of an intrastate farmer’s personal consumption

of home-grown wheat under the Agricultural Adjustment Act of 1938

because, “. . . his contribution [to the wheat market], taken

together with that of many others similarly situated, is far from

trivial.” Wickard, 317 U.S. at 127-28. A primary purpose of the

act in question was, as the Court noted, “to increase the market

price of wheat and to that end to limit the volume thereof that

could affect the market.” Id. at 90.

After Wickard, the Court has sustained commerce clause

legislation using aggregation in instances where Congress was

regulating commercial activity. See Katzenbach v. McClung, 379

U.S. 294 (1964) (prohibiting refusal of restaurant service to

interstate travelers); Heart of Atlanta Motel v. United States,

8 379 U.S. 241 (1964) (prohibiting refusal of hotel accommodations

to interstate travelers); Maryland v. Wirtz, 392 U.S. 183 (1968)

(regulating wages of employees of business engaged in interstate

commerce); Perez v. United States, 402 U.S. 146 (1971)

(regulating loan sharking); Hodel v. Virginia Surface Mining and

Reclamation Association,452 U.S. 246 (1981) (regulating coal

industry); see Lopez, 514 U.S. at 560 (recognizing these

“examples are by no means exhaustive, but the pattern is clear”).

In both Lopez and Morrison, by contrast, the federal

government’s efforts to sustain non-economic criminal laws under

the commerce clause through aggregation were rebuffed. In Lopez,

only Justice Breyer’s dissent accepted the theory that discrete

instances of gun possession in a school zone, when aggregated,

increased the costs of crime and reduced national productivity so

as to justify the Gun-Free School Zones Act of 1990. See Lopez,

514 U.S. at 618-624 (Breyer, J. dissenting). The Court majority

rejected aggregation, because it would allow Congress to regulate

“all activities that might lead to violent crime, regardless of

how tenuously they relate to interstate commerce.” Id. at 564.

The Court concluded that, “if we were to accept the government’s

arguments, we are hard pressed to posit any activity by an

individual that Congress is without power to regulate.” Id.

9 Likewise, in Morrison, the Court rejected arguments

concerning the aggregate effects of sex-based crime on national

productivity, increased medical and other costs, and a decreased

supply and demand for interstate goods. Morrison, 529 U.S. at

615. Again, the Court concluded that aggregation “would allow

Congress to regulate any crime as long as the nationwide,

aggregated impact of that crime has substantial effects on

employment, production, transit or consumption.” Id. (adding

that “the concern we expressed in Lopez that Congress might use

the Commerce Clause to completely obliterate the Constitution’s

distinction between national and local authority seems well-

founded”) (citing Lopez, 514 U.S. at 564).

Together, these cases strongly suggest that when the

Supreme Court has sustained Commerce Clause regulation under the

aggregation principle, “the regulated activity was of an apparent

commercial character.” Morrison, 529 U.S. at 611. Nevertheless,

Morrison declined to create a categorical rule “against

aggregating the effects of non-economic activity,” even as it

observed, “thus far in our nation’s history our cases have upheld

Commerce Clause regulation of intrastate activity only where the

activity is economic in nature.” Id. at 613.

The panel recognized that “[i]n light of Lopez and

Morrison, the key question for purposes of aggregation is whether

10 the nature of the regulated activity is economic.” GDF Realty,

326 F.3d at 630. The panel conceded that “in a sense, Cave

Species takes are neither economic nor commercial. There is no

market for them; any future market is conjecture.” GDF Realty,

326 F.3d at 638. The panel added that “[i]f the speculative

future medical benefits from Cave Species makes their regulation

commercial, then almost anything would be.” Id. Furthermore,

“there is no historic trade in the Cave Species, nor do tourists

come to Texas to view them.” Id. Finally, the panel rejected

the government’s argument that Cave Species takes become

commercial in character once aggregated with other endangered

species. Id. “To accept such a justification would render

meaningless any ‘economic nature’ prerequisite to aggregation.”

Id.

Nevertheless, the panel aggregated the Cave Species

takes with all takes of all endangered species because: (1) they

are part of a larger regulation that is “directed at activity

that is economic in nature” and (2) the intrastate activity (Cave

Species takes) is an “essential part of the economic regulatory

scheme.” Id. at 639 (internal citations and quotations omitted).

How the panel’s conclusion follows from its generally

excellent preceding discussion of Lopez and Morrison, I cannot

fathom. The panel offers little reasoning why any take of a Cave

11 Species is (a) part of a larger “economic” regulatory scheme;

(b) so essential to the larger national scheme that the

accidental crushing of one Cave Species underfoot (or even the

diminutive species’ destruction) threatens to undo the national

program; and (c) so significant to the commerce clause that

Congress, for the first time in U.S. history, is authorized to

aggregate purely intrastate, non-economic activity.

It is undeniable that many ESA-prohibited takings of

endangered species may be regulated, and even aggregated, under

Lopez and Morrison because they involve commercial or

commercially-related activities like hunting, tourism and

scientific research. On this basis, the Fourth Circuit decision

in Gibbs v. Babbitt, 214 F.3d 483, 493-96 (4th Cir. 2000),

approved federal red wolf regulations. Under reasoning like that

in Gibbs, aggregation may be sustained on a species-by-species

basis or across certain categories of species. The pursuit of

hunting trophies, for instance, affects markets for hunting,

outfitting, taxidermy, etc. Where the link between endangered

species takes and commercial or economic activity is plain,

courts need not be concerned about the limits of the aggregation

principle.

But in this case, there is no link — as the panel

concedes — between Cave Species takes and any sort of commerce,

12 whether tourism, scientific research, or agricultural markets.

Compare Gibbs, 214 F.3d at 493-95. The cautions expressed in

Morrison about aggregation of wholly intrastate non-economic

activity should be taken seriously by the courts. See GDF

Realty, 326 F.3d at 628. Elsewhere in its opinion, the panel was

quite emphatic about this, saying “the possibility of future

substantial effects of the Cave Species on interstate commerce .

. . is simply too hypothetical and attenuated from the regulation

to pass constitutional muster.” Id. (citing Morrison, 529 U.S.

at 612) (emphasis in original).

When the panel nevertheless approves the application of

the ESA to these Cave Species, its opinion becomes confusing and

self-contradictory. First, the panel attempts to convert the ESA

to an economic regulatory statute by opining that the majority of

species takes would result from economic activity, and “the Cave

Species takes would occur as a result of plaintiffs’ planned

commercial development.” GDF Realty, 326 F.3d at 639. The panel

had, however, rejected this argument earlier, when it found that

the regulated activity is the take, not the planned commercial

land development. GDF Realty, 326 F.3d at 633-34. As the panel

itself understood, this “analysis would allow application of

otherwise unconstitutional statutes to commercial actors, but not

non-commercial actors. There would be no limit to Congress’

13 authority to regulate intrastate activities, so long as those

subjected to the regulation were entities which had an otherwise

substantial connection to interstate commerce.” Id. at 634.4

Second, the panel states that Cave Species takes are

essential to the ESA, because any take of any species

“threaten[s] the interdependent web of all species.” GDF Realty,

326 F.3d at 640 (internal quotations omitted). Under the panel’s

approach, “the essential purpose of the ESA is to protect the

ecosystems upon which we and other species depend.” Id. (quoting

H.R. Rep. No. 93-412, at 10). Further, every take is “essential”

to the ESA because the extinction of any species risks the

extinction of all species, and the extinction of all species

could lead to the extinction of ecosystems. GDF Realty, 326 F.3d

at 640. At one level, this is no more than the “but-for-causal

chain” approach twice rejected by the Supreme Court in Lopez and

Morrison. Hence, “the Lopez Court declined to apply the

aggregation principle in conjunction with long chains of causal

inference that would have been necessary to arrive at a

substantial effect on interstate commerce.” United States v.

Wang, 222 F.3d 234, 239 (6th Cir. 2000). An even more obvious

4 Arguably, Congress could pass a statute prohibiting anyone engaged in interstate commerce from “taking” endangered species. But Congress did not do so in these parts of the statute.

14 dissonance between the panel opinion and Lopez, Morrison and the

Constitution is that the Commerce Clause regulates commerce, not

ecosystems.5

Third, while the panel acknowledges the Supreme Court’s

concern that federal legislation under the Commerce Clause must

have a limiting principle so as not to obliterate the distinction

between that which is truly national and that which is local, the

panel’s conclusion tramples that precept. The panel concludes,

summarily, that its “interdependent web” approach “will not allow

Congress to regulate land use or wildlife preservation.” GDF

Realty, 326 F.3d at 640. I disagree. Once the FWS designates a

species as endangered, the Government has functional control over

the land designated as its habitat. If such authority is not

justified by a federal interest in regulating interstate

5 That a true, not merely conjectural, economic activity must be the subject of Congress’s regulation is reinforced by our court’s debates over the Hobbs Act. In United States v. Robinson, 119 F.3d 1205 (5th Cir. 1997), the panel reasoned that any robbery of a business that has an effect on interstate commerce under the Hobbs Act’s express jurisdictional requirements may be aggregated with other similar crimes for purposes of establishing a “substantial effect.” Here, there is no jurisdictional element, and the only aggregate effect articulated by the panel is on biodiversity, which the panel somehow equates with “economic” or commercial activity. It seems clear, though, that biodiversity is a condition of nature, not a human activity. The panel’s opinion goes farther than Robinson in permitting aggregation to overcome a commerce clause challenge.

15 commerce, it “would result in a significant impingement of the

States’ traditional and primary power over land and water use.”

Solid Waste Agency, 531 U.S. at 173-74.6

Perversely, federal protection of the Cave Species has

become a device to thwart not only these appellants’ prospects of

land development but also the State’s construction of a highway,

the quintessential modern artery of commerce. See “Dateline

Texas: Officials at Odds over Spider Habitat,” Houston Chron.,

Feb. 22, 2004, at 35A (to get federal approval for highway

construction over two limestone caverns housing the Cave Species,

“state highway administrators must find a site in Williamson

County that is also home to the endangered species and

permanently preserve that site”).

6 Contrary to recent Supreme Court authority, the panel interprets the Endangered Species Act extremely broadly to permit the federal government to regulate a matter of unique local concern. See Solid Waste Agency, 531 U.S. at 172-173 (Congressional authority must be narrowly construed “where the administrative interpretation alters the federal-state framework by permitting federal encroachment upon a traditional state power.”). Further, “where an otherwise acceptable construction of a statute would raise serious constitutional problems, [courts] will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress.” Id. (quoting Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988)). Regulation of land use is traditionally the province of state and local governments. Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 44 (1994).

16 The panel also concludes, without explanation, that

“the link” between Cave Species takes “and a substantial

commercial effect is not attenuated.” GDF Realty, 326 F.3d at

640. The panel’s reasoning — all takes are essential, therefore,

all takes have a substantial commercial effect — is circular.

Even aside from this problem, the Fifth Circuit and other courts

have recognized that in an otherwise constitutional federal

regulatory scheme, some applications may go too far. See e.g.,

United States v. Collins, 40 F.3d 95, 99 (5th Cir. 1994) (robbery

of an individual citizen not covered under the Hobbs Act); United

States v. Wang, supra (same); United States v. Quigley, 53 F.3d

909, 910-11 (8th Cir. 1995). In fact, the panel’s reasoning

contradicts Collins, inasmuch as it would authorize federal

criminal prosecution under the ESA of a landowner, or even an FWS

agent, who climbed down into one of the caves in order to study

the Cave Species and crushed one. See 16 U.S.C. §§ 1538-1540;

compare Rancho Viejo, supra, 323 F.3d at 1080 (Ginsburg, J.,

concurring) (“. . . our rationale for concluding the take of the

arroyo toad affects interstate commerce does indeed have a

logical stopping point . . . Just as important, however, the lone

hiker in the woods, or the homeowner who moves dirt in order to

landscape his property, though he takes the toad, does not affect

interstate commerce.”).

17 In the end, the panel is unable to refute the

attenuation concern of Lopez and Morrison because its analysis

rests on the false implication that all takes of all species

necessarily relate to an ecosystem, which by its very grandiosity

must at some point be “economic” in actuality or in effect. This

is precisely the reasoning rejected by the Supreme Court. Not

all crime is “economic” for commerce clause purposes, in

actuality or effect, even though any or all of its human victims

may become impoverished. Not all crimes against women are

“economic” in practicality or effect, despite the same possible

consequences. The Commerce Clause does not regulate crime,

sexual inequity, or ecosystems as such — it regulates commerce.

Thus, I reiterate: many applications of the ESA may be

constitutional, but this one simply goes too far. To be faithful

to the Supreme Court’s principles in Lopez and Morrison and this

court’s Commerce Clause decisions, we should rehear this case en

banc.