GDF Realty Invst Ltd v. Norton , 326 F.3d 622 ( 2004 )

  •                                                        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
                    Plaintiffs - Appellants
    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.
    (Opinion 3/26/03, 5 Cir.,_______, _______ F.3d ______)
    Before DAVIS, BARKSDALE, and DENNIS, Circuit Judges.
         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.
    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
    “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
    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
         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.
         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.
                 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
    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
                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”
         The appellants concede that, if aggregated with all
    endangered species, the Cave Species takes would have a
    substantial effect on interstate commerce.
    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,
    379 U.S. 241
     (1964) (prohibiting refusal of hotel accommodations
    to interstate travelers); Maryland v. Wirtz, 
    392 U.S. 183
    (regulating wages of employees of business engaged in interstate
    commerce);    Perez       v.     United     States,         
    402 U.S. 146
    (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.
               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
    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.”
               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
    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
                   But in this case, there is no link — as the panel
    concedes — between Cave Species takes and any sort of commerce,
    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’
    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.
    222 F.3d 234
    , 239 (6th Cir. 2000).                An even more obvious
         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.
    dissonance between the panel opinion and Lopez, Morrison and the
    Constitution is that the Commerce Clause regulates commerce, not
                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
         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.
    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
    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”).
         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).
                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.”).
                 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