Originally published on Law360, Dec. 15, 2014. Posted with permission.

Utah Prairie Dog Could Narrow Endangered Species Act

By David Metres and Josh Bloom

A Utah federal court has created the potential for a constitutional showdown that could result in a significant narrowing of the Endangered Species Act and further limiting Congress’ power to legislate. In an unprecedented ruling, U.S. District Judge Dee Benson struck down the application of the ESA to a prairie dog whose habitat is wholly within Utah. People for the Ethical Treatment of Property Owners v. U.S. Fish & Wildlife Serv., No. 2:13-cv-00278-DB (D. Utah Nov. 4, 2014) (“PETPO”).

The court determined that Congress exceeded its constitutional powers under the Commerce Clause and the Necessary and Proper Clause, ruling that Congress’ power does not extend to a purely intrastate species with, according to the court, no apparent nexus to economic activity. If upheld, the PETPO ruling could significantly limit the reach of ESA because more than half the species regulated by the ESA exist entirely in one state and have no obvious market nexus that would extend beyond that of the Utah prairie dog.

Although the decision is subject to appeal to the Tenth Circuit, this case may eventually provide a vehicle for the U.S. Supreme Court to further limit Congress’ Commerce Clause power, as most recently highlighted by the Affordable Care Act case before the court in 2012. Should the appellate courts uphold this ruling, Congress could find its authority to legislate further constrained — not just on environmental issues, but potentially in other areas as well.

Case Background: Utah Prairie Dogs and the ESA Section 4(d) Rule

Beginning with the Utah prairie dog’s ESA listing in the 1970s, landowners, local governments and conservationists have worked together to improve the prairie dog’s prospects for survival. With increasing populations, the U.S. Fish and Wildlife Service reclassified the prairie dog from endangered to threatened in 1984, using an ESA Section 4(d) rule to allow regulated take of Utah prairie dogs. Under Section 4(d), threatened species may be afforded the same protections given to endangered species, and may also allow application to those species various ESA conservation programs, such as programmatic safe harbor agreements and habitat credit exchanges. Use of these conservation tools, among other efforts, have resulted in stable or increasing Utah prairie dog populations.

At issue in the PETPO case was whether Congress had the power to authorize the service to apply Section 4(d) protections to the Utah prairie dog. Generally, Congress’ Commerce Clause power extends to (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce, or persons or things in interstate commerce, and (3) activities that substantially affect or substantially relate to interstate commerce. United States v. Lopez, 514 U.S. 549 (1995). In PETPO, the plaintiffs argued that Congress could not use this power because this prairie dog is found solely within Utah’s borders and has no substantial effect on or relation to interstate commerce.

District Court: Take of the Prairie Dog Has Insufficient Effect on Interstate Commerce to Support Federal Regulation

The government conceded that the Utah prairie dog is a purely intrastate species, residing only in Utah, but pointed to a long line of circuit court decisions that upheld ESA regulation of intrastate species on Commerce Clause grounds. See San Luis & Delta-Mendota Water Authority v. Salazar, 638 F.3d 1163 (9th Cir. 2011) (Delta smelt living only in California); Alabama-Tombigbee Rivers Coalition v. Kempthorne, 477 F.3d 1250 (11th Cir. 2007) (Alabama sturgeon living only in Alabama); Rancho Viejo LLC v. Norton, 323 F.3d 1062, 1069 (D.C. Cir. 2003) (arroyo toad living only in California); GDF Realty Investments Ltd. v. Norton, 326 F.3d 622 (5th Cir. 2003) (six species of subterranean, cave-dwelling invertebrate spiders and beetles living only in Texas); Gibbs v. Babbitt, 214 F.3d 483 (4th Cir. 2000) (red wolf living only in North Carolina); Nat’l Ass’n of Home Builders v. Babbitt, 130 F.3d 1041 (D.C. Cir. 1997) (Delhi Sands flower-loving fly living only in California).

However, the PETPO court found that the regulated activity itself — in this case, the take of the species — must be the touchstone for the interstate commerce effects. The court determined that the focus of the “substantial effect” test is not the effect of application of Section 4(d) protections and programs on interstate commerce, but rather the effect on interstate commerce caused by take of the Utah prairie dog. PETPO, at *16. Through this lens, the court determined that such take did not substantially affect interstate commerce.

The PETPO court supported its determination by opining that the species’ biological value was “inconsequential” to this determination. Id. at *11. The court reasoned that the Commerce Clause “empowers Congress ‘to regulate commerce’ not ‘ecosystems.’” Id. at *12 (quoting National Ass’n of Home Builders v. Babbitt, 130 F. 3d 1041, 1065 (D.C. Cir. 1997) (Sentelle, J., dissenting)). Further, the court determined that both the purported commercial value of the prairie dog, as well as any commerce related to scientific research on the prairie dog, were too attenuated to establish a “substantial relation between the take of the Utah prairie dog and interstate commerce.” PETPO, at *11. On that basis, the PETPO court determined that Congress did not have the power to authorize regulation of take of the Utah prairie dog.

District Court: Necessary and Proper Clause Also Does Not Justify the Section 4(d) Rule

The PETPO court also rejected the government’s argument that the Necessary and Proper Clause authorizes the Section 4(d) rule, rejecting an argument that the rule is essential to the regulatory scheme created by the ESA. Pointing to Gonzales v. Raich, 545 U.S. 1 (2005), the government argued that a regulation may be upheld when it is an “essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.” Id. at 24-25. The PETPO court rejected this approach, finding that the 4(d) rule was not essential to the achievement of the ESA’s scheme because it would not “affect the national market for any commodity regulated by the ESA.” PETPO, at *14. Further, the court dismissed any substantial effects on national markets based on the fact that other interstate species, such as bobcats, golden eagles, and hawks, prey on the prairie dog.

Finally, the court rejected the government’s argument that take of all intrastate noncommercial species could be aggregated to satisfy the Necessary and Proper Clause, finding that aggregate take of different species did not apply to its consideration of the constitutionality of a special rule affecting only one species. PETPO, at *15.

Supreme Court Trend: Limit Scope of Commerce Clause

The PETPO court did not address congressional findings that maintaining biological diversity by preserving species, and resulting impact on the national economy, was a key purpose of the ESA. In passing the ESA, Congress noted the economic value that such species may provide, finding that the value of the planet’s biological “genetic heritage is, quite literally, incalculable.” H.R. Rep. No. 93-412, at 4–5 (1973). But while the object of the regulation — preserving endangered species — may indeed implicate an incalculable natural endowment, it is a much more difficult argument to show that the regulated activity — here, the take of the prairie dog — may have a substantial effect on economic activity. See Gonzales v. Raich, 545 U.S. 1, 23 (2005)

Although the court’s view may be at odds with many other appellate courts, it is not necessarily at odds with more recent Supreme Court Commerce Clause cases. Indeed, the court has proved willing to reject congressional findings regarding effects on interstate commerce, as was the case in United States v. Morrison. 529 U.S. 598 (2000).

In Morrison, Congress found that gender-motivated violence affects interstate commerce by deterring potential victims from traveling, diminishing work productivity, increasing demand for medical costs and other services, and creating other impacts on victims and their families. Morrison, 529 U.S. at 614-15. The court rejected those findings. Likewise, the court again rejected congressional findings of impacts of the individual mandate on interstate commerce in its recent ruling regarding the Affordable Care Act. See National Federation of Independent Business v. Sebelius, 567 U.S. ___, 132 S.Ct. 2566 (2012).

Moreover, the court has signaled concerns when the focus of federal environmental regulation is confined to one state. For example, in a decision limiting the reach of the Clean Water Act, the court noted that there are “significant constitutional questions” raised by using Commerce Clause power to regulate intrastate isolated wetlands with no apparent connection to interstate commerce. See Solid Waste Agency of Northern Cook County v.U.S. Army Corps of Eng’rs, 531 U.S. 159, 174 (2001).

Although the court has not yet had opportunity to address whether regulation under the ESA of purely intrastate species passes muster under the Commerce Clause, Chief Justice John Roberts, when sitting on the D.C. Circuit, did tip his hand. Then-Judge Roberts expressed views similar to those articulated by the PETPO court. In a dissent of a denial of rehearing en banc in Rancho Viejo LLC v. Norton, 323 F.3d 1062, 1071-73 (D.C. Cir. 2003), then-Judge Roberts stated that “[t]he panel’s opinion in effect asks whether the challenged regulation substantially affects interstate commerce, rather than whether the regulated activity does so. Thus, the panel sustains the application of the [Endangered Species] Act in this case because Rancho Viejo’s commercial development constitutes interstate commerce and the regulation impinges on that development, not because the incidental taking of arroyo toads can be said to be interstate commerce.” Id.

It remains to be seen whether the court will be ready to consider limitations on Congress’ Commerce Clause power over purely intrastate species, where there are only attenuated connections to interstate commerce. However, given the willingness of the court to curtail Congress’ Commerce Clause power to criminalize violence against women and to require participation in health insurance markets, the PETPO case may provide a vehicle to limit the ESA’s application to purely intrastate species with no established commercial value. And if the court further limits the scope of the federal government’s Commerce Clause authority, elements of other environmental statutes — such as the breadth of Clean Water Act jurisdiction — may face similar pressures, and beyond that, other federal statutes addressing crime, civil rights, and social issues may conceivably be at risk as well.

Although small in stature, the Utah prairie dog may loom large in determining the scope of Congress’ Commerce Clause power.

Joshua Bloom is a partner and David Metres is an associate at Barg Coffin Lewis & Trapp — a San Francisco-based firm that specializes in environmental law and litigation.