July 22, 2017

Tenth Circuit: Commerce Clause Authorizes Regulation of Take of Utah Prairie Dog

The Tenth Circuit Court of Appeals published its opinion in People for the Ethical Treatment of Property Owners v. U.S. Fish & Wildlife Service on Wednesday, March 29, 2017.

People for the Ethical Treatment of Property Owners (PETPO), representing over 200 property owners and entities, challenged a regulation promulgated by the Fish and Wildlife Service (FWS) pursuant to the Endangered Species Act (ESA). The challenged regulation restricts, but does not prohibit, the take of Utah prairie dogs, a listed threatened species, on non-federal land. The U.S. District Court of Utah granted PETPO’s request for summary judgment on the basis that neither the Commerce Clause nor the Necessary and Proper Clauses authorizes Congress to regulate the take. The FWS and Friends of Animals (FoA), as intervenors, appealed. Together they argue, that PETPO lacks standing and the challenged regulation is Constitutional. The Tenth Circuit agreed with the district court on the issue of standing, but concluded that the district court erred in its conclusion that the regulation was not authorized by the Commerce Clause. The court did not address whether the regulation was not authorized by Necessary and Proper Clause.

The Tenth Circuit first considered the issue of standing de novo. The parties disagreed whether the PETPO had sufficient standing for the summary judgment stage. The parties agreed that PETPO suffered an injury in fact that was traceable to the actions of defendant, but disagreed about whether PETPO’s injury would be redressable. PETPO claimed that the regulation was unduly burdensome and requested declaratory and injunctive relief, which “pertain to any federal prohibition on the take of Utah prairie dogs on nonfederal land.” The Tenth Circuit found that PETPO had standing, since the Necessary and Proper and Commerce clauses allow Congress to regulate the take.

The Tenth Circuit found that the district court erred in holding that the challenged regulation was not permissible under the Commerce Clause. The court held that “[R]egulation on nonfederal land of take of a purely intrastate species, like the Utah prairie dog, under the ESA is a constitutional exercise of congressional authority under the Commerce Clause.” The court applied the framework established by the Supreme Court in Gonzales v. Raich and found (1) the ESA to be a comprehensive regulatory scheme substantially affecting commerce; and (2) Congress had a rational basis to believe that the regulation at issue is an essential part of that scheme.

Here, the “[R]egulation of take of endangered and threatened species is directly related to—indeed, arguably inversely correlated with—economic development and commercial activity.” This is because Congress intended the ESA to conserve species, restrict commerce, and thereby promote long-term commerce. Further, the Commerce Clause authorizes Congress to regulate commerce, which includes “the power to prohibit commerce.”

Remaining was the question of whether regulation of a purely intrastate species, such as the Utah prairie dog, is authorized within the Raich framework. Here, the court reasoned that the majority of species protected by the ESA are intrastate. If this particular regulation is viewed in isolation as PETPO proposed, the “[p]iecemeal excision of purely intrastate species would severely undercut the ESA’s conservation purposes.” Further, this approach was foreclosed by Raich because it “[w]ould lead to just such a lingering death for the ESA—and likely for other regulatory schemes—insofar as every individual regulation passed within a larger regulatory scheme would be subject to a narrowly applied substantial effects test.” Therefore, “[C]ongress had a rational basis to conclude that providing for the protection of purely intrastate species is essential to the ESA’s comprehensive regulatory scheme.”

The court REVERSED and REMANDED with instructions to enter judgment in favor FWS and FoA.

Tenth Circuit: Commerce Clause Does Not Protect Creator of Child Pornography

The Tenth Circuit Court of Appeals issued its opinion in United States v. Humphrey on Wednesday, January 18, 2017.

Reginald Humphrey was convicted of the rape and forcible sexual abuse of his live-in girlfriend’s stepdaughter and sentenced to five years’ imprisonment. During the state’s investigation into the abuse claims, police found photographs and videos depicting the abuse on Humphrey’s computer. Subsequent to his conviction on the abuse claims, a grand jury indicted Humphrey on one count of producing child pornography in violation of 18 U.S.C. § 2251(a).

Section 2251(a) prohibits a minor from engaging in sexually explicit conduct to create a visual depiction of such conduct if it was made with materials that have been mailed, shipped, or transported via intrastate commerce. The court stated that there is no doubt § 2251(a) applies to Humphrey’s conduct in this case. Humphrey conditionally pleaded guilty to the charge, and reserved his right to appeal the district court’s ruling, arguing that the application of § 2251(a) to his solely intrastate activities violated the commerce clause as he did not distribute or share the child pornography across state lines.

The Tenth Circuit had to determine if the previous decisions of the court upholding the application of § 2251(a) to the production of child pornography were invalidated by the Supreme Court decision in National Federation of Independent Business v. Sebelius. While Humphrey acknowledges the court’s holding in United States v. Jeronimo-Bautista that the application of § 2251(a) to the intrastate production of child pornography did not violate the commerce clause, he argues the holding should be overturned in light of the ruling in NFIB, which rejected congress’s regulation of an individual’s inactivity in the market.

The court rejected Humphrey’s argument that NFIB should apply, as the NFIB case involved an individual’s failure to engage in a commercial activity where Congress had mandated action, while Humphrey’s case involved no requirement to act by Congress. The court states that this distinguishes Humphrey’s case from NFIB, because, “here, Humphrey didn’t fail to produce child pornography; he actively engaged in producing it.” The court states that because the NFIB case has no affect on Congress’s ability to regulate interstate commerce, they are bound by their previous holding in Jeronimo-Bautista.

The court affirmed the district court’s denial of Humphrey’s motion to dismiss.

Colorado Court of Appeals: Dormant Commerce Clause Not Violated Where Defendant Interacted with Colorado Investigator

The Colorado Court of Appeals issued its opinion in People v. Helms on Thursday, June 16, 2016.

Internet Child Exploitation Statute—CRE 404(b)—Bad Act Evidence—Evidence—Probation Revocation.

Defendant was convicted of two counts of Internet exploitation of a child. He was sentenced to 10 years of supervised probation on each count. The district court later revoked his probation when he failed to register as a sex offender and resentenced him for an indeterminate term of two years to life.

On appeal, defendant contended that the Internet child exploitation statute, C.R.S. § 18-3-405(1)(a), is facially unconstitutional for several reasons. The Court of Appeals disagreed. The statute does not violate the dormant Commerce Clause of the U.S. Constitution because the statute is limited to situations in which the criminal conduct occurs either wholly or partially in Colorado. It also does not violate the First Amendment because it is not overly broad, and it does not violate defendant’s constitutional right to due process because it is not vague.

Defendant also contended that the district court erred by admitting a statement he made, arguing that it was CRE 404(b) bad act evidence. However, the statement was not admitted as evidence of defendant’s bad character; rather, it directly rebutted his defense. Therefore, the district court did not err by admitting this evidence.

Defendant additionally argued that the evidence was insufficient to support his convictions. He argued that his conviction for count one was not supported by sufficient evidence because the jury was instructed that he must have committed the crime in Colorado to be guilty of child exploitation. However, the sufficiency of the evidence is measured against the elements of the offense rather than jury instructions. The child exploitation statute does not require that the actor be in Colorado at the time of the criminal communication. As to the second count, defendant’s conduct did not meet the requirements of the essential elements of the offense. Therefore, this conviction was reversed.

Defendant also argued that the district court erred by denying his motion for a mistrial after a witness testified about an inadmissible matter. Defense counsel elicited the statement from the witness, and although it was prejudicial, the court offered to give a curative instruction to the jury, which defense counsel declined. Therefore, the district court did not abuse its discretion by denying the motion for a mistrial.

Lastly, defendant contended that the district court’s revocation of his probation must be reversed because the district court did not adhere to the applicable statutory requirements. There was not sufficient evidence that defendant waived his right to be advised by the court through counsel, or that he was advised of potential penalties before the probation revocation hearing. In addition, the district court revoked defendant’s probation without obtaining and considering treatment and monitoring recommendations from defendant’s probation officer or treatment provider, as required by statute. Therefore, the district court’s revocation of defendant’s probation was reversed.

The judgment was affirmed in part and reversed in part, and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Renewable Energy Mandate Does Not Require Discriminatory Price Fixing Against Out-of-State Providers

The Tenth Circuit Court of Appeals issued its opinion in Energy & Environment Legal Institute v. Epel on Monday, July 13, 2015.

Colorado voters passed a ballot initiative requiring electricity generators to ensure that 20% of the electricity they sell to Colorado comes from renewable sources. Colorado receives its electricity from an interconnected grid serving 11 states and portions of Canada and Mexico. Electricity can go anywhere on the grid and come from anywhere on the grid. Colorado consumes more energy than it delivers, meaning that some out-of-state coal producers will lose business with out-of-state utilities who feed their power onto the grid. The Energy & Environment Legal Institute (EELI), on behalf of its client energy producer, brought suit in district court, arguing that Colorado’s renewable energy mandate violates dormant commerce clause jurisprudence. The district court ruled against EELI and it appealed.

The Tenth Circuit analyzed dormant or negative commerce clause jurisprudence, likening it to antitrust laws. EELI limited its appeal to the Baldwin test (see Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935)), which applies to certain price control laws controlling “extraterritorial” conduct and requires per se invalidation of the laws. EELI argued Colorado’s renewable energy mandate was such a law because it might result in fossil fuel providers being eliminated from the marketplace. The Tenth Circuit disagreed. The Tenth Circuit found no support for the proposition that Colorado’s renewable energy mandate would negatively affect prices for out-of-state consumers of fossil fuels, finding instead that the mandate was almost certain to raise energy prices in Colorado and may result in lower fossil fuel prices for out-of-state consumers. Since the Tenth Circuit read the dormant commerce clause jurisprudence as preventing discrimination against out-of-state rivals or consumers, there was no support for EELI’s argument against Colorado’s renewable energy mandate, noting that Colorado’s mandate did not directly impact pricing in Colorado or elsewhere.

The Tenth Circuit affirmed the district court.

Tenth Circuit: SORNA is a Proper Exercise of Congress’s Commerce Clause Power

The Tenth Circuit Court of Appeals issued its opinion in United States v. White on Monday, April 6, 2015.

James White took indecent liberties with the 7-year-old daughter of his girlfriend in North Carolina in 2005. When the Sex Offender Registration and Notification Act (SORNA) was implemented in 2007, it applied to all convictions, including those that occurred prior to its passage. In 2013, Mr. White moved from Oklahoma to Texas without updating his SORNA registration or registering in Texas. He was charged in Oklahoma with failing to register as a sex offender. Mr. White moved to dismiss the indictment, arguing that SORNA violates the Commerce Clause, the Tenth Amendment, and the Ex Post Facto Clause. The district court denied his motion, and Mr. White entered a conditional guilty plea, reserving his right to appeal the denial of the motion to dismiss and his sentence.

The district court adopted the probation office’s Presentence Investigation Report (PSR), which treated Mr. White as a Tier III offender and assigned an offense level of 13 after credits. His sentencing range was 18 to 24 months, and the district court sentenced him to 18 months, overruling his objection to the tier classification. The district court also imposed special conditions of supervised release, including prohibiting Mr. White from being at a residence where any person under the age of 18 reside without prior approval from the probation office and requiring a responsible adult who was aware of Mr. White’s history to be present at all such approved visits. Mr. White timely appealed, reiterating his argument that SORNA violates the Commerce Clause, the Tenth Amendment, and the Ex Post Facto Clause. Mr. White also appealed his sentence, arguing he was incorrectly classified as a Tier III offender and challenging the special conditions.

The Tenth Circuit first addressed the Commerce Clause argument, noting it rejected a similar argument in United States v. Hinckley. Mr. White argued that Hinckley was wrongly decided and that it was superseded by the Supreme Court in National Federation of Independent Businesses v. Sebelius (NFIB). The Tenth Circuit first noted that in Hinckley it held the third prong of the Commerce Clause was unnecessary to determine SORNA’s constitutionality since it was confirmed by the first two prongs. Next, the Tenth Circuit examined NFIB in detail, distinguishing its holding in Hinckley because NFIB discussed only the third prong of the Commerce Clause. The Tenth Circuit found that SORNA is a proper exercise of Congress’s Commerce Clause power.

Turning next to Mr. White’s argument that SORNA violated the Ex Post Facto Clause, the Tenth Circuit similarly disagreed, relying on prior Tenth Circuit precedent in United States v. Lawrance, which squarely addressed the same issue. Lawrance upheld SORNA because it is a regulatory statute and criminal penalties apply only for future conduct, not retroactively. The Tenth Circuit then turned to Mr. White’s argument that SORNA violates the Tenth Amendment by directing state officials to implement a federally mandated program. The Tenth Circuit found no constitutional violation, because states retain the authority to opt-out of regulation under SORNA even if they must forego federal funding to do so.

Mr. White’s fourth contention on appeal averred that he was wrongly classified as a Tier III offender and therefore his sentence is procedurally unreasonable. The Tenth Circuit agreed. The Tenth Circuit found the district court should have applied a categorical approach in order to determine Mr. White’s sentencing tier, but it instead applied a circumstance-specific approach, rendering Mr. White’s sentence procedurally unreasonable and requiring reversal. On remand, the Tenth Circuit directed the district court to classify Mr. White as a Tier I offender. The Tenth Circuit addressed Mr. White’s arguments related to the special conditions in order to guide the district court on remand, and noted that further findings were necessary to determine whether Mr. White had a parental or parental-like relationship with his minor grandchildren and nieces that would require express findings of compelling circumstances.

The Tenth Circuit affirmed the district court’s denial of Mr. White’s motion to dismiss but reversed his sentence, remanding for further findings.

Tenth Circuit: Tax Injunction Act Precluded Federal Jurisdiction in Colorado’s E-Commerce Use Tax Reporting Requirements Case

The Tenth Circuit Court of Appeals published its opinion in Direct Marketing Ass’n v. Brohl on Tuesday, August 20 2013.

Colorado imposes a 2.9% use tax on tangible goods stored, used, or consumed in the state when no sales tax has been paid. Because the dormant Commerce Clause prohibits Colorado from forcing retailers with no in-state physical presence to collect and remit taxes on sales to Colorado consumers, the state requires its residents to report and pay use taxes to the Department with their income tax returns. In 2010 the Colorado legislature enacted statutory requirements for non-collecting retailers. The statute and its implementing regulations impose three principal obligations on non-collecting retailers whose gross sales in Colorado exceed $100,000: they must (1) provide transactional notices to Colorado purchasers, (2) send annual purchase summaries to Colorado customers, and (3) annually report Colorado purchaser information to the Department.

The Direct Marketing Association (DMA) sued the Department of Revenue’s executive director, challenging the constitutionality of the state’s new notice and reporting requirements. The district court concluded that Colorado’s requirements for non-collecting retailers discriminated against and placed undue burdens on interstate commerce, in violation of the Commerce Clause and entered a permanent injunction prohibiting enforcement of the state requirements. The Department appealed.

The Tenth Circuit did not reach the Commerce Clause issue on appeal because it held that the Tax Injunction Act (TIA) precluded federal jurisdiction over DMA’s claims. The TIA provides that “district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.”

The DMA argued that it sought to avoid notice and reporting obligations, not a tax, so the TIA did not apply. The court disagreed. “The purposes of the TIA apply both to a lawsuit that would directly enjoin a tax and one that would enjoin a procedure required by the state’s tax statutes and regulations that aims to enforce and increase tax collection.” The court also found that a plain, speedy and efficient remedy is available to retailers subject to the Colorado law.

The court remanded to the district court to dismiss DMA’s Commerce Clause claims for lack of jurisdiction and to dissolve the permanent injunction.