The opinion of the court was delivered by: NEAL P. MCCURN
MEMORANDUM-DECISION AND ORDER
"Once again, a little fish has caused a commotion." Maine v. Taylor, 477 U.S. 131, 132, 106 S. Ct. 2440, 2444, 91 L. Ed. 2d 110 (1986) (and cases cited therein). Although those words were not written with this case in mind, they certainly could have been. This time though a great commotion has been caused by tiny salmon eggs.
The defendants Robert J. Gehl, Tempotech Industries, Inc., Gehl Productions, Inc.
and George Jackson,
are engaged in the business of, among other things, processing, distributing and selling fish eggs on an interstate and international basis. The Gehl defendants have processing plants in six states, including New York and Michigan. The indictment charges that all of the defendants were engaged in a scheme whereby they obtained salmon eggs near Tempotech's Pulaski, New York facility and processed those eggs into caviar. After that the caviar was transported to another of Tempotech's facilities in Hart, Michigan, so that the defendants allegedly could obscure the caviar's place of origin - New York State. The indictment further charges that the caviar was then returned to wholesale and retail facilities in Brooklyn, New York, and elsewhere, and eventually it was sold to "residents of New York State, among others." Indictment at P 3. Under the government's version of events, defendants engaged in this plan because they knew that it was prohibited to sell for human consumption salmon eggs taken from certain New York State waters.
On September 1, 1993, the defendants were named in a 25 count indictment. That indictment can be easily divided into two parts. The first six counts charge the defendants with violating the Lacey Act Amendments of 1981 ("the Lacey Act" or "the Act"), 16 U.S.C. § 3371 et seq.3 Counts seven through twenty-five charge only the Gehl defendants with violating certain laws pertaining to the filing of Cash Transaction Reports. Today the court is only concerned with the first six counts of the indictment - the Lacey Act counts.
Relatively speaking, Lacey Act prosecutions are not commonplace. A glance at the Act's legislative history, particularly with respect to the 1981 Amendments, provides some insightful background. Passed in 1990, the Lacey Act was one of this country's first federal wildlife laws. S. Rep. No. 97-123, 97th Cong., 1st Sess., at 2 (1981) reprinted in, U.S. Cong. & Admin. News vol. 3 at 1749 (1981). "It was viewed then, and should be viewed now, not as increasing the Federal role in managing wildlife, but as a Federal tool to aid the States in enforcing their own laws concerning wildlife." Id. When Congress amended the Lacey Act in 1981 it did so "to provide comprehensive enforcement of wildlife laws and regulations established by state and local entities." United States v. Big Eagle, 881 F.2d 539, 540-541 (8th Cir. 1989), cert. denied, 493 U.S. 1084, 110 S. Ct. 1145, 107 L. Ed. 2d 1049 (1990). This Congressional intent is manifested in Senate Report No. 97-123, which states, in part:
Enforcement of these laws is important both to ensure that endangered species are not further threatened with extinction, and to afford management of healthy wildlife populations for hunting and other recreational purposes * * * S. 736 would not constitute a broadening of federal authority under the Act, but merely would allow the federal government to provide more adequate support for the full range of state, foreign, and federal laws that protect wildlife.
Id. at 540 (quoting S.Rep. No. 97-123, 97th Cong., 1st Sess., at 2-4 (1981) (accompanying 95 Stat. 1073), reprinted in, U.S. Cong. & Admin. News vol. 3 at 1748, 1749-1751 (1981)).
Perhaps of more significance to the present case is that in amending the Lacey Act, Congress also intended "to deal with 'massive illegal trade in fish and wildlife and their parts and products.'" United States v. Carpenter, 933 F.2d 748, 751 (9th Cir. 1991) (quoting S.Rep. No. 123, 97th Cong., 1st Sess. 4, reprinted in 1981 U.S. Code Cong. & Admin. News 1748, 1751).
To further these legislative ends, the Lacey Act makes it a federal crime to "to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce . . . any fish or wildlife taken, possessed, transported, or sold in violation of any law or regulation of any State[.]" See 16 U.S.C. § 3372(a)(2)(A) (West 1985). The defendants are charged with violating, among other things, this provision of the Act. The indictment also charges defendants with violating section 3373(d)(1)(B) of the Act.
The court admits to being somewhat perplexed by this alleged violation because at least on its face section 3373(d)(1)(B) just sets forth the criminal penalties for violations of certain Lacey Act provisions, such as section 3372(a)(2)(A). It does not independently proscribe any certain conduct under the Act.
In any event, this case has spawned a host of motions and on March 15, 1994, the court heard oral argument with respect thereto. Two of those motions are the subject of the court's decisions today
- the defendants' motion to dismiss counts one through six of the indictment, the Lacey Act counts, and the government's motion to disqualify all defense counsel.
In the present action, the Lacey Act counts are predicated upon a New York State statute, N.Y. Envtl. Conserv. Law § 11-0107(2) (McKinney 1984),
and a New York State regulation, 6 N.Y.C.R.R. § 37.1 ("section 37.1"). This motion to dismiss focuses only upon whether the Lacey Act counts are sustainable based upon section 37.1. The defendants offer three separate reasons as to why, in their view, the court has no choice but to dismiss the Lacey Act counts:
(1) section 37.1 is unconstitutional; (2) the DEC exceeded the scope of its authority in promulgating that regulation; and (3) section 37.1 was improperly promulgated. The court will first address the constitutional argument.
The Commerce Clause of the United States Constitution grants Congress the power "to regulate Commerce . . . among the several States." Art. I, § 8, cl. 3. Just recently, the Supreme Court explained, as it has on prior occasions, "though phrased as a grant of regulatory power to Congress, the [Commerce] Clause has long been understood to have a 'negative' aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce." Oregon Waste Systems, Inc. v. Department of Environmental Quality, U.S. , , 114 S. Ct. 1345, 1349, 128 L. Ed. 2d 13 (1994) (citations omitted). "The Framers granted Congress plenary authority over interstate commerce in 'the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation.'" Id. at *11 (quoting Hughes v. Oklahoma, 441 U.S. 322, 325-326, 60 L. Ed. 2d 250, 99 S. Ct. 1727 (1979) and citing The Federalist No. 42 (J. Madison)). "'This principle that our economic unit is the Nation, which alone has the gamut of powers necessary to control of the economy, . . . has as its corollary that the states are not separable economic units." Id. (quoting H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 537-53, 93 L. Ed. 865, 69 S. Ct. 657 (1949)).
It is against this historical backdrop that the court must view the parties' respective Commerce Clause arguments.
Section 37.1 states in relevant part:
Regulation prohibiting the sale of certain fishes taken from Lake Ontario, its tributaries and the St. Lawrence River. (a) No person shall sell, offer for sale or expose for sale the listed species of fish or parts thereof, except for eggs of chinook and coho salmon which may be sold only by sport fishermen for use as bait, taken from Lake Ontario and its tributaries upstream to the first barrier impassable by fish and the St. Lawrence River, . . . .
Defendants' exh. A (copy of 6 N.Y.C.R.R. § 37.1) (emphasis in original). The defendants strenuously contend that section 37.1 violates the Commerce Clause because it "has the effect of directly regulating activity occurring wholly outside the State of New York[.]" Memorandum of Law in Support of Gehl Defendants' Motion to Dismiss ("Gehl Defendants Memorandum") at 4. They further contend that section 37.1 violates the Commerce Clause because it "burdens interstate commerce when less restrictive means are available to accomplish the purported governmental interest." Id. Implicit in these contentions is the assumption that in ascertaining whether section 37.1 passes constitutional muster, the court should apply a heightened or stricter level of scrutiny.
The government responds that section 37.1 does not discriminate against interstate commerce, and if so it does so only incidentally. The government goes so far as to claim that not only is section 37.1 not discriminatory, but it has just the opposite effect, reasoning: "By enacting regulations to protect the health and welfare of its citizens, New York State forgoes financial opportunities which other states with lesser contamination problems enjoy." United States' Response to Motion to Dismiss ("United States' Response") at 17. Thus, the government strongly urges application of what is sometimes referred to as the Pike balancing test, after the Supreme Court case of the same name. See Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S. Ct. 844, 25 L. Ed. 2d 174 (1970). Under that approach, when a given regulation or statute effects interstate commerce only incidentally, it "will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Id. at 142, 90 S. Ct. at 847.
Given these divergent views, the court's first task on this motion is to decide which level of scrutiny should be utilized in considering whether section 37.1 violates the Commerce Clause. As the foregoing demonstrates, to do that the court must first determine in what way, if at all, the challenged regulation burdens interstate commerce. See Oregon Waste Systems, supra U.S. at , 14 S. Ct. at 1350 (quoting Hughes, supra, 441 U.S. at 336, 99 S. Ct. at 1736) (other citation omitted) ("we have held that the first step in analyzing any law subject to judicial scrutiny under the negative Commerce Clause is to determine whether it 'regulates evenhandedly with only 'incidental effect on interstate commerce, or discriminates against interstate commerce.'"). Once that issue is resolved, the applicable test will become apparent.
Because of its factual similarities to the present case, and because of the relative paucity of case law involving Commerce Clause challenges to Lacey Act prosecutions, the court is compelled to discuss in some detail a seminal Supreme Court Lacey Act case, Maine v. Taylor, supra. The Supreme Court in Taylor engaged in a Commerce Clause analysis of the Lacey Act Amendments of 1981 - the federal statute which forms the basis for the first six counts of the indictment herein. The controversy in Taylor centered on whether Maine's statutory ban on the importation of live baitfish unconstitutionally burdened interstate commerce, such that it should not be permitted to form the basis for a Lacey Act prosecution. Explaining that two different tests have emerged to determine whether a state statute or regulation is constitutional under the Commerce Clause, the Court distinguished between statutes that burden interstate commerce only incidentally and those that affirmatively discriminate against interstate commerce:
while statutes in the first group violate the Commerce Clause only if the burdens they impose on interstate trade are "clearly excessive in relation to the putative local benefits," Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970), statutes in the second group are subject to more demanding scrutiny. The Court explained in Hughes v. Oklahoma, 441 U.S. , at 336, [441 U.S. 322, 99 S. Ct. 1727, 60 L. Ed. 2d 250 (1979),] that once a state law is shown to discriminate against interstate commerce 'either on its face or in practical effect,' the burden falls on the State to demonstrate both that the statute 'serves a legitimate local purpose,' and that this purpose could not be served as well by available nondiscriminatory means. . . . .
477 U.S. at 138, 106 S. Ct. at 2447 (other citations omitted); see also Chemical Waste Management, Inc. v. Hunt, U.S. , , 112 S. Ct. 2009, 2014, 119 L. Ed. 2d 121 (1992); Fort Gratiot Sanitary Landfill, Inc., U.S. , 112 S. Ct. 2019, 2027, 119 L. Ed. 2d 139 (1992).
In Taylor the statute under attack "restricted interstate trade in the most direct manner possible, blocking all inward shipments of live baitfish at the State's border." Id. at 137, 106 S. Ct. at 2447. Thus, the Supreme Court upheld application of "the strict requirements of Hughes v. Oklahoma, notwithstanding Maine's argument that those requirements were waived by the Lacey Act Amendments of 1981." Id. at 138, 106 S. Ct. at 2447. Citing several factors, including the prevalence of three types of parasites in out-of-state baitfish which were not common to Maine baitfish, and the fact that non-native species which accidently commingle with shipments of baitfish "could disturb Maine's aquatic ecology to an unpredictable extent[,]" the Court found that Maine had a legitimate reason, apart from origin, to discriminate against out-of-state baitfish. Id. at 141, 106 S. Ct. at 2448. The Court further found that Maine established that there were not alternative means available to protect its baitfish supply, because it was nearly impossible to inspect baitfish shipments for parasites and commingled species. Id. at 146-147, 106 S. Ct. at 2451-252. In reaching that conclusion, the Court reasoned:
More importantly, we agree with the District Court that the 'abstract possibility, . . . , of developing acceptable testing procedures, particularly when there is no assurance as to their effectiveness, does not make those procedures an 'available . . . nondiscriminatory alternative.' . . . , for purposes of the Commerce Clause.
Id. at 147, 106 S. Ct. at 2452 (citation omitted). The Court also noted its agreement "with the District Court that Maine has a legitimate interest in guarding against imperfectly understood environmental risks despite the possibility that they may ultimately prove to be negligible." Id. at 148, 106 S. Ct. at 2452. Thus, in Taylor even though the environmental argument fell far short of being ironclad, nonetheless, the Supreme Court was willing to uphold a blatantly discriminatory state statute.
Initially the burden is on the party making a Commerce Clause challenge, here the defendants, to show that the legislation discriminates against interstate commerce on its face or in its purpose and effect. Hughes v. Oklahoma, 441 U.S. at 336, 99 S. Ct. at 1736. As the Supreme Court has observed, however, "there is no 'clear line' separating close cases on which [level] of scrutiny should apply[.]" Wyoming v. Oklahoma, U.S. , , 112 S. Ct. 789, 800 n. 12, 117 L. Ed. 2d 1 (quoting Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573, 579, 106 S. Ct. 2080, 2084, 90 L. Ed. 2d 552 (1986)). As will be seen, the present case is close in terms of deciding to which level of scrutiny section 37.1 should be subjected for purposes of analysis under the Commerce Clause.
Plainly, section 37.1 does not discriminate against out of state concerns on its face. The defendants seemed to concede this much when, at oral argument, they described this regulation as being "sterile." The court agrees with this characterization. Section 37.1 draws no distinction between New York residents and non-New York residents; it is a flat out prohibition against the sale by anyone (residents and non-residents alike) of salmon eggs from certain New York State waters, for use other than as bait. Section 37.1 does no more than ban the sale of such eggs, for use other than as bait, irrespective of the residency of the person attempting to sell the same. Nor does the challenged regulation specify a different application depending upon the residency of the "sport fishermen." Thus, this regulation is not protectionist in the most direct sense. Hence, because this regulation does not on its face "affirmatively discriminate" against interstate commerce, it does not automatically trigger a heightened level of judicial scrutiny. Maine v. Taylor, 477 U.S., at 38, 106 S. Ct. at 2447; see Hertz Corp. v. City of New York, 1 F.3d 121, 131 (2d Cir. 1993). The court's inquiry cannot end at this point however. Absence of facial discrimination does not necessarily save section 37.1 from being held to a stricter level of scrutiny under the Commerce Clause.
As the Supreme Court recognized in Taylor, a "more demanding scrutiny" is also mandated where the regulation is "shown to discriminate . . . in practical effect[.]" Id. Therefore, the court must next focus on whether section 37.1 has the "practical effect" of discriminating against interstate commerce because, as the defendants vigorously contend, it "directly regulates commercial conduct occurring beyond the boundaries of the regulating state [New York][.]" Gehl Defendants' Memorandum at 5. The government responds that the regulation does not have the "practical effect" of discriminating against interstate commerce because the regulation "contains no discrimination or benefit in favor of New York State or its residents." United States' Response at 17. Indeed, at oral argument the government again stressed that any economic benefit which could possibly be derived from section 37.1 inures to the benefit of other states. That is so reasons the government because in the absence of contaminants such as those which purportedly motivated the enactment of section 37.1 other states are free to exploit their salmon resources in any way they see fit; and thus are able to enjoy the concomitant financial rewards which are unavailable to New York residents.
The Supreme Court's decision in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S. Ct. 3049, 82 L. Ed. 2d 200 (1984), soundly dispels that notion, however. In Bacchus, the Supreme Court found a statute exempting certainly locally-produced alcoholic beverages from a 20 percent excise tax on wholesale liquor sales to be "clearly discriminatory," id. at 271, 104 S. Ct. at 3055, "despite the fact that the out-of-state plaintiffs were 'free to take advantage of the benefit of the exemption by selling the exempted products themselves.'" Id. at 278, 104 S. Ct. at 3058 (Stevens, J., dissenting). Thus, after Bacchus, in the court's view the government places too much emphasis on the fact that section 37.1 supposedly operates to benefit out-of-state residents and not to discriminate against them.
What is more, the government seemingly did not look beyond the face of section 37.1; because when that is done it can be seen that this regulation has the "practical effect" of discriminating against interstate commerce, but not precisely for the reason urged by the defendants. The defendants assert that section 37.1 has the "practical effect" of discriminating against interstate commerce because it regulates conduct occurring wholly outside New York State. That regulation does not purport to regulate conduct occurring wholly outside New York State though, especially when the unique facts of this case are considered. The indictment describes the alleged scheme as involving significant activities within New York State, such as the processing of New York salmon eggs, and their distribution for resale within this State. Thus, section 37.1, particularly as it applies to this case, cannot be read as regulating conduct occurring wholly outside New York State. Furthermore, the Lacey Act counts in the present case are not based upon defendants' residency, or their sale of eggs outside New York State,
they are based on the fact that section 37.1 bans the sale of salmon ...