In a recent mixed decision that some news outlets reported as a win for art and antique dealers and others described as a win for conservationists, the United States Court of Appeals for the Second Circuit held that the federal Endangered Species Act and its implementing regulations do not preempt the New York State Environmental Conservation Law § 11-0535-a (the “New York State Ivory Law”), but that the New York State Ivory Law’s “Display Restriction” violates the First Amendment.[1]

  1. Background
  1. Relevant Law

The federal Endangered Species Act (“ESA”) addresses commerce in products made from endangered and threatened species, restricting their import, export, sale or movement in interstate and foreign commerce.[2]  Regulations implementing the ESA promulgated by the United States Fish and Wildlife Service  classify Asian elephants and most rhinoceros species as “endangered,”[3] and African elephants as “threatened.”[4]  Exceptions to the ESA permit the import and sale from products made of endangered or threatened species, including ivory, under certain conditions.  For example, the ESA allows the import of “antique articles” into the United States with a permit if they are at least 100 years old (the “Antiques Exception”).[5]  Another exception to the ESA, known as the “De Minimis Exception,” allows the sale  of items containing “de minimis” amounts of ivory.  Specifically, (1) the ivory cannot make up more than 50 percent of the object’s volume or value; (2) the total weight of the ivory component must be less than 200 grams; and (3) the object must have been manufactured or handcrafted before July 6, 2016.[6]  

The New York State Ivory Law likewise restricts the sale, trade and distribution of ivory articles and rhinoceros horns in New York, and is more restrictive than the federal statute.[7]   New York requires a permit or license from the State’s Department of Environmental Conservation (the “DEC”) for the sale, trade, barter or distribution of legally acquired ivory articles and rhinoceros horns.[8]  The DEC only issues licenses or permits if the ivory item falls into one of the narrow exceptions to the New York State Ivory Law, including if the item is a “bona fide antique” (the “New York Antiques Exception”).  To qualify as a “bona fide antique,” an item must be at least 100 years old, and the ivory or horn component must make up less than twenty percent of the item’s total volume.[9]  Unlike the federal law, the New York State Ivory Law contains no de minimis exception for items that are not antiques.   New York’s licenses also impose certain restrictions, including a “Display Restriction,” which prohibits licensees from “physically display[ing] for sale within New York State any item that is not authorized for Intrastate sale.”[10]  Licensees may advertise ivory items in print or online if they post a notice next to the picture or item description stating that it may not be purchased or sold within the State of New York.[11]

  1. Procedural History

As previously reported on this blog, in 2019, two trade groups of New York-based art and antiques dealers—the Art and Antique Dealers League of America, Inc. and the National Antique and Art Dealers Association of America, Inc. (the “Dealers Associations”)—brought claims against the Commissioner of the DEC, in the United States District Court for the Southern District of New York, challenging the constitutionality of the New York State Ivory Law and DEC licenses issued pursuant to that law.[12]  The Humane Society of the United States, the Center for Biological Diversity, the Natural Resources Defense Council, Inc., and the Wildlife Conservation Society (the “Intervenors”) intervened as defendants.  

The Dealers Associations brought claims for express and implied preemption and violations of the First Amendment, and sought the following relief:  (1) a declaratory judgment that the New York State Ivory Law is unconstitutional, and (2) a permanent injunction preventing the DEC from enforcing it.  The Dealers Associations filed a motion for summary judgment, and the DEC and Intervenors cross-moved to dismiss.  The District Court sustained the Dealers Associations’ First Amendment claim and dismissed their preemption claim.[13]  Following discovery, the District Court granted summary judgment to the DEC on the Dealers Associations’ First Amendment claim.[14]  In March 2021, the Dealers Associations appealed to the United States Court of Appeals for the Second Circuit. 

  1. The Second Circuit’s Decision

On November 13, 2024, the Second Circuit affirmed the District Court’s dismissal of the Dealers Associations’ preemption claim, but reversed the District Court’s grant of summary judgment to the DEC on the First Amendment claim.[15]  

First addressing the preemption claim, the Second Circuit observed that, under the doctrine of federal preemption, “state and local laws that conflict with federal law are without effect.”[16] The Second Circuit addressed two types of preemption:  express and conflict.  Express preemption occurs where a federal statute contains an express preemption provision,[17] which the ESA does.[18]  The Dealers Associations argued that the ESA’s preemption clause contains “exceedingly broad” language that voids any state law that is more restrictive than the ESA.[19]  The Second Circuit disagreed, finding that the clause “voids state law only to the extent that it ‘may effectively prohibit what is authorized pursuant to an exemption or permit provided for under this chapter . . . .’”[20]  The Second Circuit reasoned that exceptions to the ESA—including the De Minimis and Antiques Exceptions—are not the same as exemptions or permits.  While an exemption or permit may be a subcategory of an exception, the Second Circuit explained, the reverse is not true.[21]  Looking to other subsections of the ESA and its legislative history,[22] the Second Circuit held that, “[b]ecause neither the De Minimis Exception nor the Antiques Exception is an ‘exemption or permit,’ the ESA’s preemption clause does not void state statutes that prohibit conduct that those exceptions carve out from the scope of the statute’s prohibitions.”[23]

The Second Circuit also briefly addressed conflict preemption, pursuant to which federal law preempts state law where it “is impossible for a private party to comply with both state and federal law” and where the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”[24] The Second Circuit observed that, although the New York State Ivory Law restriction on intrastate sales could “make it much less profitable to be an interstate ivory dealer in New York,” it does not prevent dealers from conducting interstate or foreign sales in accordance with the ESA.   The Second Circuit thus found no basis to conclude that the New York State Ivory Law undermines the regulatory scheme established in federal law.[25]

The Second Circuit next addressed the Dealers Associations’ constitutional argument, holding that the New York State Ivory Law’s Display Restriction violates the First Amendment.  Importantly, the DEC and Intervenors conceded that the Display Restriction restrains commercial speech, and that display of an ivory product to a potential customer in aid of making a sale constitutes protected speech under the First Amendment.[26]  Because of that concession, the Second Circuit “assume[d] for the resolution of th[e] case that the restriction affects speech and implicates the First Amendment without establishing a precedent to that effect.”[27]  The Second Circuit’s decision thus turned on whether New York’s Display Restriction passed the Supreme Court’s test for constitutional restraints on commercial speech established in its 1980 decision in Central Hudson Gas & Electric Corporation v. Public Service Commission.[28]  In particular, the Second Circuit focused on whether the New York’s Display Restriction was “no more extensive than necessary” to serve the government interest of stopping illegal sales of ivory goods in New York.[29]  The DEC contended that the Display Restriction served that government interest because, “if the object for sale, the buyer, and the seller were all physically present in the same location, the risk that the seller would purchase the item on the spot, thereby engaging in an illegal intrastate sale, would be high.”[30]  By preventing the seller from displaying the ivory object for the buyer’s inspection, the DEC argued, the Display Restriction prevents the “immediate consummation” of an illegal sale.[31]

The Second Circuit disagreed with the DEC, finding that the Display Restriction was “more extensive than necessary to serve the State’s interest.”[32] The Display Restriction prevents “any display of the product for sale, including ivory goods for lawful interstate or international sale.”[33] As an example, the Court noted, if a New Jersey customer is interested in a product offered by a New York dealer, and that customer wants to inspect the item before purchase, that customer cannot travel to New York to see that item before purchasing and they must instead arrange for a viewing of the item outside of New York state. The Court found that, even though potential customers can view items in print or online, those modes of communication “fail to convey adequately information needed by purchasers about the items’ quality and authenticity, two factors that are likely of great importance to interested buyers.”[34] The court thus held that, because the Display Restriction “prohibits the communication of information that is crucially important to a potential lawful buyer (namely, the quality and authenticity of the item offered for lawful sale) within the State,” the restriction places an “excessive burden” on speech.[35]  Accordingly, the Second Circuit ruled that the Dealers Associations were entitled to an injunction barring enforcement of the Display Restriction against their members.  

  1. The Takeaway

The Second Circuit’s decision in this case leaves room for another court to reach a different outcome on both the preemption and First Amendment issues.  The preemption ruling turned on specific statutory interpretation and analysis—looking to both the text and the legislative history of the ESA—but another court could take a different approach.  On the First Amendment ruling, the Second Circuit emphasized that it “reach[ed] no conclusion and state[d] no precedent” on whether displaying ivory for a potential customer in aid of making a sale is speech protected by the First Amendment.[36]  It is possible that, if a party challenges the idea that the display of ivory is commercial speech, the Court might rule another way.  For now, the Second Circuit has lessened the burden for prospective buyers of ivory products in New York, who will now be able to see and inspect potential purchases in person.

[1] Art & Antique Dealers League of Am., Inc. v. Seggos, No. 21-569 (2d Cir. Nov. 13, 2024).  The DEC has until February 11, 2025 to file a writ of certiorari with the Supreme Court of the United States seeking review of the Court of Appeals’ decision.

[2] 16 U.S.C. § 1538(a).

[3] 50 C.F.R. § 17.11

[4] Id. § 17.40(e).

[5] 16 U.S.C. § 1539(h)(1).

[6] 50 C.F.R. § 17.40(e)(3)(iii), (v)–(vii).

[7] N.Y. Env’t Conserv. Law § 11-0535-a(2).

[8] Trading in ivory without a DEC license or permit may result in civil or criminal penalties. Id. §§ 71-0924(4), 71-0925(16).

[9] Id. § 11-0535-a(3)(a).

[10] Joint Appendix, ECF No. 45, 100, The Art and Antique Dealers League of Am., Inc. v. Seggos, No. 21-569 (2d Cir. June 15, 2021).

[11] Id.

[12] Art and Antique Dealers League of Americas, Inc. v. Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Mar. 19, 2019).

[13] Art & Antique Dealers League of Am., Inc. v. Seggos, 394 F. Supp. 3d 447 (S.D.N.Y. 2019).

[14] Art & Antique Dealers League of Am., Inc. v. Seggos, 523 F. Supp. 3d 641 (S.D.N.Y. 2021).

[15] Art & Antique Dealers League of Am., Inc. v. Seggos, No. 21-569 (2d Cir. Decided Nov. 13, 2024).

[16] Id. at 9(quoting N.Y. SMSA Ltd. P’ship v. Town of Clarkstown, 612 F.3d 97, 103–04 (2d Cir. 2010)).

[17] Id. at 10.

[18] See 16 U.S.C. § 1535(f), which states:

“Any State law or regulation which applies with respect to the importation or exportation of, or interstate or foreign commerce in, endangered species or threatened species is void to the extent that it may effectively (1) permit what is prohibited by this chapter or by any regulation which implements this chapter, or (2) prohibit what is authorized pursuant to an exemption or permit provided for in this chapter or in any regulation which implements this chapter. This chapter shall not otherwise be construed to void any State law or regulation which is intended to conserve migratory, resident, or introduced fish or wildlife, or to permit or prohibit sale of such fish or wildlife. Any State law or regulation respecting the taking of an endangered species or threatened species may be more restrictive than the exemptions or permits provided for in this chapter or in any regulation which implements this chapter but not less restrictive than the prohibitions so defined.”

[19] Seggos, No. 21-569 at 12.

[20] Id. at 12-13.

[21] Id.

[22] Id. at 14-18, 22-23.

[23] Id. at 23.

[24] Id. at 30 (quoting Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372–73 (2000)).

[25] Id. at 32.

[26] Id. at 36.

[27] Id. at 39.

[28] 447 U.S. 557 (1980)

[29] Seggos, No. 21-569 at 40.

[30] Id. at 41.

[31] Id. at 41-42.

[32] Id. at 42.

[33] Id. at 43 (emphasis in original).

[34] Id.

[35] Id. at 49.

[36] Id. at 49-50.