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Ruckelshaus v. Monsanto Co.

Citation: 14 ELR 20539
No. No. 83-196, 467 U.S. 986/21 ERC 1062/(U.S., 06/26/1984) Vacated & remanded

The Court upholds the constitutionality of the data consideration and disclosure provisions of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). The Court first rules that trade secrets recognized as property under state law are property protected by the Taking Clause of the Fifth Amendment. Turning to whether the data consideration and disclosure provisions of FIFRA §§ 3(c)(1)(D), 3(c)(2)(A), 10(b), and 10(d) effect a taking of appellee's property, the Court concludes that an inquiry into their interference with reasonable investment-backed expectations is dispositive. The Court rules that with regard to data submitted after the October 1, 1978 effective date of amendments to FIFRA, appellee could not have had a reasonable expectation that data submitted to the Environmental Protection Agency (EPA) would be treated confidentially. Section 3(c)(1)(D), as amended, delineated clear limits to the confidential treatment of such data, and those limits are a proper regulatory burden. The Court also rules that prior to the 1972 amendments to FIFRA, neither that statute nor the Trade Secrets Act guaranteed confidential treatment of appellee's data and appellee had no basis for an investment-backed expectation of confidentiality. However, FIFRA as in effect between 1972 and 1978 did provide a basis for such an expectation, the Court holds. The statute enabled an applicant for pesticide registration to designate data as trade secrets, which barred EPA from considering the data in reviewing other companies' registration applications or disclosing it to the public. EPA's unauthorized disclosure or consideration of data submitted during that period would violate the property right to exclude others, a right that is essential to a property interest in trade secrets. EPA's argument that this is not a taking, but preemption of state property, would remove all vitality from the Taking Clause. However, the Court declines to rule that a taking has occurred, finding that just compensation pursuant to negotiation or arbitration under FIFRA § 3(c)(1)(D)(ii) would satisfy the taking claim.

The Court next holds that any taking effected by FIFRA's data consideration and disclosure provisions is for a public use. EPA consideration of appellee's data in registering another company's pesticide products most directly benefits private parties, but property need not be taken for the use of the general public in order that the taking be for a public use. If a goal is within the sovereign's police power, a taking to achieve that goal is for a public use. FIFRA's legislative history indicates that Congress intended data consideration to enhance competition, and that purpose is well within its police power. The public disclosure of health and safety data clearly is not a private use, and Congress was within its discretion in deciding that such disclosure would benefit the public.

The Court also rejects the district court's holding that there is no Tucker Act remedy for a FIFRA taking. The central inquiry is whether Congress clearly removed access to the Tucker Act's compensation mechanism. FIFRA is silent on this question, and the Court is bound to interpret language in FIFRA § 3(c)(1)(D) that makes an arbitration provision the exclusive source of compensation so that both statutes are given full effect, if possible. The Court rules that the FIFRA provision simply makes recourse to the arbitration proceeding for data consideration claims a precondition to a taking claim under the Tucker Act. Furthermore, FIFRA's silence as to compensation for takings resulting from the data disclosure provisions cannot be read as barring access to the Tucker Act.Finally, the Court rules that appellee's challenge to the constitutionality of the arbitration and compensation procedures of FIFRA is premature and must await an actual arbitration.

Justice O'Connor files a separate opinion concurring in part and dissenting in part. The Justice would rule that FIFRA could effect a taking with regard to data submitted prior to the 1972 amendments, since the protections of the Trade Secrets Act and the absence in FIFRA of any provision allowing public disclosure of trade secret data create a reasonable expectation of confidential treatment of such data. The dissent also would heed the district court's factual finding that appellee had a reasonable expectation that its data also would not be used to register other companies' products.

Counsel for Appellant
Lawrence G. Wallace, Deputy Solicitor General; Jerrold J. Ganzfried
Department of Justice, Washington DC 20530
(202) 633-2211

Mary L. Walker, Deputy Attorney General; Anthony C. Liotta, Raymond N. Zagone, Anne S. Almy, John A. Bryson
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2744

A. James Barnes, Edward C. Gray, Marcia E. Mulkey, Robert S. McLaughlin
Office of the General Counsel
Environmental Protection Agency, Washington DC 20460
(202) 475-8040

Counsel for Appellee
A. Raymond Randolph
Randolph & Fox
4801 Massachusetts Ave. NW, Washington DC 20016
(202) 363-0800

David G. Norrell, Thomas O. Kuhns, Jacqueline A. Simmons
Kirkland & Ellis
1776 K St. NW, Washington DC 20006
(202) 857-5000

W. Wayne Withers, Frederick A. Provorny
Lathrop, Koontz, Righter, Claggett & Norquist
2600 Mutual Benefit Life Bldg., 2345 Grand Ave., Kansas City MO 64108
(816) 842-0820

Kenneth R. Heinemann, Gary S. Dyer, C. David Barrier
Coburn, Croft & Putzell
One Mercantile Ctr., St. Louis MO 63101
(314) 621-8575

JUSTICE WHITE took no part in the consideration or decision of this case.