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Monsanto Co. v. Acting Adm'r, EPA

ELR Citation: 13 ELR 20561
Nos. No. 79-366 C(1), 564 F. Supp. 552/18 ERC 2081/(E.D. Mo., 04/19/1983, 05/09/1983)

The court holds that parts of §§3 and 10 of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) governing the use and disclosure of pesticide registration data violate the Fifth Amendment's prohibition against uncompensated takings. The court first rules that Monsanto has a federally cognizable property right in the registration data submitted to the Environmental Protection Agency (EPA) pursuant to §3 of FIFRA. That right stems not from federal law, which establishes only a right of nondisclosure by EPA, but from the trade secret protection accorded the data under Missouri law, which extends to the constructive disclosure and use allowed by §3. Next, the court holds that §3(c)(1)(D)'s authorization for EPA to use Monsanto's data in registering other companies' pesticides constitutes a taking. The section appropriates Monsanto's fundamental right to exclusive use of its intellectual property. The economic impact of §3(c)(1)(D) is substantial and it impairs Monsanto's "investment-backed" expectations. In addition, the section operates to further a private purpose, the forced sharing of property and markets with private parties. Furthermore, the invasion of Monsanto's property right is significant in relation to the public purpose to be served.

The court also rules that public disclosure of pesticide health and safety data under §10(b) and (d) is a taking. The disclosure, which has the effect of placing the registrant's property in the public domain, is not an exercise of Congress' authority to regulate commerce since the product's label conveys all the safety information the public needs. The court rules that the compulsory binding arbitration scheme established by §3(c)(1)(D)(ii) to set compensation for the registrant whose data is used to register another company's product is not adequate to compensate the registrant for the loss of its property. Because the statute operates to force a registrant into arbitration, but offers no standards to guide the arbitrator's decision, it is arbitrary and vague. The compensation provided thus cannot be just. In addition, the court holds that the arbitration scheme is an improper delegation of judicial authority.

Finally, the court rules that the Tucker Act does not provide Monsanto with adequate compensation for the taking of its property. Congress intended the compensation and exclusive use provided by §3 to be the sole compensation for any taking caused by FIFRA. Because that compensation is uncertain as a result of the vagueness of the arbitration provision, recourse to the Tucker Act would require Monsanto to petition the Court of Claims repeatedly for compensation. Yet, the Tucker Act is intended to provide one final monetary remedy and the Court of Claims cannot provide the full range of necessary relief. The court distinguishes a line of cases which held the challenged provisions of FIFRA constitutional on the basis of their erroneous summary findings that no property right existed in the registration data.

In an amendment to the judgment, the court permanently enjoins defendant from implementing §3(c)(1)(D), the last sentence of §3(c)(2)(A), and §10(b) and (d) of FIFRA. It also (1) rules that §3(c)(1)(D) does not authorize EPA to use pre-1970 data to support another company's application for registration; (2) enjoins all but specified disclosures of registration data; and (3) decrees that EPA may continue to register products under §3(c) on the basis of a registration applicant's own data, data in the public record, or data for which written permission from the registrant has been obtained.

Counsel for Plaintiff
Gary S. Dyer
Lathrop, Koontz, Righter, Claggett & Norquist
2600 Mutual Benefit Life Bldg., 2345 Grand Ave., Kansas City MO 64108
(816) 842-0820

Kenneth R. Heineman
Croburn, Croft & Putzell
One Mercantile Ctr., Suite 2900, St. Louis MO 63101
(314) 621-8575

W. Wayne Withers, Company Counsel
Monsanto Agricultural Products Co.
800 N. Lindbergh Blvd., St. Louis MO 63166
(314) 694-1000

Counsel for Defendant
Joseph B. Moore, Ass't U.S. Attorney
U.S. Cthse., 1114 Market St., St. Louis MO 63101
(314) 425-5885

Patrick J. Cafferty
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2219

Robert McLaughlin
Office of the General Counsel
Environmental Protection Agency, Washington DC 20460
(202) 382-7505