## United States Court of Appeals for the Federal Circuit

2009-5015

ACCEPTANCE INSURANC E COMPANIES, INC., Plaintiff-Appellant,

v.

UNITED STATES, Defendant-Appellee.

Lewis S. Wiener , Sutherland Asbill & Brennan LLP , of Washington, DC, argued for plaintiff-appellan t. Of counsel were Ronald Massumi and G. Brendan Ballard ; and Patrick B. Griffin , Kutak Rock LLP, of Omaha, Nebraska. Michael N. O’Connell , Trial Attorney, Commercial Litigation Branch, Civil Division, United States D epartment of Justice, of Washington, DC, argued for defendant-Appellee. With him on the brief were Michael F. Hertz , Acting Assistant Attorney General, Jeanne E. Davidson , Director, and Mark A. Melnick , Assistant Director. Appealed from: United States Court of Federal Claims Judge Thomas C. Wheeler

## United States Court of Appeals for the Federal Circuit

2009-5015

ACCEPTANCE INSURANC E COMPANIES, INC., Plaintiff-Appellant,

v. UNITED STATES, Defendant-Appellee.
Appeal from the United States Court of Federal Claims in case No. 03-CV-2794, Judge Thomas C. Wheeler.

_________________________ DECIDED: October 1, 2009

_________________________ Before RADER, PLAGER, and SCHALL, Circuit Judges

. SCHALL, Circuit Judge

. Acceptance Insurance Companies, Inc. (“Acceptance”) seeks reversal of the decision of the United States Court of Federal Claims that dismissed its claim for a compensable taking under the Fifth Amendmen t. Acceptance Ins. Cos. v. United States , 84 Fed. Cl. 111 ( 2008) (“Dismissal Order ”). Acceptance brought suit alleging that, when the Risk Management Agency (“RMA ”), a component of the Department of Agriculture, declined to approve a proposed sa le of certain crop insurance assets to Rain and Hail LLC (“Rain & Hail”), the government r endered those assets valueless and, consequently, effected a categorical taking in violation of the Fifth Amendment.The Court of Federal Claims dismissed A cceptance’s takings claim pursuant to RCFC 12(b)(6) for two reasons. Id. at 120. First, the court held that Acceptance had not alleged a legally cognizable pr operty interest for purposes of the Fifth Amendment. Id. at 115–17. Second, the court held that, even if there was a legally cognizable property interest, Acceptance’s claim was preclu ded under the line of cases following the Supreme Court’s decision in Omnia Commercial Co. v. United States , 261 U.S. 502 (1923). See Dismissal Order , 84 Fed. Cl. at 117–20. Be cause the Court of Federal Claims did not err in holding that Acceptance had failed to allege a legally cognizable property interest for Fifth Amendment purposes, we affirm. BACKGROUND
I. Our decision in Acceptance Insurance Cos. v. United States , 503 F.3d 1328 (Fed. Cir. 2007) (“Remand Decision ”), which is discussed below, sets forth most of the pertinent facts. Additional facts recited herein are drawn from Acceptance’s First Amended Complaint (“Compl .”). See, e.g. , Papasan v. Allain , 478 U.S. 265, 283–86 (1986) (stating that courts must accept the well-pleaded fact s in the complaint as true when reviewing a dismissal for failure to state a claim); Cambridge v. United States , 558 F.3d 1331, 1335 (Fed. Cir. 2009) (looking to the well-pleaded facts in the complaint). The Federal Crop Insurance Corporation (“FCIC”) is a wholly-owned government corporation within the Departm ent of Agriculture, estab lished to regulate the crop insurance industry. Federal Crop Insurance Act, 7 U.S.C. §§ 1501, et seq. (“FCIA”);

see Remand Decision , 503 F.3d at 1330. Private in surance companies offer crop insurance and are then reinsured ( and regulated) by the FCIC. See Remand Decision ,

2009-5015 2503 F.3d at 1330. When a private insurance provider is eligib le for reinsurance through the FCIC, the insurance provider and the FCIC enter into a Standard Reinsurance Agreement (“SRA”), pursuant to which the policies issued by the private insurance provider to producers of agricultura l commodities are reinsured. Id. ; Compl. ¶ 6. See generally 7 U.S.C. § 1508 (outlining the consider ations and requirements that govern crop reinsurance). The RMA is an agency wit hin the Department of Agriculture whose purpose is to supervise the FCIC. See 7 U.S.C. § 6933. Its responsibilities include the “[a]dministration and oversight of all aspects . . . of all programs authorized under the [FCIA]” and “any other functions as the Secretary considers appropriate.” See id. ; Remand Decision , 503 F.3d at 1330 & n.2. Among ot her things, the RMA has the authority to approve or disapprove certain trans actions that affect the FCIC, such as transactions concerning insurance policies that are governed by SRAs. See, e.g. , 7 U.S.C. §§ 1508(h), (k); 7 C.F. R. §§ 400.703–.706 (providing that the RMA will review submissions pertaining to provisions of insurance policies); Compl. ¶ 4. 1 Acceptance is a publicly traded insurance holding company. At the time relevant to this case, one of its holdings was Am erican Growers Insurance Co. (“American Growers”), a corporation or ganized under the laws of Nebr aska. American Growers provided crop insurance policie s that were reinsured purs uant to the federal crop insurance program and, as such, were regulated by the FCIC/RMA. 2 See Compl. ¶¶ 6– 8, 13. American Growers’ reinsurance re lationships were governed by SRAs with the

1 We note that, for purposes of this appeal, the parties do not contest whether the RMA acted within its authorit y when it rejected the particular transaction at issue, the proposed sale to Rain & Hail. 2 Neither Acceptance nor the gov ernment contends that the FCIC and the RMA cannot be considered as one fo r the purposes of this appeal.

2009-5015 3FCIC. See id. ¶ 6. The company therefore wa s required to comply with certain coverage levels, prices, and premium rates determined by the FCIC. See id. ¶ 8. Because American Growers was organized underthe laws of Nebr aska, it also was regulated by the Nebraska Department of Insurance (“NDOI”). See id. ¶ 7. In November of 2002, Amer ican Growers disclosed that it had suffered a $130 million loss, causing its policyholder surplus to fall below mandated levels. 3 Acceptance’s Br. 4. Subsequently, on Nove mber 18, 2002, Acceptance entered into a non-binding letter of intent with Rain & Ha il, another company in the crop insurance business. Under the letter of intent, the parties contemplat ed that Rain & Hail would purchase the crop insurance portfolio se rviced by American Growers. See Compl. ¶¶ 9–11; Remand Decision , 503 F.3d at 1330–31. According to the letter of intent, Rain & Hail proposed to purchase approximately 360,000 of American Gr owers’ insurance policies for $21.5 million. See Compl. ¶¶ 10, 12. Acceptanc e states that, “[b]ecause the insurance assets to be purchased by Rain and Hail were reinsured by the FCIC and [were] subject to the FCIC’s general ov ersight authority over the crop insurance industry, the transaction between Acceptance and Rain & Hail was subject to approval by the RMA.” Compl. ¶ 13; see Remand Decision , 503 F.3d at 1330–31. The Administrator of the RMA, however, re jected the proposed sale. According to Acceptance, this was because the Admini strator determined the sale would be “detrimental” to the interests of farmers and taxpayers. See Compl. ¶¶ 15–16. On November 22, 2002, the RMA “or dered American Growers to cease and desist [from] marketing and selling . . . any new insurance contracts under its

3 Policyholder surplus refers to the amount of an insurance company’s assets, in excess of its obligations, that could be used to pay policyholders for insured losses.

2009-5015 4reinsurance agreements with the FCIC.” Compl. ¶ 18; see Remand Decision , 503 F.3d at 1330–31. In addition, the RM A notified American Growers that the FCIC would not reinsure any new insurance contracts for it. See Remand Decision , 503 F.3d at 1330– 31. Soon thereafter, as a result of Americ an Growers’ poor financial condition, the NDOI placed the company under supervisi on and in statutory liquidation. See id. at 1331. Acceptance contends th at the RMA then took control of the liquidation and redistributed a portion of Am erican Growers’ policies to other crop insurance companies. See Remand Decision , 503 F.3d at 1331. Ac ceptance received no compensation for the policies that the RMA redistributed. Acc eptance alleges that these actions, in concert, effectively put American Growers out of business and rendered Acceptance’s property (its interest in American Growers) valueless. Compl. ¶¶ 18, 19. II. In due course, Acceptance filed suit in t he Court of Federal Cla ims, alleging that “[w]hen the RMA, acting as agen t of the United States, reje cted the proposed Rain and Hail/Acceptance transaction . . ., it effect ed a taking of Acceptance’s property, namely certain of Acceptance’s assets, which were to be sold to Rain and Ha il, for public use.” Compl. ¶ 24. As explained in the Remand Decision , the government responded with a motion to dismiss for lack of jurisdiction, arguing that 7 U.S. C. § 1506(d) granted exclusive jurisdiction to the district cour ts over all suits against the FCIC. Remand Decision , 503 F.3d at 1331. Eventual ly, the Court of Federal Claims granted the government’s motion to dismiss for lack of ju risdiction and transferr ed the case to the United States District Court for the District of Nebraska. Id. at 1331–32; see

2009-5015 5Acceptance Ins. Co. v. United States , 72 Fed. Cl. 299 (2006). However, on appeal of the district court’s denial of Acceptance’s motion to retrans fer to the Court of Federal Claims, we held that, while 7 U.S.C. § 1506(d) provides exclusive jurisdiction in the district courts for suits against the FCIC, it does not divest the C ourt of Federal Claims of jurisdiction over a takings claim brought against the United States. See Remand Decision , 503 F.3d at 1338–39. Following our decision, Acceptance’s action was returned to the Court of Federal Claims. With the case back in the Court of Federal Claims, t he government f iled another motion to dismiss, but this ti me for failure to state a cl aim under RCFC 12(b)(6). On September 25, 2008, the court granted t he government’s motion and dismissed Acceptance’s takings claim. Dismissal Order , 84 Fed. Cl. at 112. The court did so for two reasons. First, relying primarily on th e rationale in cases such as Mitchell Arms, Inc. v. United States , 7 F.3d 212 (Fed. Cir. 1993), it conc luded that Acceptance had not alleged a legally cognizable property interest for purposes of the Fifth Amendment. Dismissal Order , 84 Fed. Cl. at 115–17. Despite Acceptance’s arguments that the property interest taken by the government was American Growers’ tangible insurance portfolio, the court identified the property interest that Acc eptance had alleged was taken as its “interest in selling it s property to Rain and Hail.” Id. at 116. In characterizing the property interest this way, the court noted that Acceptance’s complaint focused on the RMA’ s rejection of the proposed sale as the alleged taking and that, following the RMA’s rejection of the sale, Acceptance still “retained possession of the insurance portfolio at issue.” Id. In further support of its conclusion that Acceptance had not alleged a cognizable pr operty interest, the court noted that

2009-5015 6Acceptance had voluntarily entered into an area of pervasive government regulation and that any alleged property interest was dependent on the pertinent regulations. Id. at 116–17. As an alternative rationale for dismissing Acceptance’s claim, the court held that, even assuming the existence of a cognizable pr operty interest, the property interest, at most, was “a letter of intent to enter into an agreement [and not even] an actual contract.” Dismissal Order , 84 Fed. Cl. at 119. Starting from that premise, the court ruled that the Omnia Commercial , 262 U.S. at 508–513, line of cases—holding that a viable taking does not occur when the governm ent merely causes t he loss of benefits of a contract or simply frustrates business expectations—precluded the “taking” of that interest. See Dismissal Order , 84 Fed. Cl. at 117–120. Acceptance has timely appealed to this court. We have jurisd iction pursuant to 28 U.S.C. § 1295(a)(3). DISCUSSION
I. As noted, the Court of Federal Claims dismissed Acceptance’s takings claim on the pleadings pursuant to RCFC 12(b)(6). In or der to avoid dismissal for failure to state a claim, a complaint must allege facts “pl ausibly suggesting (not merely consistent with)” a showing of entitlement to relief. See Bell Atl. Corp. v. Twombly , 550 U.S. 544, 557 (2007); Cambridge , 558 F.3d at 1335. At the same time, a court is “not bound to accept as true a legal conclusion couc hed as a factual allegation.” Twombly , 550 U.S. at 555 (quoting Papasan , 478 U.S. at 286). “The question of whether a complaint was properly dismissed for failure to state a cl aim upon which relief could be granted is one

2009-5015 7of law, which we review independently.” Highland Falls-Fort Montgomery Cent. Sch. Dist. v. United States , 48 F.3d 1166, 1170 (Fed. Cir. 1995). The Fifth Amendment to the Un ited States Constitution pr oscribes the taking of private property “for public us e, without just compensation.” U.S. Const. V, cl. 4. “Real property, tangible property, and intangible property, all may be the subject of takings claims.” Conti v. United States , 291 F.3d 1363, 1338–39 (Fed. Cir. 2002) (citing Lucas v. S.C. Coastal Council , 505 U.S. 1003, 1019 (1992), Ru ckelshaus v. Monsanto Co. , 467 U.S. 986, 1003–04 (1984), and Andrus v. Allard , 444 U.S. 51, 65 (1979)). A “taking” may occur eitherby physical invasion or by regulation. See, e.g. , Lucas , 505 U.S. at 1014–15. The Supreme Court has long recognized that “if regulation goes too far it will be recognized as a taking.” Penn. Coal Co. v. Mahon , 260 U.S. 393, 415 (1922); see, e.g. , Lucas , 505 U.S. at 1014–19; Am. Pelagic Fishing Co. v. United States , 379 F.3d 1363, 1371 (Fed. Cir. 2004); Ma ritrans Inc. v. United States , 342 F.3d 1344, 1351 (Fed. Cir. 2003); Conti , 291 F.3d at 1339. This case concerns an alleged regulatory taking. When evaluating whether governmental ac tion constitutes a taking without just compensation, a court employs a two-part test. Fi rst, the court dete rmines whether the claimant has identified a co gnizable Fifth Amendment property interest that is asserted to be the subject of the taking. Second, if the court concludes that a cognizable property interest exists, it determines whetherthat property interest was “taken.” See,
e.g. , Palmyra Pac. Seafoods, L.L.C. v. United States , 561 F.3d 1361, 1364 (Fed. Cir. 2009); Air Pegasus of D.C ., Inc. v. United States , 424 F.3d 1206, 1212–13 (Fed. Cir. 2005); Am. Pelagic Fishing , 379 F.3d at 1372; Conti , 291 F.3d at 1339. “[W]e do not

2009-5015 8reach this second step without first identifyi ng a cognizable property interest.” Air Pegasus , 424 F.3d at 1213; see, e.g. , Am. Pelagic Fishing , 379 F.3d at 1372. II. A. On appeal, Acceptance goes to some length to explain its takings claim. It states that, “as a direct consequence of the RMA’s reje ction of the sale of assets to Rain & Hail,” it “lost the entirety of the crop insu rance business it conducted through its whollyowned crop insurance subsidiary, American Gr owers, including a large and valuable portfolio of in-force policies.” Acceptance’ s Br. 8. Amplifying, Acceptance points out that after the RMA refused to approve the sale of American Growers, the NDOI seized control of the company’s policies. Thereafter, according to Acceptance, the RMA controlled the disposition and redistribution of the Am erican Growers insurance portfolio. Acceptance argues that these actions collectively constituted a categorical taking. Contending that the Court ofFederal Claims’ basis for dismissal was incorrect, Acceptance argues that the court incorrect ly characterized the asserted property interest as only involving “the taking of a contract or a prop osed sale.” In Acceptance’s view, this characterization was incorrect because it alleged the taking of neither a contract nor a proposed sale, but instead cons istently emphasized that the government took actual property—namely, the American Growers crop insurance business. Thus, Acceptance urges, because the government tookactual property, it (Acceptance) did assert a cognizable property interest, and ther efore its takings claim is distinguishable from those asserted in cases such as Mitchell Arms , 7 F.3d 212.

2009-5015 9Acceptance points out that in Mitchell Arms , because the plaintiff actually retained possession of its prop erty—i.e., the firearms at issue—the “only affected interest was the right to sell imported assault weapons in the United States, which existed only by virtue of a re vocable federal permit to do so .” Acceptance’s Br. 11–12. In contrast, according to Acceptance, it is not complaining of the loss of the right in a particular use of its property—i.e., the right to sell its property—but ra ther the actual loss of the property itself—i.e., the entire crop insurance busi ness of American Growers. Responding, the government argues that the Court of Federal Claims correctly found no cognizable property interest. T he government points out that American Growers’ insurance policies were at all ti mes subject to, and governed by, the pertinent FCIC regulatory scheme, which provides th e RMA with the authority to reject certain proposed transactions. The government argues that, as a result, the court correctly ruled that no taking could o ccur because the “taking alleged relates to a right to exclude” that Acceptance never possess ed—namely, “the right to exclude the Government from reviewi ng sales of crop insurance policies.” Gov’t Br. 22–23. Additionally, according to the government, the court correctly held that, although the government may have precluded Acceptance fr om realizing a business expectation by preventing the proposed sale, t hat expectation was entire ly dependent upon the RMA’s approval of the sale. 4

4 Both parties make arguments about whether the Court of Federal Claims correctly dismissed Acceptance’s cl aim based on the Omnia Commercial line of cases. Because we hold that Acceptance failed to assert a cognizable property interest, we do not reach those arguments.

2009-5015 10B. As the first step in our analysis, we must identify what, if anything, was the subject of the alleged taking. See Branch v. United States , 69 F.3d 1571, 1575 (Fed. Cir. 1995) (“In analyzing a takings claim, a court must first determine what was taken.”). As just noted, in its brie fing on appeal Acceptance characte rizes the alleged taking as consisting of several distinct actions viewed in concert. We have stated, however, that such a “characterization . . . is too broad” because “it does not pinpoint what step in the sequence of events . . . constituted conduct t hat the government could not engage in without paying compensation.” Id. (rejecting the plaintiff’ s characterization of the alleged “taking,” which consisted of several distinct events); see, e.g. , Kitt v. United States , 277 F.3d 1330, 1336 (Fed. Cir. 2002) (stati ng that analysis of a takings claim requires identifying the precise governmental action that is the subject of the claim); Creppel v. United States , 41 F.3d 627, 634 (Fed. Cir. 1994) (“[T]his court must determine when the events fixi ng any potential Government liability [for a taking] occurred.”). Notwithstanding the arguments in its brief, Acceptance’s First Amended Complaint and statements to the court pinpoin t the precise action that it contends constituted conduct the government could not engage in without paying compensation. That action was the RMA’s rejection of th e proposed sale to Rain & Hail of American Growers’ portfolio of insurance policies. Looking to the complaint, as we must when reviewing a dismissal pursuant to RCFC 12(b)(6), Acceptance consistently focuses on the RMA’s rejection of the proposed sale. See generallyCompl. ¶¶ 21–30. Specifical ly, Acceptance states: “The RMA exercised its regulat ory authority in rejecting the proposed Rain and

2009-5015 11Hail/Acceptance transaction, rendering valueless American Growers’ insurance assets . . . .,” Compl. ¶ 21; “Accept ance held a reasonable investment backed expectation that the RM A would approve the propos ed Rain and Hail/Acceptance transaction,” id. ¶ 23. Moreover, in the paragraph that summarizes its takings claim, Acceptance asserts that “[w]hen the RM A . . . rejected the proposed Rain and Hail/Acceptance transaction . . . it effect ed a taking of Acceptance’s property.” Id. ¶ 24. Indeed, except for a solitary paragraph in the “Facts” section, which merely provides additional background about t he RMA’s later actions, see id. ¶ 18, Acceptance’s First Amended Complaint focuses exclusively on the RMA’s rejection of the proposed sale to Rain & Hail as the alleged taking. Moreover, at oral argum ent—not only in this appeal, but in the previous appeal relating to the same takings claim, see Remand Decision —Acceptance made it clear that it alleges a taking occurred when t he RMA rejected the proposed sale. In the previous appeal, because the court was skeptic al about whether Acceptance had in fact brought a takings claim, the court asked “[c]an you help me identify the taking here?” See Oral Arg., Aug. 8, 2007, 1:01–1:30, available at http://oralarguments.cafc.uscourts.gov/m p3/2007-1127.mp3. Responding, Acceptance stated that it “asserts a Fifth Amendment takings claim based on the government’s action in preventing Acceptance from selli ng its in-force crop in surance business and other insurance related assets . . . .” Id. (emphasis added). When asked to be more specific, Acceptance reiterated that the alleged taking occurred “[w]hen [it] wanted to sell its in-force insurance policies to Rain & Hail,” but was prevent ed from doing so by the RMA. See id. at 2:07–14. In fact, Acceptance pinpointed the RMA’s action as the

2009-5015 12alleged taking two other times duri ng the same oral argument. See id. at 3:34–46 (“As a consequence of the RMA . . . saying [it] would not authorize or approve of the requested transaction.”); id. at 4:40–5:05 (“It is the regulat ory action of denying the sale . . . .”). At the same time, Acceptance wa s consistent during oral argument in this appeal, emphasizing that a taking allegedly occurred when the RMA rejected the proposed sale of American Grow ers’ portfolio. See, e.g. , Oral Arg., Aug. 5, 2009, 6:04– 6:16, available at http://oralarguments.cafc.u scourts.gov/mp3/2009-5015.mp3 (“The taking is the frustration of saying we will not approve the sale, . . . .”); id. at 7:45–8:00 (“Court: They did not take that property. Accept ance: They certainly did your Honor. . . . By saying to Acceptance, you may not sell those policies to Rain & Hail.”). 5 In short, the action that allegedly constituted conduct that the government could not engage in without paying co mpensation was the RMA’s re jection of the proposed sale to Rain & Hail of Amer ican Growers’ insurance policy po rtfolio. We therefore must determine what interest, if any, was affe cted when that action occurred and whether Acceptance possessed a legally cognizable Fifth Amendment property right in that interest. C. The Court of Federal Claims determined that the interest that was affected by the RMA’s action was Acceptance’s interest in selling American Growers’ crop insurance policies to Rain & Hail. See Dismissal Order , 84 Fed. Cl. at 116. It also determined that such interest was not a legal ly cognizable property interest for purposes of the Fifth

5 Identifying the alleged “taking” as the RMA’s rejection of the proposed sale is consistent with Acceptance’s $21.5 million r equest for damages, which was the value of the proposed sale rejected by the RMA. See Compl. ¶¶ 10, 12, 27.

2009-5015 13Amendment. See id. at 116–17. We agree with the c ourt on both counts. The first point requires little discu ssion. Plainly, what th e RMA’s action affected was Acceptance’s ability to freely se ll American Growers’ insuranc e portfolio to Rain & Hail. The critical question is whether this was a legally cognizable property interest. It is well settled that “‘existing rules and understandings’ and ‘background principles’ derived from an i ndependent source, such as stat e, federal, or common law, define the dimensions of the requisite property rights fo r purposes of establishing a cognizable taking.” Conti , 291 F.3d at 1340; see Lucas , 505 U.S. at 1029–30; Am. Pelagic Fishing , 379 F.3d at 1376 (“We determine whet her an asserted right is one of the rights in the bundle of sticks of property rights that inheres in a res by looking to ‘existing rules or understandi ngs’ and ‘background princi ples’ derived from an independent source such as state, federal, or common law.” (quoting Lucas , 505 U.S. at 1030)). These existing rules often define “the citizen’s relation to the physical thing,” which may include the right to possess, use, and dispose of the property at issue. See,
e.g. , United States v. Gen. Motors Corp. , 323 U.S. 373, 378 (1945) (explaining that the Fifth Amendment is not concerned “with other collateral interests which may be incident to . . . ownership”); Conti , 291 F.3d at 1340. Under the “background principles” and ru les existing when Acceptance entered into the crop insurance business, Acceptanc e could not freely transfer the policies at issue. Rather, such action was subject to the RMA’s approval. Therefore, Acceptance did not possess a cognizable Fifth Amendment property interest in freely selling American Growers’ portfolio of insuranc e policies to Rain & Hail. See, e.g. , Am. Pelagic Fishing , 379 F.3d at 1381 (“Because the right to use . . . was not inherent in its

2009-5015 14ownership of the [property] , [but instead was totallydependent upon the regulatory scheme,] American Pelagic did not suffer the loss of a property interest . . . when its . . . permits were revoked.”); Conti , 291 F.3d at 1342 (affirming dism issal for failure to state a claim because “[t]he absence of crucial indicia of a property right, [such as the right to sell, assign, or otherwise transfer,] coupled wi th the government’s irrefutable retention of the right to suspend, revoke, or modify [t he plaintiff’s] permit, compels the conclusion that” there was no cognizab le property right). As a general matter, we have no reason to assume that an insurance company, such as American Growers, does not have a pr operty right in the contracts of insurance (the policies) it sells. Similarly, we have no reason to assume that such property right does not include the common law right to sell or assign its interest in the contracts. However, be that as it may, by voluntaril y entering into the federally regulated crop insurance business, Acceptance relinquished its right to freely transfer American Growers’ insurance policies, in exchange fo r the benefits of the cr op insurance program, such as being reinsured by the governm ent for certain losses. See, e.g. , Am. Pelagic Fishing , 379 F.3d at 1379 (“Because it was already in place by the time [the plaintiff] purchased the Atlantic Star , the [regulatory scheme] wa s an ‘existing rule’ or ‘background principle [ ]’ of f ederal law that inhered in [the plaintiff’s] title to the vessel.” (quoting Lucas , 505 U.S. at 1029–30)). Accord ingly, because the RMA had the authority to deny the sale of the policies at issue, A cceptance, through American Growers, did not possess the unfettered right to sell or otherwise transfer the policies, thus precluding the exist ence of a cognizable property interest. See, e.g. , Am. Pelagic Fishing , 379 F.3d at 1374 (rejecti ng an alleged property interest in permits and

2009-5015 15authorization letters because t he government retained the right to deny or sanction those permits and letters); Conti , 291 F.3d at 1341–42 (finding no cognizable property interest in a fishing permit because the plainti ff did not have “[t]he righ t[ ] to sell, assign, or otherwise transfer” the permit and “the governm ent at all times retained the right to revoke, suspend, or modify the permit”). In other words, when the RMA decided to disapprove of the sale to Rain & Hail, there was no right to freely alienate the policies extant in Acceptance/Ameri can Growers with which that decision interfered. Essentially, Acceptance asks us to recognize a cognizable property right in a decision by the RMA not to exercise its authority to reje ct the sale of insurance policies subject to the crop insurance regulatory scheme. We decline to do that. See Conti , 291 F.3d at 1342 n.5 (finding no cognizabl e property right “in the government’s discretionary decision not to exercise its ex plicitly granted authority to re voke, suspend, or modify the permit” (citing Bowen v. Public Agencies Opposed to Soc. Sec. Entrapment , 447 U.S. 41, 55 (1986))). Even assuming that the RMA had previously appr oved of other similar transactions, any expectation that the RMA wo uld approve of future transactions does not rise to the level of a c ognizable property interest because simply “enjoying a use of . . . property that the governm ent chose not to disturb,” although could have, does “not equate to a cognizable property inte rest.” Am. Pelagic Fishing , 379 F.3d at 1377 (“[T]here is a distinction between simply not being disturbed in the particular use of one’s property and having the right to that use of the property. Clearly, in order for there to be a cognizable property interest sufficient to support a takings claim, the latter must be true.”).

2009-5015 16Acceptance argues, however, that because its physical property—specifically, American Growers—was actua lly “taken,” it did suffer a taking. According to Acceptance, American Pelagic Fishing , Conti , and Mitchell Arms are therefore distinguishable. In each of those cases, Acceptance urges, the plaintiff retained physical possession of the property in ques tion and was only prevented from using the property in a particular manner—e.g., selling the property. We disagree. When the RMA rejected the proposed sale of American Growers’ policies to Rain & Hail, the government did not actually “take” Amer ican Growers. Rat her, Acceptance still maintained possession of American Growers and held the same property interest as it had prior to the RMA’s rejection—a propertyinterest that included having American Growers subject to the coverage and capital requirements of the pertinent crop insurance regulations. Put another way, when the RMA rejected the proposed sale, Acceptance possessed no more or no less of a property interest in American Growers than it did prior to the RMA’s rejection. In sum, contrary to Acceptance’s arguments, when the RMA rejected the proposed sale, it did not actually take Am erican Growers’ insurance policy portfolio. Rather, Acceptance, through its ownership of American Growers, retained possession of the polices, but was barred from selling them to a particular buyer, Rain & Hail. As a result, it was prevented from realizing a business expectation. Under these circumstances, Acceptance’s takings claim is not distinguishable from our decisions in American Pelagic Fishing , Conti , and Mitchell Arms , where physical property was retained but a business expec tation was frustrated.

2009-5015 172009-5015 18 CONCLUSION For the foregoing reasons, Acceptance did not have a cognizable property interest for Fifth Amendment purposes in the abi lity to freely transfer American Growers’ portfolio of insurance policies. Thus, ther e was no cognizable property interest that could be “taken” when the RMA rejected the proposed sale to Rain & Hail. We thus affirm the decision of the Court of Federal Claims that dismissed Acceptance’s takings claim pursuant to RCFC 12(b)(6). Becaus e we have ruled that Acceptance failed to allege a cognizable property interest, we do not need to address t he parties’ arguments relating to the Court of Federal Clai ms’ alternative rationale under the Omnia Commercial line of cases for dismissing Acceptance’s claim.
AFFIRMED