Opinion ID: 791768
Heading Depth: 2
Heading Rank: 2

Heading: Definition of a Property Right

Text: 26 The Fifth Amendment provides that private property shall not be taken for public use without just compensation. U.S. Const. amend. V, cl. 4. The purpose of the Fifth Amendment, as delineated in the cases interpreting it, is to prohibit the Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole. Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960). 27 The Constitution neither creates nor defines the scope of property interests compensable under the Fifth Amendment. Conti, 291 F.3d at 1340 (citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972)). The parameters of a protected property interest are delimited by the law that creates the interest, see Roth, 408 U.S. at 577-78, 92 S.Ct. 2701, and by existing rules and understandings and background principles derived from independent sources, such as state, federal, or common law, Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1030, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992); Maritrans Inc. v. United States, 342 F.3d 1344, 1352 (Fed.Cir.2003). These background principles and rules and understandings focus on the nature of the citizen's relationship to the alleged property, such as whether the citizen had the rights to exclude, use, transfer, or dispose of the property. See United States v. Gen. Motors, 323 U.S. 373, 378, 65 S.Ct. 357, 89 L.Ed. 311 (1945). To have a property interest in a benefit, a person ... must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. Roth, 408 U.S. at 577, 92 S.Ct. 2701. 28 On the basis of these principles, the Supreme Court and this circuit have evaluated various regulatory schemes to determine whether intangible property such as government issued permits and licenses give rise to property interests protected by the Fifth Amendment. Specifically, the Supreme Court has found that express statutory language can prevent the formation of a protectable property interest. See United States v. Fuller, 409 U.S. 488, 494, 93 S.Ct. 801, 35 L.Ed.2d 16 (1973). In the absence of express statutory language, this court has looked to whether or not the alleged property had the hallmark rights of transferability and excludability, which indicia are part of an individual's bundle of property rights. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435-36, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982) (describing the right to dispose of property as part of an individual's bundle of property rights); see, e.g., Am. Pelagic Fishing Co. v. United States, 379 F.3d 1363, 1374 (Fed.Cir.2004); Conti, 291 F.3d at 1341-42; Mitchell Arms, 7 F.3d at 216. 29 In Fuller, the Supreme Court refused to recognize a property interest in grazing permits issued under the Taylor Grazing Act, 43 U.S.C. § 315. In determining whether a property right existed, the Supreme Court focused on the revocability of the grazing permits and the clear Congressional expression in § 315b that the issuance of a permit under the Act shall not create any right, title, interest, or estate in or to the lands. 43 U.S.C. § 315. The Court noted that § 315b makes clear the congressional intent that no compensable property be created in the permit lands themselves as a result of the permit. Fuller, 409 U.S. at 494, 93 S.Ct. 801. 30 In Mitchell Arms, this court declined to recognize a property interest in a contract entered in accordance with the terms of a firearm import permit issued pursuant to 18 U.S.C. §§ 921-930 and suspended before the contract could be performed. Mitchell Arms, 7 F.3d at 216. Mitchell Arms held that when a citizen voluntarily enters a market subject to pervasive government control he cannot be said to possess the right to exclude. Id. Specifically, this court concluded that the relevant right to exclude that the plaintiff lacked was the ability to exclude others from the market for the sale of firearms. Id. 31 In Conti, this court failed to find a compensable property interest in the petitioner's fishing permit, relying on: (1) the petitioner's inability to assign, sell, or otherwise transfer the permit; (2) the petitioner's lack of authority to exclude others from the Atlantic Swordfish Fishery; and (3) the government's retained right to revoke, suspend, or modify the permit under 50 C.F.R. § 635.4(a)(3). Conti, 291 F.3d at 1341-42. The absence of crucial indicia of a property right, coupled with the government's irrefutable retention of the right to suspend, revoke, or modify Mr. Conti's swordfishing permit, compels the conclusion that the permit bestowed a revocable license, instead of a property right. Id. at 1342. 32 In American Pelagic, we held that there was no protectable property interest in fishery permits and authorizations on the grounds that the petitioner did not have the authority to assign, sell, or transfer its permit and authorization letter and that those legal instruments did not grant the petitioner exclusive privileges to fish for Atlantic mackerel and herring. 379 F.3d at 1374. This court reasoned that since nothing in the language of the regulations precluded the sanction or denial of a permit for reasons unrelated to enforcement, the government had preserved these rights with respect to the permits and authorization letters issued under the regulation. Id. 33 In sum, the decisions by both the Supreme Court and this court imply that a compensable interest is indicated by the absence of express statutory language precluding the formation of a property right in combination with the presence of the right to transfer and the right to exclude. See, e.g., Fuller, 409 U.S. at 494, 93 S.Ct. 801; Am. Pelagic, 379 F.3d at 1374; Conti, 291 F.3d at 1341-42; Mitchell Arms, 7 F.3d at 216.