Opinion ID: 791768
Heading Depth: 2
Heading Rank: 3

Heading: Peanut Quota as Property

Text: 34 The dimensions of any property interest the Members may have in peanut quota allotments are defined by the 1996 FAIR Act, which created the peanut quotas at issue. The 1996 Act created a right to plant and produce a certain amount of peanuts for a guaranteed minimum price. The government argues that this is no more a property right than government issued licenses or permits. The Members contend that this right is a property right because, unlike the permits and licenses discussed in Conti and American Pelagic, the provisions of the 1996 FAIR Act and state case law establish that a peanut quota allotment was transferable and exclusive. We agree with the Members.
35 The right to transfer is a traditional hallmark of property. See Loretto, 458 U.S. at 435-36, 102 S.Ct. 3164 (describing the right to dispose of property as part of an individual's bundle of property rights). The Members have established that the peanut quota was transferable. 36 The 1996 FAIR Act specifically allowed the peanut quota to be transferred, 7 U.S.C. § 1358a(a) (2000), albeit subject to certain limiting conditions. The 1996 FAIR Act provides, in relevant part: 37 Transfers under this section shall be subject to the following conditions: (1) no allotment shall be transferred to a farm in another county; (2) no transfer of an allotment from a farm subject to a mortgage or other lien shall be permitted unless the transfer is agreed to by the lien-holders; (3) no sale of a farm allotment from a farm shall be permitted if any sale of allotment to the same farm has been made within the three immediately preceding crop years; (4) no transfer of allotment shall be effective until a record thereof is filed with the county committee of the county in which such transfer is made and such committee determines that the transfer complies with the provisions of this section; and (5) if the normal yield established by the county committee for the farm to which the allotment is transferred does not exceed the normal yield established by the county committee for the farm from which the allotment is transferred by more than 10 per centum, the lease or sale and transfer shall be approved acre for acre. . . . 38 7 U.S.C. § 1358a(b) (2000). 39 Transferal of an allotment was historically subject to approval by the local branch of the Agricultural Stabilization and Conservation Service (ASCS). See In re Williams, 136 B.R. 311, 313 (Bankr.M.D.Ga.1992). ASCS approval was constrained by federal law, which only allowed transfers to farms within the same or an adjacent county. See Shepard v. Fed. Land Bank of Columbia, 205 Ga.App. 254, 421 S.E.2d 763, 764 (1992). 40 These restrictions on a quota holder's ability to transfer his or her quota do not distinguish quotas from other transferable goods that are inarguably property, e.g. alcohol and firearms. The mere fact that transfers of allotments are not unrestricted does not undermine the importance of transferability to the characterization of quotas as a form of property. 41 Further, the Members point out that peanut quotas were long regarded under state law to be personal assets, in part because of their transferable nature. In support of their claims, the Members cite a series of state court decisions that have held a peanut quota to be a personal asset. See, e.g., Mills v. Davis, 577 So.2d 436 (Ala.1991) (noting that peanut quotas are personal property subject to payment of debts, but ultimately dismissing appeal as untimely); McKim v. Kauffman, 205 Ga.App. 794, 424 S.E.2d 11 (1992) (holding peanut quotas to be property such that a failure to convey a quota under a contract constitutes breach). The government argues that these cases do not stand for the proposition that quotas are compensable property interests, but only illustrate that, in some circumstances, quotas are treated like property. The Members counter that the treatment of quotas as property implies that they are property for all intents and purposes. 42 The cases addressing the issue of whether an agricultural allotment is property are less than straightforward in their conclusions; courts have arrived at different conclusions, compare Walker v. Miller, 507 S.W.2d 606, 609 (Tex.App.1974) (An allotment under the [AAA] has been recognized as intangible personal property, subject to devise, inheritance, transfers and sales, division by a district court in divorce proceedings, and to treatment as property in bankruptcy proceedings. It is recognized that an allotment has a market value, and the statutory restrictions on transfer to not negate the possibility of transfer.) with Callaway v. Block, 763 F.2d 1283, 1290 (11th Cir.1985) (Appellants have no protected property interest in quotas per se nor in the specific quotas they had in 1983 or any other price year.), and even the holdings of individual courts are muddled, seeming to come down on both sides of the issue, see, e.g., In re Jackson, 169 B.R. 742, 749 n. 2 (N.D.Fla.1994) ([C]ourts have stated that an allotment is a type of intangible personal property. . . . However, allotments cannot be considered as ordinary intangible property in isolation from the statutes and regulations which control their transfer.). 43 Nonetheless, to the extent that the government's argument relies on the notion that quotas are not transferable, we must disagree. Despite their apparent ambivalence about whether or not quotas are property, courts across the peanut growing states have held consistently that quotas are transferable, subject to statutory restrictions. See, e.g., Smith v. Smith, 656 So.2d 814 (Ala.App.1994) (holding transferable in divorce); McKim, 424 S.E.2d at 12-13 (recognizing transferable through sale); In re Williams, 136 B.R. 311 (M.D.Fla.1992) (holding transferable in bankruptcy). In this case, the transferability of the quotas supports the conclusion that the quotas constitute property.
44 The Supreme Court has recently recognized that the right to exclude is perhaps the most fundamental of all property interests. Lingle v. Chevron U.S.A., Inc., ___ U.S. ___, ___, 125 S.Ct. 2074, 2082, 161 L.Ed.2d 876 (2005). The Members contend that they have an exclusive interest in their respective peanut quota allotments. They argue that cases such as American Pelagic, Conti, and Mitchell Arms are distinguishable on the ground that the licenses awarded to the various citizens in those cases were not exclusive, whereas the peanut quota allotments awarded here were exclusive. Conversely, the government argues that, at most, peanut quota holders under the 1996 FAIR Act have the power to exclude others from taking advantage of their allotment and that this limited power of exclusion is no different from a fisherman's ability to exclude others from using his fishing license. The government contends that it is still the sole arbiter of who has access to the peanut quota allotments in much the same way as it determines who shall be permitted to obtain a fishing license. The government's position fails to appreciate the difference between a license and a quota. 45 The salient difference between the licenses in the noted cases and the peanut quota allotment is that the value of the peanut quota is considerably more concrete. A license represents a limited suspension of the otherwise general restrictions imposed by the government—in the case of a fishing license, it is merely a representation by the government that it will not interfere with the licensee's efforts to catch fish. The number of licenses to be issued under such a scheme is not fixed. Each additional license dilutes the value of the previously issued licenses. So long as the government retains the discretion to determine the total number of licenses issued, the number of market entrants is indeterminate. Such a license is by its very nature not exclusive. Neither the fisherman nor the firearms salesman can exclude later licensees from entering the market, increasing competition, and thereby diminishing the value of his license. 46 Conversely, the awarding of each additional peanut quota under the 1996 FAIR Act did not increase competition. Peanut quotas represented a right to plant and produce a certain amount of peanuts at a certain price in specific crop years. The statutory scheme limited the number of total pounds of quota peanuts and, in conjunction with the price supports, guaranteed a minimum price on the peanuts. Once a particular quota had been awarded, the granting of further quotas did not dilute that allotment. Under the quota program, the government served as a surety on large agricultural loans for any quota holder who grew peanuts. That benefit, which was a form of monetary subsidy, accompanied every peanut quota that was issued and was not subject to dilution by the issuance of additional peanut quotas. By awarding a quota holder a set price on a fixed quantity of peanuts, the government established a defined market for each quota holder—a market exclusive to that quota holder. Thus, the fact that the government was entitled to confer quota benefits without any prescribed limitation does not mean that the quotas were not a form of property. 47 A property right accrues when the government has seen fit to take a limited resource and secure it for the benefit of an individual or a predetermined group of individuals. The peanut quota holders possessed an excludable interest, because the peanut quota program isolated their particular interest from competition. For the reasons stated, we conclude that the Members established a property interest cognizable under the Fifth Amendment.