Opinion ID: 779259
Heading Depth: 2
Heading Rank: 1

Heading: Evidence of Enforcement

Text: 11 The Fifth Amendment provides in relevant part: nor shall private property be taken for public use, without just compensation. U.S. Const. amend. V, cl. 4. The Supreme Court has stated that [c]ontract rights are a form of property and as such may be taken for a public purpose provided that just compensation is paid. United States Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 19 n. 16, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977). However, governmental interference with contractual rights does not necessarily constitute a taking of property. B&G Enterprises I, 220 F.3d at 1323; Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986). Therefore, as this court stated in B&G Enterprises I, for purposes of this appeal, we accept but do not decide that the vending machine contracts may constitute property, but we conclude that even if they are property rights, a taking did not occur. 220 F.3d at 1323. 12 The Supreme Court has repeatedly emphasized a distinction between takings claims that arise in the context of facial challenges and those that arise in the context of challenges to the application of a statute or regulation to a particular piece of property. As the Court stated in Keystone Bituminous Coal Ass'n v. DeBenedictis, we have recognized an important distinction between a claim that the mere enactment of a statute constitutes a taking and a claim that the particular impact of government action on a specific piece of property requires the payment of just compensation. 480 U.S. 470, 494, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987). The former constitutes a takings claim based on a facial challenge, while the latter constitutes a takings claims based on an as-applied challenge. Cf. id. at 494-95, 107 S.Ct. 1232. Two important consequences derive from this distinction: first, plaintiffs pursuing a facial challenge must show that the provision is unconstitutional in all its applications, and second, plaintiffs pursuing an as-applied challenge must show that the provision was applied to them in such a way that deprived them of their property. 13 A review of takings jurisprudence leads to the conclusion that where an as-applied challenge is not ripe, a facial challenge may still be present. In the context of facial challenges, the mere enactment of legislation may be sufficient to constitute a taking claim. See Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 736 n. 10, 117 S.Ct. 1659, 137 L.Ed.2d 980 (1997) (Such `facial' challenges to regulation are generally ripe the moment the challenged regulation or ordinance is passed, but face an `uphill battle'....); Keystone, 480 U.S. at 495, 107 S.Ct. 1232; Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 295, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981); Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980). 14 Unlike the context of a facial challenge, where mere enactment is sufficient to make a claim ripe, the Supreme Court has not held that it is sufficient in the context of an as-applied challenge. See Danforth v. United States, 308 U.S. 271, 284, 286, 60 S.Ct. 231, 84 L.Ed. 240 (1939) (holding, in the context of a physical taking, that the mere enactment of legislation which authorizes the condemnation of property cannot be a taking because it can be repealed or modified or the appropriations might fail). This stems naturally from the requirement of application to a particular piece of property in as-applied challenges. A statute or regulation cannot be applied to a particular piece of property until it goes into effect. It is only when the rule has gone into effect that a plaintiff may have a ripe as-applied challenge. This may occur on the same day as enactment. In that case, however, it is the fact that the rule has gone into effect, and not the fact that it has been enacted, that makes it ripe on that day. Furthermore, as the Supreme Court has held, even the fact that a rule has gone into effect may not be sufficient to make ripe an as-applied challenge. See Williamson County Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 187, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). This is seen most apparently where the rule is discretionary and the Court has required that a final decision adverse to the property holder is required to create a ripe claim. Id. 15 The Court in Williamson County explained that an as-applied challenge in the context of discretionary regulations is not ripe until the decision-making body has made a final decision with respect to how the regulation will affect the particular property in question. 473 U.S. at 187, 105 S.Ct. 3108; see also Gerlach Livestock Co. v. United States, 111 Ct.Cl. 1, 76 F.Supp. 87, 97 (1948) (So long as it is conjectural whether or not defendant will actually take plaintiff's property, a taking has not occurred, but when conjecture ripens into a definitely asserted purpose and steps are taken to carry out that purpose, the taking may be said to have occurred.); cf. Franconia Assocs. v. United States, ___ U.S. ___, 122 S.Ct. 1993, 2002, 153 L.Ed.2d 132 (2002). However, where a discretionary decision has not been sought, a facial challenge is still available. See Yee v. City of Escondido, 503 U.S. 519, 534, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992). 16 Regulatory takings claims based on as-applied challenges have, in the past, focused on discretionary statutes or regulations, where the governmental authority has discretion to decide to whose property the regulation will apply. In those contexts, as the Supreme Court in Williamson County explained, the taking only occurs when the government makes a final decision with respect to the application of the rule to the particular property in question. Williamson County, 473 U.S. at 187, 105 S.Ct. 3108. In some cases, like this one, the situation is different in that the regulation is not discretionary. See Cienega Gardens v. United States, 265 F.3d 1237, 1246 (Fed.Cir.2001) (Other cases cited by the Owners also conclude that where an agency has no discretion in the application of a contested regulation, an aggrieved party does not need to obtain a final decision from the agency determining the scope of the regulation.); Greenbrier v. United States, 193 F.3d 1348, 1359 (Fed.Cir.1999) (The failure to follow all applicable administrative procedures can only be excused in the limited circumstance in which the administrative entity has no discretion regarding the regulation's applicability and its only option is enforcement.... [I]n such circumstances, no uncertainty remains regarding the impact of the regulation....) (citations omitted). 17 Where a rule is non-discretionary there is no doubt as to whose property it applies; here the rules applied to all tobacco vending machines. That does not mean, however, that to succeed on an as-applied challenge, the property owner need not show that the regulation has been applied to his property. It simply means that in most cases this showing will not be onerous because once the rule is in effect it has been applied to that particular property. For a non-discretionary rule, a final decision, required by Williamson County for an as-applied challenge, is made when the rule goes into effect. 18 In sum, facial challenges to statutes or regulations are ripe as of the enactment of the rule, but, as the Court stated in Keystone, are particularly hard to prove. As-applied challenges require a showing of application to the particular property in question. This requires that the decision-making body make a final decision as to the application of the rule to the particular piece of property, as the Supreme Court stated in Williamson County. For discretionary rules, this occurs after the property owner has sought and been denied a favorable decision from the governing body. For non-discretionary rules, application occurs once the rule goes into effect, whether that be on the date of enactment or some later date. 2 This later date may be statutory or regulatory, i.e. articulated in a rule, or it may be pragmatic, for example in a case where the rule simply cannot be applied until a particular time. 19 In this case, we are presented with an as-applied challenge to federal regulations. Plaintiffs continually assert that their particular contracts were taken as a result of enforcement of the FDA regulations. They have never asserted a broader, facial challenge to the regulations, and even if they had, such a challenge would be moot in the aftermath of Brown & Williamson. Therefore, our takings analysis in this case must conform to the requirements for proving an as-applied taking. 20 Given that this case presents an as-applied challenge, the mere enactment of the regulations is not sufficient to create a taking. As we have already explained, mere enactment is sufficient only in the context of facial challenges. This conclusion is not affected by the fact that this regulation was not discretionary, as mere enactment is not sufficient for as-applied challenges regardless of whether or not they are discretionary. In this case, the FDA issued the final regulations on August 28, 1996, but the regulations were not scheduled to become effective until August 28, 1997. Therefore, as the trial court correctly determined, the earliest date that a taking could have commenced was August 28, 1997. 21 As this challenge is one of application, the next question is: When was the rule applied to the property at issue? The regulation at issue was not discretionary, and therefore, under normal circumstances would have been ripe for an as-applied takings challenge as of its effective date. However, this is not the typical case where application is easily proven, because in this case there is a serious question as to whether this self-executing, non-discretionary rule was applied to the particular piece of property, or to any vending machines whatsoever. Therefore, the essential question in this case is when, if ever, were the vending machine regulations in effect or applied. 22 While the regulation was to go into effect on August 28, 1997, the appellants cannot assert a taking as of that date because on April 25, 1997, the United States District Court for the Middle District of North Carolina issued an injunction preventing the FDA from enforcing the regulations. Coyne Beahm, 966 F.Supp. at 1400-01. The district court's order encompassed the vending machine regulations when it stated: IT IS FURTHER ORDERED that the Food and Drug Administration shall not implement any of the additional Regulations set for implementation on August 28, 1997, pending further orders by the court. Id. We agree with the Court of Federal Claims that this order prevented the FDA from enforcing the regulations on a nationwide basis. The order's plain terms do not limit the injunction to a particular locale, and as the challenge to the regulation in Coyne Beahm was one of facial validity, and not one of application, there is no reason to read the order more narrowly. This stay essentially made the regulations unenforceable as of the date they were to take effect. Therefore, for purposes of the takings analysis, they were regulations which had not yet taken effect, and no taking could occur. 23 That the nationwide stay made the regulations ineffective, however, is a presumption that can be rebutted by appellants if they can demonstrate that after the date the regulations technically went into effect, August 28, 1997, the FDA actually took steps to enforce them, in violation of the court order. Hence, we are left with the subsequent question: Have the appellants created an issue of material fact as to whether the regulations were ever enforced so that they were in effect? The summary judgment would need to be reversed if the appellants had submitted sufficient evidence that the regulations had been enforced anywhere in the United States to create a genuine issue of material fact. See RCFC 56; cf. Brown v. United States, 73 F.3d 1100, 1105 (Fed.Cir.1996) (reversing a grant of summary judgment because there were disputed issues of material fact). The trial court determined that the appellants failed to present any evidence that despite the injunction the regulations were actually enforced anywhere at anytime during this period. 24 Appellants assert that Congress appropriated funds for the FDA that the FDA used to enter into contracts with the states to enforce the tobacco regulations by paying the states to perform the enforcement task. Appellants assert that the states were clearly agents of the federal government in the regulatory enforcement scheme. If that were so, the trial court would need to infer that the states, acting as agents for the federal government, enforced the regulations in contravention of the judicial stay against the FDA. This court, however, has previously rejected this agency argument with respect to the State of California in B&G Enterprises I, 220 F.3d at 1323-25, and it is to no avail here. We must follow the previous panel opinion of this court. Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563, 19 USPQ2d 1111, 1117 (Fed.Cir. 1991) ([W]e note that decisions of a three-judge panel of this court cannot overturn prior precedential decisions.). In B&G Enterprises I, this court explained that there could not be an agency relationship because an agency relationship results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other to so act. 220 F.3d at 1323 (citing Restatement (Second) of Agency § 1(1)). The court determined that there was no manifestation by either the federal government or the State of California of an intent to create an agency relationship under the facts of the case. Id. Appellants have not suggested that the federal government dealt with the other states differently than it did with California. As in B&G Enterprises I, appellants' agency argument is premised on federal funding grants given to the states. The court in B&G Enterprises I rejected that argument, stating: 25 First, both the Supreme Court and our predecessor court ... have held that the federal government's conditioning a state or locality's receipt of federal funds on the state's taking a particular action does not make that state or locality an agent of the federal government.... [T]he conditional grant of funds to California did not subject the federal government to liability for California's actions. 26 Id. at 1323-24 (citations omitted). There is no reason to depart from this court's earlier holding; no agency relationship could be present because the federal government evinced no intent to create one. 27 Appellants also challenge the trial court's finding that the FDA complied with the stay in the Coyne Beahm case. However, they have failed to present any evidence to support this claim, even a simple declaration from a witness stating that she knew from personal knowledge that the FDA had enforced the regulation. 3 28 Appellants have not shown that any issue of disputed fact remains concerning whether the FDA enforced the regulations. Therefore, as the vending machine tobacco regulations were never in effect, and now never will be in effect, we shall not disturb the trial court's grant of summary judgment. The tobacco regulations did not effectuate a taking of any of the appellants' property because they were never enforced.