Legal Document

467 U.S. 986 104 S.Ct. 2862 81 L.Ed.2d 815 William D. RUCKELSHAUS, Administrator, United States Environmental Protection Agencyv.MONSANTO COMPANY. No. 83-196. Supreme Court of the Argued Feb. 27, 1984. Decided June 26, Syllabus The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) authorizes Agency (EPA) to use data submitted by an applicant for registration a covered product (hereinafter pesticide) in evaluating application subsequent applicant, disclose publicly some data. Under data-consideration provisions § 3, as amended 1978, applicants now are granted 10-year period exclusive on new active ingredients contained pesticides registered after September 30, while all other December 31, 1969, may be cited considered support another 15 years original submission if offers compensate submitter. If parties cannot agree amount compensation, either initiate binding arbitration proceeding, submitter refuses participate negotiations or arbitration, he forfeits his claim compensation. Data that do not qualify 15-year compensation EPA without limitation. Section 10, authorizes, general, public disclosure health, safety, environmental even though it result trade secrets. Appellee, company headquartered Missouri, is inventor, producer, seller pesticides, invests substantial sums developing producing end-use products combine such with inert ingredients. Appellee brought suit District injunctive declaratory relief, alleging, inter alia, data-disclosure FIFRA effected "taking" property just violation Fifth Amendment, violated Amendment because they taking private, rather than public, purpose. held challenged unconstitutional, permanently enjoined from implementing enforcing those provisions. Held: 1. To extent appellee has interest its cognizable trade-secret right under Missouri law, protected Taking Clause Amendment. Despite their intangible nature, secrets have many characteristics more traditional forms property. Moreover, this found kinds interests purposes Clause. Pp. 1000-1004. 2. EPA's consideration prior October 22, 1972, does effect taking, but certain constituting secret state law between two dates constitute conditions. 1004-1014. (a) A factor determining whether governmental action short acquisition destruction gone beyond proper "regulation" effects interferes reasonable investment-backed expectations. With respect any effective date 1978 amendments (October 1, 1978), could had reasonable, expectation would keep confidential limits prescribed statute itself. As long aware conditions which submitted, rationally related legitimate Government interest, voluntary exchange economic advantages can hardly called taking. 1005-1008. (b) Prior amendment 1972 (effective 1972), was silent authorized connection registration. Although Trade Secrets provides criminal penalty employee who discloses, manner information revealed him during course official duties, guarantee confidentiality submitters data, and, absent express promise, no before remain inviolate hands. possibility at future time find interest. fortiori, Act, penalizes only unauthorized disclosure, construed sort assurance against internal agency 1008-1010. (c) However, statutory scheme given opportunity protect designating them submission. explicit formed basis expectation. EPA, consistent current FIFRA, were consider version actions frustrate appellee's If, however, pursuant yield loss market value suffered (no having yet occurred), then 1010-1014. 3. Any private occur "public use," "private most direct beneficiaries. So conceivable character, means will attained Congress determine. believed eliminate costly duplication research streamline process, making available consumers quickly. Such procompetitive purose within Congress' police power. regard FIFRA's provisions, optimum assure safe determined Congress, courts. 1014-1016. 4. Tucker remedy provide thus erred enjoining acting Neither nor legislative history discusses interaction inferring withdrawal jurisdiction disfavored partial repeal implication Act. provision later submitter's fails in, comply terms of, negotiated arbitrated settlement merely requires claimant first seek satisfaction through procedure asserting claim. 1016-1019. 5. Because uncompensated suffer operation challenges constitutionality ripe resolution. 1019-1020. 564 F.Supp. 552, vacated remanded. Lawrence G. Wallace, Washington, D.C., appellant. A. Raymond Randolph, Jr., appellee. Justice BLACKMUN delivered opinion Court. 1 In case, we asked review Court's determination several (FIFRA), 61 Stat. 163, amended, 7 U.S.C. 136 et seq., unconstitutional. issue authorize pesticide1 2 * Over past century, control weeds minimize crop damage caused insects, disease, animals become increasingly important American agriculture. See S.Rep. 95-334, p. 32 (1977); 92-838, pp. 3-4, 6-7 (1972) U.S.Code Cong. & Admin.News 3993; H.R.Rep. 92-511, 3-7 (1971). While pesticide led improvements productivity, also increased risk harm humans environment. 6-7; 3-7. regulated nearly 75 years,2 adopted 1947. 163. 3 enacted, primarily licensing labeling statute. It required Secretary Agriculture sale interstate foreign commerce. §§ 3(a) 4(a) 1947 166-167. legislation general standards setting forth types necessary pesticide, including directions use; warnings prevent people, animals, plants; claims made about efficacy product. 2(u)(2) 3(a)(3). 4 Upon request Secretary, submit test supporting label, formula pesticide. (b). specifically prohibited "any relative formulas products," 3(c)(4) 8(c), health safety application.3 5 1970, Department Agriculture's responsibilities transferred newly created Agency, whose Administrator appellant case. Reorganization Plan 35 Fed.Reg. 15623 (1970), U.S.C.App., 1132. 6 mounting concern environment growing perception existing equal task safeguarding see 3-9; 92-970, 9 (1972); 5-13, undertook comprehensive revision adoption Pesticide Control 86 973. transformed into regulatory use, well labeling, pesticides; produced sold both intrastate commerce; provided review, cancellation, suspension registration; gave greater enforcement authority. added criterion registration: determine cause "unreasonable adverse environment." 3(c)(5)(C) (D), 980-981. For litigation, significant pertained pesticide-registration learned procedure. section governing section, designate portions material "trade commercial financial information." 10(a), 989. Another disclosing which, judgment, 10(b). event disagreed designation information" proposed information, institute judgment federal district court. 10(c). 8 included allowed one pertaining similar chemical, offered originally 3(c)(1)(D). effect, instituted mandatory data-licensing scheme. parties, or, failed, subject judicial upon instigation scope provision, limited, designated exempt 10 unless consented. Ibid. did specify addition, failed schemes. 1975, 3(c)(1)(D) applied January 89 755, left definitional question unanswered. Much litigation centered around definition FIFRA. maintained exemption narrow range principally statements formulae manufacturing processes. series lawsuits, data-submitting firms interpretation obtained decisions term secrets" met set Restatement Torts 757 (1939). See, e.g., Mobay Chemical Corp. v. Costle, 447 811 (WD Mo.1978); Chevron Co. 443 1024 (ND Cal.1978). These prevented much based decision register considering reviewing applicant. 7; 95-663, 18 (1977) 1966. 11 these problems embodied 2-5; 15-21; generally Office Programs, FIFRA: Impact Industry (1977), reprinted 34-68, enacted 1978. 92 819. revisions 136a 136h. 12 3(c)(1)(D)(i). All 3(c)(1)(D)(ii).4 proceeding. results proceeding fraud misrepresentation. same 3(c)(1)(D)(iii). 13 Also subsection, 10(d), 136h(d), qualified requesters, notwithstanding prohibition reveal "manufacturing quality processes" details deliberately "the unreasonable injury 10(d)(1)(A) (C).5 representatives multinational companies consents disclosure. 10(g). subsection establishes wrongful contractor 10(f). II 14 Monsanto Company (Monsanto) developer, producer various chemical products, pesticides. Monsanto, St. Louis County, Mo., sells domestic markets. relatively small group invent develop conduct testing ingredients.6 sometimes referred "manufacturing-use products" directly users Rather, must combined "inert ingredients"—chemicals dissolve, dilute, stabilize components. process "end-use produce "formulators." Acting 554 (ED Mo.1983). firm produces ingredient incorporation own sell formulators, both. products. 16 development potential candidate typically expenditure $5 million $15 annually years. take 22 years, usually expect return investment. Id., 555. every manufacturing-use average finally markets, screened tested 20,000 others. significantly better-than-average success rate; successfully markets out 10,000 chemicals tested. 17 like present application. incurred costs excess $23.6 560. instrumentality gaining particular uses additional expand valuable Monsanto's competitors. reason, stringent security measures ensure secrecy sought bringing suit. "contai[n] relate defined Confidential, 562. 19 Court, seeking relief 3(c)(1)(D), 3(c)(2)(A). alleged Finally, 3(c)(1)(D)(ii) violates due rights constitutes unconstitutional delegation 20 After bench trial, concluded possessed exclude others enjoyment preventing prohibiting F.Supp., 566. court "give competitors free ride expense." reasoned appropriated fundamental exclude, appropriation substantial. further being purpose interference good might serve. 566-567. 21 constituted cost when "permanently committed domain effectively destroyed" viewed outweighing benefit ability scrutinize seemed believe derive needed effectiveness approve label. 567, n. finding operated property, compulsory binding-arbitration adequately taken. arbitrary vague, reasoning give arbitrators guidance factors enter concept foreclosed except cases fraud. 567. infirm meet requirements Art. III Constitution. deprivations 10. 567-568. 23 therefore declared 3(c)(2)(A), 10(b), 10(d) sections. Amended Judgment, App. Juris. Statement 41a.7 24 We noted probable jurisdiction. 464 890 (1983). 25 deciding faced four questions: (1) Does Amendment's EPA? (2) so, evaluate applications members interest? (3) there use? (4) compensation? 26 stipulated "Monsanto predecessor agencies Constitution States." 36. Since exact import stipulation clear, address here 27 This never squarely addressed applicability protections kind involved answering now, mindful basic axiom " '[p]roperty . dimensions rules understandings stem independent source law.' Webb's Fabulous Pharmacies, Inc. Beckwith, 449 155, 161, 101 446, 451, 66 358 (1980), quoting Board Regents Roth, 408 564, 577, 2701, 2709, 33 548 (1972). asserts recognizes secrets, 757, Comment b, Torts, Reddi-Wip, Lemay Valve Co., 354 S.W.2d 913, 917 (Mo.App.1962); Harrington National Outdoor Advertising 355 Mo. 524, 532, 196 786, 791 (1946); Luckett Orange Julep 271 289, 302-304, S.W. 740, 743 (1917). defines formula, pattern, device compilation used one's business, gives obtain advantage over know it." b. And research, "contains relates Torts." 28 nature secret, therein owner protects Harrington, supra; Kewanee Oil Bicron Corp., 416 470, 474-476, 94 1879, 1882-1883, 40 315 (1974). Information knowledge known industry secret. supra. individual discloses obligation otherwise extinguished. R. Milgrim, 1.01[2] 29 tangible assignable. Dr. Miles Medical John Park Sons 220 373, 401-402, 31 376, 382, 55 L.Ed. 502 (1911); Painton Bourns, Inc., 442 F.2d 216, 225 (CA2 1971). form res trust, (Second) Trusts 82, e (1959); Scott, Law 82.5, 703 (3d ed. 1967), passes trustee bankruptcy. re Uniservices, 517 492, 496-497 (CA7 1975). 30 Even supports property-like nature. discussing recognized developers "proprietary interest" 31. Further, "entitled" "compensation" "have legal ownership data." H.R.Conf.Rep. 95-1560, (1978), Admin. News 1966, 2045.8 consonant notion "property" extends land goods includes individual's "labour invention." W. Blackstone, Commentaries *405; J. Locke, Second Treatise Civil Government, ch. (J. Gough 1947). person admittedly intangible, Armstrong States, 364 40, 44, 46, 80 1563, 1566, 1567, 1554 (1960) (materialman's lien Maine Clause); Louisville Joint Stock Land Bank Radford, 295 555, 596-602, 854, 866-869, 79 1593 (1935) (real estate protected); Lynch 292 571, 579, 54 840, 843, 78 1434 (1934) (valid contracts meaning Clause). That deserving protection been implicit thinking Court: "It [the Clause] vulgar untechnical sense physical thing citizen exercises law. On hand, employed accurate denote inhering citizen's relation thing, possess, dispose it. point fact, construction phrase latter." General Motors 323 377-378, 65 357, 359, 311 (1945). hold law,that Amendment.9 IV 34 Having confront difficult considers what wrestled occasions. rule "courts deprivation former accretion sovereign Governmental title occupancy held, so complete deprive matter, taking." U.S., 378, S.Ct., 359. 36 PruneYard Shopping Center Robins, 74, 100 2035, 64 741 (1980); Pennsylvania Coal Mahon, 260 393, 415, 43 158, 160, 67 322 (1922). 37 admitted numerous occasions, "this 'been unable "set formula" "justice fairness" require injuries action' deemed compensable Kaiser Aetna 444 164, 175, 383, 390, 62 332 (1979), Penn Central Transportation New York City, 438 104, 124, 98 2646, 2659, 57 631 (1978); accord, Hodel Virginia Surface Mining Reclamation Assn., 452 264, 295, 2352, 2370, 69 (1981). inquiry occurred essentially "ad hoc, factual" inquiry. Aetna, 390. identified should taken account "taking." Among are: character action, impact, expectations." 83, 2041; 390; Central, 2659. last three our attention, force overwhelming, least disposes regarding 38 "reasonable expectation" "unilateral abstract need." 451. amendments—that is, 197810 notice turned 39 Thus, knew that, submission, permission. aware, once expired, (iii). entitled offer until end 15th year relating consulted [could] hearing findings fact" issued "when carry out" duties disclosed time. 10(d). despite statute, chose requisite order receive registration, argue investmentbacked expectations disturbed acts argues statute's requirement up placing condition benefit. Brief 29. But regulate marketing Nor make challenge, restrictions burdens bear 'the living doing business civilized community.' Andrus Allard, 51, 67, 318, 327, 210 422, 162 (Brandeis, J., dissenting); Day-Brite Lighting, 342 421, 424, 72 405, 407, 96 469 (1952). particularly true area, government regulation. willing burden country evidenced fact continued enactment FIFRA.11 561. 41 Corn Products Refining Eddy, 249 427, 431-432, 325, 63 689 (1919) ("The manufacturer maintain compounds processes State, exercise power promotion fair dealing, fairly forth"); Westinghouse Electric Nuclear Regulatory Comm'n, 555 95 (CA3 1977). B 42 amendments, 1905, arguably relevant. duties. 1905 "anti-leak" aimed deterring employees profiting capacities. Chrysler Brown, 441 281, 298-301, 99 1705, 1715-1717, 60 208 (1979). applies formal i.e., approved department head. neither authority Monsanto. hands EPA. focus great regulation, far position concerning focusing issue, 1972,12 confidential. 44 registration.13 Indeed, evidence practice using widespread known.14 strictest confidence exclusively submitted. C 45 situation different, When period, understanding, another, pay compensation" 979. publicly, regime explicitly guaranteed extensive measure use. dissemination 46 "one essential sticks bundle commonly characterized property." 176, 391. central very Once others, holder lost data.15 retain usefulness disclosed—for example, bases refine old advertising tools, countries irrelevant impact right. lies competitive enjoys virtue access destroy edge. 47 encourages us view "preemption" whatever Appellant 27-28. functioning depends uniform said, Supremacy dictates vary depending State located. 28. argument proves too much. "pre-empt" advocated vitality. stated sovereign, "by ipse dixit, transform meant prevent." 452. 48 negotiation application, actual premature. infra, 1019-1020.16 49 summary, 1978;17 law; submission; conflicts period; suffers V 50 next use." recently use" "coterminous sovereign's powers." Hawaii Housing Authority Midkiff, 229, 240, 2321, 2329, 186 (1984); Berman Parker, 348 33, 98, 102, (1954). role courts second-guessing legislature's extremely narrow. Berman, supra, 32, 102. 51 benefits forcing share applicants. beneficiaries citation replicate intensive complex rejected put public. 243-244, 2330-2331; Rindge Los Angeles, 262 700, 707, 689, 692, 1186 (1923); Block Hirsh, 256 135, 458, 459, 865 (1921). 52 determine." 103. Here, behind clear history. Allowing payment already accumulated go time-consuming repeating barrier entry market, thereby allowing competition among producers 30-31, 40-41; 124 Cong.Rec. 29756-29757 (1978) (remarks Sen. Leahy). Congress. 241-242, 2329-2330.18 53 Instead, served effective, label contents, effective. enough courts, decide, embodies question. 123 Cong.Rec., 25706 observe, check decision-making allows likelihood individualized risks peculiar 95-343, Douglas M. Costle); 13. VI Equitable enjoin duly law,19 Larson Domestic Foreign Commerce 337 682, 697, 18, 1457, 1465, 93 1628 (1949). precede Hurley Kincaid, 285 95, 267, 269, 76 637 (1932). Generally, claiming 1491.20 Causby, 328 256, 1062, 1068, 90 1206 (1946) ("If 'founded Constitution' Claims hear determine"); Yearsley Ross Construction 309 21, 413, 84 (1940). 56 assessment lie activity arising "expresses affirmative showing congressional intent permit recourse remedy," "whether [statute] withdrawn grant involving Constitution.' Regional Rail Cases, 419 126, 335, 350, 320 (1974) (emphasis original). 58 Nowhere discussion grants "jurisdiction render founded Constitution," infer takings structure recognized, "repeals disfavored." 133, 353. Amell 384 165-166, 1384, 1388, 445 (1966); Mercantile Langdeau, 371 565, 83 520, 526, 523 (1963); Borden 308 188, 198-199, 182, 181 reaching agreement decision, "shall forfeit application," 3(c)(1)(D)(ii), indicates remedy. where statutes 'capable co-existence, duty clearly expressed intention contrary, each effective.' 133-134, Morton Mancari, 417 535, 551 contrary claim, entirely possible co-exist. better interpretation, therefore, language forfeiture, read exhaustion precondition withdraw remedy, Cf. 154-156, 364-365 (viewing covering shortfall compensation).21 59 whatsoever. intended relevance liability occur. failure mention reflect belief ways assumption event, unambiguous "[W]hether intended," "founded remediable 350. Therefore, belonging adequate exists VII conclude availability depend solely validity affects vindicate relies constitutional allege establish injured acknowledged received 561, negotiate reach outstanding offer. agreement, controversy arbitration. Only arbitrator award ripe. Duke Power Carolina Study Group, 59, 81, 2620, 2634, 595 138, 355. VIII infirmity Operation 1978.22 occurred, forum review. vacated, case remanded proceedings opinion. ordered. WHITE took part O'CONNOR, concurring dissenting part. I join Part IV-B conclusion, ante, 1013, "EPA's my pre-1972 license remand factual interagency 1972. 68 distinguish outset Internal undermine leaves undisturbed. notes, 1007, 11, likely weigh Thus implicitly consented necessarily seems quite clear—indeed scarcely disputes—that permitted customary expected registrations. correctly notes flatly proscribed disclosures. expressly 1970 "policy developed [Monsanto] confidentially [administrative agency] permission submitter." 1009, 14, quotes statement Agricultural Chemicals Association "registration routinely inspection." hard imagine how not, circumstances, 70 analysis appears single sentence: "industry regulation" Ante, 2876. am frankly puzzled broader context convincing degree regulation determines reasonableness confidentiality, little reason before, since deregulatory effect. explain why nondisclosure 989, No prescribed, defraud. still prohibits pain sanctions. acknowledges always extended action. me sanctions strong privacy precatory 71 tacit this: grounded situated close proximity, pages Code, Government. part, able single, overarching, provision. assume wrongdoers entire contents owned copy opened page strange assume, lawyers undoubtedly build appeared Title extend uses. competitors' registrations granted. 564. policy "that another's concludes fragments overwhelming." 1010, 14. nevertheless wisely declines matter erroneous. "District [of Agriculture] [before 1970] begs exactly question, firmly answer simply states "there known." 1009 (footnote omitted). then, ado, declares "could 'reasonable expectation' data] submitted." 1010. 73 expectations, otherwise, heavily existed precise been, appropriate disposition factfinding. follow "pesticides" herbicides, insecticides, fungicides, rodenticides, plant regulators. 2(t) (u) 136(t) (u). area Insecticide 1910, 331, unlawful manufacture insecticides adulterated misbranded. 1947, 1910 repealed replaced 172. Some undertaken legislation, enacted. 1946, Council Governments recommended model Uniform 313, 80th Cong., 1st Sess., (1947). concedes, practice, information. 5, 820-822, 136a(c)(1)(D), reads relevant part: "(i) containing initially [after 1978], adding pertains shall written submitter, ten following registers .; "(ii) subparagraph (D)(i) paragraph, registrant experimental permit, reregistration, may, item fifteen-year accompanied delivery fixed failing subparagraph. ninety days compensate, agreed requesting Mediation Conciliation Service appoint roster Service. [T]he final conclusive, determination, fraud, misrepresentation, misconduct verified complaint affidavits attesting specific instances misconduct. subparagraph, Registration delayed pending fixing compensation; "(iii) expiration subparagraphs (D)(ii) 830, "(1) objectives, methodology, results, significance experiment performed previously separate ingredients, impurities, degradation organism behavior environment, including, limited to, fish wildlife, humans, mammals, plants, soil, studies persistence, translocation fate metabolism, public: Provided, governed Act: Provided further, paragraph that— "(A) processes, "(B) methods testing, detecting, measuring quantity "(C) identity percentage "(2) production, distribution, sale, inventories treatment causes interest." study Programs showed 1977 approximately 400 (1977). estimated largest 75% country's production. 60. correspondingly number marketed year. 1974, introduced. Goring, Costs Commercializing Pesticides, International Conference Entomology, Aug. 20, 1976, Hearings Extension Subcommittee Research Legislation Senate Committee Agriculture, Nutrition, Forestry, 95th 250, 254 conflict holdings Petrolite 519 966 (DC 1981); 252, Pa.1981), aff'd sub nom. Gorsuch, 682 (CA3), cert. denied, 459 988, 103 343, 74 (1982); 499 732 (Del.1980), aff'd, 641 961, 3110, 972 Of course, recognize illustration Contrary contention, 29, Holmes' dictum E.I. du Pont de Nemours Powder Masland, 244 100, 575, 1016 (1917), holding Masland arose dispute preparation trial. stated: "The presenting full defence, said forbidden denies merits defence adjudged chance heard prove approach somewhat differently. word trade-marks unanalyzed expression secondary consequences primary makes rudimentary faith. Whether plaintiffs defendant knows facts, are, special accepted. denied be. Therefore starting stood relations plaintiffs." 575. Holmes deny existence interest; resolution decided spoken terms. Christie Grain 198 236, 250-253, 637, 639-640, 1031 (1905) (Holmes, Court). 1.01[1] 842. date. international one, decide forgo Presumably, situations deems States. became day 998. "publish[ing], divulg[ing], disclos[ing] mak[ing] known" capacity. 1905. violate prohibitions. found: "During USDA administered Mo.1983) apparently testimony Directors Regulation Division, testified instance subsequently marked Association, presented contain exclusive-use provision: "Under inspection. has, authority, registrant." 92d 2d pt. 2, 245 points Interpretation Respect Warning, Caution Antidote Statements Required Appear Labels Economic Poisons, 2267 (1962), presents list toxicological sufficient chemicals. need erroneous another. emphasize allow competitor easily improve technology reveals, harmful side decline profits sales product, stems decrease consumers, edge competitors, record contains recovery paid preclude nullifying scheme, 1975 purported backward submissions 751, ruling implication, misapprehended "barriers entry" create, reduce, barriers entry. 35, 48. arguments directed accomplish objectives. Our promote objective. 242-243, 2330 (slip op. 12); Western Southern Life Ins. Bd. Equalization, 451 648, 671-672, 2070, 2084-2085, 514 1491, reads, Constitution, executive department, implied contract liquidated unliquidated damages sounding tort." Exhaustion occurred. nothing holds class

Classification Label: 3