Ruckelshaus v. Monsanto Co.

No. 83-196. Argued February 27, 1984. Decided June 26, 1984. Appeal from the United States District Court for the Eastern District of Missouri. Judgment vacated and the case remanded (564 F. Supp. 552, vacated and remanded). Opinion of the Court by Justice Blackmun; Justice O'Connor filed an opinion concurring in part and dissenting in part; Justice White took no part in the consideration or decision of the case.

Editorial note. Under FIFRA, an applicant to register a pesticide must submit health, safety, and environmental data. As amended in 1978, the statute allowed the Environmental Protection Agency to consider data previously submitted by one applicant in evaluating a later application, subject to a ten-year period of exclusive use for newly submitted data and a fifteen-year period during which the later applicant must offer compensation, with disputes referred to binding arbitration; the statute also authorised public disclosure of certain submitted data. Monsanto, a major submitter of such data, contended that the provisions took its trade secrets without just compensation.

Editorial note. The District Court held the data-consideration and arbitration provisions unconstitutional and enjoined their operation. The Supreme Court vacated that judgment and remanded, holding the challenge to the disclosure provisions not yet ripe in part and rejecting the taking claim as to data consideration.

Editorial note. Two issues were decided. First, whether a trade secret is property for purposes of the Fifth Amendment: it is, because Missouri law, in accord with the settled understanding of trade-secret law, recognises the interest as property, and property interests are defined by existing rules and understandings from independent sources of law. Second, whether the FIFRA provisions took that property without compensation: as to data submitted after the 1978 amendments, they did not, because the submitter knew the terms on which the agency would receive and use the data and so held no reasonable investment-backed expectation of exclusivity; and to the extent any taking occurred, the statutory arbitration scheme provided the compensation the Constitution requires.

Editorial note. Justice Blackmun reasoned that a trade secret has many of the characteristics of more tangible forms of property — it is assignable, it can form the res of a trust, and it passes to a trustee in bankruptcy — and that its extinguishment by disclosure is a real deprivation. But the takings inquiry then turns on the claimant's reasonable expectations, and a voluntary submission made in exchange for the economic advantage of registration, under a publicly announced scheme, cannot generate an expectation the statute itself denies. The Court also held that where Congress has provided a mechanism for obtaining compensation, an equitable action to invalidate the statute does not lie; the remedy is to pursue compensation.

Editorial note. Monsanto is the treatise's pivotal authority on intangible property: it confirms that constitutional protection is not confined to land or chattels while making that protection depend entirely on the antecedent recognition of the interest by non-constitutional law. It also supplies the investment-backed-expectations analysis in its most disciplined form and demonstrates the significance of an available compensation remedy in regulatory-takings litigation.

Editorial note. Followed and applied. Horne v. Department of Agriculture, 576 U.S. 350 (2015), distinguished the case in holding that a physical appropriation of personal property cannot be justified as a voluntary condition of participating in a regulated market, while leaving Monsanto's expectations analysis intact for regulatory measures short of appropriation. Knick v. Township of Scott, 588 U.S. 180 (2019), altered the procedural landscape for state takings claims without disturbing this holding.

Editorial note. Read with U.S. Const. amend. V (Takings Clause), Board of Regents of State Colleges v. Roth, 408 U.S. 564 (1972), and the treatise chapter on digital and intangible property.