The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)
authorizes the Environmental Protection Agency (EPA) to use data
submitted by an applicant for registration of a covered product
(hereinafter pesticide) in evaluating the application of a
subsequent applicant, and to disclose publicly some of the
submitted data. Under the data-consideration provisions of § 3, as
amended in 1978, applicants now are granted a 10-year period of
exclusive use for data on new active ingredients contained in
pesticides registered after September 30, 1978, while all other
data submitted after December 31, 1969, may be cited and considered
in support of another application for 15 years after the original
submission if the applicant offers to compensate the original
submitter. If the parties cannot agree on the amount of
compensation, either may initiate a binding arbitration proceeding,
and if an original submitter refuses to participate in negotiations
or arbitration, he forfeits his claim for compensation. Data that
do not qualify for either the 10-year period of exclusive use or
the 15-year period of compensation may be considered by EPA without
limitation. Section 10, as amended in 1978, authorizes, in general,
public disclosure of all health, safety, and environmental data
even though it may result in disclosure of trade secrets. Appellee,
a company headquartered in Missouri, is an inventor, producer, and
seller of pesticides, and invests substantial sums in developing
active ingredients for pesticides and in producing end-use products
that combine such ingredients with inert ingredients. Appellee
brought suit in Federal District Court for injunctive and
declaratory relief, alleging,
inter alia, that the
data-consideration and data-disclosure provisions of FIFRA effected
a "taking" of property without just compensation, in violation of
the Fifth Amendment, and that the data-consideration provisions
violated the Amendment because they effected a taking of property
for a private, rather than a public, purpose. The District Court
held that the challenged provisions of FIFRA are unconstitutional,
and permanently enjoined EPA from implementing or enforcing those
provisions.
Page 467 U. S. 987
Held:
1. To the extent that appellee has an interest in its health,
safety, and environmental data cognizable as a trade secret
property right under Missouri law, that property right is protected
by the Taking Clause of the Fifth Amendment. Despite their
intangible nature, trade secrets have many of the characteristics
of more traditional forms of property. Moreover, this Court has
found other kinds of intangible interests to be property for
purposes of the Clause. Pp.
467 U. S.
1000-1004.
2. EPA's consideration or disclosure of data submitted by
appellee prior to October 22, 1972, or after September 30, 1978,
does not effect a taking, but EPA's consideration or disclosure of
certain health, safety, and environmental data constituting a trade
secret under state law and submitted by appellee between those two
dates may constitute a taking under certain conditions. Pp.
467 U. S.
1004-1014.
(a) A factor for consideration in determining whether a
governmental action short of acquisition or destruction of property
has gone beyond proper "regulation" and effects a "taking" is
whether the action interferes with reasonable investment-backed
expectations. With respect to any health, safety, and environmental
data that appellee submitted to EPA after the effective date of the
1978 FIFRA amendments (October 1, 1978), appellee could not have
had a reasonable, investment-backed expectation that EPA would keep
the data confidential beyond the limits prescribed in the amended
statute itself. As long as appellee is aware of the conditions
under which the data are submitted, and the conditions are
rationally related to a legitimate Government interest, a voluntary
submission of data in exchange for the economic advantages of a
registration can hardly be called a taking. Pp.
467 U. S.
1005-1008.
(b) Prior to its amendment in 1972 (effective October 22, 1972),
FIFRA was silent with respect to EPA's authorized use and
disclosure of data submitted to it in connection with an
application for registration. Although the Trade Secrets Act
provides a criminal penalty for a Government employee who
discloses, in a manner not authorized by law, any trade secret
information revealed to him during the course of his official
duties, it is not a guarantee of confidentiality to submitters of
data, and, absent an express promise, appellee had no reasonable,
investment-backed expectation that its information submitted to EPA
before October 22, 1972, would remain inviolate in the EPA's hands.
The possibility was substantial that the Federal Government at some
future time would find disclosure to be in the public interest.
A fortiori, the Trade Secrets Act, which penalizes only
unauthorized disclosure, cannot be construed as any sort of
assurance against internal agency
Page 467 U. S. 988
use of submitted data during consideration of the application of
a subsequent applicant for registration. Pp.
467 U.S. 1008-1010.
(c) However, under the statutory scheme in effect between
October 22, 1972, and September 30, 1978, a submitter was given an
opportunity to protect its trade secrets from disclosure by
designating them as trade secrets at the time of submission. The
explicit governmental guarantee to registration applicants of
confidentiality and exclusive use with respect to trade secrets
during this period formed the basis of a reasonable
investment-backed expectation. If EPA, consistent with current
provisions of FIFRA, were now to disclose such trade secret data or
consider those data in evaluating the application of a subsequent
applicant in a manner not authorized by the version of FIFRA in
effect between 1972 and 1978, its actions would frustrate
appellee's reasonable investment-backed expectation. If, however,
arbitration pursuant to FIFRA were to yield just compensation for
the loss in the market value of appellee's trade secret data
suffered because of EPA's consideration of the data in connection
with another application (no arbitration having yet occurred), then
appellee would have no claim against the Government for a taking.
Pp.
467 U. S.
1010-1014.
3. Any taking of private property that may occur in connection
with EPA's use of data submitted to it by appellee between October
22, 1972, and September 30, 1978, is a taking for a "public use,"
rather than for a "private use," even though subsequent applicants
may be the most direct beneficiaries. So long as a taking has a
conceivable public character, the means by which it will be
attained is for Congress to determine. Congress believed that the
data-consideration provisions would eliminate costly duplication of
research and streamline the registration process, making new
end-use products available to consumers more quickly. Such a
procompetitive purpose is within Congress' police power. With
regard to FIFRA's data-disclosure provisions, the optimum amount of
disclosure to assure the public that a product is safe and
effective is to be determined by Congress, not the courts. Pp.
467 U. S.
1014-1016.
4. A Tucker Act remedy is available to provide appellee with
just compensation for any taking of property that may occur as a
result of FIFRA's data-consideration and data-disclosure
provisions, and thus the District Court erred in enjoining EPA from
acting under those provisions. Neither FIFRA nor its legislative
history discusses the interaction between FIFRA and the Tucker Act,
and inferring a withdrawal of Tucker Act jurisdiction would amount
to a disfavored partial repeal by implication of the Tucker Act.
FIFRA's provision that an original submitter of data forfeits his
right to compensation from a later submitter for the use of the
original submitter's data if he fails to participate in, or comply
with the terms of, a negotiated or arbitrated
Page 467 U. S. 989
compensation settlement merely requires a claimant to first seek
satisfaction through FIFRA's procedure before asserting a Tucker
Act claim. Pp.
467 U. S.
1016-1019.
5. Because the Tucker Act is available as a remedy for any
uncompensated taking appellee may suffer as a result of the
operation of the challenged provisions of FIFRA, appellee's
challenges to the constitutionality of the arbitration and
compensation scheme of FIFRA are not ripe for resolution. Pp.
467 U. S.
1019-1020.
564 F.
Supp. 552, vacated and remanded.
BLACKMUN, J., delivered the opinion of the Court, in which
BURGER, C.J., and BRENNAN, MARSHALL, POWELL, REHNQUIST, and
STEVENS, JJ., joined, and in which O'CONNOR, J., joined, except for
Part IV-B and a statement on p.
467 U. S.
1013. O'CONNOR, J., filed an opinion concurring in part
and dissenting in part,
post, p.
467 U. S.
1021. WHITE, J., took no part in the consideration or
decision of the case.
Page 467 U. S. 990
JUSTICE BLACKMUN delivered the opinion of the Court.
In this case, we are asked to review a United States District
Court's determination that several provisions of the Federal
Insecticide, Fungicide, and Rodenticide Act (FIFRA), 61 Stat. 163,
as amended, 7 U.S.C. § 136
et seq., are unconstitutional.
The provisions at issue authorize the Environmental Protection
Agency (EPA) to use data submitted by an applicant for registration
of a pesticide [
Footnote 1] in
evaluating the application of a subsequent applicant, and to
disclose publicly some of the submitted data.
I
Over the past century, the use of pesticides to control weeds
and minimize crop damage caused by insects, disease, and animals
has become increasingly more important for American agriculture.
See S.Rep. No. 95-334, p. 32 (1977); S.Rep. No. 92-838,
pp. 3-4, 6-7 (1972); H.R.Rep. No. 92511, pp. 3-7 (1971). While
pesticide use has led to improvements in productivity, it has also
led to increased risk of harm to humans and the environment.
See S.Rep. No. 92-838, at 3-4, 6-7; H.R.Rep. NO. 92-511,
at 3-7. Although the Federal Government has regulated pesticide use
for nearly 75 years, [
Footnote
2] FIFRA was first adopted in 1947. 61 Stat. 163.
Page 467 U. S. 991
As first enacted, FIFRA was primarily a licensing and labeling
statute. It required that all pesticides be registered with the
Secretary of Agriculture prior to their sale in interstate or
foreign commerce. §§ 3(a) and 4(a) of the 1947 Act, 61 Stat.
166-167. The 1947 legislation also contained general standards
setting forth the types of information necessary for proper
labeling of a registered pesticide, including directions for use;
warnings to prevent harm to people, animals, and plants; and claims
made about the efficacy of the product. §§ 2(u)(2) and 3(a)(3).
Upon request of the Secretary, an applicant was required to
submit test data supporting the claims on the label, including the
formula for the pesticide. §§ 4(a) and (b). The 1947 version of
FIFRA specifically prohibited disclosure of "any information
relative to formulas of products," §§ 3(c)(4) and 8(c), but was
silent with respect to the disclosure of any of the health and
safety data submitted with an application. [
Footnote 3]
In 1970, the Department of Agriculture's FIFRA responsibilities
were transferred to the then newly created Environmental Protection
Agency, whose Administrator is the appellant in this case.
See Reorganization Plan No. 3 of 1970, 35 Fed.Reg. 15623
(1970), 5 U.S.C.App. p. 1132.
Because of mounting public concern about the safety of
pesticides and their effect on the environment, and because of a
growing perception that the existing legislation was not equal to
the task of safeguarding the public interest,
see S.Rep.
No. 92-838, at 3-9; S.Rep. No. 92-970, p. 9 (1972); H.R.Rep. No.
92-511, at 5-13, Congress undertook a comprehensive revision of
FIFRA through the adoption of the Federal Environmental Pesticide
Control Act of 1972, 86 Stat. 973. The amendments transformed FIFRA
from a labeling law into a comprehensive regulatory statute.
H.R.Rep. No. 92-511, at 1. As amended, FIFRA regulated the
Page 467 U. S. 992
use, as well as the sale and labeling, of pesticides; regulated
pesticides produced and sold in both intrastate and interstate
commerce; provided for review, cancellation, and suspension of
registration; and gave EPA greater enforcement authority. Congress
also added a new criterion for registration: that EPA determine
that the pesticide will not cause "unreasonable adverse effects on
the environment." §§ 3(c)(5)(C) and (D), 86 Stat. 980-981.
For purposes of this litigation, the most significant of the
1972 amendments pertained to the pesticide registration procedure
and the public disclosure of information learned through that
procedure. Congress added to FIFRA a new section governing public
disclosure of data submitted in support of an application for
registration. Under that section, the submitter of data could
designate any portions of the submitted material it believed to be
"trade secrets or commercial or financial information." § 10(a), 86
Stat. 989. Another section prohibited EPA from publicly disclosing
information which, in its judgment, contained or related to "trade
secrets or commercial or financial information." § 10(b). In the
event that EPA disagreed with a submitter's designation of certain
information as "trade secrets or commercial or financial
information" and proposed to disclose that information, the
original submitter could institute a declaratory judgment action in
federal district court. § 10(c).
The 1972 amendments also included a provision that allowed EPA
to consider data submitted by one applicant for registration in
support of another application pertaining to a similar chemical,
provided the subsequent applicant offered to compensate the
applicant who originally submitted the data. § 3(c)(1)(D). In
effect, the provision instituted a mandatory data-licensing scheme.
The amount of compensation was to be negotiated by the parties, or,
in the event negotiations failed, was to be determined by EPA,
subject to judicial review upon the instigation of the original
data submitter. The scope of the 1972 data-consideration provision,
however,
Page 467 U. S. 993
was limited, for any data designated as "trade secrets or
commercial or financial information" exempt from disclosure under §
10 could not be considered at all by EPA to support another
registration application unless the original submitter consented.
Ibid.
The 1972 amendments did not specify standards for the
designation of submitted data as "trade secrets or commercial or
financial information." In addition, Congress failed to designate
an effective date for the data-consideration and disclosure
schemes. In 1975, Congress amended § 3(c)(1)(D) to provide that the
data-consideration and data-disclosure provisions applied only to
data submitted on or after January 1, 1970, 89 Stat. 755, but left
the definitional question unanswered.
Much litigation centered around the definition of "trade secrets
or commercial or financial information" for the purposes of the
data-consideration and data-disclosure provisions of FIFRA. EPA
maintained that the exemption from consideration or disclosure
applied only to a narrow range of information, principally
statements of formulae and manufacturing processes. In a series of
lawsuits, however, data-submitting firms challenged EPA's
interpretation and obtained several decisions to the effect that
the term "trade secrets" applied to any data, including health,
safety, and environmental data, that met the definition of trade
secrets set forth in Restatement of Torts § 757 (1939).
See,
e.g., Mobay Chemical Corp. v. Costle, 447 F.
Supp. 811 (WD Mo.1978);
Chevron Chemical Co. v.
Costle, 443 F.
Supp. 1024 (ND Cal.1978). These decisions prevented EPA from
disclosing much of the data on which it based its decision to
register pesticides and from considering the data submitted by one
applicant in reviewing the application of a later applicant.
See S.Rep. No. 95-334, at 7; H.R.Rep. No. 95-663, p. 18
(1977).
Because of these and other problems with the regulatory scheme
embodied in FIFRA as amended in 1972,
see S.Rep.
Page 467 U. S. 994
No. 95-334, at 2-5; H.R.Rep. No. 95-663, at 15-21;
see
generally EPA Office of Pesticide Programs, FIFRA: Impact on
the Industry (1977), reprinted in S.Rep. No. 95-334, at 34-68,
Congress enacted other amendments to FIFRA in 1978. These were
effected by the Federal Pesticide Act of 1978, 92 Stat. 819. The
new amendments included a series of revisions in the
data-consideration and data-disclosure provisions of FIFRA's §§ 3
and 10, 7 U.S.C. §§ 136a and 136h. Under FIFRA, as amended in 1978,
applicants are granted a 10-year period of exclusive use for data
on new active ingredients contained in pesticides registered after
September 30, 1978. § 3(c)(1)(D)(i). All other data submitted after
December 31, 1969, may be cited and considered in support of
another application for 15 years after the original submission if
the applicant offers to compensate the original submitter. §
3(c)(1)(D)(ii). [
Footnote 4] If
the parties cannot agree on the amount of
Page 467 U. S. 995
compensation, either may initiate a binding arbitration
proceeding. The results of the arbitration proceeding are not
subject to judicial review, absent fraud or misrepresentation. The
same statute provides that an original submitter who refuses to
participate in negotiations or in the arbitration proceeding
forfeits his claim for compensation. Data that do not qualify for
either the 10-year period of exclusive use or the 15-year period of
compensation may be considered by EPA without limitation. §
3(c)(1)(D)(iii).
Also in 1978, Congress added a new subsection, § 10(d), 7 U.S.C.
§ 136h(d), that provides for disclosure of all health,
Page 467 U. S. 996
safety, and environmental data to qualified requesters,
notwithstanding the prohibition against disclosure of trade secrets
contained in § 10(b). The provision, however, does not authorize
disclosure of information that would reveal "manufacturing or
quality control processes" or certain details about deliberately
added inert ingredients unless
"the Administrator has first determined that the disclosure is
necessary to protect against an unreasonable risk of injury to
health or the environment."
§§ 10(d)(1)(A) to (C). [
Footnote
5] EPA may not disclose data to representatives of foreign or
multinational pesticide companies unless the original submitter
of
Page 467 U. S. 997
the data consents to the disclosure. § 10(g). Another subsection
establishes a criminal penalty for wrongful disclosure by a
Government employee or contractor of confidential or trade secret
data. § 10(f).
II
Appellee Monsanto Company (Monsanto) is an inventor, developer,
and producer of various kinds of chemical products, including
pesticides. Monsanto, headquartered in St. Louis County, Mo., sells
in both domestic and foreign markets. It is one of a relatively
small group of companies that invent and develop new active
ingredients for pesticides and conduct most of the research and
testing with respect to those ingredients. [
Footnote 6]
These active ingredients are sometimes referred to as
"manufacturing-use products" because they are not generally sold
directly to users of pesticides. Rather, they must first be
combined with "inert ingredients" -- chemicals that dissolve,
dilute, or stabilize the active components. The results of this
process are sometimes called "end-use products," and the firms that
produce end-use products are called "formulators."
See the
opinion of the District Court in this case,
Monsanto Co. v.
Acting Administrator, United States Environmental Protection
Agency, 564 F.
Supp. 552, 554 (ED Mo.1983). A firm that produces an active
ingredient may
Page 467 U. S. 998
use it for incorporation into its own end-use products, may sell
it to formulators, or may do both. Monsanto produces both active
ingredients and end-use products.
Ibid.
The District Court found that development of a potential
commercial pesticide candidate typically requires the expenditure
of $5 million to $15 million annually for several years. The
development process may take between 14 and 22 years, and it is
usually that long before a company can expect any return on its
investment.
Id. at 555. For every manufacturing-use
pesticide the average company finally markets, it will have
screened and tested 20,000 others. Monsanto has a significantly
better-than-average success rate; it successfully markets 1 out of
every 10,000 chemicals tested.
Ibid.
Monsanto, like any other applicant for registration of a
pesticide, must present research and test data supporting its
application. The District Court found that Monsanto had incurred
costs in excess of $23.6 million in developing the health, safety,
and environmental data submitted by it under FIFRA.
Id. at
560. The information submitted with an application usually has
value to Monsanto beyond its instrumentality in gaining that
particular application. Monsanto uses this information to develop
additional end-use products and to expand the uses of its
registered products. The information would also be valuable to
Monsanto's competitors. For that reason, Monsanto has instituted
stringent security measures to ensure the secrecy of the data.
Ibid.
It is this health, safety, and environmental data that Monsanto
sought to protect by bringing this suit. The District Court found
that much of these data "contai[n] or relat[e] to trade secrets as
defined by the Restatement of Torts and Confidential, commercial
information."
Id. at 562.
Monsanto brought suit in District Court, seeking injunctive and
declaratory relief from the operation of the data-consideration
provisions of FIFRA's § 3(c)(1)(D), and the data-disclosure
provisions of FIFRA's § 10 and the related § 3(c)(2)(A). Monsanto
alleged that all of the challenged provisions
Page 467 U. S. 999
effected a "taking" of property without just compensation, in
violation of the Fifth Amendment. In addition, Monsanto alleged
that the data-consideration provisions violated the Amendment
because they effected a taking of property for a private, rather
than a public, purpose. Finally, Monsanto alleged that the
arbitration scheme provided by § 3(c)(1)(D)(ii) violates the
original submitter's due process rights, and constitutes an
unconstitutional delegation of judicial power.
After a bench trial, the District Court concluded that Monsanto
possessed property rights in its submitted data, specifically
including the right to exclude others from the enjoyment of such
data by preventing their unauthorized use and by prohibiting their
disclosure. 564 F. Supp. at 566. The court found that the
challenged data-consideration provisions "give Monsanto's
competitors a free ride at Monsanto's expense."
Ibid. The
District Court reasoned that § 3(c)(1)(D) appropriated Monsanto's
fundamental right to exclude, and that the effect of that
appropriation is substantial. The court further found that
Monsanto's property was being appropriated for a private purpose,
and that this interference was much more significant than the
public good that the appropriation might serve. 564 F. Supp. at
566-567.
The District Court also found that operation of the disclosure
provisions of FIFRA constituted a taking of Monsanto's property.
The cost incurred by Monsanto when its property is "permanently
committed to the public domain and thus effectively destroyed" was
viewed by the District Court as significantly outweighing any
benefit to the general public from having the ability to scrutinize
the data, for the court seemed to believe that the general public
could derive all the assurance it needed about the safety and
effectiveness of a pesticide from EPA's decision to register the
product and to approve the label.
Id. at 567, and n.
4.
After finding that the data-consideration provisions operated to
effect a taking of property, the District Court found
Page 467 U. S. 1000
that the compulsory binding arbitration scheme set forth in §
3(c)(1)(D)(ii) did not adequately provide compensation for the
property taken. The court found the arbitration provision to be
arbitrary and vague, reasoning that the statute does not give
arbitrators guidance as to the factors that enter into the concept
of just compensation, and that judicial review is foreclosed except
in cases of fraud. 564 F. Supp. at 567. The District Court also
found that the arbitration scheme was infirm because it did not
meet the requirements of Art. III of the Constitution.
Ibid. Finally, the court found that a remedy under the
Tucker Act was not available for the deprivations of property
effected by §§ 3 and 10. 564 F. Supp. at 567-568.
The District Court therefore declared §§ 3(c)(1)(D), 3(c)(2)(A),
10(b), and 10(d) of FIFRA, as amended by the Federal Pesticide Act
of 1978, to be unconstitutional, and permanently enjoined EPA from
implementing or enforcing those sections.
See Amended
Judgment, App. to Juris.Statement 41a. [
Footnote 7]
We noted probable jurisdiction. 464 U.S. 890 (1983).
III
In deciding this case, we are faced with four questions: (1)
Does Monsanto have a property interest protected by the Fifth
Amendment's Taking Clause in the health, safety, and environmental
data it has submitted to EPA? (2) If so, does EPA's use of the data
to evaluate the applications of others or EPA's disclosure of the
data to qualified members of the public effect a taking of that
property interest? (3) If there
Page 467 U. S. 1001
is a taking, is it a taking for a public use? (4) If there is a
taking for a public use, does the statute adequately provide for
just compensation?
For purposes of this case, EPA has stipulated that
"Monsanto has certain property rights in its information,
research and test data that it has submitted under FIFRA to EPA and
its predecessor agencies which may be protected by the Fifth
Amendment to the Constitution of the United States."
App. 36. Since the exact import of that stipulation is not
clear, we address the question whether the data at issue here can
be considered property for the purposes of the Taking Clause of the
Fifth Amendment.
This Court never has squarely addressed the applicability of the
protections of the Taking Clause of the Fifth Amendment to
commercial data of the kind involved in this case. In answering the
question now, we are mindful of the basic axiom that
"'[p]roperty interests . . . are not created by the
Constitution. Rather, they are created and their dimensions are
defined by existing rules or understandings that stem from an
independent source such as state law.'"
Webb's Fabulous Pharmacies, Inc. v. Beckwith,
449 U. S. 155,
449 U. S. 161
(1980), quoting
Board of Regents v. Roth, 408 U.
S. 564,
408 U. S. 577
(1972). Monsanto asserts that the health, safety, and environmental
data it has submitted to EPA are property under Missouri law, which
recognizes trade secrets, as defined in § 757, Comment b, of the
Restatement of Torts, as property.
See Reddi-Wip, Inc. v. Lemay
Valve Co., 354 S.W.2d
913, 917 (Mo.App.1962);
Harrington v. National Outdoor
Advertising Co., 355 Mo. 524, 532, 196 S.W.2d 786, 791 (1946);
Luckett v. Orange Julep Co., 271 Mo. 289, 302-304, 196
S.W. 740, 743 (1917). The Restatement defines a trade secret as
"any formula, pattern, device or compilation of information
which is used in one's business, and which gives him an opportunity
to obtain an advantage over competitors who do not know or use
it."
§ 757, Comment b. And the parties have stipulated that much of
the information, research, and test data that Monsanto has
submitted under
Page 467 U. S. 1002
FIFRA to EPA "contains or relates to trade secrets as defined by
the Restatement of Torts." App. 36.
Because of the intangible nature of a trade secret, the extent
of the property right therein is defined by the extent to which the
owner of the secret protects his interest from disclosure to
others.
See Harrington, supra; Reddi-Wip, supra;
Restatement of Torts,
supra; see also Kewanee Oil Co. v. Bicron
Corp., 416 U. S. 470,
416 U. S.
474-476 (1974). Information that is public knowledge or
that is generally known in an industry cannot be a trade secret.
Restatement of Torts,
supra. If an individual discloses
his trade secret to others who are under no obligation to protect
the confidentiality of the information, or otherwise publicly
discloses the secret, his property right is extinguished.
See
Harrington, supra; 1 R. Milgrim, Trade Secrets § 1.01[2]
(1983).
Trade secrets have many of the characteristics of more tangible
forms of property. A trade secret is assignable.
See, e.g., Dr.
Miles Medical Co. v. John D. Park & Sons Co., 220 U.
S. 373,
220 U. S.
401-402 (1911);
Painton & Co. v. Bourns,
Inc., 442 F.2d 216, 225 (CA2 1971). A trade secret can form
the
res of a trust, Restatement (Second) of Trusts § 82,
Comment e (1959); 1 A. Scott, Law of Trusts § 82.5, p. 703 (3d
ed.1967), and it passes to a trustee in bankruptcy.
See In re
Uniservices, Inc., 517 F.2d 492, 496-497 (CA7 1975).
Even the manner in which Congress referred to trade secrets in
the legislative history of FIFRA supports the general perception of
their property-like nature. In discussing the 1978 amendments to
FIFRA, Congress recognized that data developers like Monsanto have
a "proprietary interest" in their data. S.Rep. No. 95-334, at 31.
Further, Congress reasoned that submitters of data are "entitled"
to "compensation" because they "have legal ownership of the data."
H.R.Conf.Rep. No. 95-1560, p. 29 (1978). [
Footnote 8] This general
Page 467 U. S. 1003
perception of trade secrets as property is consonant with a
notion of "property" that extends beyond land and tangible goods
and includes the products of an individual's "labour and
invention." 2 W. Blackstone, Commentaries *405;
see
generally J. Locke, The Second Treatise of Civil Government,
ch. 5 (J. Gough ed.1947).
Although this Court never has squarely addressed the question
whether a person can have a property interest in a trade secret,
which is admittedly intangible, the Court has found other kinds of
intangible interests to be property for purposes of the Fifth
Amendment's Taking Clause.
See, e.g., Armstrong v. United
States, 364 U. S. 40,
364 U. S. 44, 46
(1960) (materialman's lien provided for under Maine law protected
by Taking Clause);
Louisville Joint Stock Land Bank v.
Radford, 295 U. S. 555,
295 U. S.
596-602 (1935) (real estate lien protected);
Lynch
v. United States, 292 U. S. 571,
292 U. S. 579
(1934) (valid contracts are property within meaning of the Taking
Clause). That intangible property rights protected by state law are
deserving of the protection of the Taking Clause has long been
implicit in the thinking of this Court:
"It is conceivable that [the term 'property' in the Taking
Clause] was used in its vulgar and untechnical sense of the
physical thing with respect to which the citizen exercises rights
recognized by law. On the other hand, it may have been employed in
a more accurate sense to denote the group of rights inhering in the
citizen's relation to the physical thing, as the right to possess,
use and dispose of it. In point of fact, the construction given the
phrase has been the latter."
United States v. General Motors Corp., 323 U.
S. 373,
323 U. S.
377-378 (1945).
We therefore hold that, to the extent that Monsanto has an
interest in its health, safety, and environmental data cognizable
as a trade secret property right under Missouri law,
Page 467 U. S. 1004
that property right is protected by the Taking Clause of the
Fifth Amendment. [
Footnote
9]
IV
Having determined that Monsanto has a property interest in the
data it has submitted to EPA, we confront the difficult question
whether a "taking" will occur when EPA discloses those data or
considers the data in evaluating another application for
registration. The question of what constitutes a "taking" is one
with which this Court has wrestled on many occasions. It has never
been the rule that only governmental acquisition or destruction of
the property of an individual constitutes a taking, for
"courts have held that the deprivation of the former owner,
rather than the accretion of a right or interest
Page 467 U. S. 1005
to the sovereign constitutes the taking. Governmental action
short of acquisition of title or occupancy has been held, if its
effects are so complete as to deprive the owner of all or most of
his interest in the subject matter, to amount to a taking."
United States v. General Motors Corp., 323 U.S. at
323 U. S. 378.
See also PruneYard Shopping Center v. Robins, 447 U. S.
74 (1980);
Pennsylvania Coal Co. v. Mahon,
260 U. S. 393,
260 U. S.
415(1922).
As has been admitted on numerous occasions,
"this Court has generally "been unable to develop any
set
formula' for determining when `justice and fairness' require that
economic injuries caused by public action""
must be deemed a compensable taking.
Kaiser Aetna v. United
States, 444 U. S. 164,
444 U. S. 175
(1979), quoting
Penn Central Transportation Co. v. New York
City, 438 U. S. 104,
438 U. S. 124
(1978);
accord, Hodel v. Virginia Surface Mining &
Reclamation Assn., Inc., 452 U. S. 264,
452 U. S. 295
(1981). The inquiry into whether a taking has occurred is
essentially an "
ad hoc, factual" inquiry.
Kaiser-Aetna, 444 U.S. at
444 U. S. 175.
The Court, however, has identified several factors that should be
taken into account when determining whether a governmental action
has gone beyond "regulation" and effects a "taking." Among those
factors are:
"the character of the governmental action, its economic impact,
and its interference with reasonable investment-backed
expectations."
PruneYard Shopping Center v. Robins, 447 U.S. at
447 U. S. 83;
see Kaiser-Aetna, 444 U.S. at
444 U. S. 175;
Penn Central, 438 U.S. at
438 U. S. 124.
It is to the last of these three factors that we now direct our
attention, for we find that the force of this factor is so
overwhelming, at least with respect to certain of the data
submitted by Monsanto to EPA, that it disposes of the taking
question regarding those data.
A
A "reasonable investment-backed expectation" must be more than a
"unilateral expectation or an abstract need."
Page 467 U. S. 1006
Webb's Fabulous Pharmacies, 449 U.S. at
449 U. S. 161.
We find that, with respect to any health, safety, and environmental
data that Monsanto submitted to EPA after the effective date of the
1978 FIFRA amendments -- that is, on or after October 1, 1978
[
Footnote 10] -- Monsanto
could not have had a reasonable, investment-backed expectation that
EPA would keep the data confidential beyond the limits prescribed
in the amended statute itself. Monsanto was on notice of the manner
in which EPA was authorized to use and disclose any data turned
over to it by an applicant for registration.
Thus, with respect to any data submitted to EPA on or after
October 1, 1978, Monsanto knew that, for a period of 10 years from
the date of submission, EPA would not consider those data in
evaluating the application of another without Monsanto's
permission. § 3(c)(1)(D)(i). It was also aware, however, that, once
the 10-year period had expired, EPA could use the data without
Monsanto's permission. §§ 3(c)(1)(D)(ii) and (iii). Monsanto was
further aware that it was entitled to an offer of compensation from
the subsequent applicant only until the end of the 15th year from
the date of submission. § 3(c)(1)(D)(iii). In addition, Monsanto
was aware that information relating to formulae of products could
be revealed by EPA to "any Federal agency consulted and [could] be
revealed at a public hearing or in findings of fact" issued by EPA
"when necessary to carry out" EPA's duties under FIFRA. § 10(b).
The statute also gave Monsanto notice that much of the health,
safety, and efficacy data provided by it could be disclosed to the
general public at any time. § 10(d). If, despite the
data-consideration and data-disclosure provisions in the statute,
Monsanto chose to submit the requisite data in order to receive a
registration, it can hardly argue that its reasonable
investment-
Page 467 U. S. 1007
backed expectations are disturbed when EPA acts to use or
disclose the data in a manner that was authorized by law at the
time of the submission.
Monsanto argues that the statute's requirement that a submitter
give up its property interest in the data constitutes placing an
unconstitutional condition on the right to a valuable Government
benefit.
See Brief for Appellee 29. But Monsanto has not
challenged the ability of the Federal Government to regulate the
marketing and use of pesticides. Nor could Monsanto successfully
make such a challenge, for such restrictions are the burdens we all
must bear in exchange for "
the advantage of living and doing
business in a civiized community.'" Andrus v. Allard,
444 U. S. 51,
444 U. S. 67
(1979), quoting Pennsylvania Coal Co. v. Mahon, 260 U.S.
at 260 U. S. 422
(Brandeis, J., dissenting); see Day-Brite Lighting, Inc. v.
Missouri, 342 U. S. 421,
342 U. S. 424
(1952). This is particularly true in an area, such as pesticide
sale and use, that has long been the source of public concern and
the subject of government regulation. That Monsanto is willing to
bear this burden in exchange for the ability to market pesticides
in this country is evidenced by the fact that it has continued to
expand its research and development and to submit data to EPA
despite the enactment of the 1978 amendments to FIFRA. [Footnote 11] 564 F. Supp. at
561.
Thus, as long as Monsanto is aware of the conditions under which
the data are submitted, and the conditions are rationally related
to a legitimate Government interest, a voluntary submission of data
by an applicant in exchange for the economic advantages of a
registration can hardly be called a taking.
See Corn
Products Re.fining Co. v. Eddy, 249 U.S.
Page 467 U. S. 1008
427,
249 U. S.
431-432 (1919) ("The right of a manufacturer to maintain
secrecy as to his compounds and processes must be held subject to
the right of the State, in the exercise of its police power and in
promotion of fair dealing, to require that the nature of the
product be fairly set forth");
see also Westinghouse Electric
Corp. v. United States Nuclear Reglatory Comm'n, 555 F.2d 82,
95 (CA3 1977).
B
Prior to the 1972 amendments, FIFRA was silent with respect to
EPA's authorized use and disclosure of data submitted to it in
connection with an application for registration. Another statute,
the Trade Secrets Act, 18 U.S.C. § 1905, however, arguably is
relevant. That Act is a general criminal statute that provides a
penalty for any employee of the United States Government who
discloses, in a manner not authorized by law, any trade secret
information that is revealed to him during the course of his
official duties. This Court has determined that § 1905 is more than
an "anti-leak" statute aimed at deterring Government employees from
profiting by information they receive in their official capacities.
See Chrysler Corp. v. Brow, 441 U.
S. 281,
441 U. S.
298-301 (1979). Rather, § 1905 also applies to formal
agency action,
i.e., action approved by the agency or
department head.
Ibid.
It is true that, prior to the 1972 amendments, neither FIFRA nor
any other provision of law gave EPA authority to disclose data
obtained from Monsanto. But the Trade Secrets Act is not a
guarantee of confidentiality to submitters of data, and, absent an
express promise, Monsanto had no reasonable, investment-backed
expectation that its information would remain inviolate in the
hands of EPA. In an industry that long has been the focus of great
public concern and significant government regulation, the
possibility was substantial that the Federal Government, which had
thus far taken no position on disclosure of health, safety, and
environmental data concerning pesticides, upon focusing on the
issue, would
Page 467 U. S. 1009
find disclosure to be in the public interest. Thus, with respect
to data submitted to EPA in connection with an application for
registration prior to October 22, 1972, [
Footnote 12] the Trade Secrets Act provided no basis
for a reasonable investment-backed expectation that data submitted
to EPA would remain confidential.
A fortiori, the Trade Secrets Act cannot be construed
as any sort of assurance against internal agency use of submitted
data during consideration of the application of a subsequent
applicant for registration. [
Footnote 13] Indeed, there is some evidence that the
practice of using data submitted by one company during
consideration of the application of a subsequent applicant was
widespread and well known. [
Footnote 14] Thus,
Page 467 U. S. 1010
with respect to any data that Monsanto submitted to EPA prior to
the effective date of the 1972 amendments to FIFRA, we hold that
Monsanto could not have had a "reasonable investment-backed
expectation" that EPA would maintain those data in strictest
confidence and would use them exclusively for the purpose of
considering the Monsanto application in connection with which the
data were submitted.
C
The situation may be different, however, with respect to data
submitted by Monsanto to EPA during the period from October 22,
1972, through September 30, 1978. Under the statutory scheme then
in effect, a submitter was given an opportunity to protect its
trade secrets from disclosure by designating them as trade secrets
at the time of submission. When Monsanto provided data to EPA
during this period, it was with the understanding, embodied in
FIFRA, that EPA was free to use any of the submitted data that were
not trade secrets in considering the application of another,
provided
Page 467 U. S. 1011
that EPA required the subsequent applicant to pay "reasonable
compensation" to the original submitter. § 3(c)(1)(D), 86 Stat.
979. But the statute also gave Monsanto explicit assurance that EPA
was prohibited from disclosing publicly, or considering in
connection with the application of another, any data submitted by
an applicant if both the applicant and EPA determined the data to
constitute trade secrets. § 10, 86 Stat. 989. Thus, with respect to
trade secrets submitted under the statutory regime in force between
the time of the adoption of the 1972 amendments and the adoption of
the 1978 amendments, the Federal Government had explicitly
guaranteed to Monsanto and other registration applicants an
extensive measure of confidentiality and exclusive use. This
explicit governmental guarantee formed the basis of a reasonable
investment-backed expectation. If EPA, consistent with the
authority granted it by the 1978 FIFRA amendments, were now to
disclose trade secret data or consider those data in evaluating the
application of a subsequent applicant in a manner not authorized by
the version of FIFRA in effect between 1972 and 1978, EPA's actions
would frustrate Monsanto's reasonable investment-backed expectation
with respect to its control over the use and dissemination of the
data it had submitted.
The right to exclude others is generally "one of the most
essential sticks in the bundle of rights that are commonly
characterized as property."
Kaiser-Aetna, 444 U.S. at
444 U. S. 176.
With respect to a trade secret, the right to exclude others is
central to the very definition of the property interest. Once the
data that constitute a trade secret are disclosed to others, or
others are allowed to use those data, the holder of the trade
secret has lost his property interest in the data. [
Footnote 15]
Page 467 U. S. 1012
That the data retain usefulness for Monsanto even after they are
disclosed -- for example, as bases from which to develop new
products or refine old products, as marketing and advertising
tools, or as information necessary to obtain registration in
foreign countries -- is irrelevant to the determination of the
economic impact of the EPA action on Monsanto's property right. The
economic value of that property right lies in the competitive
advantage over others that Monsanto enjoys by virtue of its
exclusive access to the data, and disclosure or use by others of
the data would destroy that competitive edge.
EPA encourages us to view the situation not as a taking of
Monsanto's property interest in the trade secrets, but as a
"preemption" of whatever property rights Monsanto may have had in
those trade secrets. Brief for Appellant 27-28. The agency argues
that the proper functioning of the comprehensive FIFRA registration
scheme depends upon its uniform application to all data. Thus, it
is said, the Supremacy Clause dictates that the scheme not vary
depending on the property law of the State in which the submitter
is located.
Id. at 28. This argument proves too much. If
Congress can "preempt" state property law in the manner advocated
by EPA, then the Taking Clause has lost all vitality. This Court
has stated that a sovereign,
"by
ipse dixit, may not transform private property into
public property without compensation. . . . This is the very kind
of thing that the Taking Clause of the Fifth Amendment was meant to
prevent."
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.
at
449 U. S.
164.
Page 467 U. S. 1013
If a negotiation or arbitration pursuant to § 3(c)(1)(D)(ii)
were to yield just compensation to Monsanto for the loss in the
market value of its trade secret data suffered because of EPA's
consideration of the data in connection with another application,
then Monsanto would have no claim against the Government for a
taking. Since no arbitration has yet occurred with respect to any
use of Monsanto's data, any finding that there has been an actual
taking would be premature.
See infra at
467 U. S.
1O19-1020. [
Footnote
16]
In summary, we hold that EPA's consideration or disclosure of
data submitted by Monsanto to the agency prior to October 22, 1972,
or after September 30, 1978, does not effect a taking. We further
hold that EPA consideration or disclosure of health, safety, and
environmental data will constitute a taking if Monsanto submitted
the data to EPA between October 22, 1972, and September 30, 1978;
[
Footnote 17] the data
constituted trade secrets under Missouri law; Monsanto had
designated the data as trade secrets at the time of its submission;
the use or disclosure conflicts with the explicit assurance of
confidentiality or exclusive use contained in the statute during
that period; and the operation of the arbitration provision
Page 467 U. S. 1014
does not adequately compensate for the loss in market value of
the data that Monsanto suffers because of EPA's use or disclosure
of the trade secrets.
V
We must next consider whether any taking of private property
that may occur by operation of the data-disclosure and
data-consideration provisions of FIFRA is a taking for a "public
use." We have recently stated that the scope of the "public use"
requirement of the Taking Clause is "coterminous with the scope of
a sovereign's police powers."
Hawaii Housing Authority v.
Midkiff, ante at
467 U. S. 240;
see Berman v. Parker, 348 U. S. 26,
348 U. S. 33
(1954). The role of the courts in second-guessing the legislature's
judgment of what constitutes a public use is extremely narrow.
Midkiff, supra; Berman, supra, at
348 U. S.
32.
The District Court found that EPA's action pursuant to the
data-consideration provisions of FIFRA would effect a taking for a
private use, rather than a public use, because such action benefits
subsequent applicants by forcing original submitters to share their
data with later applicants. 564 F. Supp. at 566. It is true that
the most direct beneficiaries of EPA actions under the
data-consideration provisions of FIFRA will be the later applicants
who will support their applications by citation to data submitted
by Monsanto or some other original submitter. Because of the
data-consideration provisions, later applicants will not have to
replicate the sometimes intensive and complex research necessary to
produce the requisite data. This Court, however, has rejected the
notion that a use is a public use only if the property taken is put
to use for the general public.
Midkiff, ante at
467 U. S.
243-244;
Rindge Co. v. Los Angeles,
262 U. S. 700,
262 U. S. 707
(1923);
Block v. Hirsh, 256 U. S. 135,
256 U. S. 155
(1921).
So long as the taking has a conceivable public character, "the
means by which it will be attained is . . . for Congress to
determine."
Berman, 348 U.S. at
348 U. S. 33.
Here, the public purpose behind the data-consideration provisions
is clear from
Page 467 U. S. 1015
the legislative history. Congress believed that the provisions
would eliminate costly duplication of research and streamline the
registration process, making new end-use products available to
consumers more quickly. Allowing applicants for registration, upon
payment of compensation, to use data already accumulated by others,
rather than forcing them to go through the time-consuming process
of repeating the research, would eliminate a significant barrier to
entry into the pesticide market, thereby allowing greater
competition among producers of end-use products. S.Rep. No. 95-334,
at 30-31, 40-41; 124 Cong.Rec. 29756-29757 (1978) (remarks of Sen.
Leahy). Such a procompetitive purpose is well within the police
power of Congress.
See Midkiff, ante, at
467 U. S.
241-242. [
Footnote
18]
Because the data-disclosure provisions of FIFRA provide for
disclosure to the general public, the District Court did not find
that those provisions constituted a taking for a private use.
Instead, the court found that the data-disclosure provisions served
no use. It reasoned that, because EPA, before registration, must
determine that a product is safe and effective, and because the
label on a pesticide, by statute, must set forth the nature,
contents, and purpose of the pesticide, the label provided the
public with all the assurance it needed that the product is safe
and effective. 564 F. Supp. at 567, and n. 4. It is enough for us
to state that the optimum amount of disclosure to the public is for
Congress, not the courts, to decide, and that the statute embodies
Congress'
Page 467 U. S. 1016
judgment on that question.
See 123 Cong.Rec. at 25706
(remarks of Sen. Leahy). We further observe, however, that public
disclosure can provide an effective check on the decisionmaking
processes of EPA, and allows members of the public to determine the
likelihood of individualized risks peculiar to their use of the
product.
See H.R.Rep. No. 95-343, p. 8 (1977) (remarks of
Douglas M. Costle); S.Rep. No. 95-334, at 13.
We therefore hold that any taking of private property that may
occur in connection with EPA's use or disclosure of data submitted
to it by Monsanto between October 22, 1972, and September 30, 1978,
is a taking for a public use.
VI
Equitable relief is not available to enjoin an alleged taking of
private property for a public use, duly authorized by law,
[
Footnote 19] when a suit
for compensation can be brought against the sovereign subsequent to
the taking.
Larson v. Domestic & Foreign Commerce
Corp., 337 U. S. 682,
337 U. S. 697,
n. 18 (1949). The Fifth Amendment does not require that
compensation precede the taking.
Hurley v. Kincaid,
285 U. S. 95,
285 U. S. 104
(1932). Generally, an individual claiming that the United States
has taken his property can seek just compensation under the Tucker
Act, 28 U.S.C. § 1491. [
Footnote
20]
United States v. Causby, 328 U.
S. 256,
328 U. S. 267
(1946) ("If there is a taking, the claim is
founded upon the
Constitution' and within the jurisdiction
Page 467 U. S.
1017
of the Court of Claims to hear and determine"); Yearsley
v. Ross Construction Co., 309 U. S. 18,
309 U. S. 21
(1940).
In this case, however, the District Court enjoined EPA action
under the data-consideration and data-disclosure provisions of
FIFRA, finding that a Tucker Act remedy is not available for any
taking of property that may occur as a result of the operation of
those provisions. We do not agree with the District Court's
assessment that no Tucker Act remedy will lie for whatever taking
may occur due to EPA activity pursuant to FIFRA.
In determining whether a Tucker Act remedy is available for
claims arising out of a taking pursuant to a federal statute, the
proper inquiry is not whether the statute "expresses an affirmative
showing of congressional intent to permit recourse to a Tucker Act
remedy," but
"whether Congress has, in the [statute,]
withdrawn the
Tucker Act grant of jurisdiction to the Court of Claims to hear a
suit involving the [statute] 'founded . . . upon the
Constitution.'"
Regional Rail Reorganization Act Cases, 419 U.
S. 102,
419 U. S. 126
(1974) (emphasis in original).
Nowhere in FIFRA or in its legislative history is there
discussion of the interaction between FIFRA and the Tucker Act.
Since the Tucker Act grants what is now the Claims Court
"jurisdiction to render judgment upon any claim against the United
States founded . . . upon the Constitution," we would have to infer
a withdrawal of jurisdiction with respect to takings under FIFRA
from the structure of the statute or from its legislative history.
A withdrawal of jurisdiction would amount to a partial repeal of
the Tucker Act. This Court has recognized, however, that "repeals
by implication are disfavored."
Regional Rail Reorganization
Act Cases, 419 U.S. at
419 U. S. 133.
See, e.g., Amell v. United States, 384 U.
S. 158,
384 U. S.
165-166 (1966);
Mercantile National Bank v.
Langdeau, 371 U. S. 555,
371 U. S. 565
(1963);
United States v. Borden Co., 308 U.
S. 188,
308 U. S.
198-199 (1939).
Page 467 U. S. 1018
Monsanto argues that FIFRA's provision that an original
submitter of data who fails to participate in a procedure for
reaching an agreement or in an arbitration proceeding, or fails to
comply with the terms of an agreement or arbitration decision,
"shall forfeit the right to compensation for the use of the data in
support of the application," § 3(c)(1)(D)(ii), indicates Congress'
intent that there be no Tucker Act remedy. But where two statutes
are
"'capable of co-existence, it is the duty of the courts, absent
a clearly expressed congressional intention to the contrary, to
regard each as effective.'"
Regional Rail Reorganization Act Cases, 419 U.S. at
419 U. S.
133-134, quoting
Morton v. Mancari,
417 U. S. 535,
417 U. S. 551
(1974). Here, contrary to Monsanto's claim, it is entirely possible
for the Tucker Act and FIFRA to co-exist. The better
interpretation, therefore, of the FIFRA language on forfeiture,
which gives force to both the Tucker Act and the FIFRA provision,
is to read FIFRA as implementing an exhaustion requirement as a
precondition to a Tucker Act claim. That is, FIFRA does not
withdraw the possibility of a Tucker Act remedy, but merely
requires that a claimant first seek satisfaction through the
statutory procedure.
Cf. Regional Rail Reorganization Act
Cases, 419 U.S. at
419 U. S.
154-156 (viewing Tucker Act remedy as covering any
shortfall between statutory remedy and just compensation).
[
Footnote 21]
With respect to data disclosure to the general public, FIFRA
provides for no compensation whatsoever. Thus, Monsanto's argument
that Congress intended the compensation scheme provided in FIFRA to
be exclusive has no relevance to the data-disclosure provisions of
§ 10.
Congress in FIFRA did not address the liability of the
Government to pay just compensation should a taking occur.
Congress' failure specifically to mention or provide for
recourse
Page 467 U. S. 1019
against the Government may reflect a congressional belief that
use of data by EPA in the ways authorized by FIFRA effects no Fifth
Amendment taking, or it may reflect Congress' assumption that the
general grant of jurisdiction under the Tucker Act would provide
the necessary remedy for any taking that may occur. In any event,
the failure cannot be construed to reflect an unambiguous intention
to withdraw the Tucker Act remedy. "[W]hether or not the United
States so intended," any taking claim under FIFRA is one "founded .
. . upon the Constitution," and is thus remediable under the Tucker
Act.
Regional Rail Reorganization Act Cases, 419 U.S. at
419 U. S. 126.
Therefore, where the operation of the data-consideration and
data-disclosure provisions of FIFRA effect a taking of property
belonging to Monsanto, an adequate remedy for the taking exists
under the Tucker Act. The District Court erred in enjoining the
taking.
VII
Because we hold that the Tucker Act is available as a remedy for
any uncompensated taking Monsanto may suffer as a result of the
operation of the challenged provisions of FIFRA, we conclude that
Monsanto's challenges to the constitutionality of the arbitration
and compensation scheme are not ripe for our resolution. Because of
the availability of the Tucker Act, Monsanto's ability to obtain
just compensation does not depend solely on the validity of the
statutory compensation scheme. The operation of the arbitration
procedure affects only Monsanto's ability to vindicate its
statutory right to obtain compensation from a subsequent applicant
whose registration application relies on data originally submitted
by Monsanto, not its ability to vindicate its constitutional right
to just compensation.
Monsanto did not allege or establish that it had been injured by
actual arbitration under the statute. While the District Court
acknowledged that Monsanto had received several offers of
compensation from applicants for registration, 564 F. Supp. at 561,
it did not find that EPA had considered
Page 467 U. S. 1020
Monsanto's data in considering another application. Further,
Monsanto and any subsequent applicant may negotiate and reach
agreement concerning an outstanding offer. If they do not reach
agreement, then the controversy must go to arbitration. Only after
EPA has considered data submitted by Monsanto in evaluating another
application and an arbitrator has made an award will Monsanto's
claims with respect to the constitutionality of the arbitration
scheme become ripe.
See Duke Power Co. v. Carolina
Environmental Study Group, Inc., 438 U. S.
59,
438 U. S. 81
(1978);
Regional Rail Reorganization Act Cases, 419 U.S.
at
419 U. S.
138.
VIII
We find no constitutional infirmity in the challenged provisions
of FIFRA. Operation of the provisions may effect a taking with
respect to certain health, safety, and environmental data
constituting trade secrets under state law and designated by
Monsanto as trade secrets upon submission to EPA between October
22, 1972, and September 30, 1978. [
Footnote 22] But whatever taking may occur is one for a
public use, and a Tucker Act remedy is available to provide
Monsanto with just compensation. Once a taking has occurred, the
proper forum for Monsanto's claim is the Claims Court. Monsanto's
challenges to the constitutionality of the arbitration procedure
are not yet ripe for review. The judgment of the District Court is
therefore vacated, and the case is remanded for further proceedings
consistent with this opinion.
It is so ordered.
JUSTICE WHITE took no part in the consideration or decision of
this case.
Page 467 U. S. 1021
[
Footnote 1]
For purposes of our discussion of FIFRA, the term "pesticides"
includes herbicides, insecticides, fungicides, rodenticides, and
plant regulators.
See §§ 2(t) and (u) of FIFRA, as
amended, 7 U.S.C. §§ 136(t) and (u).
[
Footnote 2]
The first federal legislation in this area was the Insecticide
Act of 1910, 36 Stat. 331, which made it unlawful to manufacture
and sell insecticides that were adulterated or misbranded. In 1947,
the 1910 legislation was repealed and replaced with FIFRA. 61 Stat.
172.
Some States had undertaken to regulate pesticide use before
there was federal legislation, and many more continued to do so
after federal legislation was enacted. In 1946, the Council of
State Governments recommended for adoption a model state statute,
the Uniform State Insecticide, Fungicide, and Rodenticide Act.
See S.Rep. No. 92-838, p. 7 (1972); H.R.Rep. No. 313, 80th
Cong., 1st Sess., 3 (1947).
[
Footnote 3]
Appellant here concedes, however, that, as a matter of practice,
the Department of Agriculture did not publicly disclose the health
and safety information. Brief for Appellant 5, n. 5.
[
Footnote 4]
Section 3(c)(1)(D), 92 Stat. 820-822, 7 U.S.C. § 136a(c)(1)(D),
reads in relevant part:
"(i) With respect to pesticides containing active ingredients
that are initially registered under this Act after [September 30,
1978], data submitted to support the application for the original
registration of the pesticide, or an application for an amendment
adding any new use to the registration and that pertains solely to
such new use, shall not, without the written permission of the
original data submitter, be considered by the Administrator to
support an application by another person during a period of ten
years following the date the Administrator first registers the
pesticide . . . ;"
"(ii) except as otherwise provided in subparagraph (D)(i) of
this paragraph, with respect to data submitted after December 31,
1969, by an applicant or registrant to support an application for
registration, experimental use permit, or amendment adding a new
use to an existing registration, to support or maintain in effect
an existing registration, or for reregistration, the Administrator
may, without the permission of the original data submitter,
consider any such item of data in support of an application by any
other person . . . within the fifteen-year period following the
date the data were originally submitted only if the applicant has
made an offer to compensate the original data submitter and
submitted such offer to the Administrator accompanied by evidence
of delivery to the original data submitter of the offer. The terms
and amount of compensation may be fixed by agreement between the
original data submitter and the applicant, or, failing such
agreement, binding arbitration under this subparagraph. If, at the
end of ninety days after the date of delivery to the original data
submitter of the offer to compensate, the original data submitter
and the applicant have neither agreed on the amount and terms of
compensation nor on a procedure for reaching an agreement on the
amount and terms of compensation, either person may initiate
binding arbitration proceedings by requesting the Federal Mediation
and Conciliation Service to appoint an arbitrator from the roster
of arbitrators maintained by such Service. . . . [T]he findings and
determination of the arbitrator shall be final and conclusive, and
no official or court of the United States shall have power or
jurisdiction to review any such findings and determination, except
for fraud, misrepresentation, or other misconduct by one of the
parties to the arbitration or the arbitrator where there is a
verified complaint with supporting affidavits attesting to specific
instances of such fraud, misrepresentation, or other misconduct. .
. . If the Administrator determines that an original data submitter
has failed to participate in a procedure for reaching an agreement
or in an arbitration proceeding as required by this subparagraph,
or failed to comply with the terms of an agreement or arbitration
decision concerning compensation under this subparagraph, the
original data submitter shall forfeit the right to compensation for
the use of the data in support of the application. . . .
Registration action by the Administrator shall not be delayed
pending the fixing of compensation;"
"(iii) after expiration of any period of exclusive use and any
period for which compensation is required for the use of an item of
data under subparagraphs (D)(i) and (D)(ii) of this paragraph, the
Administrator may consider such item of data in support of an
application by any other applicant without the permission of the
original data submitter and without an offer having been received
to compensate the original data submitter for the use of such item
of data."
[
Footnote 5]
Section 10(d), 92 Stat. 830, reads in relevant part:
"(1) All information concerning the objectives, methodology,
results, or significance of any test or experiment performed on or
with a registered or previously registered pesticide or its
separate ingredients, impurities, or degradation products and any
information concerning the effects of such pesticide on any
organism or the behavior of such pesticide in the environment,
including, but not limited to, data on safety to fish and wildlife,
humans, and other mammals, plants, animals, and soil, and studies
on persistence, translocation and fate in the environment, and
metabolism, shall be available for disclosure to the public:
Provided, That the use of such data for any registration
purpose shall be governed by section 3 of this Act:
Provided
further, That this paragraph does not authorize the disclosure
of any information that -- "
"(A) discloses manufacturing or quality control processes,"
"(B) discloses the details of any methods for testing,
detecting, or measuring the quantity of any deliberately added
inert ingredients of a pesticide, or"
"(C) discloses the identity or percentage quantity of any
deliberately added inert ingredient of a pesticide,"
unless the Administrator has first determined that disclosure is
necessary to protect against an unreasonable risk of injury to
health or the environment.
"(2) Information concerning production, distribution, sale, or
inventories of a pesticide that is otherwise entitled to
confidential treatment under subsection (b) of this section may be
publicly disclosed in connection with a public proceeding to
determine whether a pesticide, or any ingredient of a pesticide,
causes unreasonable adverse effects on health or the environment,
if the Administrator determines that such disclosure is necessary
in the public interest."
[
Footnote 6]
A study by the Office of Pesticide Programs of the EPA showed
that, in 1977, approximately 400 firms were registered to produce
manufacturinguse products. S.Rep. No. 95-334, p. 34 (1977). It was
estimated that the 10 largest firms account for 75% of this
country's pesticide production.
Id. at 60. A
correspondingly small number of new pesticides are marketed each
year. In 1974, only 10 new pesticides were introduced.
See
Goring, The Costs of Commercializing Pesticides, International
Conference of Entomology, Aug. 20, 1976, reprinted in Hearings on
Extension of the Federal Insecticide, Fungicide, and Rodenticide
Act before the Subcommittee on Agricultural Research and General
Legislation of the Senate Committee on Agriculture, Nutrition, and
Forestry, 95th Cong., 1st Sess., 250, 254 (1977).
[
Footnote 7]
The District Court's judgment in this case is in conflict with
the holdings of other federal courts.
See, e.g., PetroCite
Corp. v. United States Environmental Protection
Agency, 519 F.
Supp. 966 (DC 1981);
Mobay Chemical Corp. v.
Costle, 517 F.
Supp. 252, and
517 F.
Supp. 254 (WD Pa.1981),
aff'd sub nom. Mobay Chemical Co.
v. Gorsuch, 682 F.2d 419 (CA3),
cert. denied, 459
U.S. 988 (1982);
Chevron Chemical Co. v.
Costle, 499 F.
Supp. 732 (Del.1980),
aff'd, 641 F.2d 104 (CA3),
cert. denied, 452 U.S. 961 (1981).
[
Footnote 8]
Of course, it was not necessary that Congress recognize the data
at issue here as property in order for the data to be protected by
the Taking Clause. We mention the legislative history merely as one
more illustration of the general perception of the property-like
nature of trade secrets.
[
Footnote 9]
Contrary to EPA's contention, Brief for Appellant 29, Justice
Holmes' dictum in
E. I. du Pont de Nemours Powder Co. v.
Masland, 244 U. S. 100
(1917), does not undermine our holding that a trade secret is
property protected by the Fifth Amendment Taking Clause.
Masland arose from a dispute about the disclosure of trade
secrets during preparation for a trial. In his opinion for the
Court, the Justice stated:
"The case has been considered as presenting a conflict between a
right of property and a right to make a full defence, and it is
said that, if the disclosure is forbidden to one who denies that
there is a trade secret, the merits of his defence are adjudged
against him before he has a chance to be heard or to prove his
case. We approach the question somewhat differently. The word
property, as applied to trademarks and trade secrets, is an
unanalyzed expression of certain secondary consequences of the
primary fact that the law makes some rudimentary requirements of
good faith. Whether the plaintiffs have any valuable secret or not,
the defendant knows the facts, whatever they are, through a special
confidence that he accepted. The property may be denied, but the
confidence cannot be. Therefore the starting point for the present
matter is not property or due process of law, but that the
defendant stood in confidential relations with the plaintiffs."
Id. at
244 U. S. 102.
Justice Holmes did not deny the existence of a property interest;
he simply deemed determination of the existence of that interest
irrelevant to resolution of the case. In a case decided prior to
Masland, the Court had spoken of trade secrets in property
terms.
Board of Trade v. Christie Grail & Stock Co.,
198 U. S. 236,
198 U. S.
250-253 (1905) (Holmes, J., for the Court).
See
generally 1 R. Milgrim, Trade Secrets § 1.01[1] (1983).
[
Footnote 10]
The Federal Pesticide Act of 1978 was approved on September 30,
1978. 92 Stat. 842. The new data-consideration and data-disclosure
provisions applied with full force to all data submitted after that
date.
[
Footnote 11]
Because the market for Monsanto's pesticide products is an
international one, Monsanto could decide to forgo registration in
the United States and sell a pesticide only in foreign markets.
Presumably, it will do so in those situations where it deems the
data to be protected from disclosure more valuable than the right
to sell in the United States.
[
Footnote 12]
The 1972 amendments to FIFRA became effective at the close of
the business day on October 21, 1972. 86 Stat. 998.
[
Footnote 13]
The Trade Secrets Act prohibits a Government employee from
"publish[ing], divulg[ing], disclos[ing] or mak[ing] known"
confidential information received in his official capacity. 18
U.S.C. § 1905. In considering the data of one applicant in
connection with the application of another, EPA does not violate
any of these prohibitions.
[
Footnote 14]
The District Court found:
"During the period that USDA administered FIFRA, it was also its
policy that the data developed and submitted by companies
such as [Monsanto] could not be used to support the registration of
another's product without the permission of the data
submitter."
Monsanto Co. v. Acting Administrator, United States
Environmental Protection Agency, 564 F.
Supp. 552, 564 (ED Mo.1983) (emphasis in original). The
District Court apparently based this finding on the testimony of
two former Directors of the Pesticide Regulation Division, who
testified that they knew of no instance in which data submitted by
one applicant were subsequently considered in evaluating another
application.
Ibid.
This finding is in marked conflict with the statement of the
National Agricultural Chemicals Association, presented before a
Senate Subcommittee in 1972, which advocated that the 1972
amendments to FIFRA should contain an exclusive-use provision:
"Under the present law, registration information submitted to
the Administrator has not routinely been made available for public
inspection. Such information has, however, as a matter of practice
but without statutory authority, been considered by the
Administrator to support the registration of the same or a similar
product by another registrant."
Federal Environmental Pesticide Control Act: Hearings before the
Subcommittee on Agricultural Research and General Legislation of
the Senate Committee on Agriculture and Forestry, 92d Cong., 2d
Sess., pt. 2, p. 245 (1972). In addition, EPA points to the
Department of Agriculture's Interpretation with Respect to Warning,
Caution and Antidote Statements Required to Appear on Labels of
Economic Poisons, 27 Fed.Reg. 2267 (1962), which presents a list of
pesticides that would require no additional toxicological data for
registration. The clear implication from the Interpretation is that
the Department determined that the data already submitted with
respect to those chemicals would be sufficient for purposes of
evaluating any future applications for registration of those
chemicals.
Although the evidence against the District Court's finding seems
overwhelming, we need not determine that the finding was clearly
erroneous in order to find that a submitter had no reasonable
expectation that the Department or EPA would not use the data it
had submitted when evaluating the application of another. The
District Court did not find that the policy of the Department was
publicly known at the time, or that there was any explicit
guarantee of exclusive use.
[
Footnote 15]
We emphasize that the value of a trade secret lies in the
competitive advantage it gives its owner over competitors. Thus, it
is the fact that operation of the data-consideration or
data-disclosure provisions will allow a competitor to register more
easily its product or to use the disclosed data to improve its own
technology that may constitute a taking. If, however, a public
disclosure of data reveals, for example, the harmful side effects
of the submitter's product and causes the submitter to suffer a
decline in the potential profits from sales of the product, that
decline in profits stems from a decrease in the value of the
pesticide to consumers, rather than from the destruction of an edge
the submitter had over its competitors, and cannot constitute the
taking of a trade secret.
[
Footnote 16]
Because the record contains no findings with respect to the
value of the trade secret data at issue, and because no arbitration
proceeding has yet been held to detemine the amount of recovery to
be paid by a subsequent applicant to Monsanto, we cannot preclude
the possibility that the arbitration award will be sufficient to
provide Monsanto with just compensation, thus nullifying any claim
against the Government for a taking when EPA uses Monsanto's data
in considering another application. The statutory arbitration
scheme, of course, provides for compensation only in cases where
the data are considered in connection with a subsequent
application, not in cases of disclosure of the data.
[
Footnote 17]
While the 1975 amendments to FIFRA purported to carry backward
the protections against data consideration and data disclosure to
submissions of data made on or after January 1, 1970, 89 Stat. 751,
the relevant consideration for our purposes is the nature of the
expectations of the submitter at the time the data were submitted.
We therefore do not extend our ruling as to a possible taking to
data submitted prior to October 22, 1972.
[
Footnote 18]
Monsanto argues that EPA and, by implication, Congress
misapprehended the true "barriers to entry" in the pesticide
industry, and that the challenged provisions of the law create,
rather than reduce, barriers to entry. Brief for Appellee 35, n.
48. Such economic arguments are better directed to Congress. The
proper inquiry before this Court is not whether the provisions in
fact will accomplish their stated objectives. Our review is limited
to determining that the purpose is legitimate and that Congress
rationally could have believed that the provisions would promote
that objective.
Midkiff, ante at
467 U. S.
242-243;
Western & Southern Life Ins. Co. v.
State Bd. of Equalization, 451 U. S. 648,
451 U. S.
671-672 (1981).
[
Footnote 19]
Any taking of private property that would occur as a result of
EPA disclosure or consideration of data submitted by Monsanto
between October 22, 1972, and September 30, 1978, is, of course,
duly authorized by FIFRA as amended in 1978.
[
Footnote 20]
The Tucker Act, 28 U.S.C. § 1491, reads, in relevant part:
"The United States Claims Court shall have jurisdiction to
render judgment upon any claim against the United States founded
either upon the Constitution, or any Act of Congress or any
regulation of an executive department, or upon any express or
implied contract with the United States, or for liquidated or
unliquidated damages in cases not sounding in tort."
[
Footnote 21]
Exhaustion of the statutory remedy is necessary to determine the
extent of the taking that has occurred. To the extent that the
operation of the statute provides compensation, no taking has
occurred and the original submitter of data has no claim against
the Government.
[
Footnote 22]
We emphasize that nothing in our opinion prohibits EPA's
consideration or disclosure, in a manner authorized by FIFRA, of
data submitted to it by Monsanto. Our decision merely holds that,
with respect to a certain limited class of data submitted by
Monsanto to EPA, EPA actions under the data-disclosure and
data-consideration provisions of the statute may give Monsanto a
claim for just compensation.
JUSTICE O'CONNOR, concurring in part and dissenting in part.
I join all of the Court's opinion except for Part
467 U. S. ante at
467 U. S.
1013, that "EPA's consideration or disclosure of data
submitted by Monsanto to the agency prior to October 22, 1972, . .
. does not effect a taking." In my view, public disclosure of
pre-1972 data would effect a taking. As to consideration of this
information within EPA in connection with other license
applications not submitted by Monsanto, I believe we should remand
to the District Court for further factual findings concerning
Monsanto's expectations regarding interagency uses of trade secret
infol mation prior to 1972.
It is important to distinguish at the outset public disclosure
of trade secrets from use of those secrets entirely within EPA.
Internal use may undermine Monsanto's competitive position within
the United States, but it leaves Monsanto's position in foreign
markets undisturbed. As the Court notes,
ante at
467 U. S.
1007, n. 11, the likely impact on foreign market
position is one that Monsanto would weigh when deciding whether to
submit trade secrets to EPA. Thus, a submission of trade secrets to
EPA that implicitly consented to further use of the information
within the agency is not necessarily the same as one that
implicitly consented to public disclosure.
It seems quite clear -- indeed, the Court scarcely disputes --
that public disclosure of trade secrets submitted to the Federal
Government before 1972 was neither permitted by law, nor customary
agency practice before 1972, nor expected by applicants for
pesticide registrations. The Court correctly notes that the Trade
Secrets Act, 18 U.S.C. § 1905, flatly proscribed such disclosures.
The District Court expressly found that, until 1970, it was
Government
"policy that the data developed and submitted by companies such
as [Monsanto] be maintained confidentially by the [administrative
agency], and was not to be disclosed without the permission of the
data submitter."
Molsanto Co. v. Acting Administrator,
EPA, 564 F.
Supp. 552, 564 (1983). Finally, the Court,
ante at
Page 467 U. S. 1022
467 U. S.
1009, n. 14, quotes from a 1972 statement by the
National Agricultural Chemicals Association that "registration
information submitted to the Administrator has not routinely been
made available for public inspection." It is hard to imagine how a
pre-1972 applicant for a pesticide license would not, under these
circumstances, have formed a very firm expectation that its trade
secrets submitted in connection with a pesticide registration would
not be disclosed to the public.
The Court's analysis of this question appears in a single
sentence: an "industry that long has been the focus of great public
concern and significant government regulation" can have no
reasonable expectation that the Government will not later find
public disclosure of trade secrets to be in the public interest.
Ante at
467 U.S.
1008. I am frankly puzzled to read this statement in the
broader context of the Court's otherwise convincing opinion. If the
degree of Government regulation determines the reasonableness of an
expectation of confidentiality, Monsanto had as little reason to
expect confidentiality after 1972 as before, since the 1972
amendments were not deregulatory in intent or effect. And the Court
entirely fails to explain why the nondisclosure provision of the
1972 Act, § 10, 86 Stat. 989, created any greater expectation of
confidentiality than the Trade Secrets Act. Section 10 prohibited
EPA from disclosing "trade secrets or commercial or financial
information." No penalty for disclosure was prescribed, unless
disclosure was with the intent to defraud. The Trade Secrets Act,
18 U.S.C. § 1905, prohibited and still prohibits Government
disclosure of trade secrets and other commercial or financial
information revealed during the course of official duties, on pain
of substantial criminal sanctions. The Court acknowledges that this
prohibition has always extended to formal and official agency
action.
Chrysler Corp. v. Brown, 441 U.
S. 281,
441 U. S.
298-301 (1979). It seems to me that the criminal
sanctions in the Trade Secrets Act therefore created at least as
strong an expectation of privacy before 1972 as the precatory
language of § 10 created after 1972.
Page 467 U. S. 1023
The Court's tacit analysis seems to be this: an expectation of
confidentiality can be grounded only on a statutory nondisclosure
provision situated in close physical proximity, in the pages of the
United States Code, to the provisions pursuant to which information
is submitted to the Government. For my part, I see no reason why
Congress should not be able to give effective protection to all
trade secrets submitted to the Federal Government by means of a
single, overarching, trade secrets provision. We routinely assume
that wrongdoers are put on notice of the entire contents of the
Code, though in all likelihood most of them have never owned a copy
or opened a single page of it. It seems strange to assume, on the
other hand, that a company like Monsanto, well served by lawyers
who undoubtedly do read the Code, could build an expectation of
privacy in pesticide trade secrets only if the assurance of
confidentiality appeared in Title 7 itself.
The question of interagency use of trade secrets before 1972 is
more difficult, because the Trade Secrets Act most likely does not
extend to such uses. The District Court found that, prior to
October 1972, only two competitors' registrations were granted on
the basis of data submitted by Monsanto, and that Monsanto had no
knowledge of either of these registrations prior to their being
granted. 564 F. Supp. at 564. The District Court also found that,
before 1970, it was agency policy
"that the data developed and submitted by companies such as
[Monsanto] could not be used to support the registration of
another's product without the permission of the data
submitter."
Ibid. This Court, however, concludes on the basis of
two cited fragments of evidence that "the evidence against the
District Court's finding seems overwhelming."
Ante at
467 U. S.
1010, n. 14. The Court nevertheless wisely declines to
label the District Court's findings of fact on this matter clearly
erroneous. Instead, the Court notes that the
"District Court did not find that the policy of the Department
[of Agriculture] was publicly known at the time [before 1970,] or
that there was any explicit guarantee of exclusive use."
Ibid. This begs exactly the right question, but the
Page 467 U. S. 1024
Court firmly declines to answer it. The Court simply states
that
"there is some evidence that the practice of using data
submitted by one company during consideration of the application of
a subsequent applicant was widespread and well known."
Ante at
467 U. S.
1009 (footnote omitted). And then, without more ado, the
Court declares that, with respect to pre-1972 data, Monsanto
"could not have had a 'reasonable investment-backed expectation'
that EPA would . . . use [the data] exclusively for the purpose of
considering the Monsanto application in connection with which the
data were submitted."
Ante at
467 U. S.
1010.
If one thing is quite clear, it is that the extent of Monsanto's
pre-1972 expectations, whether reasonable and investment-backed or
otherwise, is a heavily factual question. It is fairly clear that
the District Court found that those expectations existed as a
matter of fact, and were reasonable as a matter of law. But if the
factual findings of the District Court on this precise question
were not as explicit as they might have been, the appropriate
disposition is to remand to the District Court for further
factfinding. That is the course I would follow with respect to
interagency use of trade secrets submitted by Monsanto before
1972.