 United States Court of Appeals for the Federal Circuit




                                      04-5099


       MEMBERS OF THE PEANUT QUOTA HOLDERS ASSOCIATION, INC.,
           AUGUSTUS GARRETT, JEROME PAULK, FAYE PAULK,
                          and D. U. PULLUM,

                                                    Plaintiffs-Appellants,

                                          v.


                                 UNITED STATES,

                                                    Defendant-Appellee.


       David Wm. Boone, Boone & Stone, of Atlanta, Georgia, argued for plaintiff-
appellants.

       Jane W. Vanneman, Senior Trial Counsel, Commercial Litigation Branch, United
States Department of Justice, of Washington, DC, argued for defendant-appellee. With
her on the brief were Peter D. Keisler, Assistant Attorney General and David M. Cohen,
Director.

Appealed from: United States Court of Federal Claims

Judge Christine O.C. Miller
United States Court of Appeals for the Federal Circuit


                                      04-5099

       MEMBERS OF THE PEANUT QUOTA HOLDERS ASSOCIATION, INC.,
           AUGUSTUS GARRETT, JEROME PAULK, FAYE PAULK,
                          and D. U. PULLUM,

                                                          Plaintiffs-Appellants,

                                         v.

                                 UNITED STATES,


                                                          Defendant-Appellee.

                           ________________________

                           DECIDED: August 25, 2005
                           ________________________



Before LOURIE, BRYSON, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

      Augustus Garrett, Jerome Paulk, Faye Paulk, and D.U. Pullum (collectively "the

Members") are individual members of the Peanut Quota Holders Association, Inc. The

Members individually appeal the final decision of the United States Court of Federal

Claims (the "trial court") awarding summary judgment to the United States ("the

government") on the ground that the Members possessed no compensable property

interest in the peanut quota allocated to them under the Federal Agriculture

Improvement and Reform Act of 1996, Pub. L. No. 104-127, § 155, 110 Stat. 888, 922-
30 (the "1996 FAIR Act").     Members of the Peanut Quota Holders Ass'n v. United

States, 60 Fed. Cl. 524 (2004) ("Peanut Quota Holders Ass'n").

      The Members are all individuals who owned farms to which peanut quotas had

been allocated under the former statutory provisions and who had leased their quotas to

other farmers since at least 1998. The peanut quotas allowed the Members to obtain

favorable loan rates1 for their peanut crop. The loan rates effectively maintained an

artificial minimum price for a quota holder's peanut crop. Under the former statutory

provisions, the loan rates could also be sold or leased.2

      The statute granting the peanut quotas was amended in 2002. Farm Security

and Rural Investment Act of 2002, Pub. L. No. 107-171, §§ 1301-1310, 116 Stat. 134,

166-83 (the "2002 Act"). The 2002 Act made peanut quotas available only to those who

actually farm peanuts and thereby share in the risk of production. Since the Members

had leased their quotas, they were not eligible to receive a peanut quota under the new

statutory provisions. The Members claim that the loss of price support for the 2002 crop

and their loss of eligibility for future peanut quotas have led to financial losses. The

gravamen of their complaint is that the new statute effectuated a regulatory taking of the

loan rate they would have received in 2002 as well as their eligibility to obtain future

peanut quotas.



      1
              A loan rate is defined as "[t]he price per unit (bushel, bale, pound, or
hundredweight, depending on the commodity) at which the government will provide non-
recourse loans to farmers (or associations acting on their behalf). This short term
financing at below market interest rates enables farmers to hold their commodities for
later sale." Agricultural Dictionary, available at http://www.nasda.org/joint/farmbill/
dictionary.html (last visited July 13, 2005).
       2
              By leasing a peanut quota allotment a peanut quota holder could retain
the peanut quota for use in future years while allowing another farmer to produce
peanuts at the quota loan rate.


04-5099                                     2
       Upon review, we conclude that the trial court erred in determining that the

statutorily created peanut quota is not a property interest. Nonetheless, we agree with

the trial court that this property right is not compensable under the Fifth Amendment.

Consequently, the judgment of the trial court is affirmed.

                                   BACKGROUND

A.     The History of the Peanut Quota

       In order to assess whether the Members have a property interest in the peanut

quota, it is necessary to understand the statutory evolution of the peanut quota

program. In the 1930s the United States’ economic depression particularly affected the

agricultural community.      Congress, in an attempt to mitigate the effects of the

depression on agricultural products, enacted the Agricultural Adjustment Act of 1938

("AAA"), ch. 30 tit. III, § 301 et seq., 52 Stat. 31, 38, which regulated the production and

sale of tobacco and wheat within the United States. The statute instituted acreage

allotments to prevent oversupply of the targeted agricultural commodities. In 1941, the

AAA was amended to include farm acreage allotments for peanuts. The Agricultural

Adjustment Act of 1938, as amended, ch. 39, tit. III, §§ 357-359, 55 Stat. 88, 88-91 (the

"1941 Act"). The 1941 Act sought to regulate the production of peanuts to avoid severe

fluctuations in price caused by rapid changes in market demand and the year-long lag in

response to that demand caused by crop growing cycles. 1941 Act, 55 Stat. at 88.

Since 1941, Congress has regulated peanut production primarily through quotas set by

the Secretary of Agriculture ("Secretary"), but the nature and reach of the quota system

has not remained constant.




04-5099                                      3
      Under the 1941 Act, the Secretary was required to proclaim annually the total

quantity of peanuts that would be made available for marketing the following year; this

was known as the "national marketing quota."       This quota was to be equal to the

average amount of peanuts harvested during the five years prior to the year of the

proclamation, adjusted for trends in production and prospective demand. To apportion

the national marketing quota among the producing peanut farms, it was converted to a

national acreage allotment.    This allotment was derived by dividing the national

marketing quota by the normal yield per acre.3

      The national acreage allotment was divided proportionally among states based

on the average relative peanut production per state for the five years immediately

preceding the proclamation year, adjusted for trends in yields and abnormal conditions

of production.   Each state acreage allotment was subsequently apportioned among

farms in that state. The farms that obtained allotments were farms on which peanuts

were grown in any of the three years immediately preceding the year for which the

allotment was determined. The state allotments were apportioned on the basis of the

tillable acreage available for the production of peanuts and the past acreage of peanuts

grown on the farm. The actual amount of peanuts produced on the acreage allotment

equaled the marketing quota for the farm. 1941 Act, 55 Stat. at 89-90.




      3
             The normal yield per acre was set at the five-year average of the national
average yield per acre derived from the years preceding the proclamation year.


04-5099                                    4
       A farmer with an allotment was subject to financial penalties4 if he marketed

peanuts in excess of his farm's marketing quota. Any farmer who grew peanuts without

an allotment was also subject to financial penalties.5

       Under the 1941 Act, the Secretary of Agriculture was directed to make loans

available to farmers with marketing quotas for peanuts. The Secretary of Agriculture

provided the loans through the Commodity Credit Corporation ("CCC").            The CCC

offered loans to farmers at rates between fifty and seventy-five percent of the parity

price6 of peanuts.      1941 Act, 55 Stat. at 91.   These loans provided farmers with

operating capital. The loans were non-recourse, such that if the farmer was unable to

sell his crop at a profit and repay the loan with interest before it matured, the CCC

accepted the actual peanut crop sales revenue as full repayment of the loan.

       The Agricultural Act of 1949, ch. 792, tit. I, § 101, 63 Stat. 1051-52 (the "1949

Act"), instituted the price support program. The 1949 Act increased loan rates overall. It

also tied the loan rates into an inverse relationship with the amount of overproduction of

peanuts for the year.

       The AAA was amended again in 1967 to allow peanut farm owners and

operators "to sell or lease all or any part of the right to all or any part of their peanut



       4
               The penalty was three cents per pound, unless the peanuts were falsely
identified or unreported, in which case a fine of twenty-five dollars per acre, or fraction
thereof, was imposed.
        5
               The penalties for growing peanuts without any allotment were the same as
those for exceeding an allotment.
        6
               The parity price is defined as "[a] measurement of the purchasing power of
a unit of a particular commodity."                 Agricultural Dictionary, available at
http://www.nasda.org/joint/farmbill/dictionary.html (last visited July 13, 2005).
        The 1941 Act set the parity price "on the basis of the formula used in determining
the parity price of peanuts as published by the Bureau of Agricultural Economics in The
Agricultural Situation, volume 25, number 1, January 1941." 1941 Act, 55 Stat. at 91.


04-5099                                      5
acreage allotment." Pub. L. No. 90-211, § 358a, 81 Stat. 658 (the "1967 Act"). The

1967 Act also permitted an owner of a farm with an acreage allotment to transfer the

allotment to his other farms.      Transfers were restricted such that they were only

permitted between farms within the county in which the peanut acreage allotment was

apportioned. Other restrictions further limited the transferability of the allotments.

       By 1977, the introduction of new seed varieties, new fertilizers, and new farm

management techniques had substantially increased the yield of peanuts per acre. As

a result, there was an oversupply of peanuts. These conditions prompted Congress to

revamp the peanut program in the Food and Agriculture Act of 1977, Pub. L. No. 95-

113, §§ 801-807, 91 Stat. 913, 944-49 (the "1977 Act"). The 1977 Act temporarily

suspended much of the AAA and its subsequent amendments and, in its place,

instituted poundage quotas based on the weight of peanuts produced by the quota

holders.   The new poundage quotas applied only to peanuts destined for domestic

edible use.7 The poundage quota system was used in conjunction with the acreage

allotment system; a poundage quota was established for each farm that possessed an

acreage allotment under the AAA.

       The 1977 Act also amended the price support program to provide different

support levels for "quota peanuts" and "additional peanuts." Quota peanuts were any

peanuts that were eligible for domestic edible use and that did not exceed the poundage

quota of the farm. Additional peanuts were any peanuts that were in excess of a farm's

poundage quota but not in excess of the actual production of the acreage allotment.

This differentiation continued to discourage overproduction because the price support

       7
               "Domestic edible use" referred to all food uses for peanuts and, at this
juncture, included peanuts used for seed. 1977 Act, 91 Stat. at 946.


04-5099                                       6
provided for additional peanuts was substantially lower than that provided for quota

peanuts.8

      In 1981, Congress passed yet another law that temporarily suspended the AAA.

The Agriculture and Food Act of 1981, Pub. L. No. 97-98, §§ 701-707, 95 Stat. 1213,

1248-56 (the "1981 Act"). The 1981 Act terminated acreage allocations and marked the

end of a four year transition to the poundage quota system that began with the 1977

Act. The 1981 Act retained the two-tiered system (of quota peanuts and additional

peanuts) based on poundage. It also enlarged the definition of additional peanuts to

include any peanuts that were not covered by a poundage quota, irrespective of

whether the peanuts were grown by a farm that possessed a poundage quota. Thus,

under the 1981 Act, the peanut quota no longer restricted the production of peanuts.

Poundage quota holders simply received more generous support from the government

than non-quota holders.

      In 1996, to mitigate the ever increasing costs to the public of maintaining the

price support programs, Congress enacted the 1996 FAIR Act. The 1996 FAIR Act, like

the 1977, 1981, 1985, and 1990 Acts before it, suspended most provisions of the AAA.

The 1996 FAIR Act, in large part, continued the system created in 1977 with minor

modifications. The price support for peanut producers under the 1996 FAIR Act took

the form of marketing assistance loans. The U.S. Department of Agriculture ("USDA")

set loan rates and extended these loans to marketing associations, which, in turn, made

loans to peanut producers. The loans were again represented by non-recourse notes,


      8
              The level of support for additional peanuts was calculated by taking into
consideration the demand for peanut oil and peanut meal, expected prices of other
vegetable oils and protein meal, and demand for peanuts in foreign markets.


04-5099                                   7
such that if the revenue from the sale of the peanuts did not cover the full amount of the

loan, the marketing association and, by default, the USDA made up the difference. If

the revenue from the sale of the peanut crop covered the loan amount, the producer

repaid the loan in full.

       The 1996 FAIR Act established marketing loan rates through the 2002 marketing

year.9 The 1996 FAIR Act set the loan rate for quota peanuts at $610.00 per ton. 1996

FAIR Act, § 155(a)(2). By comparison, the loan rate set by the Secretary for non-quota

peanuts in 1997 was $132.00 per ton.10 The loan rate differential, combined with

restrictions on importation, gave quota holders a considerable financial advantage in the

peanut market by setting a floor on the price they would receive for their crop.

       The 1996 FAIR Act specifically allowed quota holders to sell or lease their quotas

to other producers with a farm in the same state. 1996 FAIR Act, § 155(i)(6)(A). The

1996 Act also amended the AAA to specifically protect transferors from a subsequent

reduction of their quotas: "Any farm poundage quota transferred under this paragraph

shall not result in any reduction in the farm poundage quota for the transferring farm if

the transferred quota is produced or considered produced on the receiving farm." 1996

FAIR Act, § 155(i)(6)(D).

       In 2002, Congress amended the peanut quota program by repealing the

marketing quota program, establishing a "buyout" of quota holders, and creating a new

price support program. The buyout provision authorized a one-time payment to quota

       9
             The marketing year is the twelve-month period, generally from the
beginning of a new harvest, over which a crop is marketed. For peanuts it is August 1 to
July 31.
       10
             By statute, the Secretary is required to set the loan rate at a level
estimated to ensure that there are no losses by the CCC on the sale or disposal of the
peanuts. 1996 FAIR Act, § 155(b)(2).


04-5099                                     8
holders of $0.55 per pound, which equated to a payment of $0.11 per pound for five

years. 2002 Act, § 1309(b)(1).

        To have been eligible for the new quota, one must have been a "producer on a

farm in the United States that produced or was prevented from planting peanuts during

any or all of the 1998 through 2001 crop years." 2002 Act, § 1301(5). Thus, the new

quota was available to "an owner, operator, landlord, tenant, or sharecropper that

shares in the risk of producing a crop on a farm and is entitled to share in the crop

available for marketing from the farm." 2002 Act, § 1301(8). This definition of producer

marks a distinct departure from the definition used in previous statutes, including the

1996 Act, because it excludes from consideration farmers who leased or transferred

their quotas to other producers. 7 C.F.R. § 729.214(m) (2003). Prior to the 2002 Act,

farmers were considered producers even if they had leased their quotas and, as a

consequence, could have a quota even if they did not share in the risk of producing a

crop.

B.      The Proceedings Before the Court of Federal Claims

        The trial court determined that the primary issue before it was whether the 1996

FAIR Act created a property interest vested in a peanut quota holder that was

eliminated by the 2002 Act. The Members asserted a regulatory taking of their alleged

property right in the peanut quota created by the 1996 FAIR Act.11 They argued (1) that

the 2002 Act rendered valueless expenditures made in reliance on their peanut quotas



        11
              On appeal, the Members attempt to assert a categorical taking of their
"peanut quota" under the Fifth Amendment. Because the Members failed to raise this
issue before the trial court, this court cannot entertain it on appeal. Absent
extraordinary circumstances, an appellant may not raise a new issue on appeal.
Singleton v. Wulff, 428 U.S. 106, 120 (1976).


04-5099                                     9
for the 2002 growing season; (2) that by establishing a program of marketing loans

open to peanut producers who actually grew peanuts, the statutory changes deprived

them of their entitlement to price supports under the 1996 FAIR Act; and (3) that the

"buyout payments" established under the 2002 Act did not approximate the fair market

value of the repealed "peanut quota."

       The trial court determined that while the Members hold protected property

interests in farm land and equipment, those property interests do not extend to the crop

marketing quotas established by the 1996 FAIR Act. The trial court reasoned that "[a]

citizen does not possess the 'right to exclude' when he voluntarily enters an area

subject to government control." Peanut Quota Holders Ass'n, 60 Fed. Cl. at 528. The

trial court found support for this conclusion from our holding in Mitchell Arms, Inc. v.

United States, 7 F.3d 212, 216 (Fed. Cir. 1993). Relying on Mitchell Arms, the trial

court reasoned that the expectation of a poundage quota share was merely a collateral

interest incident to the Members' ownership of farm land. Peanut Quota Holders Ass'n,

60 Fed. Cl. at 529. The trial court concluded that "[b]ecause Congress has the right to

modify or terminate a federal program, the benefits of such a program do not constitute

a property interest protected by the Fifth Amendment." Id. Accordingly, the trial court

awarded summary judgment in favor of the government. The Members appeal the trial

court's decision.

       We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).




04-5099                                   10
                                       DISCUSSION

A.       Standard of Review

         Summary judgment is appropriate if there is no genuine issue of material fact and

the moving party is entitled to a judgment as a matter of law. Fed. Cl. R. 56(c);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). We review a grant of

summary judgment de novo to determine whether the trial court correctly applied this

standard. See Cienega Gardens v. United States, 265 F.3d 1237, 1244 (Fed. Cir.

2001).

         Whether a compensable taking has occurred is a question of law based on

factual underpinnings. Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir. 2001).

To evaluate whether a governmental action effects a taking of private property without

just compensation, this court must first determine whether the claimant has established

a property interest for purposes of the Fifth Amendment. Conti v. United States, 291

F.3d 1334, 1339 (Fed. Cir. 2002). Once a property right has been established, the court

must then determine whether a part or a whole of that interest has been appropriated by

the government for the benefit of the public. Id. While a taking often occurs as a result

of a physical invasion or confiscation, the Supreme Court has long recognized that "if a

regulation goes too far it will be recognized as a taking." Pennsylvania Coal Co. v.

Mahon, 260 U.S. 393, 415 (1922). The issue in this case is whether, in amending the

statute that created the peanut quota, the government effected a compensable taking of

a property interest under the Fifth Amendment.




04-5099                                     11
B.     Definition of a Property Right

       The Fifth Amendment provides that private property shall not be taken for public

use without just compensation. U.S. Const. amend. V, cl. 4. The purpose of the Fifth

Amendment, as delineated in the cases interpreting it, is to prohibit the "Government

from forcing some people alone to bear public burdens which, in all fairness and justice,

should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49

(1960).

       "The Constitution neither creates nor defines the scope of property interests

compensable under the Fifth Amendment."          Conti, 291 F.3d at 1340 (citing Bd. of

Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972)).         The parameters of a

protected property interest are delimited by the law that creates the interest, see Roth,

408 U.S. at 577-78, and by "existing rules and understandings" and "background

principles" derived from independent sources, such as state, federal, or common law,

Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1030 (1992); Maritrans Inc. v. United

States, 342 F.3d 1344, 1352 (Fed. Cir. 2003). These "background principles" and "rules

and understandings" focus on the nature of the citizen's relationship to the alleged

property, such as whether the citizen had the rights to exclude, use, transfer, or dispose

of the property. See United States v. Gen. Motors, 323 U.S. 373, 378 (1945). To have

a property interest in a benefit, "a person . . . must have more than an abstract need or

desire for it. He must have more than a unilateral expectation of it. He must, instead,

have a legitimate claim of entitlement to it." Roth, 408 U.S. at 577.

       On the basis of these principles, the Supreme Court and this circuit have

evaluated various regulatory schemes to determine whether intangible property such as




04-5099                                     12
government issued permits and licenses give rise to property interests protected by the

Fifth Amendment. Specifically, the Supreme Court has found that express statutory

language can prevent the formation of a protectable property interest.          See United

States v. Fuller, 409 U.S. 488, 494 (1973).         In the absence of express statutory

language, this court has looked to whether or not the alleged property had the hallmark

rights of transferability and excludability, which indicia are part of an individual's bundle

of property rights. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435-

36 (1982) (describing the right to dispose of property as part of an individual's bundle of

property rights); see, e.g., Am. Pelagic Fishing Co. v. United States, 379 F.3d 1363,

1374 (Fed. Cir. 2004); Conti, 291 F.3d at 1341-42; Mitchell Arms, 7 F.3d at 216.

       In Fuller, the Supreme Court refused to recognize a property interest in grazing

permits issued under the Taylor Grazing Act, 43 U.S.C. § 315. In determining whether

a property right existed, the Supreme Court focused on the revocability of the grazing

permits and the clear Congressional expression in § 315b that the issuance of a permit

under the Act "shall not create any right, title, interest, or estate in or to the lands." 43

U.S.C. § 315. The Court noted that § 315b makes "clear the congressional intent that

no compensable property be created in the permit lands themselves as a result of the

permit." Fuller, 409 U.S. at 494.

       In Mitchell Arms, this court declined to recognize a property interest in a contract

entered in accordance with the terms of a firearm import permit issued pursuant to 18

U.S.C. §§ 921-930 and suspended before the contract could be performed. Mitchell

Arms, 7 F.3d at 216. Mitchell Arms held that when a citizen voluntarily enters a market

subject to pervasive government control he cannot be said to possess the right to




04-5099                                      13
exclude. Id. Specifically, this court concluded that the relevant right to exclude that the

plaintiff lacked was the ability to exclude others from the market for the sale of firearms.

Id.

       In Conti, this court failed to find a compensable property interest in the

petitioner's fishing permit, relying on: (1) the petitioner's inability to assign, sell, or

otherwise transfer the permit; (2) the petitioner's lack of authority to exclude others from

the Atlantic Swordfish Fishery; and (3) the government's retained right to revoke,

suspend, or modify the permit under 50 C.F.R. § 635.4(a)(3). Conti, 291 F.3d at 1341-

42. "The absence of crucial indicia of a property right, coupled with the government's

irrefutable retention of the right to suspend, revoke, or modify Mr. Conti's swordfishing

permit, compels the conclusion that the permit bestowed a revocable license, instead of

a property right." Id. at 1342.

       In American Pelagic, we held that there was no protectable property interest in

fishery permits and authorizations on the grounds that the petitioner did not have the

authority to assign, sell, or transfer its permit and authorization letter and that those

legal instruments did not grant the petitioner exclusive privileges to fish for Atlantic

mackerel and herring. 379 F.3d at 1374. This court reasoned that since nothing in the

language of the regulations precluded the sanction or denial of a permit for reasons

unrelated to enforcement, the government had preserved these rights with respect to

the permits and authorization letters issued under the regulation. Id.

       In sum, the decisions by both the Supreme Court and this court imply that a

compensable interest is indicated by the absence of express statutory language

precluding the formation of a property right in combination with the presence of the right




04-5099                                     14
to transfer and the right to exclude. See, e.g., Fuller, 409 U.S. at 494; Am. Pelagic, 379

F.3d at 1374; Conti, 291 F.3d at 1341-42; Mitchell Arms, 7 F.3d at 216.

C.     Peanut Quota as Property

       The dimensions of any property interest the Members may have in peanut quota

allotments are defined by the 1996 FAIR Act, which created the peanut quotas at issue.

The 1996 Act created a right to plant and produce a certain amount of peanuts for a

guaranteed minimum price. The government argues that this is no more a property

right than government issued licenses or permits. The Members contend that this right

is a property right because, unlike the permits and licenses discussed in Conti and

American Pelagic, the provisions of the 1996 FAIR Act and state case law establish that

a peanut quota allotment was transferable and exclusive. We agree with the Members.

       1.       Transferability

       The right to transfer is a traditional hallmark of property. See Loretto, 458 U.S. at

435-36 (describing the right to dispose of property as part of an individual's bundle of

property rights).      The Members have established that the peanut quota was

transferable.

       The 1996 FAIR Act specifically allowed the peanut quota to be transferred, 7

U.S.C. § 1358a(a) (2000), albeit subject to certain limiting conditions. The 1996 FAIR

Act provides, in relevant part:

       Transfers under this section shall be subject to the following conditions:
       (1) no allotment shall be transferred to a farm in another county; (2) no
       transfer of an allotment from a farm subject to a mortgage or other lien
       shall be permitted unless the transfer is agreed to by the lien-holders; (3)
       no sale of a farm allotment from a farm shall be permitted if any sale of
       allotment to the same farm has been made within the three immediately
       preceding crop years; (4) no transfer of allotment shall be effective until a
       record thereof is filed with the county committee of the county in which



04-5099                                     15
      such transfer is made and such committee determines that the transfer
      complies with the provisions of this section; and (5) if the normal yield
      established by the county committee for the farm to which the allotment is
      transferred does not exceed the normal yield established by the county
      committee for the farm from which the allotment is transferred by more
      than 10 per centum, the lease or sale and transfer shall be approved acre
      for acre . . . .

7 U.S.C. § 1358a(b) (2000).

      Transferal of an allotment was historically subject to approval by the local branch

of the Agricultural Stabilization and Conservation Service ("ASCS"). See In re Williams,

136 B.R. 311, 313 (Bankr. M.D. Ga. 1992). ASCS approval was constrained by federal

law, which only allowed transfers to farms within the same or an adjacent county. See

Shepard v. Fed. Land Bank of Columbia, 421 S.E.2d 763, 764 (Ga. Ct. App. 1992).

      These restrictions on a quota holder's ability to transfer his or her quota do not

distinguish quotas from other transferable goods that are inarguably property, e.g.

alcohol and firearms. The mere fact that transfers of allotments are not unrestricted

does not undermine the importance of transferability to the characterization of quotas as

a form of property.

      Further, the Members point out that peanut quotas were long regarded under

state law to be personal assets, in part because of their transferable nature. In support

of their claims, the Members cite a series of state court decisions that have held a

peanut quota to be a personal asset. See, e.g., Mills v. Davis, 577 So. 2d 436 (Ala.

1991) (noting that peanut quotas are personal property subject to payment of debts, but

ultimately dismissing appeal as untimely); McKim v. Kauffman, 424 S.E.2d 11 (Ga. Ct.

App. 1992) (holding peanut quotas to be property such that a failure to convey a quota

under a contract constitutes breach). The government argues that these cases do not




04-5099                                    16
stand for the proposition that quotas are compensable property interests, but only

illustrate that, in some circumstances, quotas are treated like property. The Members

counter that the treatment of quotas as property implies that they are property for all

intents and purposes.

       The cases addressing the issue of whether an agricultural allotment is property

are less than straightforward in their conclusions; courts have arrived at different

conclusions, compare Walker v. Miller, 507 S.W.2d 606, 609 (Tex. App. 1974) (“An

allotment under the [AAA] has been recognized as intangible personal property, subject

to devise, inheritance, transfers and sales, division by a district court in divorce

proceedings, and to treatment as property in bankruptcy proceedings. It is recognized

that an allotment has a market value, and the statutory restrictions on transfer to not

negate the possibility of transfer.") with Callaway v. Block, 763 F.2d 1283, 1290 (11th

Cir. 1985) (“Appellants have no protected property interest in quotas per se nor in the

specific quotas they had in 1983 or any other price year.”), and even the holdings of

individual courts are muddled, seeming to come down on both sides of the issue, see,

e.g., In re Jackson, 169 B.R. 742, 749 n.2 (N.D. Fla. 1994) ("[C]ourts have stated that

an allotment is a type of intangible personal property . . . . However, allotments cannot

be considered as ordinary intangible property in isolation from the statutes and

regulations which control their transfer.").

       Nonetheless, to the extent that the government's argument relies on the notion

that quotas are not transferable, we must disagree. Despite their apparent ambivalence

about whether or not quotas are property, courts across the peanut growing states have

held consistently that quotas are transferable, subject to statutory restrictions. See,




04-5099                                        17
e.g., Smith v. Smith, 656 So. 2d 814 (Ala. App. 1994) (holding transferable in divorce);

McKim, 424 S.E.2d at 12-13 (recognizing transferable through sale); In re Williams, 136

B.R. 311 (M.D. Fla. 1992) (holding transferable in bankruptcy).          In this case, the

transferability of the quotas supports the conclusion that the quotas constitute property.

       2.     Excludability

       The Supreme Court has recently recognized that the right to exclude is "perhaps

the most fundamental of all property interests." Lingle v. Chevron U.S.A., Inc., 125

S.Ct. 2074, 2082 (2005). The Members contend that they have an exclusive interest in

their respective peanut quota allotments. They argue that cases such as American

Pelagic, Conti, and Mitchell Arms are distinguishable on the ground that the licenses

awarded to the various citizens in those cases were not exclusive, whereas the peanut

quota allotments awarded here were exclusive. Conversely, the government argues

that, at most, peanut quota holders under the 1996 FAIR Act have the power to exclude

others from taking advantage of their allotment and that this limited power of exclusion

is no different from a fisherman's ability to exclude others from using his fishing license.

The government contends that it is still the sole arbiter of who has access to the peanut

quota allotments in much the same way as it determines who shall be permitted to

obtain a fishing license. The government's position fails to appreciate the difference

between a license and a quota.

       The salient difference between the licenses in the noted cases and the peanut

quota allotment is that the value of the peanut quota is considerably more concrete. A

license represents a limited suspension of the otherwise general restrictions imposed by

the government—in the case of a fishing license, it is merely a representation by the




04-5099                                     18
government that it will not interfere with the licensee's efforts to catch fish. The number

of licenses to be issued under such a scheme is not fixed. Each additional license

dilutes the value of the previously issued licenses. So long as the government retains

the discretion to determine the total number of licenses issued, the number of market

entrants is indeterminate. Such a license is by its very nature not exclusive. Neither the

fisherman nor the firearms salesman can exclude later licensees from entering the

market, increasing competition, and thereby diminishing the value of his license.

      Conversely, the awarding of each additional peanut quota under the 1996 FAIR

Act did not increase competition.     Peanut quotas represented a right to plant and

produce a certain amount of peanuts at a certain price in specific crop years. The

statutory scheme limited the number of total pounds of quota peanuts and, in

conjunction with the price supports, guaranteed a minimum price on the peanuts. Once

a particular quota had been awarded, the granting of further quotas did not dilute that

allotment.   Under the quota program, the government served as a surety on large

agricultural loans for any quota holder who grew peanuts. That benefit, which was a

form of monetary subsidy, accompanied every peanut quota that was issued and was

not subject to dilution by the issuance of additional peanut quotas. By awarding a quota

holder a set price on a fixed quantity of peanuts, the government established a defined

market for each quota holder—a market exclusive to that quota holder. Thus, the fact

that the government was entitled to confer quota benefits without any prescribed

limitation does not mean that the quotas were not a form of property.

      A property right accrues when the government has seen fit to take a limited

resource and secure it for the benefit of an individual or a predetermined group of




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individuals. The peanut quota holders possessed an excludable interest, because the

peanut quota program isolated their particular interest from competition.        For the

reasons stated, we conclude that the Members established a property interest

cognizable under the Fifth Amendment.

      D.     Peanut Quota Not Compensable

      The question, therefore, is not whether the peanut quotas have aspects of

property, but whether Congress must pay the owners of peanut quotas compensation

when it takes steps that render the quotas less valuable, or even valueless.          The

answer is no, because the property interest represented by the peanut quota is entirely

the product of a government program unilaterally extending benefits to the quota

holders, and nothing in the terms of the statute indicated that the benefits could not be

altered or extinguished at the government's election.

      By analogy, undoubtedly food stamps in the hands of food stamp recipients are

property.   Theft or fraud that deprived the owner of food stamps would surely be

punishable as theft or fraud directed at property. But, the government's decision to

terminate the food stamp program before the food stamps could be issued would not

give rise to an obligation to compensate prospective holders of the stamps.

      The same principle applies here. Peanut quotas are property, but they are a

form of property that is subject to alteration or elimination by changes in the government

program that gave them value. The peanut quota granted under the 1996 FAIR Act was

a privilege extended by Congress to support farmers during times of market stress as a

general policy to attenuate and smooth out the fluctuations of the market place. Thus,

the holders of peanut quotas, like the holders of food stamps, have no legally protected




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right against the government's making changes in the underlying program and no right

to compensation for the loss in value resulting from the changes. Bowen v. Gillard, 483

U.S. 587, 604 (1987) ("Congress is not, by virtue of having instituted a social welfare

program, bound to continue it . . . .").

       The explanation of why government termination of such a program does not give

rise to a right of compensation has been stated in different ways at different times. It is

sometimes said that the property holder's rights in the property have not "vested," see

Bowen v. Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 55 (1986); it

is sometimes said that the property holder has no investment-backed expectation of

maintaining a continued right to the property, see Penn Cent. Transp. Co. v. City of

N.Y., 438 U.S. 104, 124 (1978); and it is sometimes said that the property is in the form

of a gratuity that the government has explicitly or implicitly retained the right to alter or

revoke, see Gilliard, 483 U.S. at 604. Each of these characterizations captures the

essence of the reason the government's action does not give rise to a constitutional

duty of compensation: The government is free to create programs that convey benefits

in the form of property, but, unless the statute itself or surrounding circumstances

indicate that such conveyances are intended to be irrevocable, the government does

not forfeit its right to withdraw those benefits or qualify them as it chooses. Since

Congress at all times retains the ability to amend statutes, a power which inheres in its

authority to legislate, Congress at all times retains the right to revoke legislatively

created entitlements. Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. at 52

(noting that courts should be "extremely reluctant" to construe statues in a manner that

forecloses the ability of Congress to exercise its legislative powers). In this case, there




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is nothing to suggest that the peanut quota program was intended to provide irrevocable

benefits to quota holders.

      The Members contend that the sunset clause of the 1996 FAIR Act somehow

transmuted the regulatory scheme promulgated by the act into an irrevocable grant of

property.   The Members argue that 1996 FAIR Act, § 155(h), which stated

"[s]ubsections (a) through (g) shall be effective only for the 1996 through 2002 crops of

peanuts," acted to make the provisions of the 1996 FAIR Act irrevocable. Thus, they

maintain that the 2002 Act effectuated a taking by impermissibly applying retroactively

to the 2002 crop of peanuts for which price supports had already been established

under the 1996 Act.

      The inclusion of a sunset provision does not operate to transform a regulatory

scheme for the distribution of subsidies into a compensable property interest under the

Fifth Amendment. We decline the Members' invitation to hold that statutory limitations

to the applicability of statutes constitute an abandonment of Congress’s inherent

authority to legislate. Rather, the sunset provision highlights Congress’s intention that

the price support provisions be temporary in nature.

      To be sure, quota holders who transferred their quotas in the expectation that the

benefits of the quota program would continue, in effect unchanged, lost the value of

their quotas when the program was altered. But, the fact that quota holders expected to

continue to derive benefits from the program does not create rights to compensation

from the government.     Therefore, as we view this case, the change in the quota

program deprived the quota holder's property of value, but the government's conduct

did not constitute a compensable taking of that property.




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                                     CONCLUSION

       While we conclude that the Members do possess a property interest in the

peanut quotas awarded to them under the 1996 FAIR Act, we also conclude that this

right is not compensable. Consequently, the 2002 Act did not effect a taking of a Fifth

Amendment property right. Because no taking occurred, we do not reach the Members'

argument that they were inadequately compensated for their claim. Accordingly, the

judgment of the trial court is

                                      AFFIRMED.

                                        COSTS

       Each party shall bear its own costs.




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