Summary of a Recent
Judicial Development in
Farm Commodity Programs

No Compensable Property Interest
in Peanut Quotas

Amy K. Miller
National AgLaw Center Graduate Assistant

In Members of the Peanut Quota Holders Ass'n v. United States, 421 F.3d 1323 (Fed. Cir. 2005), the United States Court of Appeals for the Federal Circuit affirmed the trial court's decision that members of the Peanut Quota Holders Association, Inc., did not have a compensable property interest in the peanut quota allocated to them under the Federal Agricultural Improvement and Reform Act of 1996, Pub. L. No. 104-127, § 155, 110 Stat. 888, 922-30 ("the 1996 FAIR Act").

The 1996 FAIR Act provided price support for peanut producers in the form of marketing loans based on peanut quotas. Id. at 1328. Although subject to some restrictions, the Act specifically allowed quota holders to sell or lease their quotas to other producers and since 1998 the members had leased their quotas to other farmers. Id. at 1325. In 2002, Congress established a new program that limited availability of quotas to "those who actually farm[ed] peanuts and thereby share[d] in the risk of production." Id. Because the members had leased their quotas and thus did not share in the risk of production they were no longer eligible to receive a peanut quota. See id. at 1329.

The court stated 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 to transfer and the right to exclude." Id. at 1331. The court concluded that the 1996 FAIR Act expressly allowed the peanut quota to be transferred. Id. at 1332. Furthermore, the court stated that "[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 individuals." Id. at 1334. The court concluded that the members had an excludable interest because the peanut quota program isolated their particular interest from competition. Id.

The court, however, held that the members' property interest was not compensable because neither the 1996 FAIR Act nor surrounding circumstances indicated that the peanut quota was intended to be irrevocable or that the government forfeited its right to withdrawal or qualify the quota at its discretion. See id. at 1335.

The case was decided on August 25, 2005; this summary was posted Nov. 6, 2006.