Rehearing Denied; Suggestion for Rehearing In Banc Declined August 22, 2000.
LOURIE, Circuit Judge.
B & G Enterprises, Ltd. appeals from the decision of the United States Court of Federal Claims granting summary judgment against B & G's takings claim. See B & G Enters., Ltd. v. United States, 43 Fed.Cl. 523 (1999). We affirm.
In 1992, Congress amended the Public Health Service Act and established the Substance Abuse and Mental Health Services Administration ("SAMHSA") as an agency of the Department of Health and
In 1993, HHS issued a Notice of Proposed Rulemaking (NPRM) seeking comments on proposed regulations to implement section 300x-26. See 58 Fed.Reg. 45156 (1993). HHS proposed to implement this statutory provision by
Id. (emphasis added). The proposed regulation, 45 C.F.R. § 96.130, provided that to qualify for a block grant a state must have in effect "a law providing that it is unlawful for any manufacturer, retailer, or distributor of tobacco products to sell or distribute any such product to any individual under the age of 18 through any sales or distribution outlet, including over-the-counter and vending machine sales" and that the state take action to ensure compliance with this rule. See id. at 45173. Thus, the proposed regulation merely echoed the language of the statute itself and clarified that it also applied to vending machine retailers. Appended to the NPRM was a "Model Sale of Tobacco Products to Minors Control Act." See id. at 45165 (Appendix A). The model act banned all vending machine sales of tobacco. See id. Also appended to the NPRM was a report by the Office of Inspector General that discussed some of the ways in which states and localities already limited youth access to tobacco. See id. at 45171-72. The report stated in relevant part as follows:
Id. at 45171. The proposed regulation did not make tobacco vending machine restrictions a condition of the receipt of the federal block grant, but the NPRM did suggest that states ban tobacco vending machines or restrict their placement in order to limit youth access to tobacco. Proposed regulation section 96.130 was finalized in 1996. See 61 Fed.Reg. 1492 (1996).
At the time that section 300x-26 was enacted in 1992, California already had a law in place making tobacco sales and distributions to persons under 18 illegal. See Cal.Penal Code § 308(a) (West 1990) ("Every person, firm, or corporation which knowingly sells, gives, or in any way furnishes to another person who is under the age of 18 years any tobacco, cigarette, or
In 1994, after section 300x-26 was enacted and the NPRM published, California did enact a law restricting, but not banning, the placement of tobacco vending machines. See Stop Tobacco Access to Kids Enforcement Act ("STAKE"), 1994 Cal. Stat. 1009 (codified at Cal. Bus.Code §§ 22950-61 (West 1999)). California enacted STAKE in order to "reduc[e] and eventually eliminat[e] the illegal purchase and consumption of tobacco products by minors" and to comply with section 300x-26.
B & G owns and operates cigarette vending machines located in business establishments in Los Angeles, California, pursuant to contracts with the establishment owners. B & G sued the United States in the United States Court of Federal Claims, alleging that its cigarette vending machine contracts constituted property interests, that it "lost" vending machine contracts when California's tobacco vending machine restrictions went into effect on January 1, 1996, and that this loss constituted an unlawful taking of property by the federal government without just compensation. Specifically, B & G alleged that California's vending machine law is attributable to the federal government because, it asserts, the state was acting as an agent of the federal government when it enacted the law. The government moved for summary judgment that the federal government did not take B & G's property, asserting that California did not act as an agent of the federal government when it enacted the tobacco vending machine restrictions. The Court of Federal Claims granted the government's motion, holding that California did not act as an agent of the federal government when it enacted section 22960, but rather did so voluntarily for its own benefit. See B & G Enters., 43 Fed.Cl. at 528. B & G timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) (1994).
Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." U.S.Ct. Fed. Cl. R. 56. We review a grant of summary judgment by the Court of Federal Claims de novo to determine whether the summary judgment standard has been correctly applied. See Winstar Corp. v. United States, 64 F.3d 1531, 1539 (Fed.Cir.1995) (en banc), aff'd 518 U.S. 839, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996). Summary judgment is particularly appropriate here. There are no material facts in dispute. The only issue is legal—whether the Court of Federal Claims properly held that the state of California was not an agent of the federal government
As a preliminary matter, we understand B & G to argue that it has suffered a regulatory rather than a physical taking, since it does not allege that the federal government physically occupied or destroyed its property,
The Fifth Amendment provides in relevant part as follows: "nor shall private property be taken for public use, without just compensation." U.S. Const. amend. V, cl. 4. Although the Supreme Court has stated that "[c]ontract rights are a form of property and as such may be taken for a public purpose provided that just compensation is paid," United States Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 19 n. 16, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977), it has also emphasized that government interference with contractual rights does not necessarily constitute a taking of property:
Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 223-24, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986) (internal quotation marks and citations omitted); see also Eastern Enters. v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998); Greenbrier, 193 F.3d at 1356-57. For purposes of this appeal we accept, but do not decide, that B & G's vending machine contracts may constitute "property." See Greenbrier, 193 F.3d at 1357. Even if B & G's contracts are property rights and were affected by the government's actions, we conclude that a taking did not occur.
We agree with the government that California did not act as an agent of the United States by enacting the section 22960 vending machine restrictions and that the United States is therefore not responsible for that law's interference with B & G's vending machine contracts as a matter of law. "Agency is the fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other to so act." Restatement (Second) of Agency § 1(1). There is no manifestation by either the federal government or the State of California of an intent to create an agency relationship under the facts of this case.
First, both the Supreme Court and our predecessor court, the United States Court of Claims, have held that the federal government's conditioning a state or locality's receipt of federal funds on the state's taking a particular action does not make that state or locality an agent of the federal government. See Griggs v. Allegheny County, Pa., 369 U.S. 84, 89, 82 S.Ct. 531, 7 L.Ed.2d 585 (1962) (holding that the county government, not the federal government, was liable for the taking of an air easement over plaintiff's property,
Second, California's legislature cannot be considered to have acted under federal authority. The State of California is an independent sovereign, which itself possesses the authority to enact legislation
Third, this case is distinguishable from those cases in which a state or local official was acting under the authority of a federal order or law. See Preseault v. United States, 100 F.3d 1525, 1550 (Fed.Cir.1996) (en banc) (holding that the federal government was liable for a taking of property where City of Burlington acted under federal authority); Hendler v. United States, 952 F.2d 1364, 1378-79 (Fed.Cir.1991) (holding that the federal government was liable for a taking of property where California officials, acting under the authority of a federal order, occupied land). The first distinction is that both cases involved a physical occupation, whereas this case does not. Moreover, in each case, an order from the federal government led to state action. In Preseault, an order by the ICC occurred before the city of Burlington physically occupied the land. In Hendler, the EPA issued an order that authorized the state of California to enter upon the land and establish monitoring wells. No such order was issued here.
Finally, California's passage of section 22960 was not enacted for the benefit of the federal government or all Americans. As discussed supra, California enacted restrictions on the placement of tobacco vending machines for two reasons: to vigorously enforce its own law prohibiting
We therefore conclude that B & G's property was not taken by the federal government, either by Congress's enactment of section 300x-26 in 1992, by HHS's publication of the NPRM in 1993, or by HHS's promulgation of section 96.130 in 1996. Congress's enactment of section 300x-26 did not constitute a taking of B & G's "property" because section 300x-26 did not place federal restrictions on the location of tobacco vending machines. Rather, section 300x-26 only conditioned a state's receipt of funds on that state's prohibition of tobacco sales and distribution to persons under 18. As discussed supra, California already had such a prohibition when section 300x-26 was enacted. The enactment of section 300x-26 thus did not by itself affect B & G's vending machine contracts. Moreover, the NPRM published in 1993 only suggested that states ban or place restrictions on tobacco vending machines in order to limit youth access to tobacco. These suggestions were not rules of law affecting B & G's contracts. Lastly, HHS's promulgation of section 96.130 in 1996 also did not constitute a taking for the same reason that Congress's enactment of section 300x-26 did not. Section 96.130 merely echoed and clarified section 300x-26's requirements; it did not ban or place restrictions on the locations of tobacco vending machines.
In sum, it was California's decision to create restrictions on the placement of tobacco vending machines, not the federal government's. Congress may have provided the bait, but California decided to bite. If California's enactment of section 22960 interfered with B & G's vending machine contracts, it was not the responsibility of the federal government. The Court of Federal Claims properly granted the government's motion for summary judgment on B & G's takings claim.
Because California did not act as an agent of the United States when it enacted a law banning tobacco vending machines from establishments that were not licensed to sell alcoholic beverages, the United States is not liable for California's interference with B & G's tobacco vending machine contracts with such establishments; it did not "take" B & G's alleged property rights. Accordingly, the Court of Federal Claims properly granted the government's motion for summary judgment. The decision of that court is therefore