Bench Memos

Horne v. Department of Agriculture: Government, Please Step Away from the Raisins

Today we saw a major victory for property rights in the Supreme Court’s decision in Horne v. Department of Agriculture.  The case addresses a Depression-era federal program designed to maintain a stable market of several agricultural products, including grapes, by requiring growers to give a percentage of their crops to the federal government. Yes, giving: gratis, free of charge, set-aside, whatever you want to call it.  This is in tension, to put it nicely, with the Fifth Amendment of the Constitution, which requires that the government must pay just compensation when it takes private property. Instead of paying just compensation, though, the government was trying to make the growers pay the fair market value of the raisins that the government wanted to confiscate. 

The Supreme Court, in an excellent opinion by Chief Justice Roberts, held today that the Fifth Amendment does not allow such a program.  While the government may take the grapes, it must pay growers fair compensation, some of which could be paid out of proceeds from the sale of any confiscated raisins.  Justice Sotomayor dissented from the decision, while Justices Breyer, Ginsburg, and Kagan concurred in part and dissented in part.  So the decision was in part 8-1, and in part 5-4.

The Court had to address three questions to decide whether this constituted a taking, and on this question, eight justices were in agreement.

First, it determined whether the Constitution’s Takings Clause, the text of which simply addresses “private property,” covers only real estate, or whether it also covers personal property (like the raisins in this case).  The Court rightly held that the words “private property” are broad enough to cover property in general, so “the Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.”  This reading is particularly sensible in light of history, including Revolutionary War-era appropriations of personal property that angered the colonists and likely inspired the constitutional protections.  The Chief even cited the understanding of property in the Magna Carta, which just last week celebrated its 800th birthday

The second question for the Court was whether a contingent residual interest in the property was enough to compensate growers for the taking.  In this case, after the raisins were disposed of (in various noncompetitive markets or even given away), growers were paid their share of any net proceeds – often less than the cost of producing the crop or nothing at all.  The Court held that the speculative possibility of a payment at a later date was not sufficient to save the scheme.  Law students will recall that even forcible installation of a cable box on a rooftop constitutes a taking due (presumably small) compensation.  In light of that precedent, it’s hard to see why losing control over how one’s crop is used wouldn’t be a taking. Under the USDA’s program, the government takes title to (full legal ownership of) the raisins and has the right to dispose of them however it wants. Any residual funds paid to growers would simply be accounted to the “just compensation” due for such a taking. 

It’s significant that the physical taking of the raisins was key to the Court’s result on both these questions.  While many have decried the burden that purely regulatory takings place on the economy, the Court’s decision explicitly distinguishes this case from that sort of taking.  So the answer may have come out differently if, for example, growers were simply limited in the ways they could use their raisins rather than having their raisins physically “appropriated” from them and title given to the government.  That case will have to wait for another term.

The third question considered by the Court was whether the raisin-confiscation scheme was still a taking despite the fact that it was a “condition on permission to engage in commerce.”  The government was arguing, in effect, that the raisin growers opted into this scheme voluntarily in exchange for being allowed to sell their crop at all.  But Chief Justice Roberts wrote that saying “let them sell wine” (the vintner’s equivalent of “let them eat cake”) is cold comfort and anyway outside the government’s authority.  While the government can require compliance with safety regulations for sellers of pesticides,  

Selling produce in interstate commerce, although certainly subject to reasonable government regulation, is . . . not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection.

As the Chief put it, “[r]aisins are not dangerous pesticides; they are a healthy snack.” And selling normal agricultural products shouldn’t require farmers to go to the government with hat in hand. 

But even a wine cellar can’t reach the chilling effects of the government‘s asserted entitlement to control of the growers’ property.  While the government had the good sense not to endorse the Ninth Circuit’s attempts to limit the Fifth Amendment to protecting real property, it showed little respect for property owners. Its arguments suggested that Americans should have to ask permission from their benevolent overlords to be allowed to enter the marketplace at all. The government argued that being allowed to “keep the change” after a third party disposed of nearly half the annual crop was equivalent to retaining full ownership of the literal fruit of one’s labors.

The 5-4 section of the opinion dealt with whether the Hornes had received just compensation for their raisins.  The Chief held that the value of the grapes had already been established by the government itself when it assessed a nearly half-million dollar fine on the Hornes as the value of the grapes they refused to release to federal agents.  The case was thus neatly resolved by simply canceling out the fine imposed by the government.

Justice Thomas concurred, questioning whether taking raisins simply to give them away or sell them elsewhere constitutes a public purpose at all.

Justice Breyer’s dissent, joined by Justices Ginsburg and Kagan, argued that the question of just compensation should have been decided by the Ninth Circuit on remand.

Justice Sotomayor dissented, arguing that the confiscation of the raisins is not a per se taking because it did not destroy every property right – it left the growers with the right to the net proceeds from the raisins’ sale or distribution.  So at least the Ninth Circuit got one vote, though it’s not encouraging to see even a single Supreme Court justice buying the Ninth Circuit’s argument.

 All in all, it’s a good result and a solid victory for traditional methods of interpreting the Constitution. Today we had eight justices signing onto Chief Justice’s originalist analysis of the meaning of “private property,” which is very encouraging. 


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