Raisins in the Sun
The Supreme Court is
skeptical about federal farm 'takings.'
Taxpayers are wary of government programs that confiscate private
property—witness outrage over the 2005 Supreme CourtKelo decision that
let government take homes via eminent domain for private use. Now the High Court
is considering another program that orders citizens to surrender their assets—or
else.
U.S. raisin farmers have been required for nearly 80 years to turn over a share of their crops to the federal government every year, often at below-market prices. Last week the Supreme Court heard oral argument on whether, in the words of Justice Elena Kagan, this annual raisin heist is "a taking, or just the world's most outdated law."
Horne v. USDA turns on a Great Depression "price stabilization" program that established a Raisin Administrative Committee to control raisin supply. The committee acts as a cartel, setting raisin prices and recommending through "marketing orders" how many tons of raisins must be sold to the feds at a steep discount. The Department of Agriculture enforces the orders.
Marvin and Laura Horne organized their business to process and pack the raisins themselves, mistakenly reasoning that their raisins would then not pass through the middleman "sellers" who must forfeit a share of the crop to the government. In 2002-2003, the first year the Hornes didn't turn over their raisins to the government, the Raisin Administrative Committee required producers to forfeit 47% of their crop while paying them less than the cost of production. In 2003-2004, raisin farmers had to hand over 30% for nothing.
The USDA came after the Hornes and ordered them to pay both the $483,843 cash value of the raisins the government said they should have turned over plus $202,600 in fines. The Hornes appealed on ground that the seizure violates the Constitution's Takings Clause.
A District Court in California ruled against the Hornes and the Ninth Circuit Court of Appeals agreed, claiming the Takings Clause doesn't apply to the federal regulatory program. When the court reheard the case en banc, the government shifted its argument and asked the court to rule that the takings claim had to be separately handled in the Court of Federal Claims.
The Ninth Circuit fell for that bait and switch, but last week the Justices were skeptical of both the raisin program and the government's procedural run-around. Justice Kagan bristled that the feds "only started talking about [the procedural issue] in a petition for rehearing en banc, and the Government can't do that. You know, it can't introduce an argument like this in a petition for rehearing en banc."
On the merits of the takings claim, Assistant to the Solicitor General Joseph Palmore noted at one point that if the Justices were to remand the case to the Ninth Circuit, the effect would be to reinstate the lower court's original rejection of the takings claim. "No, no," Justice Stephen Breyer responded, "We'll say given the way that we've talked about the program, perhaps it's best to consider this matter fully."
For small businesses, these routine confiscations are a special burden because so few can afford to defend their property rights. Similar federal marketing orders cover produce including apricots, avocados, kiwis and olives. The effect is to impose a tax on farmers.
As Justice Antonin Scalia put it, so it's "your raisins or your life, right? . . . you don't have to pay the penalty if you give us the raisins." No, Mr. Palmore explained. "They have to give the raisins . . . It's not a choice." Which is why the Justices should find these takings to be unconstitutional.
U.S. raisin farmers have been required for nearly 80 years to turn over a share of their crops to the federal government every year, often at below-market prices. Last week the Supreme Court heard oral argument on whether, in the words of Justice Elena Kagan, this annual raisin heist is "a taking, or just the world's most outdated law."
Horne v. USDA turns on a Great Depression "price stabilization" program that established a Raisin Administrative Committee to control raisin supply. The committee acts as a cartel, setting raisin prices and recommending through "marketing orders" how many tons of raisins must be sold to the feds at a steep discount. The Department of Agriculture enforces the orders.
Marvin and Laura Horne organized their business to process and pack the raisins themselves, mistakenly reasoning that their raisins would then not pass through the middleman "sellers" who must forfeit a share of the crop to the government. In 2002-2003, the first year the Hornes didn't turn over their raisins to the government, the Raisin Administrative Committee required producers to forfeit 47% of their crop while paying them less than the cost of production. In 2003-2004, raisin farmers had to hand over 30% for nothing.
The USDA came after the Hornes and ordered them to pay both the $483,843 cash value of the raisins the government said they should have turned over plus $202,600 in fines. The Hornes appealed on ground that the seizure violates the Constitution's Takings Clause.
A District Court in California ruled against the Hornes and the Ninth Circuit Court of Appeals agreed, claiming the Takings Clause doesn't apply to the federal regulatory program. When the court reheard the case en banc, the government shifted its argument and asked the court to rule that the takings claim had to be separately handled in the Court of Federal Claims.
The Ninth Circuit fell for that bait and switch, but last week the Justices were skeptical of both the raisin program and the government's procedural run-around. Justice Kagan bristled that the feds "only started talking about [the procedural issue] in a petition for rehearing en banc, and the Government can't do that. You know, it can't introduce an argument like this in a petition for rehearing en banc."
On the merits of the takings claim, Assistant to the Solicitor General Joseph Palmore noted at one point that if the Justices were to remand the case to the Ninth Circuit, the effect would be to reinstate the lower court's original rejection of the takings claim. "No, no," Justice Stephen Breyer responded, "We'll say given the way that we've talked about the program, perhaps it's best to consider this matter fully."
For small businesses, these routine confiscations are a special burden because so few can afford to defend their property rights. Similar federal marketing orders cover produce including apricots, avocados, kiwis and olives. The effect is to impose a tax on farmers.
As Justice Antonin Scalia put it, so it's "your raisins or your life, right? . . . you don't have to pay the penalty if you give us the raisins." No, Mr. Palmore explained. "They have to give the raisins . . . It's not a choice." Which is why the Justices should find these takings to be unconstitutional.
A version of this article appeared March 26, 2013, on
page A12 in the U.S. edition of The Wall Street Journal, with the headline:
Raisins in the Sun.
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