Response by Professor Alan B. Morrison
Geo. Wash. L. Rev. Docket (Oct. Term 2014)
Horne v. Department of Agriculture, 575 U.S. ___ (2015).
Docket No. 14-275; argued April 22, 2015; June 22, 2015
Slip Opinion | New York Times | SCOTUSblog
By a vote of 8-1, the Supreme Court today dealt a significant blow to the current program of the United States Department of Agriculture (USDA) that is designed to stabilize the market for raisins. The opinion of Chief Justice Roberts was joined in full by Justices Scalia, Kennedy, Alito, and Thomas and, except as to the remedy, by Justices Breyer, Ginsburg, and Kagan, who thought that a remand was needed. How serious a blow it turns out to be, and whether it extends to other agricultural products that do not operate in the same manner, remain to be seen. Justice Thomas concurred, expressly doubting that the taking here was valid at all since it did not appear to him to be for a “public use,” which is a requirement for any taking.
Since 1937, it has been the policy of the federal government to try to stabilize markets in agricultural products to ensure both adequate supplies and reasonable incomes for the farmers. The basic approach is to limit supply so that prices will increase and farmers will be willing to continue to produce the regulated products for consumers. In the raisin industry, this is accomplished by literally requiring that all farmers turn over a substantial percentage of their crop—47 percent in 2002–03 and 30 percent the following year—to the Government which can use it for specified purposes, including sale. Farmers are entitled to their share of the net proceeds after expenses of any sale, which were less than the cost of producing the crop in 2002–03 and nothing in the next. However, according to a letter from the Solicitor General to the Court, there were distributions, in unspecified amounts, in 42 of the 49 years that the program operated.1
The litigation began after the Hornes refused to turn over their allocated share, the USDA assessed fines of more than $480,000, plus a civil penalty of $200,000 for disobeying the turnover order. When they refused to pay, USDA sued them, and the majority today ruled that the Hornes’ refusal to pay was justified because the Government had taken their property without just compensation, in violation of the Fifth Amendment.
The Ninth Circuit, the USDA, and Justice Sotomayor saw this program as regulatory and therefore analyzed it under the regulatory takings line of cases.2 The other eight Justices concluded that, because the USDA took physical possession of the raisins and controlled their distribution, this was a per se takings case for which just compensation was due. No Justice would have treated the program differently because it dealt with personal in contrast to real property, but Justice Sotomayor did not see this as a per se taking. She acknowledged that the small physical intrusion to install a cable box on the building owner’s property in Loretto v. Teleprompter Manhattan CATV Corp3 was a per se taking, but not the 47 percent or 30 percent of the Hornes’ raisins taken in the two years because the taking here was not total due to the rights to residual payments that might accrue to the Hornes. The majority also (properly) rejected the defense that the Hornes could be forced to give up the excess raisins that they produced and owned as the price of gaining the benefit of the stabilization program.
The Government argued that, even if there was a taking, there was no loss to the Hornes because the program to which they objected increased the price of the 53 and 70 percent of the raisins they did sell in those years, and so they were fully compensated for the ones that they did not sell. Accordingly, it asked for a remand to calculate what amount would be due if the Hornes had complied with the turnover requirement, relief that Justice Breyer and his two concurring Justices agreed was the appropriate disposition. While not rejecting entirely the principle that offsets may be required in some situations, the majority found that the “Government has already calculated the amount of just compensation in this case, when it fined the Hornes the fair market value of the raisins: $483,843.53.”4 It declined to allow the Government to disavow that figure nor to argue that the Hornes had already received that amount in benefits under the program. The majority also noted that this litigation had been going on for ten years which is “long enough.”5 The majority might also have justified that approach by noting that, even if there were some additional benefit to the Hornes, there was still at least a partial uncompensated taking and hence the fine and civil penalty could not stand for that reason alone. Perhaps more importantly, this case was not about how much or how little USDA had to pay the Hornes, but whether they had to pay them at all, even if there were no offsetting benefits from the market stabilization. The Hornes won that issue and so, despite the persuasive partial dissent by Justice Breyer arguing that it is the net loss, if any, to the Hornes that matters, it was not unreasonable for the Court to say that it was simply not going to get into that issue in this case.
The big question is, what will happen now, both for raisins and the other products that are subject to the same or at least some regulatory schemes. I say regulatory because, although the Court found there to be a taking in this case, the Court appears to recognize that this is a regulatory program, but the means used to carry it out involved a “clear physical taking” of the Hornes’ property.6 Indeed, the majority stated that a “physical taking of raisins and a regulatory limit on production may have the same economic impact on a grower. The Constitution, however, is concerned with means as well as ends.”7 This suggests there may be other means by which these ends could be achieved, although they would be subject to scrutiny as potential regulatory takings of the kind found in cases cited by the majority throughout the opinion.8 And if that approach were taken, the advantages to the farmers from a stable market could be taken into account, although those calculations would not be without difficulty, if the Court required some exactitude. Given the central role that farmers play in the Advisory Committee that administers this program, and the admitted aim to stabilize the market—translated: stabilize and perhaps raise the income of the raisin farmers—this is clearly not a case in which the Hornes and other farmers do not share in the program’s benefits.
In many respects, this decision is simply the first, or perhaps, the next step in the evolution of the raisin and other similar programs. It plainly cannot continue as it has, but without examining the 1937 Act and the applicable regulations for each program, it is impossible to tell what kind of changes can lawfully be made to respond to the takings problem and still achieve the goals of the program. On the other hand, as Justice Sotomayor observed about the program, it “may well be an outdated, and by some lights downright silly, regulation. It is also no doubt intrusive.”9 Together with the underlying economic skepticism of the other Justices, this may the right time for Congress and perhaps consumers to ask if they are paying too great a price today for a program that may have been justified during the Depression, but not today, even if it can be reconfigured to avoid the Takings Clause problem that brought it down in Horne.
The federal government has backed away from direct setting of prices and market conditions in many areas, such as transportation, in favor of lighter regulation designed to assure health and safety, prevent fraud, and eliminate the most blatant forms of unfair competition. Whether domestic agricultural production falls into that de-regulation category is an important and complicated question, the answer to which may depend on where you sit. But given the impossibility of continuing the raisin program (and almost certainly others) as is, today’s decision will at least serve as a necessary call to think hard about the program and that is probably a good thing, even if one disagrees with the Court’s decision.
P.S.
The Justices could not resist the opportunity to deliver a few literary references or use the character of the product at issue to make a legal point:
Chief Justice Roberts in response to the argument that the Hornes could plant different crops or make other uses of their grapes: “‘Let them sell wine’ is probably not much more comforting to the raisin growers than similar retorts have been to others throughout history.”10
More from the Chief in rejecting a case involving oysters:
“Raisins are not like oysters: they are private property—the fruit of the growers’ labor. . . .”11
Justice Thomas, observing that if there were no proper taking, calculating just compensation “would be a fruitless exercise.”12
But at least no one accused either the Hornes, the USDA, or the other farmers of having “sour grapes.”
1. Horne v. Dep’t of Agric., No. 14-275, slip op. at 4–5 (U.S. June 22, 2015) (Sotomayor, J., dissenting).
2. These cases were cited by the majority. Id. at 3–4, 7–8, 11 (majority opinion).
3. 458 U.S. 419 (1982).
4. Horne, slip op. at 17 (majority opinion).
5. Id. at 18 (majority opinion).
6. Id. at 8 (majority opinion).
7. Id. at 9 (majority opinion).
8. Id. at 3–4, 7–8, 11 (majority opinion).
9. Id. at 4 (Sotomayor, J., dissenting).
10. Id. at 12 (majority opinion).
11. Id. at 14 (majority opinion).
12. Id. at 1 (Thomas, J., concurring).
Recommended Citation
Alan B. Morrison, Response, Horne v. Department of Agriculture, Geo. Wash. L. Rev. Docket (June 19, 2015), http://www.gwlr.org/horne-v-dept-of-agriculture/.
