Gov't Raisin Program Is Unconstitutional Taking, Court Rules
The Supreme Court ruled today that a government program that sought to prop up the price of raisins by seizing excess production is a taking that requires just compensation. Under the Agricultural Marketing Agreement Act, a New Deal era attempt to protect agricultural markets, government-backed agricultural boards can set "marketing orders," under which a certain amount of a crop is set aside and sold off-market.
Since the raisins are actually seized, that constitutes a physical appropriation and a per se taking. The fact that the farmers retain an interest in the raisins and that they are compensated through higher market prices does not matter, according to the Court.
Opposition to Law Bears Fruit
The AMAA attempts to stabilize raisin prices by limiting how much of a farmer's production can go to market. The part ordered to be withheld must be kept in reserve, though it can be sold in non-competitive markets, such as to school-lunch programs. The reserve tonnage, which is turned over to the federal government, can count for a third to nearly half of a farm's production, depending on the year.
The Horne family was fined nearly $700,000 for attempting to circumvent the program, which they claim is "communism." When they sued, the Supreme Court agreed, 8-1, that the government's raisin restrictions were a Fifth Amendment taking that requires just compensation.
Emphasis on Physical Appropriation
The Court's opinion, written by Roberts and joined by all but Sotomayor, begins at the beginning -- with the Magna Carta, which Roberts says protects both personal and real property against government seizure, an idea enshrined in the Fifth Amendment. The AMAA constitutes such a taking -- the government literally takes raisins by the ton.
According to the government, no compensation is owed for that taking, however, since the property owner still has a contingent interest in those surplus raisins. When they are sold, the owner is remunerated.
Retaining an interest doesn't undo the physical appropriation, the Court held. Here, the physical appropriation trumped the different treatment that real and personal property are often given in takings cases. Since the government took physical control of the raisins, it was a per se taking requiring compensation, much like the attachment of a cable box on a private house. For physical appropriations, there's a "categorical duty to pay."
Undermining Price-Support Programs
Only Sotomayor objected, finding the Court's reasoning "baffling." The other liberal justices, Breyer, Kagan, and Ginsburg, agreed that the program was a taking, but objected to the Court's ruling that approximately $400,000 was owed -- the amount the Hornes were fined.
While the existence of a national raisin reserve or even the need to prop up such a crop may seem bizarre to many, the program had wide support amongst farmers. Similar programs are in place to regulate much tastier crops, such as nectarines, peaches and even milk. Those programs may need to be reworked in light of today's decision.
- Supreme Court Sides with Fresno Farmer in Raisin Dispute (Los Angeles Times)
- Raisin d'Être: Court to Consider California Raisin Marketing (FindLaw's U.S. Supreme Court Blog)
- Supreme Court Makes a Dam Decision (FindLaw's U.S. Supreme Court Blog)
- Planting the Seed for Patent Exhaustion: Will Monsanto Win Again? (FindLaw's U.S. Supreme Court Blog)
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