Unanimous Supreme Court Allows Raisin Farmers to Challenge New Deal-Era Farm Control Law

Takings Clause challenge will proceed in 9th Circuit Court of Appeals

In a unanimous decision issued today, the U.S. Supreme Court ruled that several California raisin farmers may proceed with their constitutional challenge to a New Deal-era farm control law designed to artificially inflate agricultural prices by restricting the supply of goods available for sale on the market.

Under the terms of the Agricultural Marketing Agreement Act of 1937, certain farmers are required to hand over a percentage of their crop to the government without compensation for the purpose of raising prices by controlling supply. That seized portion, known as the "reserve tonnage," may later be used by the government for sale overseas, or sold or given away in a "noncompetitive" domestic market, such as to a school lunch program.

The petitioners in this case, California raisin farmers Marvin and Laura Horne, challenged the government's seizure of their property on several grounds, including the 5th Amendment to the U.S. Constitution, which mandates the payment of just compensation when private property is taken for a public use.

The Hornes lost at the federal district court level, however, where the court likened the government's seizure to "an admissions fee or toll—admittedly a steep one" that the Hornes must pay before enjoying the right to sell their products on the market. On appeal, the U.S. Court of Appeals for the 9th Circuit also ruled against the Hornes, but that court held that it lacked the jurisdiction to rule on their Takings Clause claim.

In his opinion today for a unanimous Supreme Court in Horne v. USDA, Justice Clarence Thomas held that the 9th Circuit does indeed have jurisdiction and that the Hornes must be permitted to raise their constitutional objection to the government's actions. Thomas also rejected the government's argument that the Hornes must first pay a hefty fine before they may turn to the Takings Clause for redress. "When a party raises a constitutional defense to an assessed fine," Thomas wrote, "it would make little sense to require the party to pay the fine in one proceeding and then turn around and sue for recovery of that same money in another proceeding." Horne is an important win for all farmers grappling with the web of agricultural regulations and price controls that have been in place since the New Deal.

One issue the Supreme Court did not address was whether the Hornes had raised a valid Takings Clause objection to the government's uncompensated seizure of their raisins. That issue now returns to the 9th Circuit for further proceedings, and may still reach the Supreme Court on future appeal.

Notably, this is the second unanimous defeat this term for the federal government in a Takings Clause case.

In December, the Court rejected the Obama administration's argument that a series of recurring floods induced by the U.S. Army Corps of Engineers did not qualify as a taking because the flooding was only temporary. In other words, according to the federal government, because the destructive flood waters eventually receded, no property was technically "taken." Yet as Justice Ruth Bader Ginsburg observed in her unanimous opinion in Arkansas Game and Fish Commission v. United States, "No decision of this Court authorizes a blanket temporary-flooding exception to our Takings Clause jurisprudence, and we decline to create such an exception in this case."

But don't get too comfortable with all these unanimous decisions in property rights cases. Still to be decided this term is Koontz v. St. Johns River Water Management District, a case arising from a Florida regulatory agency's refusal to permit the commercial development of a small piece of property unless the owner first agreed to several burdensome conditions, including the funding of off-site improvements to publicly-owned land. During January's oral argument in that case, the Court's liberal justices expressed strong hostility to the idea that these conditions violated the property owner's rights. And perhaps even more significantly, Justice Antonin Scalia expressed his own doubts about whether petitioner Coy Koontz Jr. and his attorneys at the Pacific Legal Foundation had raised a valid Takings Clause argument in the first place.

We'll know by month's end whether the government's current Takings Clause losing streak will come to an end in Koontz.