Farming

Federal Court Upholds 'Out-Dated' New Deal Scheme That Hurts Small Farmers

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In June 2013 the U.S. Supreme Court ruled unanimously in favor of California raisin farmers Marvin and Laura Horne. At issue in Horne v. Department of Agriculture was the Agricultural Marketing Agreement Act of 1937, a New Deal law designed to raise certain agricultural prices by controlling supplies. For the Hornes, this meant handing over a portion of their raisin crop each year to the federal government, thereby contributing to the artificial scarcity that is supposed to benefit the industry at large. (Never mind if those higher prices benefit consumers. New Deal lawmakers were not worried about that.)

As the Hornes see it, this government-mandated surrender of a portion of their crop violates the Takings Clause of the 5th Amendment, which requires the government to pay just compensation when it takes private property for a public use. But the U.S. Court of Appeals for the 9th Circuit ruled against the Hornes in 2011, holding that it lacked jurisdiction to even hear their Takings Clause arguments. On appeal last year, the U.S. Supreme Court overruled that decision and granted the Hornes their day in federal court.

That day has now come and gone. And once again, the 9th Circuit ruled against the Hornes. In a decision issued last Friday, the 9th Circuit found the Takings Clause to be undisturbed because the USDA "did not authorize a forced seizure of the Hornes' crops, but rather imposed a condition on the Hornes' use of their crops by regulating their sale." In effect, so long as the farmers "voluntarily choose to send their raisins into the stream of interstate commerce," they must bend to the regulatory rules set by the USDA. Don't like it? Try "planting different crops," the court suggested. Or perhaps the Hornes might consider "selling their grapes without drying them into raisins."

At this point, you may be wondering where the USDA gets the authority to impose these sorts of controls on the raisin supply in the first place. We're not talking about health or safety regulations, after all, we're talking about a federal agency raising prices by artificially limiting supplies. What makes that pass muster?

Here's how the 9th Circuit addressed those concerns:

While the Hornes' impatience with a regulatory program they view to be out-dated and perhaps disadvantageous to smaller agricultural firms is understandable, the courts are not well-positioned to effect the change the Hornes seek, which is, at base, a restructuring of the way government regulates raisin production. The Constitution endows Congress, not the courts, with the authority to regulate the national economy.

Translation: This court defers to the judgment of Congress on economic matters and there's nothing you small farmers can do about it.

The Hornes next move is to either ask for a rehearing of their case by a full panel of the 9th Circuit, or else seek review (once again) at the U.S. Supreme Court.

Related: Reason TV profiled the Hornes last year.