Supreme Court

Today at SCOTUS: Property Rights vs. USDA Crop Seizures

The federal government seeks to confiscate raisins without paying just compensation to raisin farmers.

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According to the Fifth Amendment to the U.S. Constitution, the government must pay just compensation when it takes private property for a public use. Three years ago, in the case of Arkansas Game & Fish Commission v. United States, the U.S. Supreme Court reaffirmed that command, declaring that the government has a "categorical duty" to pay just compensation when it "physically takes possession of an interest in property."

Yet according to the Obama administration, the Fifth Amendment places no substantive check on the federal government's power to seize tens of thousands of tons of raisins without paying just compensation to raisin farmers. In oral argument this morning, the Supreme Court will consider the legality of that federal claim.

At issue today in Horne v. United States Department of Agriculture is a federal regulatory scheme which dates back to the Agricultural Marketing Agreement Act of 1937, a New Deal law designed to raise agricultural prices by tightly controlling the amount of agricultural products that went to market. For raisin "handlers" such as family farmers Marvin and Laura Horne of California, what this means in practice is that each year they are required to turn over a certain percentage of their crop to the federal government, or else pay the government the dollar equivalent of that crop, plus certain fines. The federal government then enjoys exclusive control over those raisins, and may opt to sell them for export, or put them to other use, such as in school lunch programs. To put that in perspective, in 2002-2003, the Hornes and other farmers were told to hand over 30 percent of their raisin crop, which amounted to 89,000 tons. In return, the federal government paid nothing.

"Simply put," the Hornes argue in their main brief, "the Marketing Order physically deprives raisin producers of a large portion of their raisin crop and compels transfer of those raisins to the [Raisin Administrative Committee], the agent of the USDA, without just compensation." Those government actions violate the Fifth Amendment to the Constitution, the Hornes say, and must be stopped.

In response, the Obama administration claims that the Fifth Amendment should really have nothing to do with it. The Hornes "are subject to the reserve requirement due to their voluntary choice to market raisins in commerce," the federal government argues in its brief. Because the raisin confiscation "is rationally related to the legitimate government interest in ensuring orderly market conditions and fair prices for producers," the Obama administration maintains, "the government may condition participation in that market on compliance with the reserve requirement."

Notice the terms "rationally related" and "legitimate government interest." That language is taken directly from a legal concept known as the rational-basis test, which is, in the words of Black's Law Dictionary, "the most deferential of the standards of review" used by the courts when judging the constitutionality of government action. In other words, rather than viewing this case through the lens of the Fifth Amendment, which, like the rest of the Bill of Rights, places strict limits on what the government is permitted to do, the Obama administration wants the Supreme Court to adopt "the most deferential" approach possible when reviewing the USDA's actions.

Let's hope the Supreme Court declines this unsavory federal invitation. Whether the Obama administration cares to admit it or not, the USDA is clearly seeking to take physical possession of private property (crops or their cash equivalent) for an ostensible public use, and the USDA is just as clearly refusing to pay just compensation for the taking of that property. This situation is a textbook example of an unconstitutional taking under both the language of the Fifth Amendment and the Court's precedents. 

Related: Reason TV on "Feds vs. Raisins: Small Farmers Stand Up to the USDA."

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101 responses to “Today at SCOTUS: Property Rights vs. USDA Crop Seizures

  1. Question: Does the raisin reserve ever actually put raisins back on the market to lower raisin prices? Or does it just always keep the raisins and use them for the government’s purposes?

    1. Is this curiosity, or do you think it has merit to the case?

      1. I think it has merit.

        If they are “regulating” the market it would make some rational sense to sometimes hold raising in reserve in good years and sell them in bad years. But if they are just taking a percentage of raisins all the time, that’s not rational regulation. Regulators can’t just keep prices above market forever and take a cut. If the long-term market price of raisins has fallen so much they should be adapting to the new reality.

        1. Sure the regulators can. They have been doing it for decades at the USDA. The problem here is the idea that they can do that by just stealing the excess commodities rather than paying for them.

          1. Yeah, actually, if they really want to do this rationally, the should return the raisins to the farmers during bad years. So the farmers eventually get back what they put in.

            The way they are running the program, the farmers get a price support in the good year, but lose a portion of the crop, and in the bad year, prices are higher, but they have less to sell, and never get anything back. So it’s not really evening out their income the way it is supposed to.

            1. return the raisins to the farmers during bad years

              Nobody wants 1 year old raisins even if they’re flash frozen, which I’m sure they are not.

              1. I thought the whole point of drying fruit was to preserve it.

            2. “It’s been a bad year for raisin farming. Here you go, farmers, here are some nasty old 3 year old raisins from the Federal Raisin Reserve. Good luck selling them on the free and open market, and don’t forget to say thanks”.

              1. “and don’t forget to clear this with the FDA, whose agents are already loading up their SWAT teams as we speak.”

        2. lol, rational regulation of what other people are doing is a ridiculous concept unless you believe in rational regulation of people’s lives too. But that would then draw into question the regulators as people too.

          Let’s make them gods. 😀

    2. The raisins go to the DoD for them to use in their new Raisin-Powered Death Ray.

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  2. And this is why I linger on the edge of anarchy.

    1. Don’t linger, c’mon in.

      The water is rational and voluntary.

  3. Yet according to the Obama administration, the Fifth Amendment places no substantive check on the federal government’s power to seize tens of thousands of tons of raisins without paying just compensation to raisin farmers. In oral argument this morning, the Supreme Court will consider the legality of that federal claim.

    But property rights only protect the rich!

    /derp

    1. There was some OWS fool who tried to distinguish his belongings like iphone, etc from property to justify keeping his shit while confiscating others’

      1. That was from a Daily Show segment

        They try to distinguish between private and personal property.

  4. Yet according to the Obama administration, the Fifth Amendment places no substantive check on the federal government’s power to seize tens of thousands of tons of raisins without paying just compensation to raisin farmers. In oral argument this morning, the Supreme Court will consider the legality of that federal claim. was a silly mistake that they are working hard to make worthless.

    1. “In response, the Obama administration claims that the Fifth Amendment should really have nothing to do with it. The Hornes “are subject to the reserve requirement due to their voluntary choice to market raisins in commerce,””

      This reasoning is absurd and flawed on so many levels.

      In response, the Obama administration claims that the Fifth Amendment should really have nothing to do with it. The Hornes “are subject to the reserve requirement due to their voluntary choice to own and use housing””

      In response, the Obama administration claims that the Fifth Amendment should really have nothing to do with it. The Hornes “are subject to the reserve requirement due to their voluntary choice to use healthcare””

      In response, the Obama administration claims that the Fifth Amendment should really have nothing to do with it. The Hornes “are subject to the reserve requirement due to their voluntary choice to breath air””

      1. How the heck do you highlight specific text on this site? Still haven’t figured that out yet apparently.

  5. The Administration is claiming that the government can confiscate property as long as it is doing so for the purpose of market stability and price supports. The argument is that the government has the power to support the price of commodities, in this case raisins. (Yes, I realize that is a debatable claim but spare me the pedantry for once because that is not the issue the court is considering.) Since the government has the power to support the price of raisins, it can do so by limiting the supply. The Obama administration seems to think that it can limit supply by just stealing it from farmers. That is a rather startling claim. Farm price supports usually work by buying the excess supply or paying farmers a guaranteed income not to produce it. If the court were to adopt the administration’s view here, the government would have the power to take any property meant for commerce without compensation in the name of supporting the price. So for example, take the infamous cash for clunkers program. Under the government’s theory here, they need not have offered people money for their cars, they could have just confiscated a given number of used cars off of used car lots that have been put up for sale on the theory that the price of entering the commerce of used car sales was not selling too many cars than the government deemed appropriate.

    1. The thing is if the government is using the raisins in the school lunch program, or selling them over seas, or doing anything other than burning them, that undermines their claim that this is rational market regulation. Because raisins used in the school lunch program or sold internationally are still moving in interstate commerce and if they are in the market anywhere, they are going to lower the price of raisins, counteracting any price support intent. Raisins not purchased by the school lunch program decreases demand for raisins and affects the price of raisins. International buyers who get their raisins from the government aren’t buying them from US farmers.

      What might be rational would be keeping the raisins in reserve and then selling them back into the US market during bad years when the price is high. But that doesn’t seem ot be what they are doing.

      1. Yes, if the government is putting them into commerce themselves, then that defeats the entire purpose of the price control.

        1. Aggregate effects can only be caused by individuals!

          1. Dear government, Stay the fuck out!
            Thank you,
            US Citizen
            (your boss, fucker)

      2. According to Roberts, I think the government can do that.

        But you have to call it a “tax”.

        1. “…each year they are required to turn over a certain percentage of their crop to the federal government, or else pay the government the dollar equivalent of that crop, plus certain fines.”

          It’s a PENALTAX!!11!!!!!! Therefore constitutional.
          – JRob

      3. What might be rational would be keeping the raisins in reserve

        This is not rational either. Even dried fruit isn’t something that can be stored long term without considerable costs.

        1. Yeah, if that were a good solution, why wouldn’t raisin farmers do it themselves?

          My guess is that the best approach is crop insurance. And there is no reason the government has to provide that, either.

          1. Well, let’s assume for the sake of argument that it’s possible to store raisins for a few years.

            My guess is that the government might want to do that (leaving aside the economic arguments or whether it is just in a libertarian society) to prevent farmers from selling more than their quota into the market – kind of like if OPEC had a mechanism for stopping oil-producing countries from overproducing. If they could just seize the excess oil and put it into a reserve and then release it back to the producers when the price went up. That would sort of make sense.

            It doesn’t make a ton of sense for OPEC to take the oil and then sell it.

            1. It doesn’t make a ton of sense for OPEC to take the oil and then sell it.

              Sure it would. That way they get the money themselves, and get to decide who gets the oil.

        2. They’re doing this, ostensibly, to keep the price of raisins high, right?

          Because they want to protect the raisin farmers.

          …from themselves?

          How does seizing 30% of the raisin crop protect raisin farmers?

          Moral of the story: They don’t know what they’re doing or why. You’re all twice as sensible as anybody in the government is that’s administering this program. You’ll drive yourselves crazy trying to project some kind of reason onto it.

      4. So, basically, the government should take the raisins and burn them. That way the price is totally protected and there’s no temptation to put those raisins into the market.

        Which illustrates how idiotic government control over agriculture it–you’re growing food and disposing of it so that farmers are protected.

    2. Well the Obama Administration is at least consistent in its approach that once the executive is authorized to do something in pursuit of a goal, then it can do anything in pursuit of it, the statute and constitution be damned.

    3. If the court were to adopt the administration’s view here, the government would have the power to take any property meant for commerce without compensation in the name of supporting the price.

      At the risk of seeming overly cynical, I wonder if the government would even limit this power to property meant for commerce. After all, they’ve argued that property meant for private use “impacts interstate commerce”.

      I also wonder, venturing further down the slippery slope, if they won’t eventually stretch this beyond price supports to any “legitimate” taking.

    4. Since the government has the power to support the price of raisins, it can do so by limiting the supply.

      To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

      Not seeing that power there.

      1. Which part of Yes, I realize that is a debatable claim but spare me the pedantry for once because that is not the issue the court is considering. did you not understand? I realize that debate but that is not what the court is considering.

    5. Of course, this is what speculators do, so there really is no need for the government to get involved. In fact, they are only causing resources to be wasted by doing so.

  6. My grand parents had a farm during the new deal.The had milk cows,hogs chickens and grain and vegetables.One day a government agent showed up and told them they had too much corn and wheat and it had to be destroyed. They grew their own food and sold the rest.They hated FDR till the day they died.

    1. Well duh. You wouldn’t want poor people in the city having too much cheap food available during a depression.

    2. Click-Click…*BOOM*

      /Proper response to raider

  7. “In response, the Obama administration claims that the Fifth Amendment should really have nothing to do with it. The Hornes “are subject to the reserve requirement due to their voluntary choice to market raisins in commerce,” the federal government argues in its brief.”

    That’s what the mob used to tell the victims of their protection rackets.

    If you don’t want to pay protection money, that’s fine. Just don’t do any business in our territory.

    You’re the one choosing to run a business in our territory. You don’t have to if you don’t want to.

  8. Shriek – O! supports it, thus it is market oriented!

    Tony – I don’t see what the problem is here?

    Am Soc – This should be wider spread!

    1. AVG AMERICAN: I have no idea what you are talking about.

    2. Lizzie Warren – You didn’t grow that!

      1. Yes, you didn’t grow that, because you wouldn’t have even had the land to grow your crops on if the government hadn’t wiped out my people so that your ancestors could take ownership of it.

      2. Yes, you didn’t grow that, because you wouldn’t have even had the land to grow your crops on if the government hadn’t wiped out my people so that your ancestors could take ownership of it.

  9. is rationally related to the legitimate government interest in ensuring orderly market conditions and fair prices for producers

    In a more just world, SCOTUS would invalidate this entire line of reasoning. Oh well, a man can dream…

    1. Nothing says ensuring fair prices for producers like forcibly taking a chunk of their production for $0.

      1. And then suppressing demand by giving it away.

  10. legitimate government interest in ensuring orderly market conditions
    .
    Private ownership is so 19th century.
    “Managed Competition” is just a polite name for Socialism.

  11. This is so much of a slam dunk for the plaintiffs that I have absolutely zero doubt that the court will rule in favor of the government.

    *sigh*

  12. I’m not so sure that this is a taking. If what is happening is that the Government is creating a Cournotian cartel then these raisin growers are benefitting from having a distribution system that acts like a monopolist. If the Government didn’t do it then they get their raisins back and so does everyone else and they make less money. They want their cake and eat it to. Higher prices for the raisins they sell on the suppressed market and then market price (I assume the same price) from the Government for the 30% that they had to destroy to jack the price up in the first place. As if the central valley farmers don’t get enough welfare in the form of underpriced water.

    I would prefer the government (a) not have the power to do this or (b) have that power make it too costly. So, I hope they win and the government eliminates these Depression-era price controls. I suspect that these growers won’t like what happens if they win.

    1. I’m not so sure that this is a taking

      taking is giving…of course

    2. They’re still paying the production costs for the confiscated raisins. If they were doing this cartel style they would be avoiding the production altogether and then saving even more money.

      1. If that is the case then I think it isn’t a taking at all unless they are for resale. In a cartel scheme, enabling the participants to reap dominant firm level profits on 70% of their crop and then paying the costs of the other 30% seems like just compensation to me. Now if the government double dips then that argument is weaker. Would the farmers rather they keep all their production and selling into perfect competition? Or are they better off?

        1. Would the farmers rather they keep all their production and selling into perfect competition? Or are they better off?

          I’d say that’s a choice for the farmers to make.

        2. They are almost surely worse off than they would be selling into a true competitive market. And no, the farmers would just produce 70% as much if all they wanted was the cartel pricing.

        3. I’m sure that the farmers are much better off in a Byzantine system of violence and tribute, than selling their crops through voluntary transactions.

    3. The federal government then enjoys exclusive control over those raisins, and may opt to sell them for export, or put them to other use, such as in school lunch programs.

      If they are putting the raisins back into commerce then they aren’t supporting prices.
      Raisins not purchased by the school lunch program are raisins the farmers have to find another buyer for.

    4. Re: jdd6y,

      I’m not so sure that this is a taking.

      If the farmer doesn’t want his production taken, then it IS a taking. Also called “theft”.

      1. It is also called chiseling on a cartel that makes you more money than the alternative. These price support programs don’t exist because they hurt farmers. They hurt consumers. If they were bad for farmers then they would have been discontinued.

        These people want the benefit of monopolistic pricing without the cost (curtailing production). Now maybe the cartel isn’t run that well and output is hard to predict because weather is probably a massive determinant. But what was the marginal cost of the production?

        I hope it is a taking. And that the program gets discontinued because there is no rational basis for government run cartels if private cartels are illegal. And I suspect that these farmers will wish the program were still in place.

        1. Curtailing production isn’t a cost. It’s a savings.

          1. If I understand correctly they are not curtailing production, they taking production deemed surplus. That is especially egregious given that a farmer does not grow raisins, he grows grapes. Turning those grapes into raisins requires extra work.

            1. We’re talking hypothetically, if the farmers were doing this themselves as a cartel instead of the government situation that currently exists.

              1. If they were doing this themselves they could opt out or never opt in. The government requires submission to this program as part of the price of participating in this part of the market.

                It would be a completely different situation.

  13. You’d think that a magazine called Raisin…oh wait, never mind.

      1. refuses to drink

        WTF?! GET OUT OF HERE RIGHT NOW AND DON’T COME BACK UNTIL YOU ARE SHIT-FACED!

        1. *sneaks flask out of desk drawer, knocks back some kirsch*

          Is that better?

    1. Why did that take so long?

      1. Sorry, I meant Notorious G.K.C.’s comment:

        You’d think that a magazine called Raisin…oh wait, never mind.

  14. “Simply put,” the Hornes argue in their main brief, “the Marketing Order physically deprives raisin producers of a large portion of their raisin crop and compels transfer of those raisins to the [Raisin Administrative Committee]

    “Simply put,” that is called stealing at gunpoint.

  15. How did we ever manage to barter, trade and survive without Top Men to guide us?

    We were probably on the edge of extinction, one foot already in, when they came along with their wise and guiding fists.

    1. wise and guiding fists

      Weren’t they involved in the Boxer Rebellion?

  16. This goes back to Ukiah Company and Fruit Industries being indicted for selling raisins during alcohol prohibition. Folks learned to make them into wine just as other folks learned to smoke reefers instead of drinking. The economy collapsed because the wartime income tax was levered into a club to enforce prohibition, yet was not repealed with prohibition. People could not afford the excise taxes on wort, beer and corn sugar, so the beer industry never really recovered even after the 21st Amendment. This led brewers to lobby for marijuana prohibition while corporate vintners pressed for raisin fascism. Herbert Hoover, who enforced prohibition, also raised grapes, so some of this may have been revenge. But the “other” real problem all along was (and still is) the individual income tax.

    1. Raisin wine sounds awful.

      1. Not after you turn it into grappa. Then it tastes as bad as all other grappa

        1. May the burning stares of a thousand Tuscan old men bore into you.

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  18. I remember when this story first came out and I did some further reading on this government program. It was a depression-era program which was of course demanded by the raisin growers themselves.

    What we really have here is a case of Landau Calrissian making a deal with Darth Vader, then realizing the deal just kept getting worse and worse. Now Landau wants out.

    This should act as a cautionary tale to all trade organizations that make these types of deals.

    1. I’m not sure the Hornes were around to looby for protection back then.

      1. That’s not the issue. While I don’t know all about the Horne’s specific relationshipto this program, I believe they had been members, and benefited from this program for years. The Horne’s fellow raisin farmers are very much upset with them for breaking the agreement and threatening their profit.

        From what I read, the Horne’s were perfectly happy to reap the benefits of this protectionist association, until they weren’t.

        I’m not saying the Horne’s deserve what they’re getting, but I am suggesting that the Horne’s didn’t come into this raisin farming deal unaware of these strictures.

        1. Exactly right. There is a reason that the big producers are concerned. This is the only lawful way to have a cartel for raisin production. They can’t do it themselves — it would be a Sherman Act violation.

          The Horne’s get the benefit of selling into an artificial scarcity via a raisin board. But yeah, the costs are you only get to sell X. The rest goes to the government, which can sell to itself, export, and if there is any money left in the fund, it gets paid out to he producers. But that rarely happens.

          But the Hornes now want to get full market for their 30%. And viewed in isolation, I think they are entitled to it.

          But if they win, then Congress will be faced with a program that raises prices on the market, and then the USA has to pay those prices for the crops that are taken off the market to create the higher price. Congress may not want to do that and the same rules may apply to 10+ other agricultural programs.

          I am surprised that the big growers didn’t buy off the Hornes. Roberts made the following comment “[w]e are not going to jeopardize the Agriculture Department’s marketing programs.”

          Well, that is exactly what is at risk. Price floors for agricultural products that, shockingly, leads to overproduction and the desire to chisel by the small producers.

          1. The problem with the “they benefitted from it” argument is that they never had a choice in the first place. It is hard to not benefit from cartel when you do not have a legal choice to not be a member and have a business in this sector.

    2. who the hell is Land-AU Calrissian? I know Land-O Calrissian though…

  19. The entire purpose of the government creating a cartel is to allow the members to cheat.

  20. “Notice the terms “rationally related” and “legitimate government interest.” That language is taken directly from a legal concept known as the rational-basis test, which is, in the words of Black’s Law Dictionary, “the most deferential of the standards of review” used by the courts when judging the constitutionality of government action”

    The so-called “rational-basis test” is not based on anything in the Constitution and was dreamed up out of whole cloth by the Supreme Court itself as a way to rationalize rubber stamping state power.

  21. The government has no business telling anyone how much of a legal product they can produce, the price they can charge, who they can sell it to, and so on. If the government steals private property, it must pay for it and the people who authorized the theft should be charged tried and shot dead as the worthless bureaucratic fucks that they are.

  22. Seizing crops to maintain a higher price hurts not only the producer but it also hurts the poor who now cant afford the product so they then have to turn to the government to get the product. Unfortunetly this forces the government to seize even more crops to help the poor that were hurt by the governments own actions. Eventually the government has to seize 100% of all products. Of course at that point the people quite producing the product so the government starts to force people to produce the product and we have 100% socialism. See the system works perfectly you can no longer build anything without the government.

  23. Such ignorance here. Apparently posters have not the slightest knowledge of what a Marketing Order is, voluntarily entered into by a majority of raisin growers. I am not that much in favor of Marketing Orders, but you would think the article would have noticed that is one in this case.

  24. I know this is in Arkansas but someone should make a drawing of the California Raisins in handcuffs with bags over their, uh, heads.

    Where does a CA Raisin’s head end?

  25. “nor shall private property be taken for public use, without just compensation.”

    As “The federal government then enjoys exclusive control over those raisins, and may opt to sell them for export, or put them to other use, such as in school lunch programs.”, and “that each year they are required to turn over a certain percentage of their crop to the federal government, or else pay the government the dollar equivalent of that crop, plus certain fines.”, it only stands to reason that the raisin farmers should be remunerated in an amount equal to the dollar equivalent of their crop confiscated by the Federal government.

    The ‘Raisin Administrative Committee? Maybe a closer look into the FDA would identify numerous departments for elimination to help in reducing the Federal deficit.

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  28. Why confiscation of the property of others?

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