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SCOTUS strikes blow for private property owners

The Supreme Court struck a great blow in favor of property rights in Horne v. U.S. Department of Agriculture, which came out yesterday (June 22). The case involved family farmers, Marvin and Laura Horne of California, who grow grapes and make raisins.  Due to the Agricultural Marketing Agreement Act of 1937, a New Deal era law, the Hornes, and all raisin producers, are required to turn over a certain percentage of their crop to the federal government, as determined by the Raisin Administrative Committee (yes, that is a thing). The purpose of these confiscations is to inflate the price of raisins and stabilize the market. The federal government then uses the raisins in a variety of ways including exporting them overseas or using them in domestic school lunch programs.  If the crop is not turned over, then the withholding farmer is be forced to pay the federal government the monetary equivalent of the withheld crop plus fines. To boot, prior to this case farmers were not reimbursed for the crop they were forced to turn over.

In 2002-03 the Hornes were ordered to turn over 30 percent of their crop or pay a $684,000 fine. The Hornes alleged that this confiscation was an unlawful taking under the 5th Amendment (which states in part, “nor shall private property be taken for public use, without just compensation.”) The 9th Circuit Court of Appeals denied that this was a taking stating that the Fifth Amendment’s Takings Clause only applied to real estate, not personal property. On appeal to the Supreme Court the Hornes argued that “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.”[1] In response the Obama Administration contended that the confiscation was regulation that is rationally related to a legitimate governmental interest, ensuring a stable market and “fair prices for producers” that “the government may condition participation in that market on compliance with the reserve requirement” without violating the 5th Amendment’s Takings Clause.[2]

In the majority opinion by Chief Justice Roberts, the Court reversed the 9th Circuit’s holding stating, “Government has a categorical duty to pay just compensation.” Furthermore the Court cast aside the Obama Administration’s argument stating that “selling produce in interstate commerce, although certainly subject to reasonable government regulation, is similarly not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection.” The Chief Justice held that the Raisin Administrative Committee’s actions was a textbook example of an uncompensated government taking of private property and that the Hornes, and other raisin producers, may challenge the imposition of the Raisin Committee’s fine in court, as an uncompensated taking, and do not have to pay the fine beforehand. His opinion was joined by Justices Scalia, Kennedy, Thomas, and Alito. Justice Thomas also filed a separate concurring opinion. Justices Breyer, Kagan, and Ginsburg concurred in part and dissented in part. Justice Sotomayor filed a lone dissent stating that “the government may condition the ability to offer goods in the market on the giving-up of certain property interests without effecting a per se taking.” The full opinion can be found here.

Horne does not overturn all agriculture committees which continue to govern the sale of at least 20 fruits and vegetables. However via this decision the Court does take a meaningful step forward in protecting private property rights from government confiscation.