SCOTUS Saves Raisins, Gives Away The Farm

In Horne v. Dep’t of Agriculture, the Supreme Court recently held that the Department of Agriculture’s confiscation of significant percentages of raisin growers’ crops, without compensation, violated the Takings Clause of the Fifth Amendment. The decision has been hailed as a victory for property rights and a rebuke to governmental overreach.

But to the contrary, Horne merely demonstrates that the Supreme Court has reduced the substantive protections of the Takings Clause to procedural formalism, rewriting the Takings Clause and its own precedent along the way.

The facts of Horne arose out of the Agricultural Marketing Agreement Act of 1937, a piece of New Deal legislation that created government cartels for certain agricultural products, including raisins, in order to subsidize and prop up their prices. To that end, the Act empowers the Secretary of Agriculture to promulgate “marketing orders” that require growers like the Hornes to give a percentage of their annual crop to the Government, for no compensation.

In 2002, the Government ordered raisin growers to hand over 47 percent of their crop. The Hornes refused. When the Government sought to collect more than $680,000 in fines and penalties, the Hornes brought suit, invoking the Takings Clause.

Those facts presented a complicated question that threatened the Court’s recent efforts at maintaining a neat doctrinal separation between regulatory and physical takings cases.

On the one hand, a series of (wrongly decided) precedents makes clear that governments can effectuate regulatory appropriations at no cost, i.e., they can use their regulatory authority to restrict the use of private property almost entirely (and thus drastically reduce its value) without paying any compensation. On the other hand, the Court has continued to distinguish governments’ purely physical appropriations of private property, holding such appropriations to be per se takings that require compensation.

Horne raised the thorny interstitial issue of how the Court’s modern takings jurisprudence applies in the context of governmental market-making regulations effectuated through physical appropriations.

Chief Justice Roberts, writing for the Court, resolved that difficult question by ignoring it. Focusing on the Government’s “actual taking of possession and control” of the raisins, the Chief Justice labeled the Government’s regulatory requirement a “clear physical taking,” giving rise to a per se taking, and thus distinguished all of the Court’s regulatory takings jurisprudence as inapposite.

It says everything that, for the current Supreme Court to square its modern takings jurisprudence with pre-New Deal precedent, it must actually rewrite that precedent, and the Takings Clause itself.

But that approach failed to address the significant regulatory realities at play, and was thus intellectually doomed from the outset.

The Court could not deny that its regulatory takings jurisprudence allows the Government to take private property in order to operate a raisin cartel. Indeed, the Court conceded that its decision in Horne left the Government free to achieve the same ends (and the same harm) through a regulatory cap on raisin production. Instead, the Horne decision merely precludes the Government from managing such agricultural cartels through physical crop appropriations.

As the Court admitted, however, the consequence of its categorical distinction between physical and regulatory takings is to relegate the Takings Clause to a procedural hurdle, rather than a substantive protection. “A physical taking of raisins and a regulatory limit on production may have the same economic impact on a grower,” the Court acknowledged, but the fact that the Court in Horne forbid the former while permitting the latter without any compensation “flows naturally from the settled difference in [the Court’s] takings jurisprudence between appropriation and regulation.”

That striking acknowledgment should have framed the beginning of the Court’s analysis. Instead, it served as the Court’s last word on the matter.

As Horne makes clear, the upshot of the Court’s modern takings jurisprudence is that the Constitution does not so much bar the Government from taking private property without just compensation as it requires the Government to do so through regulatory restrictions rather than physical appropriations.

Nor does Horne signal a willingness by the Court to revisit its artificial and unworkable distinction between regulatory and physical takings.

To the contrary, Horne further entrenches that distinction as a “settled difference.” To that end, Chief Justice Roberts attempted in Horne to reconcile the Court’s modern takings jurisprudence with its pre-New Deal precedent. Quoting Justice Holmes’s decision in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922), the Chief Justice asserted that the very essence of the Takings Clause is to forbid the Government from pursuing its aims “by a shorter cut than the constitutional way.”

In the Chief Justice’s formulation of Justice Holmes’s statement, the “constitutional way” is for the Government to take property rights through regulation, and the forbidden “shorter cut” is for the Government to take property through physical appropriation.

But that is neither what the Takings Clause means, nor what Justice Holmes wrote.

In striking down the regulatory taking at issue in Pennsylvania Coal, Justice Holmes actually wrote: “We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.” Id. (emphasis added).

Justice Holmes thus did not bless uncompensated regulatory takings as the “constitutional way,” but instead struck down such takings as unconstitutional. As Justice Holmes made clear, and as Horne ignores, the “constitutional way” is for the Government to “pay” for regulations that take property rights, and uncompensated takings—whether regulatory or physical—are the very “shorter cut” the Constitution precludes.

Chief Justice Robert’s quotation of Pennsylvania Coal, by contrast, intentionally omits Justice Holmes’s last five words, without any ellipses to signal the omission, and thus rewrites the holding of Pennsylvania Coal itself.

It says everything that, for the current Supreme Court to square its modern takings jurisprudence with pre-New Deal precedent, it must actually rewrite that precedent, and the Takings Clause itself.

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