Oral argument in Horne v. Department of Agriculture was lively, and the government got the worst of it. The case involves a raisin marketing program by which the federal government orders packers of raisins (”handlers”) to cede title to a significant portion of their crop – anywhere from one-third to one-half – to the federal government. The remaining portion (the “free tonnage”) may be sold at market prices but the portion requisitioned by the government (the “reserve tonnage”) is sold, exported, or given away by the federal government. The proceeds from these dispositions of the reserve tonnage, after administrative expenses, are remitted to the producers. But in recent years the amount the producers get back is either zero or less than their production costs. The Hornes, a family business, refused to give up the portion of their raisins that the government demanded and were assessed a penalty of nearly $700,,000. After a prior trip to the US Supreme Court on a jurisdictional issue, the case was back today.
Michael McConnell, for the Hornes, opened the argument by asserting that the case was all about the government’s forced taking of title to the raisins. He conceded that a volume limit (perhaps of the sort famously at issue in Wickard v. Filburn) would be a use restriction analyzed under Penn Central, but argued that this case was a permanent dispossession, and thus a per se taking. Justice Sotomayor wondered whether this case was akin to Leonard v. Earle, in which the Court upheld a Maryland tax of 10% of the oyster shells taken by harvesters in Maryland waters. McConnell distinguished Leonard by noting that the oysters were the state’s property prior to harvesting, but raisins (and their precursors, grapes) were never the government’s property until seized. McConnell added that this was no tax but a seizure or imposition of a penalty equal to the market value of the raisins subject to seizure.
Justice Breyer contended that the nature of the program was to prop up prices for the free tonnage so there was a benefit to the producers from the seizure. Perhaps, although McConnell disputed this, but in any case Justice Breyer’s point goes to just compensation, On that point, McConnell noted that the facts suggest that the drop in market prices from unregulated trade in raisins would be so small that there would be no benefit to producers, and thus no implicit in-kind compensation. In any case the government’s regulations do not permit consideration of implicit in-kind compensation.
Justice Kagan argued that this case was no different from a hypothetical government regulation that citizens surrender “records” permanently to the government. McConnell pointed out that, under Nixon v. GSA, historical records can’t be taken from private citizens without compensation. Justice Kennedy noted that even in the case of evidence seized for trial purposes (e.g., “a valuable diamond ring”) the government can’t keep it forever without compensation.
Edward Kneedler, Deputy SG, faced a skeptical panel. Justice Scalia cut off his argument that the program benefited raisin producers and handlers by sarcasm: “These plaintiffs are ingrates, right?” Justice Scalia then elicited Kneedler’s concession that the government did not think there was any difference between seizures of personal and real property. Kneedler argued that the government could validly attach conditions to entering the stream of commerce. Justice Alito asked if the government could condition entry into the cellphone market on giving every fifth phone to the government. The Chief noted that such a program would arguably aid cellphone manufacturers by giving the phones to cell-less users, thus spurring demand. What’s the difference between cellphones and raisins? Kneedler’s answer was that marketing orders have a long history. The Chief replied that those programs usually involved volume limits but this was different because “you come up with the truck and you get the shovels and you take their raisins, preferably in the dark of night.” Justice Sotomayor echoed Justice Alito’s concern about “every fifth cellphone,” to which Kneedler said this was different because it was a comprehensive regulatory program. Kneedler eventually turned to his argument that this was no taking because the producers voluntarily sold their grapes to the handlers, and they had other options – wineries, table grapes. The Chief shot this down by observing that if a public school mandated pledging allegiance to the flag, it would be valid so long as the kid could go to a different school. Later on, Kneedler defended the program by suggesting that deference should be given to the congressional judgment in 1937 that this was for the benefit of producers. Justice Scalia responded by noting that “central planning was thought to work very well in 1937, and Russia tried it for a long time.” Towards the end of Kneedler’s argument the Court voiced concern over how many programs might be affected by a decision finding this to be a taking. “Scores,” said Kneedler.
On rebuttal, McConnell made the point that benefit to the producers didn’t matter to the question of whether it was a taking. Loretto’s apartment building was probably more attractive to tenants because of cable access, but it was still a taking. Argument ended on a lighter note when the Chief asked McConnell about the effect of the drought on California raisin growers. “It is not good. ... And I wonder if I will be able to take a shower when I go home.”
Based on oral argument – always a dangerous premise – the government will lose.
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