A divided Supreme Court today wrestled with a complex Depression-era program that requires farmers to turn over some of their raisins to the government.
Horne v. Department of Agriculture concerns an effort by Congress and USDA to stabilize the price of raisins, nuts and other crops.
In 1937, Congress passed the Agricultural Marketing Agreement Act, which directed USDA to issue annual "marketing orders" that require handlers of raisins to turn over a percentage of their crop. Those raisins are later sold for school lunches and other programs.
In 2000, Horne, who has grown raisins in Fresno and Madera counties for decades, reorganized his business in an attempt to avoid the USDA program. In addition to growing the crop, he began sorting, stemming and marketing it — hoping to sidestep being classified as a "handler," which is subject to the USDA requirements, instead of a "producer," which isn’t.
He stopped turning over raisins to the government in the 2002-2003 and 2003-2004 crop years. For those years, USDA required that 47 percent and 30 percent of the crop be turned over, respectively.
USDA found Horne’s new business model didn’t exempt him from the program. In April 2004, it slapped Horne with about $700,000 in penalties and fines.
Horne challenged the enforcement action in court, arguing that the program amounts to a taking without compensation in violation of the Fifth Amendment.
Today, the conservative wing of the Supreme Court appeared to agree.
Chief Justice John Roberts called the raisin provision a classic "physical taking."
And Justice Samuel Alito appeared concerned that if the raisin program is constitutional, the government could extend its principle. Could the government, for example, require a car manufacturer to turn over every fifth car it makes?
Is "there any limit to that?" Alito asked.
Deputy Solicitor General Edwin Kneedler, representing USDA, countered that Horne was mischaracterizing a program that most raisin farmers endorse.
He said that requiring handlers to set aside raisins into a reserve fund is just "one feature" of USDA’s comprehensive raisin program.
Further, he repeatedly argued that the program benefits the raisin growers by increasing the market price of raisins.
He contended that the government doesn’t actually take ownership of the raisins. It only presides over the reserve fund before selling them. Then, if the program turns a profit, it returns those proceeds to the raisin producers.
The "government is not acquiring these raisins for itself," he said. So the raisins are not actually taken in the constitutional sense, he said.
Horne’s case previously reached the Supreme Court in 2013. The justices held then that he could challenge USDA in federal court but did not rule on the merits of the takings claim (Greenwire, June 10, 2013).
The case was sent back to the San Francisco-based 9th U.S. Circuit Court of Appeals, which again sided with the government. Horne appealed to the Supreme Court for a second time, contending that the justices must resolve the constitutional issue.
Today, the court appeared divided and, at times, confused by the program.
Liberal justices — Sonia Sotomayor, Ruth Bader Ginsburg and Elena Kagan — posed stiff questions to former federal appellate Judge Michael McConnell, now a Stanford Law School professor representing Horne.
Ginsburg called it "puzzling" that Horne wasn’t challenging a requirement of the program that farmers only produce a certain volume of raisins.
"At least with this reserve pool," she said, "there is the possibility of getting some money."
McConnell countered that "this is not a program that is designed to [provide] compensation."
The justices appeared particularly concerned about the scope of a ruling on the taking issue.
Kagan, in questioning McConnell, asked whether a ruling in favor of Horne would prohibit the government from obtaining other property — such as requiring documents to be turned over.
"Seems to me the government asks people to turn over stuff all the time," she said.
Later, in questioning Kneedler, Kagan asked what was the "realm of regulatory programs" that would be affected by the case.
Kneedler responded that there are about eight to 10 other crops that may have reserve requirements, but those have not be activated in recent years.
Justice Anthony Kennedy, who is often the swing vote on the panel, seemed troubled by the government’s position.
The government seems to be saying that "even if it is a taking, it’s OK. Everything will work out," he said.
A key issue in the case is how to classify what kind of property the raisins are. Horne contends that they are his property and if the government takes them without paying him, that constitutes a taking.
Under that logic, the raisins amount to a per se, or categorical, automatic taking.
The government sees the issue differently. It contends that the government acquiring physical property — typically land — constitutes a per se taking. The raisins, the government argues, do not fall into the same category because they are personal property that is commercial in nature.
Toward the end of the argument, the justices pointed out some of the strange aspects of the program.
Kagan called it a "historical anomaly," but said the court needn’t think it sensible in order to side with the government.
"We can think this is a ridiculous program," she said.
To which, Justice Antonin Scalia, who was clearly sympathetic to Horne, quickly responded, "It doesn’t help your case that it’s ridiculous."
A decision in Horne v. Department of Agriculture is due by the end of June.