The Government May Take No Raisins Without Just Compensation

Raisin lovers may want to take note that the U.S. Supreme Court in the case of Horne v. Department of Agriculture, Case No. 14-275, on June 22, 2015, issued a decision regarding an obscure raisin law. The Agricultural Marketing Agreement Act of 1937 authorized the Secretary of Agriculture to promulgate “marketing orders” to maintain stable markets for certain agricultural products. The marketing order for raisins resulted in the creation of the Raisin Administrative Committee. The Committee apparently took a rather liberal interpretation of its mandate to the extent that raisin growers were required to set aside a certain percentage of their crop – 47% in 2002-2003, 30% in 2003-2004 – which the government took free of charge. Those raisins were then disposed of as the Committee saw fit. They may have been sold in noncompetitive markets, donated, or otherwise disposed of in furtherance of the program. The growers only received the net proceeds of the program (less the government’s expenses in administering it). Nothing guaranteed the growers ever received a cent and, in fact, in one year they did receive nothing. The Hornes are family growers who were not very happy with turning a large percentage of their crop over to the government for potentially nothing in return and eventually refused to do so. They were fined the fair market value (of their own raisins) plus additional civil penalties.

The Hornes believed the government program was an unconstitutional taking of their property without just compensation, as required by the Fifth Amendment. The government contended that the program was not a taking as (i) personal property is afforded less protection than real property, (ii) the program conferred a benefit in the form of an orderly raisin market, (iii) the growers maintained a net interest in the raisins, and (iv) they could just plant something else. In essence, the government argued the program was a regulatory “use restriction” and, while affecting private property, did not amount to a taking.

The Supreme Court rejected these arguments. It held that personal property enjoys the same protection under the Takings Clause as real property. This program required the physical transfer of the crop to the government which then held title to it and sole control over its disposition. The fact that the growers are provided some benefit in the form of net proceeds did not change the character of the taking.