Horne v. Department of Agriculture

PETITIONER: Marvin D. Horne
RESPONDENT: U.S. Department of Agriculture
LOCATION: Carman Residence

DOCKET NO.: 14-275
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 576 US (2015)
GRANTED: Jan 16, 2015
ARGUED: Apr 22, 2015
DECIDED: Jun 22, 2015

ADVOCATES:
Edwin S. Kneedler - Deputy Solicitor General, Department of Justice, for the respondent
Michael W. McConnell - for the petitioners

Facts of the case

In 1949 the U.S. Department of Agriculture implemented the Marketing Order Regulating the Handling of Raisins Produced from Grapes Grown in California (Marketing Order). The Marketing Order authorized the federal government to reserve a percentage of the yearly California raisin crop to stabilize the supply, and thus the price, of California raisins. Under the Marketing Order, farmers are entitled to a share of the proceeds acquired when, or if, the government sells the reserved raisins. Marvin Horne, a farmer and raisin producer, attempted to skirt the Marketing Order by processing his own raisins, which he claimed exempted his raisins from the Marketing Order's reserve requirement. The Department of Agriculture claimed Horne's raisins were still subject to the Market Order, and following administrative proceedings, Horne was fined nearly $700,000.

Horne sued the Department of Agriculture and claimed that the Marketing Order violated his Fifth Amendment rights against uncompensated takings. The district court found in favor of the Department of Agriculture. The U.S. Court of Appeals for the Ninth Circuit held that it lacked standing to address Horne's claim, because Fifth Amendment takings claims are within the jurisdiction of the Court of Federal Claims. The United States Supreme Court held that the appellate court did have jurisdiction and remanded the case. On remand, the appellate court found for the Department of Agriculture by holding that the reserve requirement did not act as a per se taking because Horne's raisins constituted personal property rather than real property. The appellate court also held that the Marketing Order did not constitute a taking because there was a sufficient nexus, and rough proportionality, between the reserve requirement and the specific interest the government seeks to protect, which in this case is the government's interest in stabilizing raisin prices.

Question

(1) Does the Takings Clause of the Fifth Amendment apply only to real property?

(2) Can the government avoid the duty to pay just compensation for the physical taking of property by reserving the property owner a contingent interest in the value of the property?

(3) Does a per se taking occur when the government mandates the relinquishment of specific, identifiable property as a condition of permission to engage in commerce?

Media for Horne v. Department of Agriculture

Audio Transcription for Opinion Announcement - June 22, 2015 in Horne v. Department of Agriculture

John G. Roberts, Jr.:

I have the opinion of the Court in case number 14-275, Horne v. United States Department of Agriculture.

At 8 o'clock one April morning in Fresno County, California government trucks waited outside the raisin handling facility of the Horne's, a family of raisin growers.

The trucks were there to pick up over a thousand tons of the Hornes' raisin crop, even though the government had not paid for those raisins.

The government sought the raisins pursuant to the Agricultural Marketing Agreement Act of 1937.

That statute was passed during the Great Depression to help respond to the farming crisis at that time.

It authorizes the Secretary of Agriculture to promulgate what are known as marketing orders to help maintain stable markets for certain agricultural products.

One of those marketing orders, the California Raisin Marketing Order, requires raisin growers like the Hornes to set aside a specified portion of their raisin crop in certain years for the government free of charge.

In 2002 that amount was 47%; in 2003 30%.

The government uses that portion of a grower's raisin crop, what are known as reserve raisins, in ways it thinks best promote the purposes of the Marketing Order Program, such as by selling them in noncompetitive markets, donating them, or otherwise disposing of them.

After deducting the expenses of administering the program, the government returns to the growers any net proceeds leftover from the sale of the reserve raisins.

In one of the two years at issue in this case those proceeds were less than the cost of producing the raisins.

In the other year they were -- there were no net proceeds at all.

Now, when the trucks arrived at the Hornes' facility, the Hornes refused to hand over the raisins.

In response, the government assessed a fine against the Hornes, equal to the fair market value of the raisins, as well as a civil penalty for disobeying the order.

The Hornes challenged the fine and penalty in Federal District Court, arguing that the government's program took their raisins for public use without just compensation in violation of the Takings Clause of the Fifth Amendment to the Constitution.

The Court of Appeals rejected that argument.

The Court acknowledged that the government could not physically take real property, land, without compensation under the Fifth Amendment.

It ruled however that personal property, like raisins, was entitled to less protection.

There had to be a more complicated analysis to determine whether there had been a taking with respect to personal property, even when the government physically took such property.

The Court of Appeals also relied on the fact that growers like the Hornes retained the right to any net proceeds from the government's use of the raisins.

In the Court's view, if the Hornes did not wish to give up a portion of their raisins to the government, they could plant something else.

Now, this case raises three questions which we answer in turn.

The first question is whether a physical appropriation of real and personal property should be treated the same?

The answer is yes.

The Takings Clause of the Fifth Amendment provides “nor shall private property be taken for public use without just compensation”.

That clause makes no distinction between real and personal property.

The government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.

That has been the rule from before the beginning.

800 years ago in Magna Carta King John promised not to take “corn or other provisions from anyone without immediately tendering money therefore”.

So the earliest predecessor of the Takings Clause applied to personal property.

Sarah from Law Aspect

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