Horne v. Department of Agriculture

The Supreme Court has agreed to hear a very interesting property rights case, Horne v. USDA, that concerns the taking of raisins.

Horne’s history begins all the way back in 1937, when Congress passed the Agricultural Marketing Agreement Act of 1937 (AMAA), which allows the Secretary of Agriculture to impose production quotas on products in an effort to protect farmers from fluctuations in the market. The production quotas are imposed on “handlers” – those who process and package the product for distribution to consumers. Such an order, “The Raisin Marketing Order of 1949”, required that a percentage of raisins must be turned over to the government every year to maintain a reserve tonnage. Yes, we have a strategic raisin reserve.

Fast forward a few decades, and we find Marvin and Laura Horne, who are raisin farmers in California. The Hornes were thus subject to the 1949 raisin marketing order. Under this order, a board of bureaucrats, the Raisin Administrative Committee, decides what the “proper yield” of raisins should be in order to meet a centrally agreed-upon price. The board estimates the size the annual crop, and then orders all raisin farmers to turn over a portion of their crop to the raisin handlers mentioned above. The handlers (also known as packers) then place the raisins reserve pool. These reserve raisins cannot be sold in the U.S., but the handlers can later sell them overseas at discounted prices, or into school lunch prices (there also a deeply discounted rate).

Under the AMAA, the farmers are supposed to receive a percentage of the money made from the sale of the reserve pool raisins. Profit margins dwindled over the years, however, and with them, the return to the farmers. 2003 marked a turning point in this story, when the farmers were forced to turn over forty-seven (47!) percent of their crop, and received a total of zero dollars in return.

The Hornes feared that their business couldn’t survive, giving up 47 percent of their produce for no money, so they reorganized their business. They began packing and selling their own raisins, hoping that doing so would allow them to circumvent the marketing order. [Many other raisin farmers followed the Hornes’ lead, and began to pack and sell their own raisins.] The government did not approve of this move. The USDA levied huge fines against the Hornes, and also charged them for the raisins that they had not surrendered. You can see a short (about 7 minute) video wherein the Hornes and their lawyer talk about the case, here.

The Hornes sued in federal court, alleging that the marketing order amounted to an unconstitutional taking in violation of the Fifth Amendment. The District Court in which the case was first heard, and then the Ninth Circuit on appeal both held that this was a matter of unpaid fines, and not a takings. The Supreme Court disagreed, holding (9-0) in Horne v. Department of Agriculture 569 U.S. ___ (2012) that there was a potential takings here, and the case could be adjudicated as such. In other words, the Takings Clause can be a valid defense in actions regarding government mandated transfers of funds. [To be very clear, the earlier case (decided in 2012) and the current case (to be heard on April 22, 2015) have the same name.]

By agreeing to hear the case again, this time on the merits (the substance of the dispute), the Supreme Court is agreeing to answer three important questions: first, does the recognized “categorical duty” under the Fifth Amendment to pay just compensation when “physically takes possession of an interest in property” apply to personal property, or only to real property? Second, can government avoid paying just compensation by “allowing” the owner to reserve a portion of the property’s value? And third, does a government mandate to hand over a specific property as a “condition” to engage in commerce amount to a per se taking?

These are very important questions – thus this is a very important case – for those of us interested in the politics and law of property. And the Court’s answer to these questions will reverberate far beyond the raisin farms of California, whichever way they decide. Oral arguments are scheduled for April 22, 2015. Tune in, as we’ll have commentary on the arguments as quickly as possible thereafter.

If you’re interested in hearing the arguments for yourself, you can find them here. If you’d like to read more about this case, SCOTUSBlog has some good coverage, and Oyez has a good summary of the 2012 decision.


It’s Spring!

This week is spring break for me. And spring weather came just in time!

Here in the middle of the country, we’re enjoying sixty degree weather, and drying out after all our snow melted and a couple of days of steady, soaking, puddle-making rain. I went for a long walk around Cape Girardeau yesterday and noticed that lawns are soaked, park areas are muddy, and our creeks and rivers are leaving their banks. Indeed, according to a post on the US Army Corps of Engineers Memphis District Facebook page, the Mississippi should crest later this week (on the 19th at Cairo at 47 feet, and on the 20th at New Madrid at 35 feet).

Warm and dry sounds good to me.

There’s a few things happening out there in the world worth noting:

Cycle Pam Hits Vanuatu

Those of you watching the news the last several days know that a major cyclone has hit the island nation Vanuatu in the South Pacific. The BBC has some coverage of the damage here. Cyclone Pam was a Category 5 storm, and the worst tropical cyclone in the South Pacific since 2002. The Economist explains some of the characteristics of Pam that made it “out of the ordinary”. Relief efforts have begun, with various organizations beginning work in the area, including Australia’s Red Cross and financial assistance from Australia, New Zealand, Britain. When I have more information concerning relief efforts, I will post it.

New Madrid Quake Potential

The US Geological Survey released an update to their National Seismic Hazards Map in February. The NMSZ includes southeast Missouri, northeastern Arkansas, western Tennessee, western Kentucky, and southern Illinois. The Missouri Department of Natural Resources says that it is the most active seismic zone east of the Rockies. The new USGS hazard map is an update from their 2008 map. In line with some recent scientific studies, they’ve elevated the potential for a serious earthquake in southeast Missouri. I blogged about some of that research several months ago. The Southeast Missourian summarized the report and discussed the possible ramifications for the region here. For my readers interested Emergency Management and FEMA’s recent work to prepare communities for various hazards, the predictions and findings of this work is especially important. For the more technically minded, the USGS’s Earthquake Hazard Program  provides further information.

Perez v. Mortgage Bankers Association

People who are interested in FEMA, Emergency Management and administrative procedure (including those of you who, on occasion, participate in Notice and Comment and attend public hearings on various administrative/regulatory issues) should be interested in hearing that the US Supreme Court ruled recently in Perez v. Mortgage Bankers Association that administrative agencies no longer have to provide notice and comment when they change an interpretive rule. So, first, what is an interpretive rule? It is an interpretation of a regulation or law, designed to clarify the law/regulation. Here’s a more detailed explanation. Under the Administrative Procedure Act, there is no requirement that interpretive (or interpretative) rules go through Notice and Comment, but past Supreme Court precedent maintained that when an agency had provided a ‘definitive interpretation’ that then, at a later date, they decide to change, they should go through Notice and Comment to provide those affected with an opportunity to receive advance notice of the change and provide public comment. In Perez, however, after citing another famous administrative law case, Vermont Yankee, the Court says that Notice and Comment for interpretive rules is not required. An agency can simply change the rule without advance notice and public comment.

Commentators around the Internet have voiced concerns about the significance of this ruling for its impact on the process to change administrative policy. Some of those concerns include pragmatic political concerns: while it may make changing administrative policies faster and make administration more flexible, a new administration will be able to reverse or change policy much more quickly as well. Along with that, changes that do not bring advance notice strike me as being problematic for stakeholders in general (because it could destabilize expectations concerning what the policy is and whether it will change suddenly); and in regulatory areas such as land use and environmental concerns, where administrative agencies must coordinate with one another as well as state and local officials, lack of advance notice — even just the potential of a lack of advance notice — is likely to create both political and legal difficulties. For a discussion of some of these issues as well as some of the other matters that seem to be looming on the Court’s horizon, see Brian Wolfman and Bradley Girard’s excellent discussion at Scotusblog. Leland Beck also provided some interesting insights here.

(And for those readers interested in administrative law issues, Beck’s blog, Federal Regulations Advisor, is an excellent resource!)