Oral Arguments in Horne v. USDA

A few weeks ago, I wrote about an interesting takings case the Supreme Court was set to hear this term, Horne v. USDA. The Court heard oral arguments in this case on April 22, so this is the promised update now that I’ve had time to go through the transcript.

The short version of the story is: things don’t look good for the government.

Orals got underway with arguments from Michael McConnell, a renowned constitutional law scholar, who represented the Hornes. McConnell laid out the basics of the Hornes’ position – which is, essentially, that taking raisins from farmers is still a taking as far as the Constitution is concerned, even though raisins are personal, as opposed to real, property.

Several justices questioned McConnell’s claim that this case should be considered a per se taking as opposed to a regulatory taking. Justice Kagan asked several pointed questions about the limits of the Hornes’ claim: that is, what other sorts of government requirements might a ruling in their favor affect? Kagan asks “So how about just programs where the government says, give us – produce records for us. I’m sure that there are a lot of programs like that in the world. And there is something intuitive about your saying, well, the government is asking us to turn over stuff. …How would that fare under your argument?”

McConnell responded by drawing attention to an important distinction: in records (Kagan’s example), the value is not in the documents themselves, but in the information they contain – and in most cases, the individual forced to turn those records over does not herself lose that value (i.e. she does not lose the information). Thus McConnell implicitly argues that it is not the deprivation of a possessory interest that makes a taking, but rather the deprivation of the value of that possessory interest. These sorts of arguments are common – and often quite strong – in the world of regulatory takings, but are less common in physical takings cases, like this one.

Deputy Solicitor General Edwin Kneedler argued for the government. Kneedler didn’t even get through his opening remarks before Justice Scalia interjected “These plaintiffs are ingrates, right? You’re – you’re – you’re really helping them?” And Kneedler barely defended the claim that raisin farmers benefit from the program. This seems a strange move, as Kneedler emphasized that there is no taking in this case because the premise of the program is to benefit those farmers. That is, he argued no taking occurred because the program was intended to benefit raisin farmers – but he did not argue that the program actually benefits those farmers. Several of the justices appeared to be quite skeptical of these claims.

The justices pointed out that even if the property owners do in fact benefit from the program, that does not change the reality that a taking has occurred in the first place. Justice Alito, for example, argued that the government’s logic suggests that no taking when government takes personal property for any purpose which might potentially benefit the owner in some (conceivable) way: Alito asked “Could the government say to a manufacturer of cellphones, you can sell cellphones; however, every fifth one you have to give to us? Or a manufacturer of cars, you can sell cars in the United States, but every third car you have to give to the ­­ to the United States.”

A few minutes later, Justice Sotomayor weighed in, stating that she wondered, “like Justice Alito, about his every fifth telephone or whatever. Every fifth car or every fifth telephone you have to give to the government. You – I don’t know you’ve answered that question. Is that a taking or isn’t it?” Kneedler continued to evade the direct question, and continued to irk the justices in so doing.

Parts of Kneedler’s arguments were – to me at least – almost comical. He repeatedly stated the government’s position that this was not a taking though he did “concede that the government gets legal title.” At another point, he argued this was not taking, but just part of a comprehensive regulatory scheme. He then argued that the regulatory scheme was not a historical anomaly (as Chief Justice Roberts and Justice Kagan suggested), but in the next breath acknowledged that no other programs actively “reserve” (i.e. take) commodities. [I’m not the only one who found some of Kneedler’s problems amusing — laughter at some of the government’s claims are noted in the transcript, and has been discussed by other Court watchers.]

Perhaps the oddest argument Kneedler made in defending the Raisin Administrative Committee, was that “this is not a taking to begin with because the – the grower voluntarily submits the total amount of raisins to the handler” and the handler then hands over the required portion to the government [emphasis mine]. But recall from my earlier post on this case – the Act requires growers to turn over their crop – there is nothing voluntary about the program.

All told, Justices Breyer, Kagan, and Sotomayor, along with the Court’s five more conservative members, expressed considerable concern with government’s arguments. (If I had to bet, I would say that the final vote on the case will be 8-1 in favor of the Hornes with Justice Ginsburg dissenting—though I admit a 9-0 decision would not surprise me). The Court would most likely hold that this was indeed a taking, and then remand the case to a lower court to determine how much compensation would be owed.

If I’m right, the case on remand would be interesting in its own right, as the government argued repeatedly that the (alleged) benefits of the program to farmers amount to in-kind compensation, which might reduce any eventual cash compensation found to be due.

For those interested, you can read the full transcript of the oral arguments here.

Belated Happy New Year — And Let’s Talk Keystone XL!

Belated Happy New Year, Readers!

We’ve been on a final exam/holiday/traveling/beginning of the semester hiatus. But we will be blogging regularly again beginning this week. We’ll be kicking that off with my regulatory takings series later in the week, and then Logan will be back with his work on physical takings and some other issues he’s working on. Sometime this spring there will be another book review or two. I’ll also return to the weekly suggested readings in “Reading Around the Internet”. Oh, and look around — there’s been some changes to the design of the blog. You’ll notice that we’ve added keywords on the top menu so that you can find our takings series, as well as other popular topics more easily. I hope the site is more navigable and user-friendly than it was before!

Before we do anything else, though, I thought maybe we’d kick things off with a brief discussion of the Keystone XL Pipeline….

Everyone who listened to the State of the Union Address knows that the Republican response included a discussion of the Keystone XL Pipeline project as a “jobs bill”.  The President made a passing reference to it in his discussion of energy policy, though he did not explicitly mention the pipeline. The Republican framing caused quite a stir in many circles, but I thought something else was interesting about the discussion: in a Washington, D.C. vortex of Presidential State of the Union and Congressional politics, the comments were made with hardly even a hint from either Congress or the President that these discussions were occurring in the same week that, according to The New York Times, Keystone XL began its condemnation proceedings in Nebraska. The point of these proceedings is to acquire the land Keystone XL needs to build its pipeline. These are not the first condemnation proceedings brought by Keystone XL, nor will they be the last; but they were the ones filed the same week as the State of the Union speech and the Republican response. Therefore, they are now getting a lot of attention.

Nebraskans responded to the condemnation proceedings by filing lawsuits against TransCanada Keystone Pipeline seeking declaratory judgments as well as temporary and permanent injunctions. Filed in state court, their lawsuit alleges a breach of property rights in violation of the Nebraska Constitution, as well as making various other legal claims (including some fascinating discussions around the nature of separation of powers). Claims like these are not new, as you can see from this Forbes article from a year ago. You can also get a sense of the landowners and their issues from this article in The New York Times.

Of course, the siting of a pipeline through multiple states is bound to cause problems… In multiple states.

Down in Texas, land owners have refused to come to agreements with Keystone XL, and as a result there, too, the company has sought condemnation proceedings. We will hear more about condemnations in various states where the pipeline is to be built. Landowners are not well known (especially ranchers and farmers) for happily giving away their land most of the time. Even when a fair market value is assigned to the land in some sort of agreement (either a sale or potentially the purchase of an easement), rural residents who depend upon their land for long-term income (as well as the ability to secure loans to grow their businesses) are rarely happy to give up a lot of acreage.

So a few preliminary thoughts — with the caveat that I’m still thinking all this through and these are ideas about the consequences of a building project such as this one, and not predictions of future political intrigue:

Many, many years ago when this project was first proposed, I was aware that not only many environmental groups, but also property rights activists would be interested in the building of the pipeline. Anytime you condemn land to build something like a pipeline (or a railroad), there will be landowners who will take issue with the action. These protests are a long, historical and legal tradition in the US. And their protests will slow the process down. Another part of this long, historical tradition in the US is that these major construction projections done under the guise of a public purpose and for the public interest involve (a) large tracts of rural land; (b) potential jobs in the areas where the construction project will be done; and (c) private corporations working with the federal government on the project. Now, rural communities often do not have a lot of political power. Often times, the jobs that come in bring with them migrant workers who do not stay after the job is done. And as for those private corporations — multimillion dollar enterprises with little if any interest in the specific towns and communities where the pipeline is built, will then reap the profits from the pipeline itself. This is all part of a very long tradition.

In the nineteenth century, the railroads and federal government found many ways to solve some of the political and legal issues so that the project of building a transcontinental railroad could proceed. However, we know that a century a later, those solutions bring new difficulties that some future US Supreme Court may have to decide. A great example is the Brandt case, which I blogged on last year when it was decided by the Supreme Court. Also, our rural citizens, when the love of their land and their traditions are at stake, can dig their heels in when it comes to condemnation proceedings. Nebraskans and Texans are already showing us what this looks like. I don’t see any of these landowners caving quickly, so expect some prolonged fighting in court in multiple venues.

Like the railroads built in the nineteenth century, the pipeline is said to be needed for a public purpose and for the public interest. Our eminent domain law will likely allow the government and Keystone XL to proceed as long as they can make this argument persuasively to the judges hearing the cases. The caveat, here, is that the lawyers for the property owners may be able to find some hidden nuggets in their state constitutions and various state legislative initiatives designed to protect private property interests that they can use to at least slow things down if not actually stop them altogether. That’s because this is an area of law that developed dramatically in the past forty years or so through the work of a wide array of property rights movements, often working in state legislatures. And in an unusual political alignment, the lawyers for landowners will find that there are environmentalists cheering them on and willing to help though their political connections to the Democratic party. That should make for some fascinating congressional hearings, as well as state political discussions.

Here’s some other thoughts (maybe even some predictions):

First, it will be some time before that pipeline is built. Courts move slowly, and understaffed courts move even more slowly. While some of this is occurring in state courts (and I do not know the status of state litigation processes in Nebraska or other states where the pipeline condemnations have begun), eventually there will be federal judges involved. If I were the lawyers in these cases, I’d keep my case in state court as long as possible because federal court will hold its own complexities legally, as well as in terms of the time frame in the litigation.

Federal courts are, in many places, understaffed and flooded with litigation… So, the Republican Congress, if they want this pipeline to go through, may want to get those federal district courts (and their appellate courts) staffed pretty darned soon, and they may want to try to get the cases moved to federal court because the status of eminent domain law there may prove more helpful to them than state property law. Of course… That means they have to deal with President Obama, who will be nominating those judges, and may not want to nominate judges who are necessarily what the Republicans would prefer… And certainly, it would be the current administration that, working through the Justice Department, would be defending any federal litigation on this issue. It strikes me that would sort of be like helping the Republicans out given the current political dynamics around the pipeline… Checks and balances are great! So these court battles will be prolonged in state courts… If we get a new President and he’s a Republican with a Republican Congress to work with, those cases may move into federal court more quickly and the pipeline may be built a little faster.

Second, keep an eye on what happens during the next election cycle (which is already starting to get revved up) in areas where there are condemnation proceedings going on. I won’t predict that Republican strongholds will swing to the Democrats’ column. I will suggest, however, that some very savvy politicians will be attempting to make precisely that occur. I would think that we’d see more third party activism in those same places as voters choose not to vote for either Republicans or Democrats. That usually has consequences for elections. In fact, if the election is a close call between the Republicans and the Democrats, this sort of activity can change the outcome. (It can also make it very difficult for pollsters to predict election results!)

Also, watch the state legislatures in the states that the pipeline is supposed to go through. If enough of their voters are upset by the condemnation proceedings, there will be shifts there. But the catch will be this: are there major population centers in the state that support the pipeline? If so, the state legislatures will be able to withstand the storm coming out of their rural communities. Votes matter — who votes matters, but so does the issue of where the money comes from for election campaigns. Typically, votes and money come out of areas with larger populations. So there may be no change if those large populations support the building of the pipeline. Yet there could be some shifts in states where rural communities have more of a stronghold in their state legislature.

Finally, a thought drawn from sociolegal research on legal mobilization and its political consequences: judicial politics can have far reaching and indirect effects.  A lot of times we think that this only happens when the Supreme Court makes a major ruling. But in fact, state level and federal district level litigation, when it receives attention, can have very interesting impacts on other parts of the political system. I guess my main point here is this: not only are there property law and federalism issues involved in these lawsuits, I think it’s likely there will be electoral and other ramifications in some areas of the country. Keystone XL, which is mostly being framed in Washington as a federal level jobs bill or an element of an energy policy, is more than that, and therefore well worth watching.