Supreme Court Issues Important Takings Decision, 10 Years After Kelo Case Decided


An important Fifth Amendment Takings Clause case was decided today. The U.S. Supreme Court, by reversing the Ninth Circuit, has terminated the decades-old litigation over the Department of Agriculture’s administration of the California raisin “marketing order.” The case is Horne, et al. v. Department of Agriculture.

Chief Justice Roberts, writing for the majority (Justice Sotomayor dissented, and Justices Breyer, Kagan and Ginsburg filed partial dissents), described the program and how it was applied to the petitioners, who raise and “handle” raisins subject to the Agricultural Marketing Agreement Act of 1937, which was enacted during the Depression to maintain stable market for certain agricultural commodities. The marketing order for raisins requires raisin growers in certain years to give percentage of their crop to the government, free of charge. In 2003, 47% of the raisin crop was ordered to be turned over. The Raisin Administrative Committee, a governmental entity, acquires title to the raisins and decides, in its discretion, how to dispose of them.

In 2002, the petitioners refused to set aside any of their raisins for the Government, which caused the Government to initiate administrative enforcement proceedings to assess a fine equal to the market value of the raisins ($480,000) and a civil penalty of $200,000 for failing to turn the raisins over. When the Government tried to collect the fine, the petitioners turned to the courts, which initially held that the federal courts could not adjudicate a takings defense when seeking review of a final agency order. Prolonged litigation ensued, resulting in two rulings by the Ninth Circuit and two rulings by the Supreme Court.

Chief Justice Roberts noted that the petition for certiorari raised three questions: (1) does the Fifth Amendment’s Takings Clause apply to both real and personal property, and the court, beginning with a reference to Magna Carta held that it does; (2) was the reserve requirement imposed by the Raisin Committee a “clear physical taking”, and the Court ruled that it was; and (3) whether a governmental mandate to relinquish specific identifiable property as a condition on permission to engage in commerce, was a “per se” taking; and in this case it was.

The Chief Justice stated that “Selling produce in interstate commerce, although certainly subject to reasonable governmental regulation, is not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection”. Finally, the Government argued that the case should be heard by the Court of Federal Claims pursuant to the Tucker Act to determine the just compensation due the petitioners, but the Court rejected this argument, noting that in its initial decision, it specifically rejected the contention that the Hornes were required to pay the fine and then seek compensation. The Court concluded: “There is no need for a remand. This case, in litigation for more than a decade, has gone on long enough”

In his opinion, Justice Breyer noted concerns that the majority’s opinion appeared to slight the offsetting benefits that governing regulation can provide, which should be part of the calculus in determining what “just compensation ” should be in particular cases.

Additional Resource: Kelo, et al., v. City of New London, et al., 545 U.S. 469 (June 5, 2005) (Court considered whether the city’s proposed disposition of this property qualifies as a “public use” within the meaning of the Takings Clause of the Fifth Amendment to the Constitution.)