May 12, 2014

Heard through the grapevine: Ninth Circuit holds Koontz allows government price controls

By Jonathan Wood Attorney

Single_raisin_iiLast week, the Ninth Circuit decided the remand of Horne v. USDA, the raisin case that the Supreme Court overturned last term. The case previously drew attention for what it had to say about Williamson County — the case that keeps essentially all takings cases from federal court. The most recent round in this litigation addresses how Koontz applies to forced surrender of a farmer’s crops to the government so that it can control prices.

According to liberal Supreme Court Justice Elena Kagan, the case concerns “the world’s most outdated law.” During the depression, the federal government concocted a scheme to artificially inflate crop prices. It required raisin producers to hand over a share of their product to the federal government so that the supply of raisins would be artificially reduced and the price raised. Even if this program made sense during the emergency of the Great Depression — it didn’t — it’s crazy to hurt consumers everywhere on the off-chance that some raisin producers might benefit from price controls. Note that even the benefit to producers is suspect as the plaintiff in this case a producer challenging the requirement that he turn over a large share of his crop. And this isn’t an isolated problem. Many commodities are made more expensive for consumers than they have to be. The most disturbing of which is milk, since the costs of the program are borne most heavily by impoverished infants and children.

The Ninth Circuit upheld this scheme under Koontz on the grounds that the confiscation of these raisins is closely related to and proportional to Congress’ goal to control the price of raisins. But the Court never considered the predicate question: is the government’s justification for requiring someone to waive their Fifth Amendment rights? In Nollan, Dolan, and Koontz, the government imposed conditions on the basis of a development projects effect on the environment or other peoples use of private and public property.

You can disagree over how many of those effects are any of the government’s business. But, in the raisin case, the government’s justification for placing conditions on a persons right to earn a living producing and selling raisins is simply that it wants to control who enters the profession and how much they earn. That really makes clear the government and the courts’ disdain for economic liberty, doesn’t it?

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St. Johns River Water Management District v. Koontz

Coy A. Koontz sought to develop commercial land, most of which lies within a riparian habitat protection zone in Orange County, Florida. He applied for a dredge and fill permit with the St. Johns Water Management District, which  agreed to grant the permit only on the condition that he place a conservation easement over his land, and perform mitigation off-site by replacing culverts and plugging certain drainage canals on distant District-owned properties. When Koontz refused to perform the off-site mitigation, St. Johns denied the permit. PLF successfully represented Koontz before the U.S. Supreme Court, which held that a land-use agency cannot condition a permit on the payment of a mitigation fee to be used to pay for facilities that have no connection to the impacts of the permitted development.

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