Under a draconian, Depression-era regulatory scheme, California raisin farmers are required to hand over a portion of their crop to the “Raisin Administrative Committee” (RAC), rather than selling it on the open market. The RAC is an unelected board overseen by the United States Department of Agriculture (USDA) that has the authority to set the amount each individual farmer must contribute to the “raisin reserve.” The law’s stated purpose is to ensure “an orderly domestic raisin market.” In 2002-03, for example, the law required farmers to turn over 47 percent of their raisin crop to the RAC. Several farmers, including Marvin and Laura Horne, have been fighting back against this scheme in federal court for several years. After the USDA determined the Hornes were in violation of the regulations because they did not contribute to the raisin reserve, they were fined almost $700,000.
The Hornes challenged the large fine, and the requirement they hand over their raisins, in federal district court as an uncompensated taking of private property under the Fifth Amendment. After the district court ruled against them, they appealed to the Ninth Circuit, which held that it lacked jurisdiction to consider their Fifth Amendment claim. They then persuaded the Supreme Court to take up the case, and it unanimously held that the Hornes could bring their constitutional claim as a defense to the regulation, rather than pay the fine and then sue in the Court of Federal Claims, as the Ninth Circuit would have required. During oral argument, Justice Kagan joked that the Ninth Circuit would have to figure out whether the regulations effected a taking or were “just the world’s most outdated law.” However, the Hornes once again had their Fifth Amendment claim rejected in the Ninth Circuit on remand, five years after their initial filing. This time, the Court of Appeals applied a novel theory of the Supreme Court’s land-use exactions cases, contrary to Supreme Court precedent, to uphold the regulations.
Today, PLF filed an amicus curiae brief in support of the Hornes’ petition for writ of certiorari in the Supreme Court. We hope to convince the Court to take the Hornes’ case for a second time and once again correct the Ninth Circuit’s error. Our brief makes two principal arguments. First, the Court of Appeals made a serious error by concluding that the government did not commit a physical taking of the Hornes’ raisins. The Supreme Court and at least five other circuits have consistently made it clear that when the government appropriates private property – whether real or personal – a per se taking occurs. It was therefore unnecessary to apply any of the more complicated tests used for regulatory takings. But the Ninth Circuit wrongly assumed that the per se takings rule applies only to real property, and not to personal property like raisins. Instead, the court considered the government’s appropriation of the raisins to be a mere “use restriction.” Under this theory, government agencies could recast any taking of private property as a use restriction. This is precisely what the Takings Clause was designed to prohibit.
Second, the Court of Appeals erred by misconstruing the Supreme Court’s land-use “exaction cases,” Nollan v. California Coastal Commission and Dolan v. City of Tigard. Under those cases, government has the burden to prove that the property dedication it demands in return for a development permit bears an “essential nexus” and “rough proportionality” to the social costs of the applicant’s proposal. But the Ninth Circuit ignored those standards by requiring only that the means and ends of the regulatory scheme be compatible, rather than by applying a stricter cause-and-effect relationship requirement. The Ninth Circuit’s analysis is indistinct from the cursory rational-basis review given to economic regulations in the federal courts. It is inappropriate to treat the taking of a portion of the Hornes’ raisin crop this way. Thus, after the Ninth Circuit improperly determined that there can be no per se physical takings of personal property, it compounded its mistake by not subjecting the regulatory scheme to proper judicial scrutiny.
The Supreme Court should grant the Hornes’ petition for certiorari and clarify that the protections of the Fifth Amendment apply equally to personal property as to real property, and that the heightened scrutiny which the Court has applied to land use exactions cannot be relegated to a mere means-ends test.