June 22, 2015

The right to use your property isn't a privilege the government can force you to pay for

By The right to use your property isn't a privilege the government can force you to pay for

The Supreme Court today issued its decision in the Horne raisin seizure case. This case involves a 70+ year old program in which the government annually confiscates as much as half the raisin crop of California, for the express purpose of making them more expensive. This sort of insanity was considered cutting-edge economic theory in FDR’s day.

Anyway, raisin producers challenged this program on the argument that since the government is taking away their raisins, they’re at least entitled to just compensation. The government answered, no: selling your raisins in interstate commerce is a “privilege,” and the government can charge you a “toll” for that privilege. The exchange on this point during the oral argument was shocking.

“The government has not taken the raisins,” argued Deputy Solicitor General Edwin Kneedler. “This program operates only when the producer, the grower, has voluntarily submitted—committed the raisins to the stream of commerce.”

Justice Scalia balked. “The government can—can prevent you from putting something into the stream of commerce? Can charge you for putting something into the stream?”

When Kneedler answered yes, Justice Samuel Alito was stunned. “Is there any—any limit to that argument?” he 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 United States?”

“I—I think that would present a very different question,” stammered Kneedler. “I think that would present a very different question.”

“Why would it be different?” Alito demanded.

“Because—because this—this is part of a comprehensive regulatory program that if—that—it—it isn’t just acquiring it. It’s, in fact—”

Justice Anthony Kennedy jumped in. “So you say if the government took all GM’s cars, then it would be okay?”

Kneedler cited as precedent a 1985 case in which Monsanto had been forced to disclose information in order to sell pesticides, the same case Justice William Brennan used three decades earlier in the Nollan case to argue that building permits are a form of government privilege. Justice Scalia objected. He had written the Nollan opinion, and had refused to accept Brennan’s argument. He did not accept it now, either. “[Y]ou say that introducing raisins into interstate commerce is a government benefit, right?” he asked Kneedler. “You’re saying the activity, which is subjected to this taking, is the introduction of raisins in interstate commerce. And you say that is something that the benign government can give or withhold.”

“It is,” answered Kneedler. “It is—it is the permission to do it, which is—”

Scalia was shocked. “Really?”

Today’s decision squarely rejects that argument:

The taking here cannot reasonably be characterized as part of a similar voluntary exchange. In one of the years at issue here, the Government insisted that the Hornes turn over 47 percent of their raisin crop, in exchange for the “benefit” of being allowed to sell the remaining 53 percent. The next year, the toll was 30 percent. We have already rejected the idea that Monsanto may be extended by regarding basic and familiar uses of property as a “Government benefit” on the same order as a permit to sell hazardous chemicals. See Nollan (distinguishing Monsanto on the ground that “the right to build on one’s own property—even though its exercise can be subjected to legitimate permitting requirements—cannot remotely be described as a ‘governmental benefit’ ”). Selling produce in interstate commerce, although certainly subject to reasonable government regulation, is similarly not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection. Raisins are not dangerous pesticides; they are a healthy snack. A case about conditioning the sale of hazardous substances on disclosure of health, safety, and environmental information related to those hazards is hardly on point.

The government here is literally taking away the fruits of the Hornes’ labor. And, agreeing with the brief we filed in the case, the Court rightly holds that it must pay them just compensation.

What to read next