Commentary

Victory Over The Raisin Administrative Committee: The New Deal Case That Took 80 Years To Bring

Thirteen years ago the government tried to take 47 percent of farmer Marvin Horne’s raisins and give him nothing in return. Horne fought back, arguing that the confiscation was an uncompensated taking of private property under the Fifth Amendment’s Takings Clause. Today, on his second trip to the Supreme Court, Mr. Horne’s claim was vindicated by eight justices.

For a case about raisins, Mr. Horne’s plight has generated a fair amount of attention, including coverage by the Daily Show as well as a previous Forbes piece by me. Perhaps this is because Mr. Horne’s adversary, a New Deal-era government agency called the Raisin Administrative Committee (RAC), is so inherently comical and head scratching. It’s the New-Deal case that took almost 80 years to bring, and, like so many of President Franklin Roosevelt’s crazy schemes, a majority of justices found it had severe constitutional problems.

The RAC is a group of 46 raisin growers and packers (and one “member of the public”) that meets in an office in Fresno, California. There they decide how many raisins they must take off the market in order to keep the price of raisins artificially high. If it weren’t ratified by the government, such a meeting would undoubtedly be an illegal collusion to raise prices under the Sherman Antitrust Act.

If the RAC requests a farmer’s raisins, then the farmer must give them up and he is guaranteed nothing in return—at least, that’s how it was until this morning.

The RAC is the product of a 1937 law called the Agricultural Marketing Agreement Act (AMAA). The AMAA was the consequence of the antiquated economic thinking of the New Deal, much of it directly pushed by President Franklin Roosevelt himself. Roosevelt strongly believed in the power of government-created cartels to fix perceived problems with the free market. The first major New-Deal law, the National Industrial Recovery Act (NIRA), tried to cartelize nearly the entire economy in order to prevent “destructive competition.” Businesses jumped at the chance to use government power to gain a competitive advantage.

The Supreme Court struck down the NIRA in 1935, but Roosevelt’s infatuation with cartelization never abated. In fact, he once told his friend Henry Morganthau, Jr. that he envisioned a system of “international cartels in different commodities” that would be overseen by Roosevelt.

With the Bituminous Coal Conservation Act of 1935, Roosevelt tried to re-impose the NIRA’s cartelization scheme on the coal industry, but the Supreme Court struck it down too. In agriculture, however, Roosevelt had more success in creating cartels, as the continued existence of Raisin Administrative Committee demonstrates.

The RAC is not immediately going away, but today eight justices agreed—and agreed with Cato’s amicus brief—that the confiscation of the Hornes’ raisins was a taking of property that requires just compensation under the Fifth Amendment (Justice Sonia Sotomayor was the lone dissenter). This important holding overruled the very dangerous lower court opinion in which the Ninth Circuit held that different standards apply to the taking of personal property than to the taking of real property (land). Nothing in the Takings Clause allowed for this interpretation—it just says “nor shall private property be taken for public use without just compensation”—and eight justices saw the error in the Ninth Circuit’s reasoning.

The Court was less in agreement on how the “just compensation” to the Hornes should be calculated. Justice Stephen Breyer, joined by Justices Ruth Bader Ginsburg and Elena Kagan, wrote separately to say that the case should be sent back to the Ninth Circuit in order to calculate the difference between what the Hornes received in benefits from the RAC and how much they lost. Chief Justice John Roberts, however, disagreed: “the Hornes should simply be relieved of the obligation to pay the fine and associated civil penalty they were assessed when they resisted the Government’s effort to take their raisins. This case, in litigation for more than a decade, has gone on long enough.”

Indeed it has, and so, for that matter, has the Raisin Administrative Committee. The RAC will no longer be allowed to ride roughshod over the property rights of farmers without providing just compensation. Although the RAC has now been exposed, there are many more agricultural commodities that have similar cartelization schemes. Only a few, however, have the ability to confiscate farmers’ goods without compensation. It is a testament to the prolix nature of U.S. agricultural law that, when asked by the justices at oral argument, the Deputy Solicitor General was unable to say precisely how many other commodities allowed for such confiscations.

Mr. Horne’s marathon act of civil disobedience should be commended. He saw something was wrong, and he put himself and his well-being on the line to fight it. Such opposition is rare in cartelized agricultural industries because members of those industries usually benefit—it’s mostly the consumers that are harmed.

If we’re going to roll-back our frankly insane agricultural laws, we’ll need more people like Marvin Horne.

Does anyone want to go after the Far West Spearmint Oil Administrative Committee?

Trevor Burrus is a research fellow in the Cato Institute’s Center for Constitutional Studies.