How the Supreme Court just quietly rolled back a key element of the New Deal
The court's interference in the U.S. raisin market is a big deal. Really.
During the Great Depression, one of the worst problems was that of agricultural overproduction. Farmers, walloped by falling prices and sales, would desperately plant more crops in an effort to recoup their losses, thereby flooding the market and pushing prices down further.
It's hard to imagine now how devastating that was to the American social fabric. Today, farmers make up only about 1 percent of the American workforce — but in 1930, it was 20 times that figure. The 1920s had already been hard on farmers, and millions were utterly ruined by the Depression and the Dust Bowl, forced to migrate in search of work or even bare sustenance.
That history was the source of a curious case recently decided by the Supreme Court. In Horne vs. Department of Agriculture, the court ruled against a New Deal-era raisin price support program (or "marketing order"), declaring that when a crop is taken as part of the program, the government must pay "just compensation" in the form of the raisins' market price. Raisins aren't a huge deal in and of themselves, but it's an important precedent, and Chief Justice John Roberts' incoherent treatment of prices is both illustrative and worrisome.
So, how does the marketing order work? Basically, the Raisin Administrative Committee (made up mostly of growers, but overseen by the Department of Agriculture) monitors market conditions, and is empowered to appropriate a fraction of the raisin crop to prevent domestic price collapses. These reserve raisins are typically sold overseas, or given away to free lunch programs, with the proceeds eventually distributed to the member farmers.
Though the committee has not actually used the power since the 2009-2010 season, when times are bad quite a lot of the crop can be taken. The original plaintiff in the case, Marvin Horne, is a raisin grower, and back in the 2002-03 season, during the dot-com recession, the government requested nearly half his crop. When he wouldn't turn it over, he was billed roughly $480,000 for the price of the raisins, plus a fine of $200,000.
Roberts, along with the other four conservative justices, concluded that the Fifth Amendment releases Horne from this fine. They held that any program in which the government physically appropriates part of a crop constitutes a per se taking, whether it is fixed or movable property. Therefore he must be paid the just compensation the Amendment stipulates — which Roberts defined as the market price of the raisins at the time.
There are three problems with this argument. One was spotted by Justice Stephen Breyer, in a partial dissent joined by Justices Ruth Bader Ginsberg and Elena Kagan. He took issue with the "just compensation" line, arguing that since the entire point of the marketing order is to benefit raisin farmers, it could be construed as compensation by itself. Therefore, the relevant question is not the location of raisins in time and space, but the net effect of the entire raisin program as a whole. It could be that Horne is a net beneficiary, in which case he would be owed no additional compensation. (Breyer thus recommended the case be kicked back to the lower courts to try and figure out that very question.)
A second problem was outlined by Justice Sonia Sotomayor, who dissented in full. She noted that property rights are actually a bundle (use, enjoyment, exclusion, sale, etc.), and previous decisions had restricted per se takings to ones that cancel the entire bundle at once. Since Horne retains a right to the proceeds of reserve sales, the traditional definition of per se taking has not been achieved, and other precedents should be followed. She further noted that the emphasis on physical raisin possession has weird consequences. A marketing order that simply forbade the sale of the exact same quantity of raisins as would be taken — thus foreclosing any compensatory benefits whatsoever — would be allowed under this framework.
A third problem, not mentioned by any of the liberal justices, lies in Roberts' definition of just compensation. He brushed aside Breyer's point (and USDA arguments) that Horne also benefits from government quality control increasing consumer demand and other effects. Instead he asserted that, when it comes to a physical taking, just compensation must consist of "the market value of the property at the time of the taking." But recall that this is a program explicitly dedicated to supporting the market price of raisins.
Roberts is trying to have it both ways: He insists that the broader effects of the support program cannot be considered just compensation, while simultaneously insisting that a measure inextricably entwined with that same support program — namely, the market price — is the only method of just compensation.
Like most conservatives, Roberts regards market prices and laissez-faire institutions as presumptively natural and just, though in reality they are everywhere the product of government intervention.
This is all fairly trivial when it comes to raisins, but the legal implications could be enormous, and not just for other USDA programs. Consider a climate policy that simultaneously enacted a tax on carbon pollution and nationalized a bunch of coal reserves. Those reserves are valuable today because it is possible to pollute the atmosphere with greenhouse gases and harm society without paying for the damage. Therefore, a carbon tax would reduce their value. But under Roberts' reasoning, the government would be required to pay the previous (likely enormous) price of the coal without being allowed to consider the fact that the previous value was based to a great extent on essentially a theft from the rest of society.
At any rate, as Lyle Denniston notes, this could augur in a minor change at the Department of Agriculture, or the beginnings of an assault on the last remaining scraps of the New Deal. Given Roberts' sloppy reasoning here, it doesn't bode well.