Thursday, July 18, 2013

Fear of a Raisin Glut

By Mike Dorf

As I noted yesterday, I'm in the process of reading some of the "lesser" SCOTUS opinions that I skipped over in the excitement of the end of the Term.  Here's a dispatch on one such opinion, Horne v. Dep't of Agriculture.

Facts and Procedural Posture: The Hornes grow grapes and process them into raisins.  Pursuant to a Depression-era statute, the federal Dep't of Agriculture (DOA) regulates raisin producers.  It brought agency proceedings against the Hornes for failure to comply with various requirements.  The Hornes defended on the ground that they are not "handlers" of raisins within the meaning of the relevant statute and regs, and thus not subject to the requirements.  They also argued that one aspect of regulation--the requirement that they turn over a percentage of their raisins to the DOA--was an unconstitutional taking of property without just compensation.  They lost in the agency and in the federal district court and the Ninth Circuit.  The latter rejected their statutory/admin claims on the merits, finding that they were handlers.  The Ninth Circuit declined to reach the Takings claim, however, on the ground that it could only be brought in the Court of Claims.  The Ninth Circuit said that the Takings claim arose in the Hornes' capacity as producers rather than handlers, and so needed to go to a separate proceeding.

The Supreme Court unanimously reversed, in an opinion by Justice Thomas.  The Court said that while the Hornes denied that they were handlers for statutory/regulatory purposes, their constitutional argument was conditional: if they are handlers, they say, then the reg is a Taking.  I'm not sure that's strictly correct, but the result makes eminent sense.  As Justice Thomas says, it would be wasteful for one court to find that the Hornes owe money as a fine and owe raisins pursuant to the supply-suppression program, but then to have them file in another court that adjudicates the Takings issue separately, so that they may get some of their money and/or raisins back.

Why is this interesting?  It's not, except for the fact that reading the opinion, I was struck by how much detail the Court provided about the DOA program for regulating the supply of raisins.  Some of that detail was arguably needed to provide context for the distinction between the statutory/regulatory claim about the handler/producer dichotomy and the Takings claim.  But most of it seemed gratuitous.

Reading the opinion I developed the strong feeling that the Court--or at least Justice Thomas with the acquiescence of the other Justices--thinks that the DOA program is unnecessary bordering on idiotic. This program is in addition to federal and state regulation of grape growing to ensure food safety and honest labeling.  Do we really need the federal government limiting the supply of raisins to ensure a stable return on investment for grape farmers?

My answer to that question would be this: I understand that the vagaries of weather and credit mean that agriculture is inherently subject to greater production uncertainty than many other lines of business; accordingly, production quotas may make sense as a means of stabilizing prices, even though we generally rely on the free market to set prices in response to supply and demand; whether the system of price supports is, all things considered, cost-justified, or is instead more in the nature of a government scheme for facilitating a cartel, is a complicated empirical and policy question. Accordingly, the wisdom of a system of agricultural price supports should be left to the political branches.

Now, nothing in the Supreme Court's opinion in Horne directly contradicts any of that.  Moreover, Justice Thomas has been especially clear that he has no intention of returning to the Lochner era of searching judicial review of economic regulation.  Nonetheless, in tone if not in content, I detect in Horne something between bemusement and annoyance at the fact that the federal government is deeply involved in protecting the nation from a raisin glut.

10 comments:

Hashim said...

Oral arg transcript 48:21-49:11:

Justice Kagan: Mr Palmore, what would be wrong ... with a disposition of this Court that went something like this.... And now, the Ninth Circuit can go and try to figure out whether this marketing order is a taking or it's just the world's most outdated law. (Laughter.)

The Dismal Political Economist said...

The raisin issue is a joke, but what is not a joke is the entire DOA program of price supports, crop controls and insurance subsidies.

Conservatives believe that the federal government should not be involved in private business, but once the nutrition support programs were stripped from the 10 year farm bill they voted to continue massive subsidies for farms, including a subsidy for crop insurance that is paid regardless of the wealth or size of the farming operation.

The reason we have these idiotic programs is that Conservatives will not act in a conservative manner or vote to uphold conservative principles.

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