A Modest But Potentially Significant Supreme Court Victory for Property Rights

To the disappointment of court-watchers, the Supreme Court did not announce any high-profile decisions today. But it did issue a unanimous opinion in Horne v. Department of Agriculture, a notable Takings Clause property rights case. The Hornes are California raisin farmers seeking to challenge the constitutionality of a provision of the Agricultural Marketing Agreement Act of 1937 that requires them to turn over a portion of their raisin crop to the federal government in order to create an artificial scarcity in the market and prop up the price of raisins. They claim that this requirement violates the Takings Clause of the Fifth Amendment, which requires the government to pay “just compensation” whenever private property is “taken for public use” (the Hornes and other growers are not compensated for the expropriated raisins). The Supreme Court today did not rule on the issue of whether the Takings Clause was violated here. But it did unanimously overrule the Ninth Circuit’s decision that federal courts lacked jurisdiction to hear the Takings Clause case in the first place, because the Hornes were required to first pay the massive $483,000 fine imposed by the Agriculture Department, and then pursue various administrative remedies before getting their day in court. As Justice Thomas explains in his opinion for the Court, there were no meaningful alternative remedies available to the Hornes, because all such were closed off by federal statutes. In addition, “when a party raises a constitutional defense to an assessed fine, it would make little sense to require the party to pay the fine in one proceeding and then turn around and sue for recovery of that same money in another proceeding.” He might have added that imposing such a requirement would be a heavy burden on property owners who cannot afford to wait for years of administrative and judicial proceedings to get their money back. Damon Root and Lyle Denniston have more details on the case and its potential significance.

This is the Obama administration’s third unanimous Supreme Court defeat in a property rights case in less than fifteen months, following on the heels of Sackett v. EPA and Arkansas Game and Fish Commission v. United States. I wish I could say that this heralds a newfound willigness by the justices to vigorously enforce constitutional property rights and finally put an end to their “poor relation” status. But what these rulings really reflect is that the administration took such extreme positions that even liberal justices generally unsympathetic to property rights claims could not swallow them. In addition, in all three cases, the justices achieved unanimity in part by remanding the more contentious issues to the lower courts. In this case, they did so by remanding the underlying Takings Clause issue.

As Denniston and Root point out, most of the impact of Horne is likely to be limited to farmers governed by statutes like the one the Hornes are challenging. That is far from trivial, given that there are many such regulatory regimes.

But there is at least a small chance that the ruling will have a broader effect. One of the arguments rejected in today’s opinion was the claim that federal courts lacked jurisdiction to hear the case under the Court’s 1985 decision in Williamson County Regional Planning Commission v. Hamilton Bank, which holds that property owners claiming that they have been the victims of an uncompensated taking cannot bring a case in federal court until they have first been denied compensation in any potentially available state regulatory or judicial proceedings. Until that happens, the claims are not considered “ripe.” As I discuss in this article (pp. 23-26), Williamson County makes it impossible to bring many takings claims in federal court at all; once state courts have rejected the takings claim, federal courts are often precluded from reviewing it by the Court’s later decision in San Remo Hotel v. San Francisco (2005). No other category of constitutional rights claim is systematically denied access to federal court in the same way.

Horne certainly does not overrule Williamson County. But in footnote 6, the Court notes that Williamson County’s “ripeness” requirement is not a bar to federal court jurisdiction because “[a] “Case” or “Controversy” [as required for federal jurisdiction by Article III of the Constitution] exists once the government has taken private property without paying for it. Accordingly, whether an alternative remedy exists does not affect the jurisdiction of the federal court.” [emphasis added].

Normally, ripeness is a constraint on federal court jurisdiction. If the Williamson County regime can’t be justified on jurisdictional grounds, it is not clear what – if anything – justifies it at all. If it really is true that a Takings Clause case arises “once the government has taken private property without paying for it,” then it should not matter whether that violation of the Constitution might be remedied by a state proceeding instead of a federal one. There is still a federal constitutional case that can be brought in federal court. Part of the justification for federal court jurisdiction over constitutional claims against state governments is that state courts and regulatory agencies sometimes cannot be trusted to enforce the federal Constitution against their own state governments.

Obviously, Horne involved a challenge to federal rather than state action. And it is far from clear whether all the justices who signed on to it are willing to follow the reasoning of footnote 6 to its logical conclusion. It is just a footnote, after all. Still, this part of the opinion (combined with a similar, but less clear, statement in this 2010 ruling) does reveal a chink in Williamson County’s armor that could be exploited by property owners in future takings cases. Hopefully, the Court will ultimately overrule Williamson County, as urged by the late Chief Justice Rehnquist, Justice O’Connor, Justice Kennedy, and Justice Thomas back in 2005.

UPDATE: I would add that this case, combined with Sackett, indicates that there is a limit to the range of procedural obstructions to property rights claims that the Court will tolerate. Some of the justices are hostile to most property rights claims on the merits. But they are extremely skeptical of regulatory regimes under which owners have to suffer extremely lengthy delays and pay huge costs before even getting their day in court. On this point, the liberal and conservative wings of the Court seem to agree, even if they agree on little else when it comes to property rights cases.

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