The US Supreme court will hear a case alleging that the USDA committed a regulatory “taking” under the 5th Amendment when it demanded a share of the petitioner’s raisin crop in exchange for the right to sell the rest. The case comes from the Ninth Circuit, which held that the district court lacked jurisdiction under its precedent.
According to Marzulla Law, the Ninth Circuit held that its precedents require the petitioner “must pay the money and then bring a separate, later claim requesting reimbursement of the money under the Tucker Act in the Court of Federal Claims,” which it describes as “contrary to the decisions of five other Circuit Courts of Appeals.” They quote from the petition for certiorari:
In 2004, the USDA initiated an enforcement action against petitioners for failing to set aside the reserve tonnage raisins during the 2002–2003 and 2003–2004 years. In administrative proceedings, the USDA sought, and ultimately recovered, the dollar equivalent of the raisins that petitioners were supposed to have given, but did not give, to the government. As required by statute, petitioners raised all defenses —including their Takings Clause defense — before the agency. After losing before the agency, petitioners sought judicial review of the order in the United States District Court for the Eastern District of California . . . . Among other things, petitioners argued that imposition of the fine would amount to a taking without just compensation under the Fifth Amendment to the U.S. Constitution.
According to Marzulla Law, the Ninth Circuit’s requirement creates a Catch-22. It requires the petitioner to first seek redress from the Court of Federal Claims before seeking review by a federal district court, but the Federal Circuit has held that it lacks jurisdiction because the petitioner must first seek review in federal district court.
The 5th Amendment requires the government to pay compensation when it takes private property for public use. Typically, takings occur when the government claims property such as real estate by eminent domain for the construction of a road or similar infrastructure improvement. Regulatory takings are different, however, because the government acts indirectly, via regulation, in ways that reduce (or even eliminate) the market value of private property. The Supreme Court began to rein in this practice in Lucas v. South Carolina Coastal Council (1992).
Fairly applied, the 5th Amendment roughly achieves economically efficient outcomes because governments take property only when the value to the public exceeds private market value. Inefficiency arises when governments can avoid paying in full for what they take. Most arguments against eminent domain concern philosophical or ethical issues rather than efficiency.
Meanwhile, the Raisin Marketing Order, the regulation under which USDA imposed the alleged regulatory taking, is a paragon of economic inefficiency. Its purpose is to artificially limit the supply of raisins and thereby sustain high prices for producers, to the detriment of raisin consumers.
U.S. Supreme Court
LUCAS v. SOUTH CAROLINA COASTAL COUNCIL, 505 U.S. 1003 (1992)
505 U.S. 1003
LUCAS v. SOUTH CAROLINA COASTAL COUNCIL
CERTIORARI TO THE SUPREME COURT OF SOUTH
Argued March 2, 1992
Decided June 29, 1992
In 1986, petitioner Lucas bought two residential lots on a South Carolina barrier island, intending to build single-family homes such as those on the immediately adjacent parcels. At that time, Lucas’ lots were not subject to the State’s coastal zone building permit requirements. In 1988, however, the state legislature enacted the Beachfront Management Act, which barred Lucas from erecting any permanent habitable structures on his parcels. He filed suit against respondent state agency, contending that, even though the Act may have been a lawful exercise of the State’s police power, the ban on construction deprived him of all “economically viable use” of his property, and therefore effected a “taking” under the Fifth and Fourteenth Amendments that required the payment of just compensation. See, e.g., Agins v. City of Tiburon, 447 U.S. 255, 261 . The state trial court agreed, finding that the ban rendered Lucas’ parcels “valueless,” and entered an award exceeding $1.2 million. In reversing, the State Supreme Court held itself bound, in light of Lucas’ failure to attack the Act’s validity, to accept the legislature’s “uncontested . . . findings” that new construction in the coastal zone threatened a valuable public resource. The court ruled that, under the Mugler v. Kansas, 123 U.S. 623 , line of cases, when a regulation is designed to prevent “harmful or noxious uses” of property akin to public nuisances, no compensation is owing under the Takings Clause regardless of the regulation’s effect on the property’s value.
1. Lucas’ takings claim is not rendered unripe by the fact that he may yet be able to secure a special permit to build on his property under an amendment to the Act passed after briefing and argument before the State Supreme Court, but prior to issuance of that court’s opinion. Because it declined to rest its judgment on ripeness grounds, preferring to dispose of the case on the merits, the latter court’s decision precludes, both practically and legally, any takings claim with respect to Lucas’ preamendment deprivation. Lucas has properly alleged injury in fact with respect to this preamendment deprivation, and it would not accord with sound process in these circumstances to insist that he pursue the late-created procedure before that component of his takings claim can be considered ripe. Pp. 1010-1014.
2. The State Supreme Court erred in applying the “harmful or noxious uses” principle to decide this case. Pp. 1014-1019.
(a) Regulations that deny the property owner all “economically viable use of his land” constitute one of the discrete categories of regulatory deprivations that require compensation without the usual case-specific inquiry into the public interest advanced in support of the restraint. Although the Court has never set forth the justification for this categorical rule, the practical – and economic – equivalence of physically appropriating and eliminating all beneficial use of land counsels its preservation. Pp. 1014-1019.
(b) A review of the relevant decisions demonstrates that the “harmful or noxious use” principle was merely this Court’s early formulation of the police power justification necessary to sustain (without compensation) any regulatory diminution in value; that the distinction between regulation that “prevents harmful use” and that which “confers benefits” is difficult, if not impossible, to discern on an objective, value-free basis; and that, therefore, noxious-use logic cannot be the basis for departing from this Court’s categorical rule that total regulatory takings must be compensated. Pp. 1020-1026.
(c) Rather, the question must turn, in accord with this Court’s “takings” jurisprudence, on citizens’ historic understandings regarding the content of, and the State’s power over, the “bundle of rights” that they acquire when they take title to property. Because it is not consistent with the historical compact embodied in the Takings Clause that title to real estate is held subject to the State’s subsequent decision to eliminate all economically beneficial use, a regulation having that effect cannot be newly decreed, and sustained, without compensation’s being paid the owner. However, no compensation is owed – in this setting as with all takings claims – if the State’s affirmative decree simply makes explicit what already inheres in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership. Cf. Scranton v. Wheeler, 179 U.S. 141, 163 . Pp. 1027-1031.
(d) Although it seems unlikely that common law principles would have prevented the erection of any habitable or productive improvements on Lucas’ land, this state law question must be dealt with on remand. To win its case, respondent cannot simply proffer the legislature’s declaration that the uses Lucas desires are inconsistent with the public interest, or the conclusory assertion that they violate a common law maxim such as sic utere tuo ut alienum non laedas, but must identify background principles of nuisance and property law that prohibit the uses Lucas now intends in the property’s present circumstances. P. 1031.