Christian Schnettelker | http://www.manoftaste.de/

At least one closely split Supreme Court decision seems likely to meet widespread acclaim this term. A 5-4 majority, led by Chief Justice John Roberts, sided with a California raisin grower challenging a New Deal law that had enabled government agriculture regulators to lay claim to roughly one-third of his crop.

Perverse incentives

The logic behind the Draconian rule traced back to a Depression-era scheme to prevent growers from creating a run on key commodities by slashing prices. Under the regulation, growers were allowed in effect to collude formally on setting prices, with the government stepping in to remove whatever amount of the product therefore couldn’t be sold. “The raisin board had the support of most growers, and its ‘marketing orders’ had the backing of the U.S. Department of Agriculture,” as the Los Angeles Times reported.

“The USDA defended the board and said these collective actions helped to stabilize the market and prevent sharp swings in prices. The ‘reserve’ portion of the crop is sometimes sold overseas or is given to schools as part of the school lunch program. Government lawyers said growers like Horne benefited in the end because they obtained higher prices for raisins sold on the open market.”

But as Chief Justice Roberts observed, the transfer of “actual raisins” from aggrieved Fresno grower Marvin Horne constituted a “clear physical taking,” necessitating the “just compensation” provided for so-called “takings” by the Fifth Amendment. The justices agreed almost unanimously that takings applied as much to raisins as to real property. But the court’s four more liberal judges refused to agree that they could decide that Horne merited payback during the years he bucked the system. Marvin and Laura Horne, his wife, first put their feet down in 2003; “when the raisin committee voted to set aside 47 percent of the growers’ crop, the Hornes balked, selling 100 percent of their raisins,” NPR recounted. “The federal government fined them the market value of the missing raisins — nearly $500,000 — plus an additional civil penalty of $200,000.” That fine, the court ruled, also had to go.

Big reverberations

Horne’s victory teed up substantial changes in the agriculture industry and beyond. “While part of a long-running challenge to federal regulation of various agricultural markets, the ruling Monday also broadens the government’s responsibilities to private property owners,” McClatchy reported. Marketing orders like the one Horne defied “cover crops from almonds to walnuts,” observed McClatchy, although not all actually “authorize volume control.” Reflecting the arbitrary character of the regulations, other affected crops would include dried prunes, spearmint oil and tart cherries, according to the Wall Street Journal. But the immediate impact could be minimal; dates, for instance, haven’t been subject to seizures like the one affecting Horne since the 1970-71 season, the Journal noted.

The political implications of the ruling, at least, quickly became clear: more jockeying over the federal government’s well-known largesse toward so-called “big ag.” Editorializing in favor of the ruling, the Washington Post framed the stakes starkly. “Today, the Supreme Court deregulated the raisins; it’s up to Congress to liberate sugar, milk, corn, soybeans and all the other commodities still entangled in an outmoded web of regulations and corporate welfare.”

This week we saw a perfect example dealing with a San Francisco law so extreme it seems, well, un-American. Here are the key details from the Pacific Legal Foundation’s website:

Today U.S. District Court Judge Charles Breyer sided with Pacific Legal Foundation’s (PLF) lawsuit and struck down San Francisco’s Tenant Relocation Ordinance, as unconstitutional.

Under the ordinance, rental property owners who want to reclaim use of their own property must pay a massive sum to their tenants – a sum that the tenant doesn’t even have to use for relocation purposes.

PLF’s lead clients are Dan and Maria Levin, who live in the upstairs unit of their two-story home.   They would like to use the lower unit for friends and family, but they would have to pay their tenant $118,000 to withdraw it from the rental market.

The ordinance ‘fails on its face’

This is from Breyer’s decision:

In July 2014, the City and County of San Francisco enacted an Ordinance that requires property owners wishing to withdraw their rent-controlled property from the rental market to pay a lump sum to displaced tenants. The 2014 Ordinance requires that property owners pay the greater of a relocation payment due under a 2005 Ordinance or the new, “enhanced” amount: twenty-four times the difference between the units’ current monthly rate and an amount that purports to be the fair market value of a comparable unit in San Francisco, as calculated by a schedule developed by the Controller’s Office. Plaintiffs, who are property owners now obligated to pay amounts that range to hundreds of thousands of dollars per unit, allege that the Ordinance on its face is an unconstitutional taking in violation of the Fifth Amendment. …

… fundamentally, the Ordinance fails on its face because it requires a monetary exaction that is not roughly proportional to – indeed, does not even share an essential nexus with – the impact of the property owner’s proposed change in use. That is to say, it seeks to force the property owner to pay for a broad public problem not of the owner’s making. A property owner did not cause the high market rent to which a tenant who chooses to stay in San Francisco might be exposed, nor cause the lower rent-controlled rate the tenant previously enjoyed. The Ordinance’s constitutional infirmity being one inherent in the nature of what the monetary exaction is intended to recompense – a dislocation that necessarily arises in all of the Ordinance’s applications – it fails on its face to survive Fifth Amendment scrutiny.

Breyer, like his brother, Supreme Court Justice Stephen Breyer, is a moderate on business and regulatory issues. He didn’t see this as even close to a close call. Oral arguments were held Oct. 6. His decision came out all of 15 days later.

In the federal court system, that’s hardly common.

The takeaway: Property rights live.

But it you wanted to pick the one state agency that most consistently advocates a radical view of government power, you’ll never top the California Coastal Commission. It was founded and run for a quarter-century by a green zealot named Peter Douglas — a guy who really and truly didn’t believe in private property rights and who pushed the commission to ridiculous extremes. I wrote about one of his crusades in an editorial in 2006:

“Consider the case of San Luis Obispo engineer Dennis Schneider, who hoped to build his dream home on a cliff above the ocean in a remote area north of Cayucos. Incredibly by normal cognitive standards, typically by Coastal Commission standards, the agency blocked his plans on the grounds that the home would be such an aesthetic affront to passing kayakers, boaters and surfers that it would violate their rights. We are not making this up.”

But the courts backed Schneider up, thankfully. So there was a way to deal with Douglas’ assault on conventional notions about property, individuals and government control of property and individuals.

Not just power to assess fines, but limited checks and balances

Now, the San Diego Democrat chosen to be the next speaker of the Assembly wants the commission to be given more powers with fewer checks and balances. CalWatchdog alum Steve Greenhut talks about Toni Atkins’ scary legislation in his latest U-T San Diego column.

“Last year, the Atkins bill (AB 976) was controversial enough even among some environmentally minded Democrats that it was rejected in the Assembly. But as Atkins ascends to the Assembly speakership, it’s likely that this legislative priority will rise again.

“Is it needed? The vast majority of the commission’s complaints against homeowners already are resolved before going to court. If the commission still meets resistance, it petitions the state attorney general for legal action.

“If the Atkins bill passes, the commission can decide on its own to begin assessing daily fines. The property owners can attend a public hearing before commissioners, but it’s not a neutral proceeding with witnesses and due process. The burden of proof would shift from the agency to the individual property owner.

“Not many owners could risk the bank account by challenging the agency. Some critics say the bill would provide an incentive for the commission to target picayune issues because the more fines it imposes, the more money that fills up an environmental-restoration fund.”

Groan. This is not what California needs — further empowering the Peter Douglas disciples who still run the Coastal Commission two years after his death and who still think Douglas’ views about property rights are what matters — not that minor clause in federal law known as the Fifth Amendment to the U.S. Constitution.

By Wayne Lusvardi

Chief Justice of the U.S. Supreme Court John Roberts once observed that it was virtually impossible for any landowner to win a regulatory property takings case against local government.  This was because the case that set the precedent in the law, called the Penn Central case, contains three tests that rarely appear in combination and are more difficult to prove.

However, on May 9, 2013 the California State Appeals Court rendered a decision in the case Lockaway Storage vs. County of Alameda.  The court affirmed the County was liable to pay a property owner damages for a temporary taking as a result of an “unreasonable” revoking of an approved land use permit.

A regulatory taking refers to a situation where a government regulates a property by zoning or ordinances that effectively takes all rights to the property or value without formally condemning the physical property.

At issue was 8.45 acres of land in the unincorporated area of Alameda County. In 1999, the County granted the landowner a Conditional Use Permit for a ground storage yard for RV’s and boats.

In 2000, Michael Shaw and Michael Garrity, owners of Lockaway Storage, purchased the land for $800,000.  The land was zoned agricultural. Lockaway assumed ownership of the land and the development rights when it bought the property.

Lockaway operates a number of different types of storage facilities in California, including vehicle and storage yards in Castro Valley, Fremont and Hemet.

Measure D

In November 2000, Alameda County voters approved a “slow growth” initiative called Measure D, the Urban Growth Boundary Initiative.  It specified:

“Shall an ordinance amending the Alameda County General Plan to, among other things, revise the urban growth boundary in the East County to reserve less land for urban growth and more land for agriculture and open space, apply similar policies to rural Castro Valley, require new housing to be located primarily within existing cities, modify land use restrictions applicable to rural area, and require a county-wide vote on changes to the policies, be adopted?”  

The Sierra Club, Livermore-based Citizens for Balanced Growth, and many East Bay city officials supported Measure D, which killed plans for 12,500 housing units.

This measure prohibited the development of a storage facility on the Lockaway-owned property unless it was approved by a public vote. But Measure D contained a legal grandfathering provision of all existing approved development when the law became effective.

Lockaway continued to process its permit for an RV storage yard under the grandfather provision. But it was denied on the grounds Lockaway had not obtained a building permit and had not begun construction prior to the date of the initiative.  Lockaway then pursued administrative and legal remedies to no favorable result.

Lockaway then filed suit in County Superior Court, seeking an order to proceed with development and suing for inverse condemnation and civil rights violations.  Inverse condemnation is when government indirectly takes all the rights and value from a private property but fails to pay compensation for it as required in the Fifth Amendment to the U.S. Constitution.  The Superior Court found in favor of the property owners on all counts.

The Superior Court allowed development to proceed.  The basis of the Court’s decision was that the County let Lockaway continue its development plans for 1-1/2 years after Measure D became effective.  Then the County did what was called a “showstopping U-turn” and stopped the project.  At that time the County refused to consider whether the “grandfather” clause in Measure D exempted the Lockaway Storage project.

Additionally, the lower court awarded the owner $504,175 in lost profits and $324,954 in increased construction costs due to a 1-1/2 year delay.

Alameda County then appealed to the 1st Appellate Court, seeking to overturn the lower court decision.  The Appeals court’s had to determine if the Lockaway case met the three-part test in the Penn Central case to be awarded temporary damages:

1. The County’s actions had to have a “substantial, negative impact on Lockaway’s use of the property”;
2. The County’s actions had to “materially interfere with the Plaintiff’s (owner’s) distinct, investment-backed expectations;”
3. “Its conduct could not be justified as a normal regulatory mistake.” 

The Appeals court found that the case met all three criteria. The most important ruling was that, although Measure D did not render Lockaway’s property worthless, it deprived the owner of a “return on investment that it ‘reasonably expected from the intended use’” and prior approvals.

‘Manifestly unreasonable’

The Appellate Court called the County’s application of the voter initiative to the Lockaway case “nonsense” and called its behavior “manifestly unreasonable.”

The Pacific Legal Foundation, a property rights advocacy law firm in Sacramento, said Lockaway came away with “a remarkable regulatory takings victory.”

Lockaway’s attorney, Timothy Kassouni of Los Angeles, was awarded $879,700 in attorney’s fees, which implies the County did not act in good faith. He formerly was with PLF.

Because of this case, we may see more court judgments in favor of property owners for temporary and partial damages to property due to arbitrary and capricious actions by city land planning departments.  There are countless cases of temporary damages and permanent exactions to property owners involving smaller damage sums that most law firms will not take.

By John Seiler

One of the better commercials over the years was the dancing California Raisins:

But did you know that the federal government seizes from farmers — without pay — up to 47 percent of America’s yearly raisin crop, then gives much of it away around the world? The Economist reported:

“A group of farmers has brought a complaint about the Agricultural Marketing Agreement Act of 1937, under which the government confiscates part of the annual national raisin crop. The Court is considering whether the arrangement is constitutional….

“Since the 1940s a government agency called the Raisin Administrative Committee has confiscated a portion of the annual raisin crop: 47% in 2003 and 30% in 2004, for example. Farmers who fail to surrender their raisins are fined. The committee, which is made up of 47 farmers and packers, plus one member of the public, does not pay farmers for the raisins it expropriates—indeed, it gives many away and sells others for export at low prices. After covering its costs it gives farmers the remaining profits, if there are any.

“The stated aim of this bizarre system is to preserve an ‘orderly’ market, by determining how many raisins the domestic market can bear and then getting rid of the rest.”

This is the kind of nutty socialist central planning that has brought starvation to the Stalinist Soviet Union, Maoist China and North Korea under the Kims.

Imagine if this were applied to the auto industry. GM, Ford and Chrysler would have 47 percent of their auto production stolen by the government, with the cars dumped overseas.

The U.S. Supreme Court now is taking up the socialist scheme. Let’s hope it throws out the raisin seizures on the grounds that doing so violates the Fifth Amendment protection, “nor shall private property be taken for public use, without just compensation.”

Seventy years of FDR’s socialism is enough.

By John Seiler

In civics and law classes, we’re taught that the court system is “objective” and “follows the Constitution.” In fact, courts are just more political bodies. And as someone said, the U.S. Supreme Court “reads the newspapers.”

That’s also true of the California Supreme Court. It just ruled that private property can be invaded by union protesters, but not by other protesters or by people gathering signatures for petitions.

What a coincidence. Just last month, unions demonstrated their total control over California by passing the Proposition 30 tax increase, defeating the Proposition 32 limit on taking union dues for politics directly from employee paychecks and pushing a Democratic supermajority into power in the state Legislature. Two years ago, unions put Jerry Brown on the governor’s throne; he calls them “my troops.”

As to protests, the U.S. Constitution is clear: they are allowed on public property, such as sidewalks, but not on private property. The Fifth Amendment stipulates that no person may “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

When the government allows unions — and only unions — to trample on your property, then your property is being “taken for public use, without just compensation” — or any compensation.

The Fourteenth Amendment, enacted after slavery was abolished, also guaranteed, “nor shall any State deprive any person of life, liberty, or property, without due process of law.”

State courts allowing unions to march on your private property obviously is a State — in the case before us, California — depriving property owners of their “property, without due process of law.”

What about the rights to free speech and to protest, as guaranteed by the First Amendment? Those certainly are allowed — on public property, or on private property with the owner’s permission. But no one, obviously, has a right to barge into your living room and start protesting your beliefs; that’s your private property. And the building, parking lot and private sidewalks of a business are its private property.

Except for union protests in the state of Unionifornia.