Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-10-15270/USCOURTS-ca9-10-15270-2/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARVIN D. HORNE and LAURA R.

HORNE, DBA RAISIN VALLEY

FARMS, a partnership, and DBA

RAISIN VALLEY FARMS MARKETING

ASSOCIATION, AKA RAISIN VALLEY

MARKETING, an unincorporated

association; MARVIN D. HORNE;

LAURA R. HORNE; DON DURBAHN,

and the ESTATE OF RENA DURBAHN,

DBA LASSEN VINEYARDS, a

partnership,

Plaintiffs-Appellants,

v.

UNITED STATES DEPARTMENT OF

AGRICULTURE,

Defendant-Appellee.

No. 10-15270

D.C. No.

1:08-cv-01549-

LJO-SMS

OPINION

Appeal from the United States District Court

for the Eastern District of California

Lawrence J. O’Neill, District Judge, Presiding

Argued and Submitted

February 14, 2014—San Francisco, California

Filed May 9, 2014

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2 HORNE V. USDA

Before: Stephen Reinhardt, Michael Daly Hawkins,

and Ronald M. Gould, Circuit Judges.

Opinion by Judge Hawkins

SUMMARY*

Taking

Following a reversal and remand from the United States

Supreme Court, the panel affirmed the district court’s

summary judgment in favor of the United States Secretary of

Agriculture in an action alleging that the Secretary’s

regulatory program for California’s raisin producers violated

the Takings Clause of the Fifth Amendment.

Pursuant to the Agricultural Marketing Agreement Act of

1937, the Department of Agriculture implemented a

“Marketing Order” to ensure orderly market conditions by

regulating raisin supply. The Secretary required California

producers of certain raisins to divert a percentage of their

annual crop to a reserve, and the Secretary could impose a

penalty on producers who failed to comply with the diversion

program. Plaintiffs, California raisin producers, alleged that

the Secretary worked a constitutional taking by depriving

raisin producers of their personal property, the diverted

raisins, without just compensation.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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HORNE V. USDA 3

As a threshold issue, the panel held that the plaintiffs had

standing to bring this constitutional challenge. Turning to the

merits, the panel held that the Marketing Order and its

penalties did not work a physical per se taking. The panel

concluded that the Marketing Order’s reserve requirements -

and the provisions permitting the Secretary to penalize the

plaintiffs for failing to comply with those requirements - did

not constitute a taking under the Fifth Amendment.

COUNSEL

Michael W. McConnell (argued), John C. O’Quinn and

Joseph F. Cascio, Kirkland & Ellis LLP, Washington, D.C.,

and Brian C. Leighton, Clovis, California, for PlaintiffsAppellants.

Stuart F. Delery, Acting Assistant Attorney General, Joshua

Waldman (argued) and Michael S. Raab, Attorneys,

Appellate Staff, Civil Division, United States Department of

Justice, Washington, D.C.; Benjamin B. Wagner, United

States Attorney, and Benjamin E. Hall, Assistant United

States Attorney, Fresno, California, for Defendant-Appellee.

OPINION

HAWKINS, Senior Circuit Judge:

To ensure stable market conditions, the Secretary of

Agriculture, administering a complex regulatory program,

requires California producers of certain raisins to divert a

percentage of their annual crop to a reserve. The percentage

of raisins diverted to the reserve varies annually according to

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4 HORNE V. USDA

that year’s crop output. Subject to administrative and judicial

review, the Secretary can impose a penalty on producers who

fail to comply with the diversion program. The program’s

goal is to keep raisin supply relatively constant from year to

year, smoothing the raisin supply curve and thus bringing

predictability to the market for producers and consumers

alike. The diverted raisins are sold, oftentimes in

noncompetitive markets, and raisin producers are entitled to

a pro rata share of the sales proceeds less administrative

costs. In some years, this “equitable distribution” is

significant; in other years it is zero.

Eschewing any Commerce Clause or regulatory takings

theory, Plaintiffs-Appellants Marvin and Laura Horne (“the

Hornes”) challenge this regulatory program and, in particular,

the Secretary’s ability to impose a penalty for noncompliance, as running afoul of the Takings Clause of the

Fifth Amendment.1 Specifically, the Hornes argue

Defendant-Appellee the Department of Agriculture (“the

Secretary”), charged with overseeing the diversion program,

works a constitutional taking by depriving raisin producers of

their personal property, the diverted raisins, without just

compensation. The Secretary defends the constitutionality of

the reserve requirement. Concluding the diversion program

1

 Collectively referred to as “the Hornes,” the Plaintiffs-Appellants are

Marvin and Laura Horne, d/b/a Raisin Valley Farms (a California general

partnership), and d/b/a Raisin Valley Farms Marketing Association (a

California unincorporated association), together with their business

partners Don Durbahn and the Estate of Rena Durbahn, collectively d/b/a

Lassen Vineyards (a California general partnership).

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HORNE V. USDA 5

does not work a constitutional taking on the theory advanced

by the Hornes, we affirm the judgment of the district court.2

FACTUAL AND PROCEDURAL BACKGROUND

A

Raisin prices rose rapidly between 1914 and 1920,

peaking in 1921 at $235 per ton. This surge in prices spurred

increased production, which in turn caused prices to plummet

back down to between $40 and $60 per ton, even while

production continued to expand. As a result of this growing

disparity between increasing production and decreasing

prices, the industry became “compelled to sell at less than

parity prices and in some years at prices regarded by students

of the industry as less than the cost of production.” Parker v.

Brown, 317 U.S. 341, 364 (1943); see id. at 363–64 &

nn.9–10; see also Zuber v. Allen, 396 U.S. 168, 174–76

(1969) (describing market conditions). See generally Daniel

Bensing, The Promulgation of Implementation of Federal

Marketing Orders Regulating Fruit and Vegetable Crops

Under the Agricultural Marketing Agreement Act of 1937,

5 San Joaquin Agric. L. Rev. 3 (1995) (describing the history

of the AMAA and the structure of the regulatory program it

authorizes).

This market upheaval pervaded the entire agriculture

industry, prompting Congress to enact the Agricultural

Marketing Agreement Act of 1937, as amended, 7 U.S.C.

 

2

In doing so, we note the Court of Federal Claims has also upheld the

constitutionality of this regulatory program. See Evans v. United States,

74 Fed. Cl. 554, 558 (2006), aff’d, 250 F. App’x. 321 (Fed. Cir. 2007)

(unpub.).

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6 HORNE V. USDA

§ 601 et seq. (“AMAA”), to bring consistency and

predictability to the Nation’s agricultural markets. Pursuant

to the AMAA, the Department of Agriculture implemented

the Marketing Order Regulating the Handling of Raisins

Produced from Grapes Grown in California, 7C.F.R. Part 989

(“Marketing Order”), in 1949 in direct response to the market

conditions described in Parker.

The MarketingOrder ensures “orderly” market conditions

by regulating raisin supply. 7 U.S.C. § 602(1). The Secretary

has delegated to the Raisin Administrative Committee

(“RAC”) the authority to set an annual “reserve tonnage”

requirement, which is expressed as a percentage of the overall

crop.3See 7 C.F.R. §§ 989.65–66. The remaining raisins are

“free tonnage” and can be sold on the open market. The

reserved raisins are diverted from the market to smooth the

peaks of the raisin supply curve. Id. at § 989.67(a). To

smooth the supply curve’s valleys, reserved raisins are

released when supply is low. By varying the reserve

requirement annually, the RAC can adapt the program to

address changing growing and market conditions. For

example, in the 2002–03 and 2003–04 crop years at issue

here, the reserve percentages were set at forty-seven percent

and thirty percent of the annual crop, respectively.

The operation of the Marketing Order turns on a

distinction between “producers” and “handlers.” A

“producer” is a “person engaged in a proprietary capacity in

3 The RAC is currently comprised of forty-seven industry-nominated

representatives appointed by the Secretary, of whom thirty-five represent

producers, ten represent handlers, one represents the cooperative

bargaining association, and one represents the public. See 7 C.F.R.

§§ 989.26, 989.29, and 989.30.

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HORNE V. USDA 7

the production of grapes which are sun-dried or dehydrated

by artificial means until they become raisins . . . .” 7 C.F.R.

§ 989.11. By contrast, included in the definition of a

“handler,” id. at 989.15, is any person who “stems, sorts,

cleans, or seeds raisins, grades stemmed raisins, or packages

raisins for market as raisins,” id. at 989.14.4 Raisin producers

convey their entire crop to a handler, receiving a prenegotiated field price for the free tonnage. Id. at § 989.65. 

Handlers, who sell free tonnage raisins on the open market,

bear the obligation of complying with the Marketing Order by

diverting the required percentage of each producer’s raisins

to “the account of the [RAC].” Id. § 989.66(a). Handlers

must also prepare the reserved raisins for market, and the

RAC compensates them for providing this service. Id. at

§ 989.66(f).

The RAC tracks how many raisins each producer

contributes to the reserve pool. When selling the raisins, the

RAC has a regulatory duty to sell them in a way that

“maxim[izes] producer returns.” Id. at § 989.67(d)(1). The

RAC, which receives no federal funding, finances its

operations and the disposition of reserve raisins from the

proceeds of the reserve raisin sales. Whatever net income

remains is disbursed to producers, who retain a limited equity

4 Specifically, any person who “stems, sorts, cleans, or seeds raisins,

grades stemmed raisins, or packages raisins for market as raisins” is a

“packer” of raisins, and all packers are handlers. 7 C.F.R. §§ 989.14 &

989.15. These definitions apply only to activities taking place within “the

area,” which simply refers to the State of California. Id. at § 989.4. 

Additionally, any producer who sorts and cleans his own raisins in

their unstemmed form is not a packer with respect to those raisins. 7

C.F.R. § 989.14.

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8 HORNE V. USDA

interest in the RAC’s net income derived from reserved

raisins. See 7 U.S.C. § 608c(6)(E); 7 C.F.R. § 989.66(h).

B

Dissatisfied with what they view as an out-dated

regulatory regime, the Hornes set out to restructure their

raisin operation such that the Marketing Order would not

operate against them. Put another way, the Hornes came up

with a non-traditional packing program which, in their view,

the Secretary had no authority to regulate. Instead of sending

their raisins to a traditional packer, against whom the reserve

requirement of the Marketing Order would clearly operate,

the Hornes purchased their own handling equipment to clean,

stem, sort, and package raisins. The Hornes then performed

the traditional functions of a handler with respect to the

raisins they produced. The Hornes believed that, by cleaning,

stemming, sorting, and packaging their own raisins, they

would not be “handlers” with respect to the raisins they

produced. In addition, the Hornes performed the same

functions for a number of other producers for a per-pound

fee. Similarly, by not acquiring title to the raisins of other

producers but rather charging those producers a per-pound

fee, the Hornes believed they did not fall within the

regulatory definition of “handler” with respect to the thirdparty producers’ raisins. With this set-up, the Hornes

believed the requirements of the Marketing Order would not

apply to them, relieving them of the obligation to reserve any

raisins.5

5 The government contends the Hornes lack standing to assert a takings

defense with respect to raisins they never owned, i.e., raisins produced by

third parties. The government concedes the Hornes have standing to

assert a takings defense with respect to raisins they produced themselves.

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HORNE V. USDA 9

C

The Secretary disagreed with the Hornes and applied the

Marketing Order to their operation with respect to the raisins

grown both by the Hornes and by third-party producers. At

the end of protracted administrative proceedings, a U.S.D.A.

Judicial Officer found the Hornes liable for numerous

regulatory violations and imposed a monetary penalty of

$695,226.92.6 The Hornes then sought review of that final

agency action in federal district court pursuant to 7 U.S.C.

§ 608c(14)(B). In district court, the Hornes alleged they were

not “handlers” within the meaning of the regulation and

further alleged the agency’s order violated the Takings Clause

and the Eighth Amendment’s prohibition against excessive

fines. The district court granted summary judgment in favor

We decline to decide what rights under California law a non-title

holder has to challenge the “taking” of property in his possession. See

Vandevere v. Lloyd, 644 F.3d 957, 963 (9th Cir. 2011) (holding that for

the takings claim “whether a property right exists . . . is a question ofstate

law”) (emphasis omitted). Here, it is enough to note the Hornes clearly

have standing to assert a taking defense with respect to the raisins they

produced themselves, entitling them to a decision on the merits for at least

that property. Because we rule against the Hornes on the merits, we need

not further address the standing issue.

6 The Judicial Officer ordered the Hornes to pay (1) $8,783.39 in

overdue assessments for the 2002–03 and 2003–04 crop years,

(2) $483,843.53 as the dollar equivalent for the raisins not held in reserve,

and (3) $202,600 as a civil penalty for failure to comply with the

Marketing Order. The overdue assessments in their entirety and $25,000

of the civil penalty were imposed for violations of the Marketing Order

unrelated to the reserve requirement. See, e.g., 7 C.F.R. § 989.73

(requiring handlers to file certain reports); id. at § 989.77 (requiring

handlers to allow the Agricultural Marketing Service access to records). 

The balance of the penalty and assessments pertain directly to the Hornes’

failure to reserve raisins.

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10 HORNE V. USDA

of the Secretary on all counts. See Horne v. U.S. Dep’t of

Agric., No. CV-F-08-1549 LJO SMS, 2009 WL 4895362

(E.D. Cal. filed Dec. 11, 2009).

The Hornes appealed to this court. We affirmed the

district court with respect to the Hornes’ statutory claims,

holding that even if the AMAA’s definitions of “handler” and

“producer” are ambiguous, the Secretary’s application of the

Marketing Order to the Hornes was neither arbitrary nor

capricious, and it was supported by substantial evidence. 

Horne v. U.S. Dep’t of Agric., 673 F.3d 1071, 1078 (9th Cir.

2011) (“Horne I”). We also affirmed the district court’s grant

of summary judgment in favor of the Secretary on the Eighth

Amendment claim. Id. at 1080–82. And we held we lacked

jurisdiction over the Fifth Amendment claim. Specifically,

we held the Hornes brought their takings claim as producers

rather than handlers. Because the AMAA did not in our view

displace the Tucker Act with respect to a producer’s claim,

we held that jurisdiction over the takings claim fell with the

Court of Federal Claims rather than the district court. Id. at

1078–80.

The Hornes sought and the Supreme Court granted

certiorari with respect to the jurisdictional issue.7 Reversing

our judgment on that issue alone, the Supreme Court held (1)

7 Because the Hornes’ certiorari petition only challenged our disposition

of the Hornes’ Fifth Amendment claim, Horne I is the final judgment of

the Hornes’ Eighth Amendment and statutory claims. Accordingly,

because the statutory claims are no longer at bar, the Hornes concede they

no longer challenge the Judicial Officer’s imposition of $8,783.39 in

overdue assessments or the related $25,000 in civil penalties. The Hornes’

challenge is confined to the remaining dollar value equivalent and its

attendant civil penalty (hereinafter, “the penalty”), because these are

directly traceable to the Hornes’ failure to reserve raisins. See supra n.5.

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HORNE V. USDA 11

the Hornes brought their takings claim as handlers, and

(2) the Hornes, as handlers, may assert a constitutional

defense to the underlying agency action in district court. 

Horne v. Dep’t of Agric., 133 S. Ct. 2053, 2061, 2062 (2013). 

(The Supreme Court reserved the question of whether the

Hornes could have sought relief in the Court of Federal

Claims, instead holding only that handlers could obtain

judicial review in district court. Id. at 1062 n.7.) The

Supreme Court remanded for a determination of the merits of

the Hornes’ takings claim, which, having received

supplementarybriefing and additional oral argument, we now

decide.

STANDARD OF REVIEW

We review de novo a district court’s grant of summary

judgment in a case involving a constitutional challenge to a

federal regulation. Ariz. Life Coal., Inc. v. Stanton, 515 F.3d

956, 962 (9th Cir. 2008); Doe v. Rumsfeld, 435 F.3d 980, 984

(9th Cir. 2006).

STANDING

The Secretary contends the Hornes lack standing to

challenge the portion of the penalty attributable to the sale of

any raisins produced by third-party firms, then handled by the

Hornes (the “third-party raisins”). The Secretary argues the

Hornes never owned these raisins and so cannot challenge

their seizure.8 We find this argument unpersuasive.

8 The Secretary concedes the Hornes have standing to challenge the

remainder of the penalty.

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12 HORNE V. USDA

As the Supreme Court made clear, the injury suffered by

the Hornes is not the obligation to reserve raisins for the RAC

(which, of course, the Hornes did not do), but rather to pay

the penalty imposed for the Hornes’ failure to comply with

the Marketing Order. Horne, 133 S. Ct. at 2061 n.4. Thus,

the government’s contention that the Hornes would not have

standing to challenge a government seizure of the third-party

raisins (a seizure which, of course, never happened) is

irrelevant to the standing inquiry here.9

Instead, we analyze whether the Hornes have standing to

challenge the penalty. A monetary penalty is an actual,

concrete and particularized injury-in-fact. Sacks v. Office of

Foreign Assets Control, 466 F.3d 764, 771 (9th Cir. 2006)

(citing Cent. Ariz. Water Conserv. Dist. v. EPA, 990 F.2d

1531, 1537 (9th Cir. 2006)); see Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992). The need to pay a

penalty is obviously traceable to its imposition, and a

favorable merits determination in this litigation would redress

the Hornes’ alleged injury, thereby satisfying the Lujan

requirements. See Lujan, 504 U.S. at 560–61. We thus hold

9 Additionally, we doubt the government’s contention that the Hornes

would lack standing to challenge a seizure of property they held in

bailment. In an analogous situation, we have held that individuals lacking

an ownership interest in a given piece of property have standing to

challenge the seizure of that property. See United States v. $191,910 in

U.S. Currency, 16 F.3d 1051, 1057 (9th Cir. 1994) (“In order to contest

a forfeiture, a claimant need only have some type of property interest in

the forfeited items. This interest need not be an ownership interest; it can

be any type of interest, including a possessory interest.”), superseded on

other grounds by statute as stated in United States v. $80,180.00, 303 F.3d

1182, 1184 (9th Cir. 2002). In any event, because we hold the Hornes

have established standing as the subjects of the penalty, we need not

confront this question.

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HORNE V. USDA 13

the Hornes have standing to bring this constitutional

challenge.

CONSTITUTIONAL CLAIM

The Takings Clause does not prohibit the government

from taking property for public use; rather, it requires the

government to pay “just compensation” for any property it

takes. U.S. Const. amend. V. Thus, a takings challenge

follows a two-step inquiry. First, we must determine whether

a “taking” has occurred; that is, whether the complained-of

government action constitutes a “taking,” thus triggering the

requirements of the Fifth Amendment. If so, we move to the

second step and ask if the government provided just

compensation to the former property owner. Brown v. Legal

Found. of Wash., 538 U.S. 216, 231–32, 235–36 (2003); First

English Evangelical Lutheran Church of Glendale v. Cnty. of

L.A., 482 U.S. 304, 314 (1987).

However, before turning to the first step of this formula,

we must address a threshold issue and identify precisely

which property was allegedly taken from the Hornes.

A

The Hornes declined to comply with the reserve

requirement of the Marketing Order; at no time did the

Hornes, either as producers or as handlers, ever physically

convey raisins to the RAC. Instead, the Secretary imposed

the penalty on the Hornes for their failure to comply with the

Marketing Order. In general, the imposition and collection of

penalties and fines does not run afoul of the Takings Clause. 

See Koontz v. St. Johns River Water Management District,

133 S. Ct. 2586, 2601 (2013) (listing cases). Here, however,

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14 HORNE V. USDA

the Hornes link the Secretary’s imposition of a penalty to a

specific governmental action they allege to be a taking. In

effect, the Hornes argue the constitutionality of the penalty

rises or falls with the constitutionality of the Marketing

Order’s reserve requirement.

We agree that the penalty cannot be analyzed without

reference to the reserve requirement, and we find Koontz

instructive on this point. In Koontz, a permitting agency

refused to grant a developer a building permit until the

developer funded offsite environmental impact mitigation

works. 133 S. Ct. at 2593. The developer sued, arguing the

permitting agency’s conditions for obtaining a permit violated

the “nexus and rough proportionality” rule of Nollan v.

California Coastal Commission, 483 U.S. 825 (1987), and

Dolan v. City of Tigard, 512 U.S. 374 (1994).10 The Supreme

Court of Florida declined to applyNollan and Dolan, because

in those cases the permitting agencies granted the relevant

permit subject to a condition subsequent. The Florida court

did not believe Nollan and Dolan would apply to situations in

which the permitting agency refused to issue a permit until

the permittee met a condition precedent. The Supreme Court

reversed, holding the distinction between conditions

precedent and subsequent constitutionally irrelevant in this

context. See id. at 2596.

Relevant to this case, Koontz confronts the issue of how

to analyze a takings claim when a “monetary exaction,” rather

than a specific piece of property, is the subject of that claim. 

Koontz distinguished Eastern Enterprises v. Apfel, 524 U.S.

498 (1988), by noting that in Koontz, “unlike Eastern

Enterprises, the monetary obligation burdened petitioner's

 

10 We discuss Nollan and Dolan in more detail in Section D.

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HORNE V. USDA 15

ownership of a specific parcel of land.” Koontz, 133 S. Ct. at

2599; accord id. at 2600 (“The fulcrum this case turns on is

the direct link between the government’s demand and a

specific parcel of real property.”). This direct linkage

between the monetary exaction and the piece of land guided

the Court to invoke the substantive takings jurisprudence

relevant to the land for the purpose of determining whether

the related monetary exaction constituted a taking. Id.

Here, the Secretary specifically linked a monetary

exaction (the penalty imposed for failure to comply with the

Marketing Order) to specific property (the reserved raisins). 

The Hornes faced a choice: relinquish the raisins to the RAC

or face the imposition of a penalty. There is no question the

monetary exaction is linked to specific property because the

Judicial Officer’s order requires the Hornes to repay the

market value of the unreserved raisins (plus an additional

penalty for non-compliance). Because the Marketing Order

is structured in this way, we follow Koontz to analyze the

constitutionality of the penaltyimposed on the Hornes against

the backdrop of the reserve requirement. If the Secretary

works a constitutional taking by accepting (through the RAC)

reserved raisins, then, under the unconstitutional conditions

doctrine, the Secretary cannot lawfully impose a penalty for

non-compliance. But if the receipt of reserved raisins does

not violate the Constitution, neither does imposition of the

penalty. See id. at 2596 (discussing the unconstitutional

conditions doctrine).11

11 Contrary to the Hornes’ suggestion, however, we read Koontz only to

say this much. The Hornes argue Koontz somehow substantively altered

the doctrinal landscape against which we evaluate takings claims. We

disagree. Koontz simply clarifies the range of takings cases in which

Nollan and Dolan provide the rule of decision. See 133 S. Ct. at 2598

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16 HORNE V. USDA

B

We return to the task of determining whether the

imposition of the penalty for failure to comply with the

reserve requirement constitutes a taking. A “paradigmatic

taking” occurs when the government appropriates or occupies

private property. Lingle v. Chevron U.S.A., Inc., 544 U.S.

528, 537 (2005). Lingle gives as an example of this sort of

taking the government’s wartime seizure of a coal mine. Id.;

see United States v. Pewee Coal Co., 341 U.S. 114, 115–16

(1951). Because the government neither seized any raisins

from the Hornes’ land nor removed any money from the

Hornes’ bank account, the Hornes cannot—and do

not—argue they suffered this sort of “paradigmatic taking.”

Instead, we must enter the doctrinal thicket of the

Supreme Court’s regulatory takings jurisprudence. Since

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1945), the

Court has recognized that “government regulation of private

property may, in some instances, be so onerous that its effect

is tantamount to a direct appropriation or ouster—and that

such ‘regulatory takings’ may be compensable . . . .” Lingle,

544 U.S. at 538. In general, regulatory takings are analyzed

under the ad hoc framework announced in Penn Central

Transportation Co. v. City of New York, 438 U.S. 104, 124

(1978). The Hornes, however, have intentionally declined to

pursue a Penn Central claim. Instead, they argue the

(declining to address merits of petitioner’s claimunder Nollan and Dolan);

id. at 2602–03 (declining to alter or overrule the holdings of Nollan and

Dolan).

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Marketing Order, though a regulation, works a categorical

taking.

12

Since Mahon, the Supreme Court has identified three

“relatively narrow categories” of regulations which work a

categorical, or per se, taking. Each category has a

paradigmatic or representative case. Lingle, 544 U.S. at

538.13 The representative case of the first category, Loretto

v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,

427–38 (1982), holds that permanent physical invasions of

real property work a per se taking. The second, represented

by Lucas v. South Carolina Coastal Council, 505 U.S. 1003,

1015 (1992), teaches that regulations depriving owners of all

economically beneficial use of their real property also work

a per se taking. The third line of cases, represented byNollan

and Dolan, articulate a more nuanced rule. Together, Nollan

and Dolan hold that a condition on the grant of a land use

permit requiring the forfeiture of a property right constitutes

a taking unless the condition (1) bears a sufficient nexus with

and (2) is roughly proportional to the specific interest the

government seeks to protect through the permitting process. 

12 Similarly, the Hornes concede the AMAA and Marketing Order fall

within Congress’s Commerce Clause authority. However, that a

governmental action is authorized by the Commerce Clause does not

immunize it from the requirements of the Takings Clause. Lingle, 544

U.S. at 543; Kaiser Aetna v. United States, 444 U.S. 164, 172 (1979).

13 We read Lingle to elevate the land use exaction cases to a third

category on par with permanent physical invasions and complete

economic deprivation regulations. 544 U.S. at 538 (“Outside these two

categories (and the special context ofland-use exactions discussed below),

regulatory takings challenges are governed by Penn Central Transp. Co.

v. New York City.”) (citation omitted and emphasis added).

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18 HORNE V. USDA

If those two conditions are met, then the imposition of the

conditional exaction is not a taking.

We must determine which analytical framework provides

the proper point of departure for our inquiry into whether a

taking has occurred here. The Hornes see a direct analogy

between Loretto’s occupation of land for the purpose of

installing an antenna and the Marketing Order’s reserve

requirement. The Secretaryargues Nollan and Dolan provide

better guidance to evaluate the constitutionality of what the

Secretary characterizes as a use restriction on raisins. We

must first identify which of the categorical takings case lines,

if any, the Marketing Order implicates. Second, we must

apply that case line’s substantive law to determine whether a

taking has occurred.

C

Loretto applies only to a total, permanent physical

invasion of real property. Two independent reasons assure us

that the Marketing Order does not fall within the “very

narrow” scope of the Loretto rule, 458 U.S. at 441: First, the

Marketing Order operates on personal, rather than real

property, and second, the Marketing Order is carefullycrafted

to ensure the Hornes are not completely divested of their

property rights, even with respect to the reserved raisins.

1

The Marketing Order operates against personal, rather

than real, property. Because the Takings Clause undoubtedly

protects personal property, see Phillips v. Wash. Legal

Found., 524 U.S. 156, 172 (1998) (interest earned on

lawyers’ trust account is a protected private property); Brown,

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HORNE V. USDA 19

538 U.S. at 235 (same); Ruckelshaus v. Monsanto Co.,

467 U.S. 986, 1001–04 (1984) (same for trade secrets), this

distinction does not mean the Takings Clause is inapplicable. 

But, as the Supreme Court stated in Lucas, the Takings

Clause affords less protection to personal than to real

property:

[O]ur “takings” jurisprudence . . . has

traditionally been guided by the

understandings of our citizens regarding the

content of, and the State’s power over, the

“bundle of rights” that they acquire when they

obtain title to property. It seems to us that the

propertyowner necessarily expects the uses of

his property to be restricted, from time to

time, by various measures newly enacted by

the State in legitimate exercise of its police

powers; as long recognized, some values are

enjoyed under an implied limitation and must

yield to the police power. And in the case of

personal property, by reason of the State’s

traditionally high degree of control over

commercial dealings, he ought to be aware of

the possibility that new regulation might even

render his propertyeconomicallyworthless (at

least if the property’s only economically

productive use is sale or manufacture for

sale). In the case of land, however, we think

the notion pressed by the Council that title is

somehow held subject to the “implied

limitation” that the State may subsequently

eliminate all economically valuable use is

inconsistent with the historical compact

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20 HORNE V. USDA

recorded in the Takings Clause that has

become part of our constitutional culture.

Lucas, 505 U.S. at 1027–28.

Lucas uses comparative language to make clear the

Takings Clause affords more protection to real than to

personal property. While the precise contours of these

differing levels of protection are not entirely sharp, Lucas

suggests the government’s authority to regulate such property

without working a taking is at its apex where, as here, the

relevant governmental program operates against personal

property and is motivated by economic, or “commercial,”

concerns. Indeed, it is clear the holding of Lucas is limited to

cases involving land. The sentence which rejects the State’s

contention that “the State may subsequently eliminate all

economically valuable use” of the Lucas’s property begins

with the phrase “[i]n the case of land” and is expressly

contrasted against commercial personal property, over which

the government exerts a “traditionally high degree of

control.” Id. at 1028.

The real/personal property distinction also undergirds

Loretto. Justifying its bright-line rule, Loretto states

“whether a permanent physical occupation has occurred

presents relatively few problems of proof. The placement of

a fixed structure on land or real property is an obvious fact

that will rarely be subject to dispute.” 458 U.S. at 437

(emphasis added). This example underscores the narrow

reach of Loretto. In reaching its decision, the Court discussed

the evolution of its takings jurisprudence, citing virtually only

cases pertaining to real property. See id. at 427–37. And

because the case unquestionably (and solely) concerned real

property, the Loretto Court did not have occasion to consider

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HORNE V. USDA 21

the occupation of personal property. Given the Court’s later

discussion of personal property in Lucas, we see no reason to

extend Loretto to govern controversies involving personal

property. See also Wash. Legal Found. v. Legal Found. of

Wash., 271 F.3d 835, 854 (9th Cir. 2001) (en banc), aff’d sub

nom., Brown v. Legal Found. of Wash., 538 U.S. 216 (2003)

(“The per se analysis has not typically been employed outside

the context of real property. It is a particularly inapt analysis

when the property in question is money.”).

2

Equally importantly, the Hornes did not lose all

economically valuable use of their personal property. Unlike

Loretto, which applies only when each “‘strand’ from the

‘bundle’ of property rights” is “chop[ped] through . . . taking

a slice of every strand,” 458 U.S. at 435, the Hornes’ rights

with respect to the reserved raisins are not extinguished

because the Hornes retain the right to the proceeds from their

sale. See 7 U.S.C. § 608c(6)(E); 7 C.F.R. § 989.66(h). The

Hornes essentially call this right meaningless because the

equitable distribution may be zero.

14 But, the equitable

distribution is not zero in every year, and even in years with

a zero distribution, there are gross proceeds from the sale of

the reserved raisins; it just so happens that in those years,

those gross proceeds are not greater than the operating

expenses of the RAC.

14 The parties dispute whether there was a distribution for the crop years

in question and, if so, the value of that distribution. We do not consider

this dispute material to the question of whether a taking occurred because

the distribution reflects net revenue. For the reasons we give, we focus on

the gross revenue generated by the reserve raisin pool.

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22 HORNE V. USDA

Here, we pause to focus on the RAC’s structure and

purpose, as well as the benefits it secures for producers such

as the Hornes. The RAC is governed by industry

representatives including producers and handlers.15Its

purpose is to stabilize market conditions for raisin producers. 

Thus, the Hornes’ equitable stake in the reserved raisins, even

in years in which they are not entitled to a cash distribution

from the RAC, funds the administration of an industry

committee tasked with (1) representing raisin producers, such

as the Hornes, and (2) implementing the reserve requirement,

the effect of which is to stabilize the field price of raisins. In

light of this scheme, the Hornes cannot claim they lose all

rights associated with the reserve raisins. Indeed, the

structure of the diversion program ensures the reserved

raisins continue to work to the Hornes’ benefit after they are

diverted to the RAC, even in years in which producers

receive no equitable distribution of the RAC’s net profits.16

For these reasons, the Hornes’ reliance on Loretto is

unavailing. Loretto specifically preserves the state’s

“substantial authority” and “broad power to impose

appropriate restrictions upon an owner’s use of his property.” 

458 U.S. at 441. Here, the reserved raisins are not

permanently occupied; rather, their disposition, while tightly

controlled, inures to the Hornes’ benefit. Coupled with

15 In fact, Mr. Horne has been an alternate member, though never a

voting member, of the RAC.

16 We must clarify that we do not hold the RAC’s market intervention

constitutes “just compensation” for a taking. Because we hold no taking

occurs, we do not conduct a just compensation inquiry. We discuss the

RAC’s purpose and organization solely to show that the Hornes’ rights to

the reserved raisins, even if diminished by the Marketing Order, are not

extinguished by it.

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HORNE V. USDA 23

Lucas’s distinction between real and personal property, this

assures us the diversion program does not work a per se

taking.

17

D

Instead of looking to Loretto for the rule of decision here,

the Secretary urges us to apply the “nexus and rough

proportionality” rule of Nollan and Dolan to this case, asking

us in essence to hold that the reserve requirement constitutes

a use restriction on the Hornes’ personal property and then

analogize that use restriction to the land use permitting

context. We believe this approach is the most faithful way to

apply the Supreme Court’s precedents to the Hornes’ claim.18

In Nollan, the California CoastalCommission conditioned

the grant of a permit to build a beachfront home on the

landowner’s surrender of an easement along the coastal side

of the property in order to link two public beaches by a

publically accessible path. 483 U.S. at 828. However, the

Commission’s proffered reason for imposing this condition

was to mitigate the diminished “visual access” to the ocean

17 Nor would the Hornes fare any better under a Lucas theory. Lucas

plainly applies only when the owner is deprived of all economic benefit

of the property. 505 U.S. at 1019 & n. 8. If the property retains any

residual value after the regulation’s application, Penn Central applies. Id.

The equitable stake, even in years where there is no monetary distribution,

is clearly not valueless, and thus Lucas does not apply.

18 We do not mean to suggest that all use restrictions concerning

personal property must comport with Nollan and Dolan. Rather, we hold

Nollan and Dolan provide an appropriate framework to decide this case

given the significant but not total loss of the Hornes’ possessory and

dispositional control over their reserved raisins.

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24 HORNE V. USDA

from the non-coastal edge of the property caused by the

Nollan’s proposed improvement. Id. at 828–29. The

Supreme Court held there was no “nexus” between the

exaction-by-condition and the Commission’s asserted state

interest, then held that, absent such a nexus, the imposition of

the condition was a taking. Id. at 837.

Dolan provides us the analytical framework to apply in

cases where a legitimate nexus exists between the asserted

state interest and the proposed exaction. In Dolan, a

landowner sought permits to enlarge and improve her

commercial property. As in Nollan, the permitting agency

approved the permit subject to certain conditions. First, the

agency required the dedication of certain creek-side land for

the purpose of mitigating the increased water run-off that

could potentially occur as a result of the landowner’s plan to

pave a parking lot. Second, the agency required the

dedication of a 15-foot strip of land to be used for a

pedestrian and bicycle pathway, the purpose of which was to

mitigate the increased traffic flow spawned by the proposed

commercial development. 512 U.S. at 380. Dolan held there

was an appropriate nexus between the state’s legitimate

interests and the proposed exactions. Id. at 387–88.

But Dolan also held the proposed means and the ends in

question were not “roughly proportional[]” to each other and

thus the permit as issued constituted a taking. Id. at 391; see

id. at 394–96. While not reducible to mathematical certainty,

the Dolan “rough proportionality” requirement does require

a permitting agency to “make some sort of individualized

determination that the required dedication is related both in

nature and extent to the impact of the proposed

development.” Id. at 391. Thus, the distillate of the

Nollan/Dolan rule appears to be this: If the government seeks

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HORNE V. USDA 25

to obtain, through the issuance of a conditional land use

permit, a propertyinterest the outright seizure of which would

constitute a taking, the government’s imposition of the

condition also constitutes a taking unless it: (1) bears a

sufficient nexus with and (2) is roughly proportional to the

specific interest the government seeks to protect through the

permitting process.

We apply the Nollan/Dolan rule here because we believe

it serves to govern this use restriction as well as it does the

land use permitting process. At bottom, the reserve

requirement is a use restriction applying to the Hornes insofar

as they voluntarily choose to send their raisins into the stream

of interstate commerce. The Secretary did not authorize a

forced seizure of the Hornes’ crops, but rather imposed a

condition on the Hornes’ use of their crops by regulating their

sale. As we explained in a similar context over seventy years

ago, the Marketing Order “contains no absolute requirement

of the delivery of [reserve-tonnage raisins] to the [RAC]” but

rather only “a conditional one.” Wallace v. Hudson-Duncan

& Co., 98 F.2d 985, 989 (9th Cir. 1938) (rejecting a takings

challenge to a reserve requirement under the walnut

marketing order); see also Yee v. City of Escondido, 503 U.S.

519, 527–28 (1992) (holding municipal regulation of a

mobile home park owners’ ability to rent did not work a

taking where park owners voluntarily rented their land and

thus acquiesced in the regulation); cf. Ruckelshaus, 467 U.S.

986, 1070 (1994) (“a voluntary submission of data by an

applicant in exchange for the economic advantages of a

registration can hardly be called a taking”).

Moreover, there are important parallels between Nollan

and Dolan on one hand and the raisin diversion program on

the other. All involve a conditional exaction, whether it be

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26 HORNE V. USDA

the granting of an easement, as in Nollan; a transfer of title,

as in Dolan; or the loss of possessory and dispositional

control, as here. All conditionally grant a government benefit

in exchange for an exaction. And, critically, all three cases

involve choice. Just as the Nollans could have continued to

lease their property with the existing bungalow and Ms.

Dolan could have left her store and unpaved parking lot as

they were, the Hornes, too, can avoid the reserve requirement

of the Marketing Order by, as the Secretary notes, planting

different crops, including other types of raisins, not subject to

this Marketing Order or selling their grapes without drying

them into raisins. Given these similarities, we are satisfied

the rule of Nollan and Dolan governs this case.

1. The Nexus Requirement

We now turn to the nexus requirement and ask if the

reserve program “further[s] the end advanced as [its]

justification.” Nollan, 483 U.S. at 837. Unquestionably, the

AMAA aims to “establish and maintain . . . orderlymarketing

conditions for agricultural commodities,” 7 U.S.C. § 602(1),

as well as to keep consumer prices stable, id. at § 602(2). By

reserving a dynamic percentage of raisins annually such that

the domestic raisin supply remains relatively constant, the

Marketing Order program furthers the end advanced: 

obtaining orderly market conditions. The government

represents (and the Hornes do not dispute) that by smoothing

the peaks and valleys of the supply curve, the program has

eliminated the severe price fluctuations common in the raisin

industry prior to the implementation of the Marketing Order,

making market conditions predictable for industry and

consumers alike. On this basis, the Marketing Order satisfies

the Nollan nexus requirement.

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HORNE V. USDA 27

2. The Rough Proportionality Requirement

Dolan does not require a “precise mathematical

calculation,” instead obliging the permitting agency only to

make an “individualized determination” that the condition

imposed is “related both in nature and extent to the impact”

of the permittee’s activity. Dolan, 512 U.S. at 391. The

Marketing Order meets this requirement. The percentage of

raisins to be reserved is revised annually to conform to

current market conditions. While Dolan does not require a

“mathematical calculation,” neither does it prohibit the RAC

from imposing a condition stated mathematically, i.e., as a

percentage. Indeed, here the RAC’s imposition of the reserve

requirement is not just in “rough” proportion to the goal of

the program, but in more or less actual proportion to the end

of stabilizing the domestic raisin market.19 By annually

modifying the “extent,” id., of the reserve requirement to

keep pace with changing market conditions, the RAC ensures

its program does not overly burden the producer’s ability to

compete while reducing to the producer’s benefit the potential

instability of this particular market.

Nor do we believe Dolan’s command that the condition

imposed be “individualized” presents a problem here. As

Dolan made clear, it was an adjudicative, not a legislative,

decision being reviewed. 512 U.S. at 835. Individualized

review makes sense in the land use context because the

development of each parcel is considered on a case-by-case

19 The Hornes do not challenge the adequacy or fairness of the RAC’s

decision to set the 2002–03 and 2003–04 reserve tonnage requirements at

forty-seven percent and thirty percent, respectively. In other words, the

Hornes’ challenge is to the program itself, not the details of its

implementation in the crop years at issue.

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28 HORNE V. USDA

basis. But here, the use restriction is imposed evenly across

the industry; all producers must contribute an equal

percentage of their overall crop to the reserve pool. At

bottom, Dolan’s individualized review ensures the

government’s implementation of the regulations is tailored to

the interest the government seeks to protect. The Marketing

Order accomplishes this goal by varying the reserve

requirement annually in accordance with market and industry

conditions. Given that raisins are fungible (as opposed to

land, which is unique), we think this is enough to ensure the

means of the Marketing Order’s diversion program is at least

roughly proportional to its goals.20

CONCLUSION

While the Hornes’ impatience with a regulatory program

they view to be out-dated and perhaps disadvantageous to

smaller agricultural firms is understandable, the courts are not

well-positioned to effect the change the Hornes seek, which

is, at base, a restructuring of the way government regulates

raisin production. The Constitution endows Congress, not the

courts, with the authority to regulate the national economy. 

See United States v. Rock Royal Co-op, Inc., 307 U.S. 533,

572 (1939). Accordingly, it is to Congress and the

Department of Agriculture to which the Hornes must address

their complaints. The courts are not institutionally equipped

20 We reiterate that we analyze the Hornes’ challenge to the monetary

penalty through the lens of the Marketing Order’s reserve requirement

because the monetary penalty is pegged directly to the extent of the

Hornes’ non-compliance with the Order, as measured by the ton and

market value of the raisins. Accordingly, we hold the Secretary’s

imposition of the penalty satisfies any requirement Koontz may impose

that we independently analyze the monetary exaction under Nollan and

Dolan.

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HORNE V. USDA 29

to modify wholesale complex regulatory regimes such as this

one.

Instead, our role is to answer the narrower question of

whether the Marketing Order and its penalties work a

physical per se taking. We hold they do not. There is a

sufficient nexus between the means and ends of the

Marketing Order. The structure of the reserve requirement is

at least roughlyproportional (and likelyactuallyproportional)

to Congress’s stated goal of ensuring an orderly domestic

raisin market. We reach these conclusions informed by the

Supreme Court’s acknowledgment that governmental

regulation of personal property is more foreseeable, and thus

less intrusive, than is the taking of real property. This,

coupled with our observation that the Secretary has

endeavored to preserve as much of the Hornes’ ownership of

the raisins as possible, leads us to conclude the Marketing

Order’s reserve requirements—and the provisions permitting

the Secretary to penalize the Hornes for failing to comply

with those requirements—do not constitute a taking under the

Fifth Amendment.

AFFIRMED.

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