May 9, 2014
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,
UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellee
Argued and Submitted, February 14, 2014, San Francisco, California
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Appeal from the United States District Court for the Eastern District of California. D.C. No. 1:08-cv-01549-LJO-SMS. Lawrence J. O'Neill, District Judge, Presiding.
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 Plaintiffs-Appellants.
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.
Before: Stephen Reinhardt, Michael Daly Hawkins, and Ronald M. Gould, Circuit Judges. Opinion by Judge Hawkins.
HAWKINS, Senior Circuit
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 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 non-compliance, as running afoul of the Takings Clause of the Fifth Amendment. 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 does not work a constitutional taking on the theory advanced by the Hornes, we affirm the judgment of the district court.
FACTUAL AND PROCEDURAL BACKGROUND
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, 63 S.Ct. 307, 87 L.Ed. 315 (1943); see id. at 363-64 & nn.9-10; see also Zuber v. Allen, 396 U.S. 168, 174-76, 90 S.Ct. 314, 24 L.Ed.2d 345 (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. § 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, 7 C.F.R. Part 989 (" Marketing Order" ), in 1949 in direct response to the market conditions described in Parker .
The Marketing Order 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. See 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 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. Raisin producers convey their entire
crop to a handler, receiving a pre-negotiated 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 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).
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 third-party 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.
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. 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 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. Reversing our judgment on that issue alone, the Supreme Court held (1) 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, 186 L.Ed.2d 69 (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 2062 n.7.) The Supreme Court remanded for a determination of the merits of the Hornes' takings claim, which, having received
supplementary briefing 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).
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. We find this argument unpersuasive.
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.
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, 112 S.Ct. 2130, 119 L.Ed.2d 351 (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 the Hornes have standing to bring this constitutional challenge.
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, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003);
First English Evangelical Lutheran Church of Glendale v. Cnty. of L.A., 482 U.S. 304, 314, 107 S.Ct. 2378, 96 L.Ed.2d 250 (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.
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, 186 L.Ed.2d 697 (2013) (listing cases). Here, however, 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, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987), and Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994). The Supreme Court of Florida declined to apply Nollan 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, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1988), by noting that in Koontz, " unlike Eastern Enterprises, the monetary obligation burdened petitioner's 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 penalty imposed 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).
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, 125 S.Ct. 2074, 161 L.Ed.2d 876 (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, 71 S.Ct. 670, 95 L.Ed. 809, 119 Ct. Cl. 851 (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, 43 S.Ct. 158, 67 L.Ed. 322 (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, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). The Hornes, however, have intentionally declined to pursue a Penn Central claim. Instead, they argue the Marketing Order, though a regulation, works a categorical taking.
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. The representative case of
the first category, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 427-38, 102 S.Ct. 3164, 73 L.Ed.2d 868 (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, 112 S.Ct. 2886, 120 L.Ed.2d 798 (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 by Nollan 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. 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 Secretary argues 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.
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 carefully crafted to ensure the Hornes are not completely divested of their property rights, even with respect to the reserved raisins.
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, 118 S.Ct. 1925, 141 L.Ed.2d 174 (1998) (interest earned on lawyers' trust account is a protected private property); Brown, 538 U.S. at 235 (same); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001-04, 104 S.Ct. 2862, 81 L.Ed.2d 815 (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 property owner 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 property economically worthless (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 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 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, 123 S.Ct. 1406, 155 L.Ed.2d 376 (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." ).
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. 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.
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. Its 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.
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 Lucas 's distinction between real and personal property, this assures us the diversion program does not work a per se taking.
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.
In Nollan, the California Coastal Commission 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 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 to obtain, through the issuance of a conditional land use permit, a property interest 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, 112 S.Ct. 1522, 118 L.Ed.2d 153 (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, 1010, 104 S.Ct. 2862, 81 L.Ed.2d 815 (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 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 . . . orderly marketing 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.
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. 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 385. Individualized review makes sense in the land use context because the development of each parcel is considered on a case-by-case 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.
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, 59 S.Ct. 993, 83 L.Ed. 1446 (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 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 roughly proportional (and likely actually proportional) 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.