A few thoughts by John Nalivka: Markets, government and the Fifth Amendment | TSLN.com

A few thoughts by John Nalivka: Markets, government and the Fifth Amendment

On June 22, the Supreme Court ruled in favor of California raisin grower, Marvin Horne, striking down the raisin price-support program. There are probably few people in the cattle industry who know much, if anything, about the raisin price-support program or for that matter even care. However, this ruling is as important to cattlemen as it is to raisin growers.

In this decision, the Supreme Court ruled that the 80 year old raisin program unconstitutionally requires growers to surrender their crop to the government for future sale. As Chief Justice John Roberts wrote for the court, the federal program violates the Fifth Amendment of the U.S. Constitution by taking private property “for public use without just compensation.”

For ranchers with federal lands grazing permits, BLM and Forest Service, the examples of takings without just compensation are many. While these do not involve the seizure of a commodity as in the case of the raisin program, they do involve the government taking a grazing right. I have completed numerous studies analyzing the value of federal grazing permits and testified in federal court. Most of these involved the loss of federal grazing as the result of government decisions. Grazing permits have a capitalized value that is attached to the ranch. This value is established and realized in the marketplace when western ranches with federal grazing permits are bought and sold. Many ranches have established long time historical use of federal lands grazing that oftentimes precedes the creation of the Forest Service or Bureau of Land Management. If the government reduces the active use of those Federal AUMs and subsequently reduces the carrying capacity of the ranch, that decision affects the economic viability and value of the ranch.

Whether there is a right attached to federal grazing permits has been a topic of much debate, in and out of court. In my opinion and many ranchers, there is a property right and consequently, this is a taking of private property without just compensation. Perhaps, the recent decision by the Supreme Court will be one step closer to establishing that fact.