Federal Court Enjoined the Agricultural Adjustment Acts Because Secretary Wickard’s Radio Address Misled Farmers

March 16th, 2017

The current issue of the Journal of Supreme Court History has a fascinating article about the origin of Wickard v. FilburnFilburn v. Helke was decided by a divided three-judge panel in the Southern District of Ohio on March 14, 1942. District Judge John H. Druffel, joined by Judge Nevin ruled for Roscoe Filburn, but not on Commerce Clause grounds. Rather the opinion was based on the “equities of the case.” The article explains:

He concluded that, due to the representations made by Secretary of Agriculture Wickard in his May 19 radio address, some of those who voted in favor of the measure might have been induced to vote against their interests, and consequently the Act, as amended, was void as applied against those misled farmers. In other words, the requisite two-thirds vote would not have voted in the affirmative but for the Secretary’s unintentionally misleading statements, and thus the increased penalty of forty-nine cents per bushel could not be enforced against Filburn. The judge opined that “it would seem that the equities of the situation demanded that the Secretary forewarn the farmers that in accepting the benefits of increased parity loans they were also subjecting themselves to higher penalties.”46 The court enjoined the county committee from collecting the penalty over and above the original fifteen cents per bushel, from placing a lien on Filburn’s entire crop, and from collecting the penalty unless and until the excess crop was actually marketed, in accordance with the terms of the original Act.

When I read this, I thought to myself, Huh!? The an executive policy was put on hold because of statements a government official made on the radio?! In 1942!

Under the insane procedures of the AAA, 2/3 of the eligible wheat farmers had to vote in a national referendum to approve the marketing quotas, which would also approve loans for wheat growers. Secretary of Commerce Claude Wickard’s speech, which the court transcribes, warned that “we have a record amount of old wheat on hand and a bumper crop in prospect” and that “Farmers should not be penalized because they have provided insurance against shortages of food.” Here is the crux of the pitch:

‘The law provides that wheat loans will not be made if wheat growers vote down marketing quotas. * * * The continuance— or discontinuance— of government loans on wheat is at stake in this referendum on May 31. To put it bluntly, no quotas, no loans.

81% of the 559,630 voting wheat-growers approved the quotas, and 19% opposed them. The quotas were approved. Asa a result, producers were “subject to a penalty on the farm marketing excess.”

The question for the Court was not whether the AAA was valid exercise of Congress’ s commerce powers, but whether the referendum was induced by fraud:

…it becomes important to determine whether or not the necessary two-thirds of the wheat farmers voluntarily voted affirmatively or were unintentionally misled in so voting in the referendum.

It is fully recognized by all that Congress has devoted much time in the past several years in a laudable effort to help the farmers, and as Mr. Wickard said: ‘parity is one of the most important objectives of the national farm programs and will continue to be a goal,‘ and it is but natural that the several hundred thousands of wheat farmers, scattered all over the United States (559,630 voted), should look to the Secretary of Agriculture for advice and direction in a matter of such importance as the quota referendum, and when in his official capacity, the Secretary, in the nation-wide radio speech appealing for an affirmative vote for the quota, eleven days prior to the referendum, said: * * * ‘To make wise decisions, we need to know the facts. * * * Because of the uncertain world situation, we deliberately planted several million extra acres of wheat. * * * Farmers should not be penalized because they have provided insurance against shortages of food,‘ it would seem that the Secretary meant what he said and that the farmers voting affirmatively would not be penalized for the ‘deliberately planted‘ excess acreage beyond the law in effect at the time of planting. But the contrary was true, the bill to which Mr. Wickard referred greatly increased the penalty for the ‘deliberately planted‘ excess acreage and subjected the entire crop to a lien for the payment of the penalty.

Giving full credit to the Secretary for his zeal and his efforts to help the farmer to avoid ruinous wheat prices which he foresaw if the quota referendum failed, yet it would seem that the equities of the situation demanded that the Secretary also forewarn the farmers that in accepting the benefits of increased parity loans they were also subjecting themselves to increased penalties for the farm marketing excess.

In other words, the Secretary failed to adequately warn the farmers that they would be hit with a penalty for growing in excess of the quota. The court acknowledged that these facts were unprecedented:

We have no precedent in point to guide us in a determination of the precise issues raised by the foregoing state of facts.

Yet, the court found that the penalties violated the Due Process of Law because it operated retroactively:

Under the circumstances we are obliged to hold that the amendment of May 26, 1941, 7 U.S.C.A. §§ 1330, 1340, in so far as it increased the penalty for the farm marketing excess over the fifteen cents per bushel prevailing at the time of planting and subjected the entire crop to a lien for the payment thereof, operated retroactively and that it amounts to a taking of plaintiff’s property without due process, and also, or in the alternative, that the equities of the case as shown by the record favor the plaintiff.

As a result, the court found it “unnecessary to pass” on the commerce clause questions.

Circuit Judge Florence Allen, the first female Article III jurist, dissented. Her analysis sounds in Justice Jackson’s ultimate aggregation principle, stating that courts must consider “the total effect of the attempted regulation”:

It is no longer open to question that Congress has the power to protect interstate commerce ‘from interference or injury due to activities which are wholly intrastate.‘ National Labor Relations Board v. Fainblatt, 306 U.S. 601, 307 U.S. 609, 59 S.Ct. 668, 671, 83 L.Ed. 1014. ‘Activities conducted within state lines do not by this fact alone escape the sweep of the Commerce Clause. Interstate commerce may be dependent upon them.‘ United States v. Rock Royal Co-operative, Inc., supra, 307 U.S.at page 569, 59 S.Ct.at page 1011, 83 L.Ed. 1446.
It is true that Congress has no power to regulate intrastate transactions which affect commerce only indirectly. A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947. But where it is claimed that the local activity sought to be regulated does not directly affect commerce, decision should not be made by examination of the effect of isolated individual activity, but must include due regard to the total effect of the attempted regulation. United States v. Darby, 312 U.S. 100, 123, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430.

The stipulation of facts now before us amply supports these legislative findings. It follows that regulation of the supply of wheat that normally moves in interstate or foreign commerce must be upheld as an appropriate means reasonably adapted to the regulation of interstate commerce. Since regulation of the supply of wheat available for sale in interstate commerce but actually used within the state of its origin is drawn into a general plan for the protection of interstate commerce in the commodity from the interferences, burdens and obstructions arising from excessive surplus and the social evils of low values, the power of Congress extends to it as well.

What a fascinating judicial opinion.

Further, the timing on this case was fascinating. Two weeks after the court’s decision, on March 30, the Supreme Court noted probable jurisdiction. The case was argued barely a month later on May 4, 1942.  The Court was unable to agree on a single rationale, and reargued the case on October 13. Justice Jacksons decision was issued on November 9. The constitutionality of the Agricultural Adjustment Act was critical, and the Court moved at light-speed.