(CN) – A Depression-era law requiring raisin growers to contribute a portion of their crop to a federal reserve pool does not violate the U.S. Constitution, the 9th Circuit ruled Monday, upholding nearly $700,000 of fines against a group of California growers opposed to the program.
Nearly identical to a 1938 dispute involving walnuts, Monday’s ruling pits the government against growers Marvin and Laura Horne and the Raisin Valley Marketing Association, a coalition of 61 raisin growers in Fresno and Madera Counties.
Both cases involve dissatisfaction with federal marketing rules requiring growers to hand over a portion of their crop every year to a crop-specific committee, which then sells the reserves for export or donates them to school-lunch programs or foreign governments. The Department of Agriculture began the program in the late 1930s under the Agricultural Marketing Agreement Act, hoping it would stabilize “commodity prices, market disequilibrium, and the accompanying threat to the nation’s credit system,” according to the ruling.
The Hornes, who have grown raisins in California since 1969, tried to circumvent the law in 2001 by cutting out the middle man, buying packaging equipment and contracting with 60 local farms to stem, clean and sort their raisins. They became “producers” instead of “handlers,” they argued. Reasoning that reserve requirements applied only to handlers, they said they should no longer have to contribute. The federal Raisin Administrative Committee did not agree and imposed nearly $700,000 in fines.
The committee also rejected the Hornes’ claim that the reserve rule violated the Fifth Amendment’s takings clause, which prohibits the federal government from seizing personal property without compensation. The Hornes sued the Department of Agriculture in Fresno, Calif., but U.S. District Court Judge Lawrence O’Neill upheld the committee’s rulings and determined that the fines were not excessive.
In a unanimous ruling Monday, a three-judge appellate panel in Pasadena affirmed on all points.
More than 70 years ago, the 9th Circuit ruled that such federal marketing orders don’t violate the takings clause, and nothing has changed since, the panel ruled.
“Far from compelling a physical taking of the Hornes’ tangible property, the Raisin Marketing Order applies to the Hornes only insofar as they voluntarily choose to send their raisins into the stream of interstate commerce,” Judge Michael Daly Hawkins wrote for the panel. “Simply put, it is a use restriction, not a direct appropriation. The Secretary of Agriculture did not authorize a forced seizure of forty-seven percent of the Hornes’ 2002-03 crops and thirty percent of their 2003-04 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 Raisin Marketing Order ‘contains no absolute requirement of the delivery of [reserve-tonnage raisins] to the [RAC]’ but rather only ‘a conditional one.'” (Brackets in original.)
Hawkins added that the Hornes’ “argument is founded on an erroneous belief that they have a property right to ‘market their [raisins] free of regulatory controls.'” (Brackets in original.)
Finally, the judge suggested that the Hornes take their complaints about the marketing order to the secretary of agriculture, as the federal court is limited to ruling on “constitutional infirmity” and has not authority to consider “the wisdom of the current regulation.”
“The Hornes are clearly dissatisfied and frustrated with a regulatory scheme they believe no longer serves the interests of the farmers it was designed, in large part, to protect,” he wrote. “That being the case, the Hornes may wish to ‘take their case to the Secretary for a reevaluation of the [Raisin Marketing] Order and the regulations, for although the [Raisin Marketing] Order and the regulations are lawful, plaintiffs and other producers may prevail upon the Secretary to change them in order to better achieve the purpose behind the [AMAA].'” (Brackets in original.)