Raisin Farmers Lose Reserve Rules Challenge

     (CN) – After a Supreme Court reversal last year, California raisin growers failed to challenge a Depression-era law that has them put a portion of their crop in a federal reserve pool, the 9th Circuit ruled Friday.
     Nearly mirroring a 1938 dispute involving walnuts, the raisin case pits the U.S. 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 that direct a share of every grower’s annual harvest 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 (AMAA), hoping it would stabilize commodity prices, market disequilibrium and the nation’s floundering credit system.
     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. Claiming that they were now “producers,” not “handlers,” and 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, but U.S. District Court Judge Lawrence O’Neill in Fresno, Calif., upheld the committee’s rulings and determined that the fines were not excessive.
     The 9th Circuit affirmed in July 2012, finding jurisdiction improper since the takings argument should have been brought before the U.S. Court of Federal Claims.
     In unanimous June 2013 reversal, the Supreme Court said that the Hornes’ takings claim “was properly before the court because the AMAA provides a comprehensive remedial scheme that withdraws Tucker Act jurisdiction over takings claims brought by raisin handlers.”
     The 9th Circuit considered the merits of the case in February only to affirm summary judgment for the government again Friday.
     To reach its conclusion, the San Francisco-based panel evaluated the restrictions under two Supreme Court cases: Nollan v. California Coastal Commission, from 1987, and Dolan v. City of Tigard, from 1994.
     The Nollan-Dolan rule “serves to govern this use restriction as well as it does the land use permitting process,” Judge Michael Hawkins wrote for a three-judge panel.
     “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,” he added. “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 [Raisin Administrative Committee]’ but rather only ‘a conditional one.'”
     The 29-page opinion also emphasizes that there is no basis for individualized review since “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,” Hawkins wrote. “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.” (Parentheses in original.)
     The ruling concludes with a note on agency deference.
     “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,” Hawkins wrote. “The Constitution endows Congress, not the courts, with the authority to regulate the national economy. 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.”

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