WASHINGTON (CN) - The Supreme Court has agreed to evaluate a Depression-era law that requires raisin growers to contribute a portion of their crop to a federal reserve pool.
Nearly mirroring a 1938 dispute involving walnuts, the raisin case 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 that directs 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, 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.
The 9th Circuit affirmed in July 2012, upholding the law and the hefty fines against the Hornes.
In support of their ruling, the judges pointed to a finding made more than 70 years earlier in which the 9th Circuit ruled that such federal marketing orders do not violate the takings clause.
"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 no 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.)
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