California raisin farmers get another day in court

The uncompensated taking of up to half a grower's raisin crop ought not stand!

A scheme cooked up by bureaucrats at the U.S. Department of Agriculture (USDA) 66 years ago that restricts raisin growers’ freedom to farm in favor of a government-sponsored cartel is at the center of a dispute soon to be heard before the U.S. Supreme Court.

California raisin farmers Marvin and Laura Horne have spent over a decade – and a lot of money in legal costs – trying to free themselves from the shackles of an marvinhorneantiquated USDA regulation designed to keep the price of raisins (most of which are grown in California) artificially high. 

Promulgated in 1949, USDA’s “California Raisin Marketing Order” contains “volume-control measures.” The scheme created something called the “Raisin Administrative Committee” that has the authority to take (seize) as much as one-half of a farmer’s annual raisin crop and turn it over to “packers,” or handlers, who then sell this “reserve pool’ abroad at a discounted price.

Growers receive below-market compensation for the ”reserve-tonnage” raisins they must turn over to the government-approved middlemen, and, in some years, they get absolutely nothing for them.

The legal odyssey

Fed up with this Rube Goldberg scheme, the Hornes refused to turn over their “reserve-tonnage” raisins in 2002-2003 and 2003-2004, and were slapped with $700,000 in fines by USDA.

ninthcourtUndeterred, the Hornes challenged the fines in federal court, arguing that the reserve-tonnage requirement was an unconstitutional taking of their property (raisins) without just compensation.  The district court and the Ninth Circuit Court in San Francisco refused to entertain the just-compensation argument, holding that the only court with jurisdiction over the Hornes’ claims was the U.S. Court of Federal Claims – and that the just compensation clause could not be used as a defense against the fines imposed by the government.

On appeal, the U.S. Supreme Court in 2013 unanimously reversed and remanded the case, instructing the Ninth Circuit Court to consider whether the Hornes had suffered an uncompensated taking.  In response, the Ninth Circuit unanimously denied the Hornes’ taking claim, saying the Hornes had failed to demonstrate that USDA’s raisin scheme was an unconstitutional regulatory taking.

Now, the Hornes are back before the Supreme Court.  They say the Ninth Circuit got it wrong by looking at their case through the prism of a regulatory taking rather than a physical taking, in this case, their raisins.

Writing in Legal Planet (Jan. 17), a collaboration between UC Berkeley School of Law and UCLA School of Law, Richard Frank sees the Supreme Court coming down on the side of the Hornes.  “This is not an instance where the challenged government program protects clean air or water, or preserves threatened wetlands,” he says.  “Rather, the case involves an antiquated, Depression-era raisin-regulation program that many observers believe has long since outlived its usefulness.”

Frank added that Stanford Law Professor Michael McConnell, the Hornes’ lead counsel and a former judge on the Tenth Circuit Court of Appeals, had done an effective job of arguing that the USDA raisin regulation constitutes a physical, not a regulatory, taking of the Hornes’ property.

“Your raisins or your life”

The high court may indeed be inclined to rule in favor of the Hornes.  The USDA rule came in for its lumps the first time the case was heard before the Supreme Court, kaganwith Justice Elena Kagan saying the scheme might be “the world’s most outdated law.”

Not to be outdone, Justice Anthony Scalia likened the regulation to a government ultimatum:  “Your raisins or your life.”

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About the Author: Bonner Cohen, Ph. D.

Bonner Cohen, Ph. D.

Bonner R. Cohen, Ph. D., is a senior policy analyst with CFACT.