Justices slam raisin regulation in federal rebuke

Conservative members of the Supreme Court on Wednesday blasted a generations-old federal program that allows the government to take crops from farmers without pay to regulate supply and demand.
 
The case, Horne v. the U.S. Department of Agriculture, centers on the federal government’s authority to intervene in the marketplace in the name of economic stability — and has sparked new cries of federal overreach from within the business community.
 
At issue in the case is a Depression-era program through which the USDA requires certain producers in California to give up a percentage of their annual raisin crop.
 
Chief Justice John Roberts led the court’s conservative wing in lambasting the program, saying the agency could choose to regulate the raisin market with marketing orders as it does with other agriculture programs.
 
“This is different,” he said, according to court transcripts. “This is different because you come up with a truck and you get the shovels and you take their raisins, probably in the dark of night.”
 
Though USDA attorney Edwin Kneedler said that is not how the program works, Roberts said the agency could achieve the government’s objectives through volume limitations without physically taking the raisins.
 
“For whatever reason, in the history of the New Deal, this one was set up differently,” he said. “And so we’re here dealing with a classical, physical taking.”
 
The case centers on Marvin and Laura Horne, the owners of Raisin Valley Farms in California, who argue that the USDA took their raisins for public use and violated the “takings clause” of the Fifth Amendment when the agency failed to pay the Hornes “just compensation” for their personal property.
 
Under the Agriculture Department program, producers are required to relinquish a portion of their crops to ensure stable market decisions. The percentage varies year to year based on how many raisins are produced.
 
Though subject to administrative and judicial review, the USDA secretary can impose a penalty on producers who fail to comply with the program, according to court documents.
 
Because the federal government sells the raisins, typically in noncompetitive markets, the producers receive a pro-rated share of the proceeds after administrative costs have been taken out. In some years, this “equitable distribution” is significant, but in other years it’s nothing.
 
Upset with the program, the Hornes refused to give up part of their crop in 2003 and 2004, for which they were fined $8,783.39 in overdue assessments and $483,843.53 for what the crop was worth.
 
The Hornes are appealing the 9th U.S. Circuit Court of Appeals decision in favor of the USDA, which has defended its constitutional right to regulate the marketplace.
 
In defense of the program, Kneedler pointed to its longevity.
 
“It doesn’t help your case that it’s ridiculous, though,” Justice Antonin Scalia countered.
 
Justice Stephen Breyer said the Constitution doesn’t forbid taking, it requires the government pay just compensation for what it takes.
 
And because the government is giving consumers the difference between what the raisins sold for and what the program costs, Breyer said it works out in the grower’s favor.
 
“It gives you money,” he said. “It doesn’t take money.”
 
But the attorney for the Hornes, attorney Michael McConnell, said the government sold the raisins in an unregulated market for 30 percent less than the field price. 
 
“Taking away 30 percent of their raisins does not end up with my clients better off as a result of the program,” he said. “Quite the contrary — they lose money.”
 
Critics of the USDA program argue it should be struck down.
 
The National Federation of Independent Business (NFIB), which filed a brief in support of the Hornes, said raisin growers have been forced to hand over their produce to the federal government since before the invention of color television.
 
“It was bad policy then, just as it’s bad policy today,” said the executive director of the NFIB’s Small Business Legal Center, Karen Harned. “For nearly 80 years, this regulation has systematically robbed raisin growers of their crop, in clear violation of the U.S. Constitution’s protections for private property.”
 
The Supreme Court will now determine the limits of the government’s “categorical duty” under the Fifth Amendment to pay just compensation when it “physically takes possession of an interest in property.”
 
The high court will also determine whether the government can avoid its duty to pay just compensation for taking property if it promises to pay the owner a portion of the property’s value, and whether a government mandate to give up property in order to engage in commerce is considered regulatory taking.
 
Business groups warn that a Supreme Court ruling in favor of the USDA would enable government agencies to adopt similar practices of taking private property without compensation.
 
“This is not just about the raisin growers; it is yet another example of an agency’s overreach,” Harned went on to say. “Small business just want to run their own business without the government reaching into their pockets.”