U.S. Supreme Court Casts Doubt on Raisin Price-Boosting Plan

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The U.S. Supreme Court cast doubt on a 65-year-old federal program that is designed to stabilize raisin prices by requiring part of the crop to be set aside during high-production years.

Hearing arguments in Washington, justices from across the ideological spectrum suggested they viewed the reserve requirement as the taking of private property, potentially requiring the government to compensate raisin producers.

“You come up with the truck, and you get the shovels, and you take their raisins,” Chief Justice John Roberts said. “Probably in the dark of night,” he added, drawing laughter from the audience.

The raisin-reserve requirement is an unusual one, and some justices said the case won’t affect most other Agriculture Department programs. Major crops such as corn and soybeans aren’t covered by marketing orders like the one issued in 1949 to govern the raisin business.

The program is being challenged by Marvin and Laura Horne, who grow seedless grapes for raisins in central California. The USDA filed a complaint against them after they refused to set aside raisins in the 2002-03 and 2003-04 growing seasons. An administrative law judge at the department ordered them to pay more than $600,000.

Higher Prices

The Agriculture Department says the penalties are warranted because the Hornes benefited from the higher prices created by the reserve pool. The government takes ownership of the raisins in the pool, later selling them if market conditions warrant and giving the companies some of the proceeds.

Under the program authorized by a 1937 statute, each year a committee made up primarily of raisin producers and handlers decides based on market conditions whether to impose a reserve requirement. The program applies to California raisins, which constitute 99 percent of the U.S. market.

The Hornes contend that the reserve requirement violates the constitutional provision that requires “just compensation” when the government seizes private property.

The Supreme Court’s Republican appointees made little secret of their disdain for the reserve requirement.

“Central planning was thought to work very well in 1937,” Justice Antonin Scalia said. “Russia tried it for a long time.”

Mobile Phones

Justice Samuel Alito asked whether the government could take ownership of every fifth mobile phone or every third car produced by a private company.

Three Democratic appointees -- Stephen Breyer, Sonia Sotomayor and Elena Kagan -- also suggested at various points that the government had taken private property. Sotomayor said she was troubled by the same issue as Alito.

Breyer, however, also questioned whether it would matter if the court concluded that the government had taken property from the Hornes. He pointed to the government’s contention that the program benefits raisin growers by propping up prices.

“If they’re no worse off, what compensation are these farmers entitled to?” he asked.

The justices spent much of the argument trying to assure themselves that a ruling in favor of the Hornes would have a limited effect. Roberts said the government could accomplish its goals by limiting production of certain crops rather than taking possession of part of a crop.

“For whatever reason in the history of the New Deal, this one was set up differently,” Roberts said. “And so we’re here dealing with a classic, physical taking. We are not going to jeopardize the Agriculture Department’s marketing order regime.”

Edwin Kneedler, the Justice Department lawyer, told the court that eight to 10 Agriculture Department programs can use reserve pools, though most currently don’t. Those crops include spearmint oil, tart cherries, California dried prunes and Walnuts.

The case is Horne v. Department of Agriculture, 14-275.

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