Federal Raisin-Reserve Program Undercut by U.S. High Court

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The federal government must compensate raisin growers who are required to set aside part of their crop during high-production years, the U.S. Supreme Court ruled, gutting a decades-old program designed to stabilize prices.

The high court ruled that the raisin-reserve requirement was a governmental “taking” of private property, something the Constitution outlaws unless officials provide “just compensation.” The court overturned more than $600,000 in penalties assessed against a couple who refused to comply with the reserve rule.

The raisin reserve requirement is an unusual one, and the justices said during arguments in April that 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.

Writing for the court, Chief Justice John Roberts said the government could accomplish the same goal by limiting production, rather than taking possession of extra raisins.

“A physical taking of raisins and a regulatory limit on production may have the same economic impact,” Roberts wrote. “The Constitution, however, is concerned with means as well as ends.”

Seven of the other eight justices agreed with Roberts that the program was a taking, though only four joined the part of his opinion that overturned the fine against Marvin and Laura Horne.

Three justices, led by Stephen Breyer, said the case should have been returned to a lower court to assess the benefits the Hornes received from the price-support program. Justice Sonia Sotomayor dissented.

‘Physical Taking’

The Hornes 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.

The Agriculture Department said penalties imposed by an administrative law judge were justified 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 raisin distributors some of the proceeds.

The program is a “clear physical taking,” Roberts wrote. “Actual raisins are transferred from the growers to the government.”

‘Long Enough’

He said overturning the fine was warranted because “this case, in litigation for more than a decade, has gone on long enough.”

Sotomayor called Roberts’s reasoning “baffling.”

The court “ultimately instructs the government that it can permissibly achieve its market-control goals by imposing a quota without offering raisin producers a way of reaping any return whatsoever on the raisins they cannot sell,” she wrote. “I have trouble understanding why anyone would prefer that.”

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.

Eight to 10 Agriculture Department programs can use reserve pools. 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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