Raisin’ a Fuss

The California Raisins are back…in the U.S. Supreme Court! After a 2013 decision resolved a jurisdictional dispute (Horne v. USDA, 81 U.S.L.W. 4367, 2013 BL 151486 (U.S. 2013) (81 U.S.L.W. 1725)), California raisin producers are back at it with the U.S. Department of Agriculture.

The issue this time is whether a New Deal-era program intended to support raisin prices violates the takings clause of the Fifth Amendment. Under the program, raisin handlers are required to set aside for the government a certain tonnage of the raisins they handle. In recent years this “reserve” amount has been 0, but in 2002-03 it was 47 percent of the crop, and in 2003-04 it was 30 percent. The government may sell or dispose of the raisins, but the handlers are entitled to any proceeds, less the cost of running the program.

The Hornes are family farmers and raisin handlers who object to the program, and argue that the government may not take the raisins without paying just compensation. In an attempt to evade the program they organized their handling business in a way that they believed made them not subject to the requirement. They then sold the raisins that made up what should have been their reserve amounts, making nearly $500,000 on the sale.

The USDA disagreed that their business model insulated them from the program, and filed an enforcement action that eventually led to a $202,000 penalty on top of requiring the proceeds from the sale.

The Hornes argue this is an uncompensated taking, pure and simple. The USDA argues that it’s market participant regulation, and not a taking at all because the handlers retain the rights to the proceeds from sales of the reserve. Conservative economists and government minimalists, as amici for the Hornes, argue that it’s a basic issue of economic liberty, while major raisin producer Sun-Maid argues that the price supports only work if everyone participates.

Jessie Kamens and Nicholas Datlowe preview the case and potential implications in a U.S. Law Week Supreme Court Preview podcast.

Oral arguments are April 22.

To keep up with the latest expert perspectives and detailed analysis of Supreme Court actions, take a free trial to United States Law Week.

by Nicholas Datlowe