WASHINGTON, June 24, 2015 –The Supreme Court has dealt another blow to 80 years of legislative efforts to shore up the prices of farm commodities, nullifying a provision of the raisin marketing order that diverts portions of a crop annually to limit the supply of raisins on the market.
Although tailored to the power of the Fresno, California-based Raisin Administrative Committee to require growers to set aside a percentage of their crop free of charge, the decision is being cheered by “free market” advocates who have long been critical of USDA-authorized efforts to regulate production and marketing of commodities, especially fruits and vegetables (see Agri-Pulse, April 29, page 11). The Supreme Court decision is not expected to affect milk marketing or commodity promotion orders.
The 8-1 decision written by Chief Justice John Roberts reversed 10 years of lower court rulings – one in federal district court and two by the Court of Appeals for the Ninth Circuit – that held the set-aside requirement to be permissible business regulation. Roberts said, instead, that the “reserve requirement imposed by the Raisin Committee is a clear physical taking” under the Fifth Amendment that requires government to pay "just compensation” if it seizes property.
In the majority opinion, Roberts and four conservative justices ruled that Marvin and Laura Horne of Fresno do not have to pay $685,000 in costs they faced. “The Hornes should simply be relieved of the obligation to pay the fine and associated civil penalty they were assessed when they resisted the government's effort to take their raisins,” Roberts wrote.
Justices Stephen Breyer, Ruth Bader Ginsburg and Elena Kagan agreed on the constitutional “takings” question but said in a concurring opinion that the lower court should first consider how the Hornes benefited from higher raisin prices before calculating how much compensation they deserve. Justice Sonia Sotomayor dissented, contending that the appeals court correctly upheld the raisin committee. The majority reached its conclusion “only by expanding our per se takings doctrine in a manner that is as unwarranted as it is vague,” she wrote.
Under the Fifth Amendment, Roberts asserts, the government “has a categorical duty to pay just compensation when it takes your car, just as when it takes your home. This principle, dating back as far as Magna Carta, was codified in the Takings Clause in part because of property appropriations by both sides during the Revolutionary War.” He held that there is no need for the Ninth Circuit to re-calculate the compensation due the Hornes because it is clear that just compensation normally is measured by the market value of property at the time of the taking.
“Today’s ruling is a major victory for property rights and a welcome rebuke to government regulators who try to stretch their powers beyond the limits set by the Constitution,” wrote Damon Root, senior editor of Reason.com, the blog of the free market advocate Reason Foundation.
The libertarian Cato Institute, which filed a brief with the court to support the Hornes, says it’s pleased that the justices ruled “in favor of the farmers whose raisins the federal government wanted to take as part of a cockamamie New Deal-era regulatory scheme.” Cato’s Ilya Shapiro said in a blog post that “it should be rather obvious that when the government takes your property, its actions are subject to the Fifth Amendment’s Takings Clause. . . Yet the government insisted here that, at least in the context of agricultural-marketing/price-setting programs, it can take your crops and do whatever it likes with them so long as it’s all hypothetically for your own benefit. Chief Justice Roberts swatted away that contention.”
During oral arguments before the court in April, several justices telegraphed their displeasure with the scheme. Justice Antonin Scalia said at one point, “Central planning was thought to work very well in 1937, and Russia tried it for a long time.” The raisin order is a feature of the Agricultural Marketing Agreement Act of 1937, enacted during the New Deal.
Criticism of marketing orders has ebbed and flowed since its peak in the Reagan Administration, when California farm interests managed to squelch an effort by David Stockman, then director of the Office of Management and Budget, to do away with such orders. Stockman recounts in his memoir, “The Triumph of Politics,” how the late Richard E. Lyng, a Californian then serving as deputy secretary of agriculture, and James Lake, a lobbyist and also a former Reagan campaign press secretary, persuaded President Reagan to overrule his OMB director.
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