Will Court Upend Government’s Raisin Confiscation Scheme?

Will the U.S. Supreme Court protect small raisin growers from the grasping hand of the federal government?

On Wednesday, the attorney for California raisin growers Marvin and Laura Horne argued before the Court that the U.S. Department of Agriculture violated the Fifth Amendment of the Constitution by taking some of his clients’ raisin crop without paying just compensation. The Court most likely will decide whether the Hornes will receive compensation by the end of June.

As explained in a prior memorandum from The Heritage Foundation, the Hornes were frustrated with a Department of Agriculture regulation, the California Raisin Marketing Order, which requires raisin farmers in California, where most of the nation’s raisins are grown, to turn over their crop to “handlers,” who hold back some of the crop from public sale under a “reserve requirement” to boost prices.

Producers may receive little or no compensation for such “reserve raisins.” The Hornes sought to act as their own handlers and evade the regulation, but the Department of Agriculture held that they violated the marketing order and fined them more than $695,000, including an assessment of nearly $484,000 for the dollar value of the raisins not held in reserve. The Hornes sued, claiming their property had been taken without just compensation.

During the argument, the lawyer for the government argued the Hornes and other raisin producers benefited overall from the marketing order, which maintained raisin prices as part of a comprehensive regulatory scheme. But a majority of justices seemed to view the “reserve raisin” restrictions as possibly constituting a taking of property, although Justice Stephen Breyer appeared to argue the Hornes and other producers had been fairly compensated under the workings of the order.

The Court’s ultimate decision is far from certain. And even a clear victory for the Hornes would not automatically put an end to the raisin marketing order or to similar Department of Agriculture marketing orders that cover other crops. Depending on how the Supreme Court’s decision is written, the government could simply rewrite the regulations to eliminate direct interferences with property rights held to constitute a taking.

Alternatively, they could keep the regulations as they are and pay just compensation. But a victory for the Hornes would strengthen the hand of those arguing for the elimination of marketing orders that raise prices to consumers and displace the operation of the free market. This would be one more step along the road to greater economic freedom and the vindication of economic liberties protected by the Constitution.