SCOTUS Sides With California Farmer Who Refused To Pay Raisins Into The National Reserve

A few years back we heard the tale of a California farmer who was raisin’ a stink over the government’s insistence that he pay 1.2 million pounds of raisins into the national reserve without paying him for them. Today, the Supreme Court of the United States sided with him, saying the Fifth Amendment requires the government to pay just compensation when it takes personal property (movable property), just as when it takes real property (things like land).

Quick background: Around 2002, the farmer had refused to let the government take away 1.2 million pounds of raisins, under something called a “marketing order” that takes the raisins and dumps them into a national reserve. In this case it was Marketing Order 989, which was initiated as part of the New Deal as a way to keep demand for raisins high when prices decline.

The raisins that go into the reserve are then sold off by the Raisin Administrative Committee, which runs the reserve. These are raisins the farmers got nothing for, but that are then exported in noncompeting markets, given to charity or other purposes. It gets them off the open market and keeps the supply for commercial buyers low. That means you could be paying higher prices for raisins than you would if the farmers were allowed to sell all their crops off.

Farmers are supposed to get whatever’s left of the net proceeds RAC makes after deductions for the export subsidies and the Committee’s administrative expenses.

For their refusal to fork over the free raisins, the government ultimately fined the farmers about $480,000, the market value of the fruit, plus “an additional civil penalty of $200,000.”

In the opinion penned by Chief Justice John Roberts writing for the majority today [PDF], he explains the system and notes that during the years at issue in this case, the net proceeds from the RAC were less than the cost of producing the crop one year, and nothing at all the next. Which means the farmers basically got nothing.

“Growers generally ship their raisins to a raisin ‘handler,’ who physically separates the raisins due the Government (called ‘reserve raisins’), pays the growers only for the remainder (‘free-tonnage raisins’), and packs and sells the free-tonnage raisins,” Roberts wrote. “The Raisin [Administrative] Committee acquires title to the reserve raisins that have been set aside, and decides how to dispose of them in its discretion.”

The farmers in question produced some of the raisins at issue here themselves and acquired some from other producers, “paying those growers in full for all of their raisins, not just the free-tonnage portion.”

The decision today doesn’t invalidate marketing orders, which have been permitted for a while as a condition for selling in interstate commerce. But essentially, the government can’t make raisin growers give up their property without just compensation.

The court held that when the government “physically takes possession” of property, that constitutes a “per se taking,” instead of a regulatory one, so that just compensation is required, whether it’s personal property or real estate.

The court also rejected the United States Department of Agriculture’s argument that promising to share future proceeds from the sale of the reserve raisins was enough to meet that requirement of just compensation.

Though eight of the justices agreed on that (with Justice Sotomayor dissenting), when it came to deciding what “just compensation was,” the justice voted 5-4, with Justice Roberts concluding:

“The Government has already calculated the amount of just compensation in this case, when it fined the [the farmers] the fair market value of the raisins: $483,843.53,” he wrote, saying the government can’t go back on that valuation now. Instead of giving the farmers that amount, he says they should “simply be relieved of the obligation to pay the fine and associated civil penalty.”

All of the justices agreed, however, that “Raisins… are a healthy snack,” Roberts wrote in the part of the opinion joined by Breyer, Ginsburg and Kagan.

“I could not agree more,” Sotomayor agreed in a footnote.