IN a 9-0 decision, the U.S. Supreme Court reversed a ninth circuit ruling and remanded it back to the lower court to decide whether federal marketing orders, which regulate the flow of products to the market, and, if not obeyed, fines represent an unconstitutional "taking."
Depending on what the ninth circuit decides, the action could set up future legal challenges regarding Fifth Amendment rights to marketing orders — in this case, one that regulates the raisin marketplace.
Under the Agricultural Marketing Agreement Act of 1937 and the California Raisin Marketing Order promulgated by the secretary of agriculture, raisin handlers are frequently required to turn over a percentage of their crop to the federal government. The act and the marketing order were adopted to stabilize prices by limiting the supply of raisins on the market.
In the case Horne vs. Department of Agriculture, California farmer Marvin D. Horne challenged the regulatory scheme laid out in the marketing order, stating that it violates the Fifth Amendment, which specifies that private property can't "be taken for public use without just compensation."
After Horne refused to surrender the requisite portion of the raisins, the U.S. Department of Agriculture began administrative proceedings against petitioners that led to the imposition of more than $650,000 in fines and civil penalties.
Specifically, the court stated that a farmer faced with a marketing order can go to a federal district court with a "takings" claim and have that claim judged before payment is actually due. It was previously thought that the Tucker Act required an entity claiming that the government seized private property without paying compensation to bring it before the Court of Federal Claims.
Roger McEowen, director of the Center for Agricultural Law & Taxation at Iowa State University, said the ruling states that the ninth circuit does have jurisdiction to rule on the takings issues that the plaintiffs raised under the Fifth Amendment.
McEowen added that, although the finding isn't a big deal at this point, "it will be a big deal if the plaintiffs ultimately win on the takings issues because that will have application to other programs."
The ruling could prove to be a major setback for USDA. If farmers are unhappy about how the marketing orders operate, they may now argue the merits of the orders in federal court.
McEowen also predicted that the issue could end up at the Supreme Court again.