Horne v. Department of Agriculture – A Small Step in the Right Direction or Simply a False Sense of Hope for Handlers of Agricultural Commodities?

October 2012

Almost 80 years ago, Congress enacted the Agricultural Marketing Agreement Act of 1937 (“AMAA”) to stabilize prices for agriculture commodities. The AMAA accomplishes its goal by regulating “handlers,” or “processors, associations of producers, and others engaging in the handling” of covered agricultural commodities. Twelve years later, under the ambit of the AMAA, the Secretary of Agriculture promulgated the California Raisin Marketing Order (“Marketing Order”) requiring raisin growers to turn over a percentage of their annual crop to the Federal Government for its reserve pool, pay assessments, and permit certain inspections.

In a case that is far from over, several raisin processors and growers in Fresno and Madera, who the U.S. Department of Agriculture (“USDA”) had previously identified as “handlers” for purposes of the AMAA and the Marketing Order, refused to relinquish ownership of their crops, failed to pay assessments, and otherwise declined to cooperate with the USDA in the 2002-2003 and 2003-2004 crop years. Although these raisin growers primarily argued against their status as “handlers,” they alternatively claimed as a defense to the agency’s enforcement action that the regulatory scheme created by the AMAA and the Marketing Order violated the Fifth Amendment’s prohibition against taking property without just compensation. While the Ninth Circuit found the raisin growers to be “handlers,” it refused to decide the constitutional issue on the grounds that it lacked jurisdiction. The Ninth Circuit determined that the Fifth Amendment claim was not ripe because the AMAA allowed the raisin growers as producers to bring a takings claim in the Court of Federal Claims, an avenue the raisin growers did not pursue.

On June 10, 2013, the United States Supreme Court remanded the case to the Ninth Circuit to decide whether the USDA’s imposition of fines and penalties on these raisin handlers pursuant to the AMAA and the Marketing Order violated the Fifth Amendment. It found the claim did not fail for lack of ripeness as the raisin growers had been subjected to a final agency order imposing concrete fines and penalties at the time they sought judicial review. The Supreme Court further held that the raisin growers’ takings claim was properly before the court because the AMAA provides a comprehensive remedial scheme that withdraws Tucker Act jurisdiction over takings claims brought by raisin handlers. Central to its holding was the Court’s determination that the raisin growers brought their constitutional claim as handlers – not producers, finding the Ninth Circuit’s conclusion to the contrary flawed as the raisin growers would have no liability, and therefore no property subject to an unconstitutional taking, under the AMAA and the Marketing Order as producers.

The Court did not take a position on the merits of the raisin growers’ claim – leaving that decision entirely within the province of the Ninth Circuit. Depending on how the Ninth Circuit comes out on the substantive takings claim, this decision could have broad implications as the AMAA not only regulates raising growers but extends its reach to handlers of a wide array of other agricultural commodities, including milk, fruits (including filberts, almonds, pecans, walnuts, pears, olives, grapefruit, cherries, caneberries, raspberries, blackberries, and loganberries), cranberries, tobacco, vegetables, hops, and honeybees.

A copy of the Supreme Court’s opinion is available here .

The information in this newsletter is not intended to provide specific legal advice. You should consult with an attorney and not rely on any information contained herein regarding your specific situation.