Supreme Court rules raisin program is "unconstitutional"

Posted June 23, 2015

In a 8-1 vote, the Supreme Court denied a raisin price-support program that dates back to the New Deal, ruling it unconstitutionally requires growers to surrender their crop to the government for future sale, according to The Wall Street Journal article available here. USA Today also published an article available here and Reuters here.

The federal program violates the Fifth Amendment prohibition of taking private property “for public use without just compensation,” according to Chief Justice John Roberts.

While the government can regulate production in order to keep goods off the market, the chief justice said it cannot seize that property without compensation, according to USA Today.

"Selling produce in interstate commerce ... (is) n ot a special governmental benefit that the government may hold hostage, to be ransomed by the waiver of constitutional protection," Roberts said. "Raisins are not dangerous pesticides; they are a healthy snack."

The raisin program was defended by the Obama administration as a win-win proposition. Prices remain high for farmers, and their excess raisins can be donated to school lunch programs or sold overseas. If profits exceed administrative costs, the farmers share in the excess.

Justice Sonia Sotomayor, the sole dissenter, said a court precedent requires that "each and every property right be destroyed by governmental action" before a taking has occurred. The program, she added, "does not deprive the Hornes of all their property rights," according to Reuters.

The Hornes came up with a plan to circumvent the program by packing and marketing their own raisins in a move they said would make them exempt from it. The government disagreed and sanctioned the Hornes for the 2002-2003 and 2003-2004 seasons.

Chief Justice John Roberts said the government should pay the Hornes the market value of the raisins and relieve them of the fine that was imposed. The total value is around $700,000.

The Hornes' constitutional challenge to the program has lasted a decade and previously led to another Supreme Court case they won in 2013.

The case is Horne v. U.S. Department of Agriculture, U.S. Supreme Court, No. 14-275.

For more information on marketing orders, please visit the National Agricultural Law Center’s website here.

AMS Requesting Comments on Honey

Posted August 29, 2014

The Agricultural Marketing Service (AMS) of the Department of Agriculture (USDA) is seeking comments on how a Federal standard of identity for honey would be in the interest of consumers, the honey industry, and U.S. agriculture.

Comments are accepted until September 19, 2014.

The Federal Register is available here.

USDA Requesting Carcass Beef Grades Comments

Posted August 27, 2014

The U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) is seeking public comments on revising the United States Standards for Grades of Carcass Beef.

USDA is requesting comments on the beef yield grade standard and carcass maturity as well as other topics. The current standards do not adequately reflect the genetic and production changes that have taken place in the cattle population since 1965 when a cutability or yield grade standard was first adopted.

Comments are accepted until November 13, 2014.

The Federal Register is available here.

AMS Adjusted Representation on Cattlemen Board

Posted August 26, 2014

The Agricultural Marketing Service adjusted representation on the Cattlemen's Beef Promotion and Research Board, established under the Beef Promotion and Research Act of 1985.

The adjustments reflect changes in cattle inventories and cattle and beef imports that have occurred since the most recent Board reapportionment rule became effective in July 2011.

The rule went into effect August 13, 2014.

The Federal Register is available here.

Spearmint Oil Assessment Rate Decreased

Posted July 28, 2014

The U.S. Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim rule that decreased the assessment rate established for the Spearmint Oil Administrative Committee for the 2014-2015 and following marketing years from $0.10 to $0.09 per pound of spearmint oil handled.

The committee locally administers the marketing order, which regulates the handling of spearmint oil produced in the Far West; the interim rule allows them to reduce their financial reserve while still providing funds to cover program expenses.

The rule is in effect July 28, 2014.

The Federal Register is available here.

Assessment Rate Decreased for California Olive Committee

Posted June 12, 2014

The U.S. Department of Agriculture (USDA) adopted an interim final rule, without change, that decreased the assessment rate established for the California Olive Committee for 2014 and succeeding fiscal years. The Federal Register notice is available here.

The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

The effective date is June 12, 2014.

For more information on marketing orders, please visit the National Agricultural Law Center’s website here.

GA Judge Declines to Intervene in Vidalia Onion Case

Posted April 17, 2014

Both sides are claiming victory after a Georgia judge refused to intervene in a case between a Vidalia onion grower and the state’s agriculture commissioner, according to an article by the Associated Press available here.

The dispute involves a regulation which mandates that Vidalia onions may not be packed for shipping before the last full week of April.  The rule is aimed at keeping unripe onions off store shelves, damaging the brand’s reputation. Vidalia onion sales are estimated to be worth $150 million a year.

Both sides are claiming victory in the most recent case, according to an article by The Packer available here.

Superior Court Judge Jay D. Stewart dismissed the case on April 15.  Judge Stewart’s ruling states that he did not have jurisdiction to hear the case, “partly because the matter was already pending before the Georgia Court of Appeals.” 

Judge Stewart wrote, “The plaintiff sought, and obtained, an order in (Judge Wright’s court) declaring that the new packing rule is void and unenforceable as well as an injunction barring (Commissioner Black) from taking any enforcement action against (Bland) for violations of this packing rule.”

The commissioner and Georgia’s Attorney General say that their notice of appeal put the case on hold, which means the new rule is still in effect.  Black’s office issued a statement saying, “We believe Judge Stewart correctly dismissed the case…With the help of the Attorney General’s office, we look forward to continuing the discussions regarding the Vidalia onion pack date in appellate court.”

Bland and his attorney, however, believe that they have an injunction barring the commissioner from enforcing the new Vidalia onion start date.

For more information on the previous case a post from this blog is available here.  For more information on marketing orders, please visit the National Agricultural Law Center’s website here.

Judge Finds Vidalia Onion Marketing Rule Invalid

Posted March 27, 2014

A Georgia judge recently ruled that the state’s Agriculture Commissioner exceeded his authority when he issued a new marketing rule setting a start date for the shipping of Vidalia onions, according to an article by The Packer available here.

Judge Wright wrote, “(The commissioner’s) desire to regulate Vidalia onions to further the goal of preventing premature harvesting is certainly commendable.”  She continued, “However, to reach this end, defendants are not authorized to enlarge the scope of (the statute), to change this statute by interpretation, or to establish different standards than those set forth within this statute without the involvement of the legislature.” 

The new rule would have prevented growers from shipping Vidalia onions before the last full week in April, April 21 for this year.

Commissioner Gary Black will appeal this ruling, according to an article by The Packer available here.  Black argues that he was within his statutory authority when he changed the rule and set a permanent start date for shipping the onions.

“Lost in this discussion is (that) it is the sole responsibility of the commissioner to protect the integrity of the Vidalia onion trademark, a trademark registered to the Georgia Department of Agriculture,” said Black.  Black also said the “majority of growers are in favor of this rule.”

The plaintiff, Delbert Bland, owner of Bland Farms, argues that growers should “continue to be allowed to ship Vidalia onions as early as they want, provided they pass inspection by the U.S. Department of Agriculture as required by Georgia law.”

Vidalia onions are subject to a federal marketing order and state regulations.

For more information on marketing orders, please visit the National Agricultural Law Center’s website here.

Leafy Greens Food Safety Audits Continue During Government Shutdown

Posted October 16, 2013

While many agencies of the U.S. government have been shut down since October 1, food safety audits on leafy greens farm have continued through the California Leafy Greens Marketing Agreement (LGMA), according to a Western Farm Press article available here.

LGMA auditors are certified and licensed by the USDA, but they are not direct employees of the federal government.  The California Department of Food and Agriculture oversees the auditors.  In addition, the audit program is fully funded by the leafy greens community through mandatory government assessments. 

Through the LGMA, handlers must be in compliance with 100 percent of the required standards and must correct any citations or risk decertification. 

The LGMA “believes this public-private partnership is the best model for food safety because it is a system in which industry and government work together to ensure safe food.  The leafy greens industry, for its part, works with scientists and food safety experts in a transparent process to develop science-based food safety standards, or metrics.  The government then works independently to ensure these practices are being followed on farms.”

The California LGMA was created in response to the lethal E. coli outbreaks in 2006 involving spinach and lettuce grown in California.  The LGMA requires participants to use “Leafy Greens Good Agricultural Practices” to improve food safety.  California was the first in the nation to use a marketing agreement to improve food safety.  For more information on the regulatory response to the E.Coli outbreak in California leafy greens, an article by Matthew Kohnke in the Drake Journal of Agricultural Law, is available here.

Marketing agreements are designed to stabilize market conditions for a certain agricultural commodity.  Marketing agreements are voluntary and only binding on those growers, handlers, processors, or others engaged in handling who sign on to the agreement.  For more information on marketing agreements and food safety, please visit the National Agricultural Law Center’s website here and here.

USDA Agricultural Marketing Service Issues Two Marketing Order Final Rules

Posted August 23, 2013

 

USDA’s Agricultural Marketing Service (AMS) recently issued two marketing order final rules affecting cranberry and avocado growers, handlers, and consumers. 

 

According to the Federal Register notice, available here, the final rule, “Cranberries Grown in States of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York; Revising Determination of Sales History” modifies sales history calculations so they are “applicable for future seasons and adjusts the number of years that can be considered when determining the highest four years of past sales.”  The rule was changed to improve the accuracy of representing grower sales because “calculated sales history impacts the amount of allotment received under volume regulation.”

The second final rule, “Avocados Grown in South Florida; Change in Minimum Grade Requirements,” increases the minimum grade requirements currently prescribed under the Florida avocado marketing order.  According to the notice, available here, the rule increases the current minimum grade requirement form a “U.S. No. 2 to a U.S. Combination grade for avocados shipped to destinations outside of the production area.”  This change “aligns marketing order regulations with current industry practices the benefit of growers, handlers, and consumers.”

For more information on federal marketing orders, please visit the National Agricultural Law Center website, here.

Supreme Court Rules that Agricultural Marketing Agreement Act of 1937 Withdraws Tucker Act Jurisdiction; Takings Claim Can Be Raised as Affirmative Defense in USDA Enforcement Proceeding

Posted:  June 11, 2013

 

In action involving a constitutional challenge to the California Raisin Marketing Order under the Agricultural Marketing Agreement Act of 1937(AMAA), 7 U.S.C. §§ 701-714, §§ 671-674 Horne v. United States Dep’t of Agric., No. 12-123, 2013 WL 2459521, -- S. Ct. – (June 10, 2013), the United States Supreme Court held in Horne v. United States Dep’t of Agric., No. 12-123, 2013 WL 2459521, -- S. Ct. – (June 10, 2013) that the AMAA withdrew Court of Federal Claims jurisdiction arising under the Tucker Act.  The Court further held that the petitioners’ takings claim could be raised as an affirmative defense against the USDA’s enforcement proceeding against them.  In so holding, the Court reversed the decision of the United States Court of Appeals for the Ninth Circuit and remanded the matter to the Ninth Circuit for further proceedings consistent with its opinion.

In 2004, USDA brought an enforcement action against Marvin and Laura Horne, et al., (hereinafter petitioners) that alleged that the petitioners were “handlers” under the raisin marketing order and that they had failed to comply with several requirements under the order.  The petitioners asserted, inter alia, that they were not “handlers” and, therefore, excluded from coverage of the marketing order.  In addition, the petitioners argued that the marketing order violated the Fifth Amendment of the U.S. Constitution as a taking without just compensation.

 

In 2006, an Administrative Law Judge (ALJ) held that petitioners were “handlers” under the AMAA and that they had, as alleged by  USDA, violated several marketing order requirements.  The ALJ rejected the petitioners’ takings claim as well.  On appeal, a Judicial Officer affirmed the decision that the petitioners were handlers, but declined to render a decision on the petitioners’ takings claim.  The matter was appealed to federal district court where it was held that the petitioners were handlers and that the marketing order did not constitute a takings.  

On appeal, the Ninth Circuit affirmed the federal district court ruling that the petitioners were handlers.  The Ninth Circuit further held that when a handler raises a takings claim against marketing orders promulgated under the AMAA, the Court of Federal Claims jurisdiction under the Tucker Act is removed by the AMAA.  Interestingly, however, the Ninth Circuit determined that the petitioners were “producers” – instead of handlers – for purposes of their takings claim and, therefore, there was nothing in AMAA that prohibited the petitioners from raising their takings claim in the Court of Federal Claims.  And, on that basis, the Ninth Circuit held that the petitioners’ takings claim was not ripe for adjudication.

In reaching its decision, the Supreme Court stated the following:

Under the AMAA's comprehensive remedial scheme, handlers may challenge the content, applicability, and enforcement of marketing orders. Pursuant to §§ 608c(15)(A)-(B), a handler may file with the Secretary a direct challenge to a marketing order and its applicability to him. We have held that “any handler” subject to a marketing order must raise any challenges to the order, including constitutional challenges, in administrative proceedings. See United States v. Ruzicka, 329 U.S. 287, 294, 67 S.Ct. 207, 91 L.Ed. 290 (1946). Once the Secretary issues a ruling, the federal district court where the “handler is an inhabitant, or has his principal place of business” is “vested with jurisdiction ... to review [the] ruling.” § 608c(15)(B). These statutory provisions afford handlers a ready avenue to bring takings claim against the USDA. We thus conclude that the AMAA withdraws Tucker Act jurisdiction over petitioners' takings claim. Petitioners (as handlers) have no alternative remedy, and their takings claim was not “premature” when presented to the Ninth Circuit.

The Court further held that “[a]lthough petitioners' claim was not 'premature' for Tucker Act purposes, the question remains whether a takings-based defense may be raised by a handler in the context of an enforcement proceeding initiated by the USDA under § 608c(14). We hold that it may.”

 

DC Circuit Rules Almond Growers Can Challenge Marketing Order

On August 3, 2010, the US Court of Appeals for the DC Circuit ruled that California organic almond growers can challenge federal requirements that almonds be pasteurized or chemically treated in Koretoff et al. v. Vilsack (Case No. 09-5286), according to the Fresno Bee.

The new rule, recommended in 2006 by the Modesto-based Almond Board of California, was prompted by instances of salmonella contamination in 2001 and 2004.  The rule is a marketing order "that helps the $2.5 billion-a-year industry regulate itself."  USDA imposed the rule in 2007.

Marketing orders are issued by the Secretary of  Agriculture and administered by the Agricultural Marketing Service (AMS).  They are designed to stabilize market conditions for certain agricultural commodities by regulating the handling of those commodities in interstate or foreign commerce.  Marketing orders must accomplish certain goals identified in the Agricultural Marketing Agreement Act of 1937 (AMAA), 7 U.S.C. §§ 601-14; §§ 671-74.  For more information on federal marketing orders, click here to visit the National Agricultural Law Center Reading Room on the subject.

The appellate panel's decision was 2-1 and did not overturn the rule, but agreed that "producers can sue to challenge agricultural marketing orders."

Judge Brett Kavanaugh of the US Court of Appeals for the DC Circuit stated that, the "requirement largely eliminates the ability of California almond producers to sell raw almonds, and therefore harms those producers' economic well being."

Additionally, Food Safety News reports that raw and organic "almond farmers pushed back over concerns about the methods of sterilization, namely over the use of propylene oxide, a probable carcinogen, to fumigate the nuts."

For the full text of the DC Circuit's opinion, click here.
To read the Fresno Bee story, click here.
To read the Food Safety News story, click here.

Posted: 08/13/2010

Oversight of financial markets affecting agriculture in the news

As recently as yesterday, the United States Senate Agriculture Committee has been working hard in developing oversight legislation for the over-the-counter-derivatives market (OTC), which is under the committee’s jurisdiction as part of the nation’s futures markets. The futures markets are used to determine what a commodity’s price should be and the markets are used to manage business risks.

Senate Chairman Blanche Lincoln, stated before the committee’s hearing on financial market regulation that “the Committee will produce a bipartisan over-the-counter derivatives bill that will provide greater oversight and transparency to the nation’s financial markets [,]” according to the Senate Agriculture Committee’s press release. Lincoln also stated that reform is a top priority for the Committee and there is “an urgency to act” on behalf of the American people.

The committee expects the bill will be part of greater regulatory reform legislation.

Meanwhile, Charles Abbott and Kevin Drawbaugh are reporting for Reuters that House Financial Service Chairman Barney Frank and House Agriculture Committee Chairman Collin Peterson have reached an agreement on their bill to provide “regulation for the first time over the over-the-counter derivatives market.” Like the Senate bill, this legislation will be folded into a broader financial reform package.

As Reuters reports, the OTC derivatives market is worth $450 trillion, and “has been widely blamed for amplifying last year’s financial crisis.” Lawmakers are caught in a balancing act of trying to maintain the markets role “in helping corporations hedge against operational risks [,]” while also curbing excessive speculation.

Both Frank and Peterson have developed bills to deal with this market as part of their respective committees’ jurisdictions. Aides claim 90 percent of the two bills have been “reconciled” but end user and clearinghouse ownership “issues must still be ironed out.”

The compromise is likely to happen and the House will probably pass a bill this year as major financial market reform is major objective of the administration. Though, as with several other bills, the pace of the Senate will dictate when a bill gets to the president’s desk and how much bi-partisan support will it enjoy.

To read the Senate Agriculture Committee press release click here.
To read the Reuters article on the markets and House action, click here.

Posted: 12/03/09

Little Help For Farmers in MO Grain Fraud Hearing

Missouri farmers caught up in the in the Missouri grain fraud case got little relief last week, August 7, 2009, following an administrative hearing for the case.

According the Associated Press report, which can be accessed at CNBC.com, Deparment of Agriculture officals reported that the majoriy of the 180 farmers who lost roughly $27 million in the scheme will only receive payments equivalent to 2% of their total claims. State agriculture director John Hagler was dissapointed in the ruling, and stated in the AP article that "'This is a sad day for Missouri agriculture . . . Our farm economy is built on trust. when that trust is iolated, the entire communities are harmed."'

Cathy Gieseker is accused of operating the largest grain fraud scheme in Missouri history. She currently is facing 15 federal and state felony charges. Gieseker is a grain dealer and owns a trucking company in northeast Missouri.

Gieseker is accused of promising farmers returns between 50 and 100$ above the market through contracts, ultimately found to be non-existant, with Archer Daniels Midland Co. According to the Associated Press story Gieseker, "instead sold grain at spot prices and used proceeds from other grain sales to pay inflated prices to some farmers, the indictment alleges. Others earned nothing in what authorities call a classic Ponzi, or pyramid, scheme."

During the 30 minute hearing no testimony from affected farmers was taken. While it would not be enough to cover all the losses, additionaly money could be recovered from seizing Gieseker's assets. To read the AP story click here. To read a previous US Agriculture and Food Law and Policy blog post click here.

Posted: 08/10/09

Struggling Dairy Farmers Get Help

Today, Agriculture Secretary Tom Vilsack announced that the department would raise the prices paid for milk and cheddar cheese through a dairy support program. For the Associated Press story by Mary Clare Jalonick, click here. This increase will be in place until October and is expected to provide a $243 million boost to dairy farmers’ overall revenue.

According to the article,

[t]he price paid by dairy processors to farmers is set by the U.S. Department of Agriculture based on commodity markets that rise and fall with global demand. Dairies increased production when demand for U.S. milk exports soared last year, but once the global recession accelerated last fall, demand dropped and farmers were left with too much milk and too many cows. Wholesale prices crashed.

To view the press release from USDA, click here.

Posted: 07/31/09

Rural Tour Continues on to New Hampshire

On Monday, Secretary Vilsack held the second community forum of the Obama administration’s rural tour in Concord, New Hampshire. For USDA Press Release, click here. At this rural forum,

“Vilsack discussed how the USDA is working to promote a sustainable, safe, sufficient and nutritious food supply, ensure that America leads the global fight against climate change, and revitalize rural communities by expanding economic opportunities.”

The Secretary also highlighted the American Recovery and Reinvestment Act activities that are going on in New Hampshire for rural communities. For more on the Rural Tour, click here to view it's website.

Finally, the Secretary assured dairy farmers in the attendance that help from the Administration was on the way. For Union Leader story, click here. The current price of milk per hundred weight is about $12, and the cost to produce is about $18 per hundred weight. According to the story,

Vilsack said in the next 10 days he will present a plan to allow cash-strapped dairy farmers to take out loans with lower interest rates and flexible payback plans.

He also said that a commission to review the federal milk pricing system is in the works. The Secretary pointed out letting the dairy industry fail was not an option.

“Some say let the market go," Vilsack said. "One or two things would happen. There would either be a massive consolidation of farms or there would be much higher food prices. And you say maybe the higher food prices is the right answer? Most consumers wouldn't agree with that and so we have this delicate balance.”

For more on this issue, click here to view a story by Holly Ramer of the Associated Press on Business Week's website.

The USDA also announced the allocations for the 2009-10 Dairy Export Incentive Program. To view press release, click here.

Posted: 07/07/2009

Dairy Industry Feeling the Effects of the Economy

The dairy industry continues to suffer along with the economy across the country. Whether traditional or organic, dairies from California to Maine continue to lose money as the demand for milk has decreased. Feed and energy prices have increased and overall demand has decreased. Some of the hardest hit operations appear to be the organic dairies which have shown remarkable growth before the beginning of the recession. As consumers try to save money by reducing expenditures on food one of the first switches that they appear to make is to go from organically produced milk back to regular milk. This switch is causing havoc on the east coast where according to an article from the New York Times:

…in New England, where dairy farms are as much a part of the landscape as whitewashed churches and rocky beaches, organic dairy farmers are bearing the
brunt of the nationwide slowdown, in part because of the cost of transporting feed from the Midwest. The contracts of 10 of Maine’s 65 organic dairies will not be renewed by HP Hood, one of the region’s three large processors. In Vermont, 32 dairy farms have closed since Dec. 1, significantly altering the face of New England’s dairy industry.

Traditional dairies are also suffering from the recession. According to the Los Angeles Times:

The California Milk Advisory Board continues to ply its "Happy Cows" advertising campaign, but there are few happy dairy farmers right now. Frustrated with low milk prices, dairy farmers are selling cows for hamburger meat and threatening to dump milk into sewers. Many are burning through their life savings hoping to survive the slump, and others are exiting the business.

Economists point to signs that the recession may soon be over, however dairy farmers throughout the country are still feeling the effects with no end in sight.

Posted: 5/29/2009

Marketing Orders

Subject Description: This subject area focuses on developments relating to marketing orders and agreements, which are legal instruments issued by the USDA Secretary designed to stabilize market conditions for certain agricultural commodities by regulating the handling of those commodities in interstate or foreign commerce.