Evans v. United States

74 Fed. Cl. 554, 2006 U.S. Claims LEXIS 400, 2006 WL 3754812
CourtUnited States Court of Federal Claims
DecidedDecember 22, 2006
DocketNo. 06-439C
StatusPublished
Cited by8 cases

This text of 74 Fed. Cl. 554 (Evans v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evans v. United States, 74 Fed. Cl. 554, 2006 U.S. Claims LEXIS 400, 2006 WL 3754812 (uscfc 2006).

Opinion

OPINION AND ORDER

LETTOW, Judge.

Plaintiffs are raisin growers in California who claim that the United States, in its implementation of the Agricultural Marketing Agreement Act of 1937 (“Agricultural Marketing Act”), Pub.L. No. 75-137, 50 Stat. 246 (codified as amended at 7 U.S.C. §§ 601-74), by promulgating the currently effective raisin marketing order under the statute, has taken their property without just compensation in contravention of the Fifth Amendment of the United States Constitution. The Agricultural Marketing Act authorizes the Secretary of Agriculture (the “Secretary”) to issue marketing orders for various agricultural products, including raisins, in an effort to limit the supply of such products on the open market and thus to stabilize prices. The raisin marketing order does not explicitly regulate raisin producers (is., growers), but it imposes draconian regulations on handlers—those who stem, sort, clean, seed, package, or process raisins—by requiring them to transfer to the government’s Raisin Administrative Committee (“RAC”) an annually specified portion of the raisins they buy from producers. Specifically, handlers must physically separate these “reserve tonnage” raisins for the government from the remaining “free tonnage” raisins, which handlers may sell on the open market. The marketing order in effect causes handlers to purchase from producers only the “free tonnage” raisins, with producers receiving an equity interest in the “reserve tonnage” raisins in the [556]*556government’s hands. The RAC may sell or dispose of “reserve tonnage” raisins in secondary, non-competitive markets, and must pay over to the equity-interest holders any net proceeds remaining after it has completed its operations for any given crop year.

Plaintiffs filed their complaint on June 1, 2006, alleging that the Agricultural Marketing Act and regulations promulgated under that Act, including the currently effective raisin marketing order, result in an uncompensated taking of the “reserve tonnage” portion of the raisins they transfer to handlers. Compl. 1ÍH 46-47, 2, 27. In further support of their claim, plaintiffs assert that their equity return on the net proceeds from the sale of these “reserve tonnage” raisins has been worthless or nearly so in recent years. Id. 1145. Plaintiffs seek certification as a class, a declaration that the statutory and regulatory bases for the marketing order violate the Fifth Amendment, an injunction to prevent the United States Department of Agriculture (“USDA”) from enforcing the raisin marketing order, and damages. Id. 111115-20, 51.

The government has filed a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Rules of the Court of Federal Claims (“RCFC”), contending that plaintiffs have not presented a cognizable takings claim. Def.’s Mot. to Dismiss at 4. Plaintiffs have responded by arguing that the government has mis-charaeterized them claim as a regulatory taking, rather than a per se physical taking, and that the federal government’s authority under the Commerce Clause to regulate interstate commerce does not trump the Takings Clause of the Fifth Amendment. Pl.’s Brief Opposing Def.’s Mot. to Dismiss 11111, 14, 29. The Pacific Legal Foundation has filed a brief as amicus curiae in support of plaintiffs, averring that the raisin marketing order confers no benefit on plaintiffs and imposes an involuntary transfer of a portion of plaintiff’s raisins to the government. Briefing has been completed and the court has held a hearing on the pending motions. For the reasons set out below, the government’s motion to dismiss is granted.

BACKGROUND1

In the midst of the Great Depression, Congress passed the Agricultural Marketing Act, which sought to address “the disruption of the orderly exchange of commodities in interstate commerce [that] impairfed] the purchasing power of farmers and destroyed] the value of agricultural assets.” Agricultural Marketing Act, 50 Stat. at 246. The Act authorizes the Secretary to promulgate marketing orders for raisins, among other agricultural commodities, restricting the amount of raisins from a given crop year that raisin handlers in California may sell on the open market. See 7 U.S.C. § 608c(l), (2), (6)(C); see also 7 C.F.R. §§ 989.4, 989.65, 989.66(a)-(b)(1), 989.257 (2006).2

Under the Agricultural Marketing Act, the Secretary may delegate to industry committees the power to administer marketing orders, and these committees may recommend to the Secretary changes to existing orders. 7 U.S.C. § 608c(7)(C); see 7 C.F.R. § 989.35 (2006).3 The raisin marketing order, originally issued in 1949, Handling of Raisins Produced from Raisin Variety Grapes Grown in California, 14 Fed.Reg. 5136 (Aug. 18, 1949) (codified, as amended, at 7 C.F.R. Part 989), created the RAC, a raisin industry group currently composed of forty-seven members, including thirty-five who represent producers, ten who represent handlers, one who represents a cooperative bargaining association, and one who represents the public. [557]*557See California Raisin Marketing Order, 71 Fed.Reg. 4805, 4805-06 (Jan. 30, 2006). The RAC is an agent of the federal government, see Lion Raisins, Inc., v. United States, 416 F.3d 1356, 1368 (Fed.Cir.2005) (“Lion Raisins III ”), whose members are nominated by industry groups and appointed by the Secretary. 7 C.F.R. §§ 989.26, 989.29, 989.30. The RAC receives no federal appropriations, but is funded by assessments levied on handlers and proceeds from the sales of “reserve tonnage” raisins withheld from the open market. See 7 C.F.R. §§ 989.53, 989.79, 989.80(a), 989.82.

By February 15 of each crop year,4 the RAC must recommend to the Secretary the portion of the raisin crop that should be made available for sale without restrictions (“free tonnage” raisins) and the portion that should be withheld from the market (“reserve tonnage” raisins). See 7 C.F.R. §§ 989.54(d), 989.65. Based on the RAC’s recommendations and after obtaining the approval of two-thirds of the raisin producers 5 or of producers of two-thirds of the raisins “produced for market,” the Secretary promulgates a regulation fixing the percentages of “reserve tonnage” and “free tonnage” raisins. 7 U.S.C. § 608c(8)(A)-(B), (9)(B)(i)-(ii); 7 C.F.R. §§ 989.55, 989.65.

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Bluebook (online)
74 Fed. Cl. 554, 2006 U.S. Claims LEXIS 400, 2006 WL 3754812, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evans-v-united-states-uscfc-2006.