Petition for Writ of Certiorari — Evans v. United States (No. 07-871)

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reme Court, U.S.

~ ILED

No. 07-

07-871 DEC 28 2007

aks OFFICE OF THE CLERK

In The

Supreme Court of the Enited States

JOYCE EVANS, MIKE ARABIAN

DBA ARABIAN FARMS, ET AL.,

Petitioners,

JNITED STATES,

Respondent.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

BRIAN C. LEIGHTON DAVID A. DOMINA

701 Pollasky Ave. Counsel of Record

Clovis, CA 93612 DOMINALAW GROUP PC LLO

559-297-6190 2425 S. 144th Street

Omaha, NE 68144

402-493-4100

Petitioners’ Lawyers

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALI. COLLECT (402) 342-2831

QUESTIONS PRESENTED

1. Does a Fifth Amendment Taking occur where

a federal crop marketing order and the Agricultural

Marketing Agreement Act require part of a crop be

taken into federal ownership without just compensa-

tion promptly paid, as a condition to cleaning, stem-

ming, sorting, processing, handling or selling the

crop?

2. Does the Fifth Amendment’s Takings Clause

permit the United States to “exact” part of a harvest

with a Regulation that prohibits crop cleaning,

stemming and sorting unless the producer submits to

the government’s taking, or exaction, without

promptly paid just compensation?

LIST OF PARTIES

The Petitioners are:

Joyce Evans, Mike Arabian dba Arabian

Farms, Jack and Mary Blehm, Earl Boya-

jian, Lynden Brack, Richard and Sally

Chavez dba Chavez Farms, Neil Donovan,

William Donovan, David Flagler, Walter

George Flagler dba Flagler Farms, Chris

Gauss, Brad Hansen, David and Belanie

Horne dba M&D Farming, Mike Jerkovich,

Kuldip and Charanjit Kaleka dba Kaleka

Farms, Loren T. Linscheid dba Linscheid

Farms, Michael A. Logoluso, Rick L. Logoluso,

Tony M. Logoluso, Wayne McFarlane, Mike

Moles, Hunter Nadler, Tom and Teresa

Ochoa dba Ochoa Farms, Gregory and Donna

Patterson, Morris Pivovaroff, Peter Ramirez,

Robert Schneider, Dale Sedoo, Walt Shubin,

Wayne Snell, Srabian Farms GP, and

Wilkens Farm

The Respondent is:

United States of America

ill

CORPORATE DISCLOSURE STATEMENT

Petitioners disclose pursuant to Sup. Ct. R. 29.6:

No publicly held corporations and no political

subdivisions of states are involved in this case.

The Petitioners are all raisin farmers in the

Fresno, California area. Several use names for their

farms as part of their business activity, but none are

publicly traded or widely held.

No political subdivision is a party.

The United States is the Defendant. Its Depart-

ment of Agriculture is involved.

The Raisin Administrative Committee (“RAC”),

Fresno, California, is the agent of the USDA and is a

Non-Appropriated Funded Instrumentality (NAF).

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED.................0........00000. i

Se MN Io chasse daaccatiasiasel nde deus cctmansedscxwehass ll

CORPORATE DISCLOSURE STATEMENT ...... iii

TABLE OF AUTHORITIES «...c0..000c.cscccccsceosse0ee vi

OFFICIAL AND UNOFFICIAL REPORTS OF

OPINIONS AND ORDERS BELOW................ 1

I ss hig adc wah avesenss eeonsvaswcvaahenesdukes 1

CONSTITUTIONAL & STATUTORY PROVI-

RU ROW ee BIE ORGAN BOOP vniiocccscvacccnneseoncesedscsnesivcnaene 1

fe SERS unar aa eels MEMENTOS REPT ER ORB IRE AAES 1

NN hc eta oee thas cata vwenseeiiaaianienesis 1

STATEMENT OF THE CASE...................... ade 10

PP ROEET TEU I OI 5 eioiesocinccnisnienctsescnsescncnnen 10

Ne MINE ign scseney iav ah cramnncaeee 14

ST eases eases decoteeestatcs tude cases oe teamn ona 18

PIE FRUMEY oiciesinsdccvnv coeds citece cessnsctanctaanes 24

REASONS TO GRANT THE PETITION ............ 25

A. The Fifth Amendment’s Payment Obliga-

tion has not been Addressed Recently ...... 25

B. The Fifth Amendment Requires that Just

Compensation be Paid Promptly; This

Court has Never Addressed the Prompt

FUE, SII ise isi varntedicscrininatacceee oe 28

TABLE OF CONTENTS - Continued

C. This Court has Not Considered Property

Exactions from Citizens as Conditions to

Participation in Government Programs.... 32

GP MRUEEE OR cid cietisaraniciccnnrasnieaxtenieueaeas 35

APPENDIX

Judgment — United States Court of Appeals for

er RO CTI odes cscs ee App. 1

Published Opinion — United States Court of

UIE Sc ING a siiskckcsrccivanccenesccmmapeccct dates App. 4

Judgment sought to be reviewed -— United

States Court of Federal Claims..................... App. 35

Excerpts from the Regulations Cited............... App. 36

TABLE OF AUTHORITIES

Page

CASES

Almota Farmers Elevator & Warehouse Co. v.

United States, 409 U.S. 470 (1973)........0... eee. 31

Armstrong v. United States, 364 U.S. 40 (1960) ....... 28

Berman v. Parker, 345 U.S. 26 (1954)... eee 27

Board of Regents of State Colleges v. Roth, 408

ks) SRS EEA eos SSR ae ea IE ties 32

Calder vu. Bull, 3 US. SBC C17OB) ....ccccccc.cceccessccccceasees 28

Doland v. City of Tigard, 512 U.S. 374 (1994) ..........33

Hawaii Housing Auth. v. Midkiff, 467 U.S. 229

| | eee saci iebddecokaauia sia sabasabscacimaucadianaakomewanstiac 27

Illinois Brick Co. v. Illinois, 431 U.S. 720

(gg FERRI aeRO ae es ee 32

Kelo v. City of New London, 545 U.S. 469

CRNET cihaseibhnanaiieniics issutabudidanbnieahab ani aebinaaigeseemeenpabanein 25

Knollan v. California Coastal Comm’n, 483

of 26): ee sau gusianeenebhadeamanaan 33, 34

Leegin Creative Leather Products, Inc. v. PSKS,

ee ae Merc ae Fe CI ED vdipnsccicenendscivacetsiennenasnncnen

Lingel v. Chevron U.S.A., Inc., 544 U.S. 528

III nin ti at ira cd Ue bcalcnadaadeehaune donaenneidnasduamancanesdentiide 33

Lion Ratsins, Inc. v. United States, 416 F.3d

1366 (Ped. Cir, 2000) ...06c...ccecccscessss iodine Waomheags 13, 23

Loretto v. Teleprompter Manhattan CATV

Corp., 458 U.S. 419, 102 S.Ct. 3164, 73

L.Ed.2d 868 (1982)............... Salen aebncealaggaanneneinaeeien 25, 26

TABLE OF AUTHORITIES - Continued

Page

Madison v. Heron Stevedoring Corp., 204 F.2d

Be en a 29

Missouri Pac. RRY Co. v. Nebraska, 164 U.S.

RUN A I isan ev catnnenseuenioraanskdee Gace eda 28

Rindge Co. v. County of Los Angeles, 262 U.S.

Pe Ric cheduanhsencactsaciscbctuatncecsvucmassncataiceeuiases 27

Strickley v. Highland Boy Gold Mining Co., 200

ne I ID ae ec a ee 27

United States v. 564.54 Acres of Land, 441 U.S.

ATER RIM Ae ODOT ALM OER ATR SOD. 31

United States v. Commodities Trading Corp,

ly Be OED arises Gindhieinstacddaaicoes 29, 31

United States v. Fuller, 409 U.S. 488 ..........c cece eee 31

United States v. Reynolds, 397 U.S. 14 (1970).......... 29

Van Horne’s Lessee v. Dorrance, 2 Dall. (2 U.S.)

as ntsc aoncactiaitedasanunce Gnteeaialdea aan ae 28

Wilkinson v. Leland, 2 Pet. (27 U.S.) 627 (829) ........ 28

CONSTITUTION

U.S. Const. amend. V, Takings Clause.............. passim

STATUTES

Pe es ee ie Amica ac nate ee ea 11

gh fel os 5B | ERD Rh aeRO er nN A MPa SR passim

5 ass 6 oasis eaten 12

Vill

TABLE OF AUTHORITIES — Continued

; Page

Fh FO iccenicsccinsisnsiraamainanaanael 1,15

RP GLEE. TO entcccasecssscsiasincntliciigumion eprenrnere 20

2 $1.29A Ge; | BR nintsmixinrcnniananinsinampaaanee 1

50 U.S.C. § 901............006- snhisaieddaiesnanpenenhininnandieilaiedl 30

OTHER AUTHORITIES

Bickford et al. Documentary History of the First

Federal Congress: Legislative Histories at 10

(Wane Eh, ROD is sictskn sas cassenkansnatcanetensssumnsabaa aan 28

Harrington, “Public Use” and the Original

Understanding of the So-Called “Takings”

Clause, 53 Hastings L.J. 1245, 1253 (2002) .......... 27

Hart, Land Use Law in the Early Republic and

the Original Meaning of the Takings Clause,

94 Nw. U. L. Rev. 1099 (2000)............sccecssscessesoonees 21

Heffernan, Wm., et al. “Concentration of Agri-

cultural Markets,” Department of Rural

Sociology, University of Missouri (April

2007); “The State of Agricultural Commodity

Markets 2004,” United Nations Food and

Agricultural Organization, http://www.fao.org/

docrep/007/y5419e/y5419e00. htm (2004)... 32

Origins and Original Significance of the Just

Compensation Clause, 94 Yale LJ. 694

CRED) nice nassnicsudtnsintneannetvencendesseededaiiniactt alana aaaeeeaan 26

Treanor, The Original Understanding of the

Takings Clause and the Political Process, 95

Colum. L. Rev. 782, 862 (1995)...................sscceseees 27

OFFICIAL AND UNOFFICIAL REPORTS

OF OPINIONS AND ORDERS BELOW

Court of Appeals For the Federal Circuit Opinion:

None published. Order (Pet. App. 1).

Court of Federal Claims Opinion:

Evans v. United States, 74 Fed. Cl. 554 (2006)

(Pet. App. 2).

JURISDICTION

The court of appeals issued its judgment on

October 4, 2007. No opinion was issued. No pe ition

for rehearing en banc was filed. This Court has

jurisdiction under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Constitution

U.S. Const. amend. V, Takings Clause:

. nor shall private property be taken for

public use, without just compensation.

Statutes

7 U.S.C. § 608e, Agricultural Marketing Agreements

Act of 1937 (in part).

(1) Issuance by Secretary

The Secretary of Agriculture shall, subject to

the provisions of this section, issue, and from

time to time amend, orders applicable to

processors, associations of producers, and

others engaged in the handling of any agri-

cultural commodity or product thereof speci-

fied in subsection (2) of this section. Such

persons are referred to in this chapter as

“handlers.” Such orders shall regulate, in the

manner hereinafter in this section provided,

only such handling of such agricultural

commodity, or product thereof, as is in the

current of interstate or foreign commerce, or

which directly burdens, obstructs, or affects,

interstate or foreign commerce in such com-

modity or product thereof. In carrying out

this section, the Secretary shall complete all

informal rulemaking actions necessary to re-

spond to recommendations submitted by ad-

ministrative committees for such orders as

expeditiously as possible, but not more than

45 days (to the extent practicable) after

submission of the committee recommenda-

tions...

(2) Commodities to which applicable

Orders issued pursuant to this section shall

be applicable only to

(A) the following agricultural commodities

and the products thereof (except canned or

frozen pears, grapefruit, cherries, apples, or

cranberries, the products of naval stores,

and the products of honeybees), or to any

regional, or market classification of any such

commodity or product: Milk, fruits (including

filberts, almonds, pecans and walnuts but

not including apples, other than apples pro-

duced in the States of.... , cranberries, and

apples produced in the States named above

except Washington, Oregon, and Idaho), to-

bacco, vegetables. ...; and

(B) any agricultural commodity. ...

(6) Terms - Other commodities

In the case of the agricultural commodities

and the products thereof, other than milk

and its products, specified in subsection (2) of

this section orders issued pursuant to this

section shall contain one or more of the fol-

lowing terms and conditions, and (except as

provided in subsection (7) of this section), no

others:

(A) Limiting, or providing methods for the

limitation of, the total quantity of any such

commodity or product, or of any grade, size,

or quality thereof, produced during any

specified period or periods, which may be

marketed in or transported to any or all

markets in the current of interstate or for-

eign commerce or so as directly to burden,

obstruct, or affect interstate or foreign com-

merce in such commodity or product thereof,

during any specified period or periods by all

handlers thereof.

(B) Allotting, or providing methods for

allotting, the amount of such commodity or

product, or any grade, size, or quality

thereof, which each handler may purchase

from or handle on behalf of any and all pro-

ducers thereof, during any specified period or

periods, under a uniform rule based upon the

amounts sold by such producers in such prior

period as the Secretary determines to be rep-

resentative, or upon the current quantities

available for sale by such producers, or both,

to the end that the total quantity thereof to

be purchased, or handled during any speci-

fied period or periods shall be apportioned

equitably among producers.

lotting, the amount of any such commodity or

product, or any grade, size, or quality

thereof, which each handler may market in

or transport to any or all markets in the cur-

rent of interstate or foreign commerce or so

as directly to burden, obstruct, or affect in-

terstate or foreign commerce in such com-

modity or product thereof, under a uniform

rule based upon the amounts which each

such handler has available for current ship-

ment, or upon the amounts shipped by each

such handler in such prior period as thé Sec-

retary determines to be representative, or

both, to the end that the total quantity of

such commodity or product, or any grade,

size, or quality thereof, to be marketed in or

transported to any or all markets in the cur-

rent of interstate or foreign commerce or so

as directly to burden, obstruct, or affect in-

terstate or foreign commerce in such com-

modity or product thereof, during any

specified period or periods shall be equitably

apportioned among all of the handlers

thereof.

(D) Determining, or providing methods for

determining, the existence and extent of the

surplus of any such commodity or product, or

of any grade, size, or quality thereof, and

providing for the control and disposition of

such surplus, and for equalizing the burden

of such surplus elimination or control among

the producers and handlers thereof.

(E) Establishing or providing for the estab-

lishment of reserve pools of any such com-

modity or product, or of any grade, size, or

quality thereof, and providing for the equita-

ble distribution of the net return derived

from the sale thereof among the persons

beneficially interested therein.

(F) Requiring or providing for the require-

ment of inspection of any such commodity or

product produced during specified periods

and marketed by handlers.

(I) establishing or providing for the estab-

lishment of production research, marketing

research and development projects designed

to assist, improve, or promote the marketing,

distribution, and consumption or efficient

production of any such commodity or prod-

uct, the expense of such projects to be paid

from funds collected pursuant to the market-

ing order: Provided, That with respect to

orders applicable to ... raisins ... such pro-

jects may provide for any form of marketing

promotion including paid advertising and

with respect to ... raisins ... may provide

for crediting the pro rata expense assess-

ment obligations of a handler with all or any

portion of his direct expenditures for such

marketing promotion including paid adver-

tising as may be authorized by the order. .. .

{

PT \

\é

) Terms common to all orders

In the case of the agricultural commodities

and the products thereof specified in subsec-

tion (2) of this section orders shall contain

one or more of the following terms and condi-

tions:

* * -

tary of Agriculture, or a method for the selec-

tion, of an agency or agencies and defining

their powers and duties, which shall include

only the powers:

(i) To administer such order in accordance

with its terms and provisions;

(ii) To make rules and regulations to effec-

tuate the terms and provisions of such order;

(i111) To receive, investigate, and report to

the Secretary of Agriculture complaints of

violations of such order;. ...

(10) Manner of regulation and applica-

bility

No order shall be issued under this section

unless it regulates the handling of the

commodity or product covered thereby in the

Same manner as, and is made applicable only

to persons in the respective classes of indus-

trial or commercial activity specified in, a

marketing agreement upon which a hearing

has been held. ...

* * *

(13) Retailer and producer exemption

(B) No order issued under this chapter

shall be applicable to any producer in his ca-

pacity as a producer.

(14) Violation of order

(A) Any handler subject to an order issued

under this section, or any officer, director,

agent, or employee of such handler, who vio-

lates any provision of such order shall, on

conviction, be fined not less than $50 or more

than $5,000 for each such violation, and each

day during which such violation continues

shall be deemed a separate violation. If the

court finds that a petition pursuant to sub-

section (15) of this section was filed and

prosecuted by the defendant in good faith

and not for delay, no penalty shall be im-

posed under this subsection for such viola-

tions as occurred between the date upon

which the defendant’s petition was filed with

the Secretary, and the date upon which no-

tice of the Secretary’s ruling thereon was

given to the defendant in accordance with

regulations prescribed pursuant to subsec-

tion (15) of this section.

(B) Any handler subject to an order issued

under this section, or any officer, director,

agent, or employee of such handler, who vio-

lates any provision of such order may be as-

sessed a civil penalty by the Secretary not

exceeding $1,000 for each such violation.

Each day during which such violation con-

tinues shall be deemed a separate violation

. except that if the Secretary finds that a

petition pursuant to paragraph (15) was filed

and prosecuted by the handler in good faith

and not for delay, no civil penalty may be as-

sessed under this paragraph for such viola-

tions as occurred between the date on which

the handler’s petition was filed with the Sec-

retary, and the date on which notice of the

Secretary's ruling thereon was given to the

handler in accordance with regulations pre-

scribed pursuant to paragraph (15). The Sec-

retary may issue an order assessing a civil

penalty under this paragraph only after no-

tice and an opportunity for an agency hear-

ing on the record. Such order shall be treated

as a final order reviewable in the district

courts of the United States in any district in

which the handler subject to the order is an

inhabitant, or has the handler’s principal

place of business. The validity of such order

may not be reviewed in an action to collect

such civil penalty.

(15) Petition by handler and review

(A) Any handler subject to an order may

file a written petition with the Secretary of

Agriculture, stating that any such order or

any provision of any such order or any obli-

gation imposed in connection therewith is

not in accordance with law and praying for a

modification thereof or to be exempted there-

from. He shall thereupon be given an oppor-

tunity for a hearing upon such petition, in

accordance with regulations made by the

Secretary of Agriculture, with the approval of

the President. After such hearing, the Secre-

tary shall make a ruling upon the prayer of

such petition which shall be final, if in accor-

dance with law.

(8) The District Courts of the United States

in any district in which such handler is an

inhabitant, or has his principal place of

business, are hereby vested with jurisdiction

in equity to review such ruling, provided a

bill in equity for that purpose is filed within

twenty days from the date of the entry of

such ruling. ... The pendency of proceedings

instituted pursuant to this subsection (15)

shall not impede, hinder, or delay the United

States or the Secretary of Agriculture from

obtaining relief pursuant to section 608a(6)

of this title. Any proceedings brought pursu-

ant to section 608a(6) of this title ... shall

abate whenever a fina] decree has been ren-

dered in proceedings between the same par-

ties, and covering the same subject matter,

instituted pursuant to this subsection (15).

Regulations:

7 C.ER. Pt. 989. Pertinent sections (Pet. App.

3) include:

Parts 11, 14, 15, 54, 55, 65, 66, 73 and

166. See Appendix.

STATEMENT OF CASE

Factual Background

Petitioners are independent raisin producers.

They meet the definition of 7 C.F.R. § 989.11 as

“producers” and do not sue as “handlers.” The Raisin

Advisory Committee (“RAC”) is the agent of the

United States and its Department of Agriculture. It

administers the Raisin Marketing Order, 7 C.F-R. Pt.

989. The RMO is enacted under the authority of the

AMAA of 1937. The government takes a significant

part of the producer’s crop when they deliver their

raisins to a handler to be stemmed, sorted, cleaned,

and prepared to be boxed or bagged for market. The

part of the crop taken from them becomes federal

property immediately, is used as the government sees

fit, but is not paid for until nearly a year later, if at

all. Then, far less than fair market value is paid for

the exacted part of the raisin farmer’s crop.

Annually, the RAC determines on an interim

basis made binding when formalized by the Secretary

of Agriculture, fractional levels for what part of the

new crop will be “free tonnage” raisins. “Free ton-

nage” can be sold by producers in their discretion.

The RAC and Secretary declare the remainder of the

crop to be “reserve raisins.” These are not held in

reserve despite their common names. They become

federal raisins. Compensation is not paid for the

reserve raisins when they are taken. The taking

occurs simultaneously with delivery of raisins to

handlers. A handler is anyone who stems, sorts,

cleans, or otherwise processes raisins. A producer

who does so is a handler.

Raisins cannot be sold unless they are stemmed,

sorted, and cleaned. Until this occurs, they are useful

for no commercial purpose.

The Raisin Marketing Order is unlike any other

federal crop marketing order. Only the RMO among

the nation’s thirty-eight (38) active fruit, vegetable

and nut marketing Orders takes a fraction of the crop

for federal use, control, and immediate ownership,

without payment. Other Orders provide for advance

payment and for storage payments, see 7 C.FR.

§$ 981.54 (almonds), 987.147 (dates), 993.59 (prunes),

993.159 (reserve tonnage prunes), but not raisins.

Producers can sell free tonnage raisins when they

want and get fair market value for them. Before they

can do so, their raisins must be “handled.” When

handling occurs, a fraction of the crop, including the

percentages described below in relevant years, are

physically segregated. Title to the segregated “reserve

raisins” passes to the government, and the raisins are

transferred to government ownership and use. Pro-

ducers lose all property rights to these reserve raisins

but are not paid for them.

The Petitioners’ Complaint, dismissed by the

Claims Court, 74 Fed. Cl. 554 (Pet. App. 2), perceived

the Petitioners’ legal problem but suggested alterna-

tive methods to litigate it. The federal circuit affirmed

without opinion. The Complaint provides the entire

backdrop for this case. It was decided on a Rule 12

Motion. The Complaint affirmatively alleges these

important facts:

1. Producers lose all property rights in the

“reserve” raisins and are “never paid for them.”

(Compl. ¥ 35).

2. Producers have thrust upon them, but not by

choice, an equity interest in a “reserve raisin pool”

providing partial payments, but never full value, for

the taken raisins. What is paid is up to the RAC and

never constitutes just or complete compensation.

(Compl. 47 36, 43).

3. Parties, basic terms, and concepts involved

here are:

Joyce Evans, et al. Independent raisin producers.

Petitioners They make claims only as

producers as defined by 7 C.E-R.

§ 989.11. (Compl. |J 9, 10) The

Petitioners are farmers.

United States, The USDA, created by 7 U.S.C.

Defendant §2202 is the Defendant.

It uses the RAC as its agent

in administering the Raisin

Marketing Order (RMO).

Raisin Advisory

Committee (“RAC”)

Raisin Marketing

Order

7 C.ER. Pt. § 989

Free Tonnage

Reserve Tonnage or

Reserve Raisins

Producer

Forty-seven (47) (member

committee appointed by Secre-

tary. Makes recommendations

about fractions of raisin crop to

be devoted to “free tonnage” or

taken as “reserve” raisins, 7

C.ER. § 989.26.

The RMO was promulgated by

the Secretary under the Agri-

cultural Marketing Agreement

Act, 7 U.S.C. §§ 608(cX7), et

seq. The Order, or RMO, pre-

scribes the taking about which

the Petitioners complain.

Raisins that producers are able

to sell on the open market, at

fair market value.

Raisins that producers cannot

sell, but are taken by the

USDA. When this _ occurs,

producers lose all their rights

in the taken raisins. Lion

Raisins, Inc. v. United States,

416 F.3d 1356 (Fed. Cir. 2000).

“Producer means any person

engaged in a proprietary capac-

ity in production of grapes

which are sun-dried or dehy-

drated by artificial means until

they become raisins;....”

7 CER. § 989.11.

“Any person [in California] who

stems, sorts, cleans, or seeds

raisins, grades stemmed rai-

sins, or packages raisins for

market, but not included a

producer who sorts and cleans

unstemmed raisins.”

7 CER. § 989.14.

Handler “(a) Any processor or packer;

(b) any person who places, ships

or continues nature-condition

raisins in the current of com-

merce from within the area to

any point outside thereof} (c) any

person who delivers off-grade ...

or other failing raisins ... ; or (d)

any person who blends raisins.”

7 C.E-R. § 989.15.

Physical Events

1. The Complaint describes a series of physical

events constituting the taking.

October 5, annually RAC sets preliminary reserve

raisin fraction

December, annually Vine pruning begins and

continues through January

and February. (Compl. { 22-

23) (Raisins are an annual

crop, but are produced on

perennial vines, some of

which are over 100 years old.

Compl. 7 22. Harvest occurs

in August and September.)

February 15, annually Final figure is published for

the fraction of “free tonnage”

and “reserve” raisins permit-

ted to be marketed. RAC and

USDA issue this determina-

tion (Compl. 4 26).

1999-2000 through Crop years at issue in

2005-2006 (Compl. { 34).

The post NAFTA Essentially, since the North

Problem American Free Trade Agree-

ment (NAFTA) the reserve

raisin pool has been used to

provide raisins for foreign

trade and to develop foreign

markets. These markets are

being subsidized at the Peti-

tioners expense. Note: There

are no federal farm subsidies

for raisin producers.

The Agricultural Marketing Adjustment Act of

1937 empowered the USDA to adopt marketing

orders. 7 U.S.C. § 608c(6XE). Compl. | 29. The Raisin

Marketing Order is entitled “Raisins Produced from

Grapes Grown in California.” It is codified at 7 C.F-R.

§ 989.1-95. Additional regulations extend from 7

C.E-R. § 989.102 to § 989.108.

The Reserve Pool was not part of the RMO when

raisin producers voted to adopt the Order. (Compl.

{| 31). Even if the Reserve Pool had been approved by

producers in their referendum, it would be uncounsti-

tutional as applied, now

Reserve raisins were confiscated (jurispruden-

tially, “exacted”) by the government. Producers,

including Petitioners, were not paid for the exacted

crop. From 1999-2000 through 2005-2006, free and

reserve tonnage percentages established by the

United States were as follows. The Reserve fraction

was exacted for public purposes:

Year Free Tonnage Reserve Tonnage

Sold at FMV Not Compensated

1999-2000 85% 15%

2000-2001 53% A7%

2001-2002 63% 37%

2002-2003 53% 47%

2003-2004 10% 30%

2004-2005 100% O%

2005-2006 82% 18%

Compl. | 34)

Raisins, unlike grapes, can be produced only in

extremely isolated locations in four small regions in

the world where grapes can be dried to raisins in the

field with absolute absence of moisture during the

critical drying period. Petitioners own or lease vine-

yards to grow grapes which are picked and dried to

produce raisins. Raisin “ranches” range in size from 5

to 500-plus acres. In the United States, they are all

located in California. Vineyards are costly, and take

years to replace.

Petitioners use their own and hired labor to grow

grapes, pick them, dry them in the field as raisins,

load them in bins, and truck them to the processing

plant for essential cleaning, stemming, sorting, and

sale or custom packing. Petitioners’ annual raisin

production costs are $700-$800 per ton or more,

including weed control, pest control, labor, cutting,

replanting, harvesting, loading, binning, storing,

interest, insurance, and trucking before the raisins

arrive at the plant. (Compl. { 23).

The price of raisins ranged from approximately

$750 to $1,210 per ton over the six critical years

(Compl. J 24). Taking 15%-47% of the crop deprives

producers of all their profits and their livelihoods.

USDA, through the RAC, forcibly confiscates up to

47% of Petitioners’ raisin crop each year. This confis-

cated volume is called “Reserve Tonnage.” (Compl.

4 25). The industry wide raisin yield range for raisins

is between 1.5 and 2.5 tons per acre. (Compl. J 26).

An example helps. The reserve tonnage for the

2005/2006 Crop Year was 26%, finalized February 15,

2006. On a 100-acre raisin “ranch” averaging 2 tons of

raisin production per acre, 52 tons, or 104,000 pounds

of raisins will be transferred to government owner-

ship as a result. Approximately 100 separate raisin

bins will be taken from this hypothetical producer; he

receives no just compensation for what is taken. The

2006 price was about $1,210 per ton. The value of this

100-acre farm’s raisins taken by the government was

$62,920. (Compl. J 27).

History

The AMAA of 1937 grants to USDA the power of:

Establishing or providing for the establish-

ment of reserve pools of any such commodity

or product, or of any grade, size, or quality

thereof, and providing for the equitable dis-

tribution of the net return derived from the

sale thereof among the persons beneficially

interested therein.

7 U.S.C. § 608c(6)(E) (Compl. J 29).

Several marketing orders arose from out of the

AMAA of 1937 (the Act). The Raisin Order was first

issued in 1949. 7 CL.E-R. § 989.1 to 989.95. The Order

gave rise to the Raisin Regulations. 7 CFR.

§ 989.102 to 989.801. (Compl. J 30).

The Reserve Pool was not a part of the Raisin

Order when raisin producers voted on the proposed

Order. Reserve Pool regulations were established

after the most recent producer vote occurred. (Compl.

4 31). The RAC, established by the Raisin Order, has

broad governmental powers, but is supervised and

controlled by the USDA. RAC is a non-appropriated

funded instrumentality (NAF).

The committee shall have the following powers:

(a) To administer the terms and provisions

of this part;

(b) To make rules and regulations to effec-

tuate the terms and provisions of this

part;

ments to this part; and

(d) Receive, investigate, and report to the

Secretary complaints of violations of this

part.

7 C.ER. § 989.35. (Compl. J 32)

The RAC recommends interim Free Tonnage and

Reserve Raisin percentages on or before October 5th

each Crop Year, and final percentages on or before

each February 15th. The final recommendation is

submitted to the Secretary of Agriculture for ap-

proval. 7 C.ELR. § 989.54(b) to (d). The Secretary acts

upon the recommendation by publishing the final

binding “Free Tonnage” and “Reserve Tonnage” raisin

percentages in the Federal Register. (Compl. { 33).

The raisin confiscation rate has been as high as

forty-seven percent (47%) in two (2) of the six (6)

affected crop years. Nearly half of all raisins the

Petitioners produced were taken by the government.

Producers were not paid (Compl. J 34). No business

can survive this burden.

Free and Reserve tonnage raisins look, taste,

smell, and feel exactly the same. Raisins are raisins.

The taking occurs upon delivery to a packer. At

delivery, the Order and Regulations require the raisin

packer to physically set the Reserve tonnage raisin

bins aside and store them for the government, the

new legal owner. (Compl. 9 35). The packer does not

become the owner of the reserve raisins — title to

them moves from producer to the United States. All

new owners of raisins except the United States pay

fair market value. The United States pays nothing.

Free tonnage is sold in the cash market. Free-

tonnage raisins become raisins in school lunches

packed by mothers, cereal products, bakery products,

on grocery store shelves, and sprinkled throughout

the food supply. Reserve raisins become food in feder-

ally-subsidized school lunches, military breakfast

cereals, federal prison meals, public assistance foods,

White House state dinners, and other government

programs (Compl. 9 44). The raisins are indistin-

guishable, except producers are paid for Free-

tonnage, but not for Reserve raisins. The Complaint

starkly alleges in { 36 that producers received “zero

money” for Reserve-tonnage raisins.

Petitioners allege that producers receive illusory

— and often valueless — rights to future equity pay-

rents from the money remaining in the crop year’s

Reserve Pool after the government does what it wants

with the Reserve raisins. Producers get an illusory

government IOU, but it is never paid at full value.

Sometimes, when the government chooses, it pays a

little, but it never pays the JOU in full. Sometimes it

pays nothing. Payment is always postponed, and

interest is never paid. Jd. Reserve Raisins exaction

from Petitioners began after NAFTA was enacted in

1993. 19 U.S.C. §3301 et seg.

Raisin production is not subsidized. Producers,

including Petitioners, are not paid to raise Reserve

tonnage raisins. They pay all fixed and variable costs

to produce the entire crop, and get no support for the

part the government exacts. (Compl. 7 36.4).

After reserve raisins are taken, they are held in

segregated bins for the RAC. The RAC disposes of

them through “alternative marketing channels.”

(Compl. J 37). The RAC physically gives some taken

raisins to packers in a “Raisin Back” program. Id.

Approximately $132 million in raisins were trans-

ferred, through the Reserve Pool, directly to packers

during affected crop years. These packers are the

same organizations that buy the producers’ free

tonnage. Of course, “Raisin Back” fruit depresses the

free tonnage price. Since raisins are raisins, packers

like the free ones from the government better than

the ones they must buy at fair market value. Peti-

tioners, as producers, received little or no “producer

equity” payments during this time. (Compl. J 38). In

short, the Reserve Pool accomplishes the precise

opposite of its intended purpose. It lowers prices

instead of increasing them.

The RAC and government use heavy handed

compliance tools to enforce the Raisin Marketing

Order, and the Reserve Program. Petitioners have no

choice but to comply. Enforcement is required to force

producers to facilitate these takings. Deterrence from

non-compliance is a major goal of the RAC and

USDA. An RAC “Compliance Committee” oversees

these efforts, and a RAC “Compliance Officer” carries

out the function. USDA investigators and government

investigative tools are used. RAC has unrestricted

access to packer’s’ plants and records for inspections.

7 C.ER. § 989.77. (Compl. J 40). Producers have no

market except through packers. As is shown below,

even packing one’s own fruit makes one a handler

and triggers the Reserve Raisin taking according to

the government. This is the Catch 22 of the Raisin

Marketing Order. Raisins must be stemmed, sorted

and cleaned to be sold. Stemming, sorting and clean-

ing are “handling.” Anyone who does this work is a

handler. Stemming, sorting and cleaning, i.e., han-

dling, triggers the Reserve Raisin exaction. Producers

cannot avoid the exaction by cleaning and selling

their own crops. They are stuck: either tear out their

vines and raise something else, or suffer the exaction.

Petitioners respectfully submit this is not tolerable

government action unless Fifth Amendment just

compensation is paid. The packer gets its money, and

government kickbacks, in the Raisin Back program.

The government gets cheap or free raisins.

Reserve raisin regulations are enforced with

vigor. The government requires reports to be filed to

assure compliance. These include:

' A “packer” is a “handler” under the Raisin Order. 7 C.ER.

$§ 989.14, 989.15. All packers are handlers. All handlers are not

packers. Anyone, including a producer, who cleans, stems or

sorts is a handler, and raisins cannot be sold unless they are

cleaned, stemmed and sorted. There is no escape from the

exaction of “reserve raisins.”

RAC-1 Forms, “Weekly Report Of Standard

Raisin Acquisitions,” authorized by 7 C.F-R.

§ 989.73(b),

RAC-20 Forms, “Monthly Reports Of Free

Tonnage Raisin Disposition,” authorized by 7

C.F-R. § 989.73(d),

RAC-50 Forms, “Inventory Of Free Tonnage

Standard Quality Raisins On Hand,” author-

ized by 7 C.E-R. § 989.73(a),

RAC-51 Forms, “Inventory Of Off-Grade Rai-

sins On Hand,” authorized by 7 C.FER.

§ 989.73(a).

(Compl. 7 41).

Raisins packers and handlers have three (3)

business days to segregate reserve raisin bins for

ownership by the government. 7 C.F-R. § 989.66(b)1);

7 CER. § 989.166(b). Once a Reserve “stack” or group

of bins — each containing 900 to 1,200 pounds of raw,

unprocessed raisins — is identified, they may not be

used because they belong to the government. Han-

dlers must deliver the Reserve raisins upon demand,

or pay damages. 7 CER. § 989.166(c). (Compl. J 42).

No one pays the producers for the taken crop at this

time.

The federal circuit decided, in a previous raisin

case, that the Petitioners are stripped of all property

interests in the raisins by the reserve pool require-

ments. Lion Raisins, Inc. v. United States, 416 F.3d

1356 (Fed. Cir. 2005) (Compl. J 43).

The Complaint, taken as admitted since this case

1s before the Court on a Rule 12 ruling, contains stark

facts about the takings of the Petitioners’ property.

Raisins are property within the meaning of the

Takings Clause. These raisins are taken by the gov-

ernment and the RAC when Reserve Pool transfer

occurs at a handler’s plant. The Petitioners lose their

property rights in the raisins, and receive no just

compensation — usually no compensation at all.

(Compl. J 47).

The Petitioners neither assert nor concede the

Raisin Marketing Order and its Regulations are

within the AMAA of 1937’s scope of authority. (Compl.

{ 47). The Complaint dismissed below was not a

challenge claiming the Raisin Order, 7 C.F-R. Pt.

S$ 989, violates the AMAA.

Procedural History

Petitioners sued as representatives on behalf of

all raisin producers as a putative class. The govern-

ment responded by seeking dismissal for failure to

state a claim upon which relief could be granted. The

claims court decided the case on a Rule 12 motion,

and the court of appeals reviewed it, and affirmed it,

on this basis.

REASONS TO GRANT THE PETITION

A. The Fifth Amendment’s Payment Obliga-

tion has not been Addressed Recently.

This Court’s recent takings jurisprudence focused

on what justifies the exercise of eminent domain

authority. Kelo v. City of New London, 545 U.S. 469

(2005). This Court has not addressed, since Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419,

102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), whether just

compensation must be paid when a clear, unambigu-

ous taking has occurred, because title to an asset has

been transferred to the government and payment has

not been made. Affirmation of this fundamental

obiigation of government and literal application of the

Fifth Amendment’s Takings Clause, require this

Court’s attention. The issues are worthy of this

Court’s consideration. It has not considered the just

compensation aspect of the Fifth Amendment for

many years. There is no clear test emergent from

prior jurisprudence.

The thirty-five (35) specialty crop marketing

orders for various crops govern the nations’ most

basic industry, agriculture and no longer work as they

did 60 years ago when they originated. They have

come to harm producers, not help them. As the econ-

omy turns, sometimes once effective laws become

antithetical to what was intended. When the turn is

* Twelve (12) specialty crop marketing orders have disap-

peared since 1981.

as dramatic as 180 degrees, this can mean a law

becomes applied in an unconstitutional fashion. The

AMAA is now used to effectuate takings without just

compensation, not to create reserves for which the

producer receives guid pro quo. This Court is asked to

examine the Raisin Marketing Order, which governs

the entire raisin industry, for its Fifth Amendment

importance.

The facts here are stark. The taking is apparent.

The government claims its Raisin Marketing Order is

valid as a tool to regulate markets. The Fifth

Amendment does not permit the government to

regulate property by taking part of it from its owners

in order to make the remainder more valuable. It is

the taking of property, not the arguable (though

absent) enhancement in value to the remainder, that

is forbidden by the Fifth Amendment. See Loretto, 458

U.S. at 434-435. (“When the ‘character of the govern-

mental action,’ is a permanent physical occupation of

property, cases uniformly have found a taking to the

extent of the occupation, without regard to whether

the action achieves an important public benefit or has

only minimal economic impact on the owner.”) (cita-

tion omitted).

Petitioners focus, here, on the government’s

actual taking of raisins from producers, not attempts

to regulate the raisin market. The Takings Clause

appears to have been understood, originally, as apply-

ing only to appropriation of private property, not

regulation of it. Note, Origins and Original Signifi-

cance of the Just Compensation Clause, 94 Yale L.J.

694 (1985); Hart, Land Use Law in the Early Republic

and the Original Meaning of the Takings Clause, 94

Nw. U. L. Rev. 1099 (2000).

Takings have long been permitted in the United

States when a broad “public use” test considering

matters of public health, recreation, enjoyment, and

welfare are considered. Strickley v. Highland Boy

Gold Mining Co., 200 U.S. 527, 531 (1906); Rindge

Co. v. County of Los Angeles, 262 U.S. 700, 707

(1923); Berman v. Parker, 345 U.S. 26, 32-3 (1954);

Hawaii Housing Auth. v. Midkiff, 467 U.S. 229

(1984). Petitioners’ complaint is not that the taking

occurs, but that they are not paid for what is taken.

The Takings Clause places two (2) limitations on

the power of eminent domain:

(1) The power must be used to further the

public welfare, and

(2) The government must pay “just compen-

sation” when it takes property. /d.; Kelo

vu. City of New London.

A number of scholars have written about this and

have nearly uniformly agreed with this _ history.

Treanor, The Original Understanding of the Takings

Clause and the Political Process, 95 Colum. L. Rev.

782, 862 (1995); Harrington, “Public Use” and the

Original Understanding of the So-Called “Takings”

Clause, 53 Hastings L.J. 1245, 1253 (2002).

B. The Fifth Amendment Requires that Just

Compensation be Paid Promptly; This

Court has Never Addressed the Prompt

Payment Issue.

The Takings Clause’s just compensation re-

quirement prohibits postponement in payment or

reduction in acquisition price from fair market value

when the government takes something from a citizen.

Armstrong v. United States, 364 U.S. 40, 49 (1960).

But the Raisin Reserve commands postponed pay-

ment, and uncompensated takings.

The original draft of the Takings Clause, “[nJo

persons shall be obliged to relinquish his property,

where it may be necessary for public use, without just

compensation,” and the final version, passed without

recorded debate by the nation’s founders. Bickford

et al. Documentary History of the First Federal Con-

gress: Legislative Histories at 10 (Veit Ed. 1986).

Petitioners raise here the lack of just compensation,

not just the taking. This Court’s attention has been

devoted primarily to what constitutes a public pur-

pose for taking. “What is a taking” jurisprudence

ranges from old: Van Horne’s Lessee v. Dorrance, 2

Dall. (2 U.S.) 304 (1795); Calder v. Bull, 3 U.S. 386

(1798); Wilkinson v. Leland, 2 Pet. (27 U.S.) 627 (829);

Missouri Pac. RRY Co. v. Nebraska, 164 U.S. 403

(1896); to new: Kelo v. City of New London, 545 US.

469 (2005).

But, little attention has been devoted to what

must be paid, and when payment must be made, to

satisfy the Fifth Amendment's requirements. “Just

compensation” has long been presumed to require

that fair market value be paid, in cash, effective as of

the time of taking. “Just compensation generally

means the full monetary equivalent of the property

taken.” United States v. Reynolds, 397 U.S. 14, 16

(1970).

Hon. Learned Hand once cautioned that when

reference is made to the Fifth Amendment’s prohibi-

tion against taking private property without just

compensation it must be remembered that “we are

dealing with a constitutional limitation, and there is

no surer way to misapprehend its scope than to

ignore its history, and treat it as inspired test.” Madi-

son v. Heron Stevedoring Corp., 204 F.2d 88, 97 (2d

Cir. 1953) (Hand, J. concurring). Certiorari is proper

so this Court can refocus judicial attention on the just

compensation limitation, and the fact its nonpayment

is a taking in and of itself. Taking procedure can be

acceptable, but nonpayment violates the Fifth

Amendment. This is the problem the Petitioners face.

Where fixed prices do not approximate the mar-

ket value of a good, and it is physically taken and

transferred to the government, the difference between

what the government does pay, and the market price,

is required for just compensation to be paid. United

States v. Commodities Trading Corp, 339 U.S. 12, 123

(1950).

In Commodities Trading Corp, this court held

that the Fifth Amendment’s Taking Clause’s use of

fv)

4 UV

the phrase “just compensation .. . evoked case by case

problems.”

This court has never attempted to prescribe

a rigid rule for determining what is “just

compensation” under all circumstances and

in all cases. Fair market value has normally

been accepted as a just standard. But, when

market value has been too difficult to find, or

when its application would result in manifest

injustice to owner or public, courts have fash-

ioned and applied other standards. Since the

market value standard was developed in the

context of a market largely free from gov-

ernment controls, prices rigidly fixed by law

raise questions concerning whether a “mar-

ket value” so fixed can be a measure of “just

compensation.” [Citation omitted.] Whatever

the circumstances under which such consti-

tutional questions arise, the dominant con-

sideration always remains the same: What

compensation is “just” both to an owner

whose property is taken, and to the public

that must pay the bill?

In the context of the Emergency Price Control

Act, 50 U.S.C. §§ 901 et seg., the Fifth Amendment

was held to require “fairness” and “equity” as “the

primary standards prescribed for sealing prices under

the Act, and, therefore, as guidance to a value that

might represent just compensation and could not be

ignored in ascertaining it.” This Court held that

even in emergency circumstances, a price control act

did not “constitute the measure of just compensation

for property taken under the Fifth Amendment.”

Commodities Trading, supra, 339 U.S. at 124. This

ruling was handed down in a case involving regula-

tions enacted to stabilize prices during Word War II.

Id.

Since 1950, this Court visited the “just compen-

sation” constitutional requirement only infrequently

and in a limited way. United States v. Fuller, 409 U.S.

488, 490, observed, “The constitutional requirement

of just compensation derives as much content from

the basic equitable principles of fairness, United

States v. Commodities Trading Corp. [citation omit-

ted] as it does from technical concepts of property

law.” In Almota Farmers Elevator & Warehouse Co. v.

United States, 409 U.S. 470, 478 (1973), Fuller was

cited and paraphrased for the same proposition noted

previously. The Court declined to designate market

value as the sole measure of just compensation,

again, in United States v. 564.54 Acres of Land, 441

U.S. 506, 512 (1979), holding, “There are situations

where this standard is inappropriate.”

But, no case has permitted the government to

take a crop from a producer, transfer title to itself,

and pay the producer less than just compensation.

And, no case has dealt with delayed payments. A

genuine public need exists for this Court to grant

certiorari and use this case to confirm that the gov-

ernment cannot take, or exact, property without just

compensation. The fair market value of raisins can be

ascertained readily. Each time a taking occurs, a

portion of the crop is sold as “free tonnage” at market

price, and the rest is confiscated to federal ownership.

This Court is asked to declare this is not permissible.

These issues are worthy of the Supreme Court’s

consideration. The Court has not focused on the just

compensation portion of Fifth Amendment jurispru-

dence for a long while, and certainly has not done so

since many decisions in many areas of the !aw have

moved toward the market-driven economics currently

found in legal expression in areas like anti-trust law,

Illinois Brick Co. v. Illinois, 431 U.S. 726 1977),

Leegin Creative Leather Products, Inc. v. PSKS, Inc.,

127 S.Ct. 2705 (2007). As the nation’s production

facilities, in agricultural and otherwise, become more

concentrated, the just compensation issue becomes

more significant, requiring consideration as more of

the nation’s economy is involved in each takings

transaction. See Heffernan, Wm., et al. “Concentration

of Agricultural Markets,” Department of Rural Sociol-

ogy, University of Missouri (April 2007); “The State of

Agricultural Commodity Markets 2004,” United

Nations Food and Agricultural Organization, http://

www.fao.org/docrep/007/y5419e/y5419e00.htm (2004).

C. This Court has Not Considered Property

Exactions from Citizens as Conditions to

Participation in Government Programs.

This case is a physical exactions case. Petitioners

claim exactions like the one undertaken here are

impermissible. This Court held in Board of Regents of

State Colleges v. Roth, 408 U.S. 564, 577 (1972):

The duty to compensate for what the gov-

ernment takes is absolute. When the gov-

ernment physically takes possession of an

interest in property for some public purpose,

it has a categorical duty to compensate the

former owner, ... regardless of whether the

interest that is taken constitutes an entire

parcel or merely a part thereof. Thus, com-

pensation is mandated when a !easehold is

taken and the government occupies the

property for its own purposes even though

that use is temporary. Similarly, when the

government appropriates part of a rooftop in

order to provide cable TV access for apart-

ment tenants, or when its planes use private

airspace to approach a government airport, it

is required to pay for that share no matter

how small.

(Internal citations omitted).

This Court's tv.o (2) exaction opinions, Knollan v.

California Coastal Comm’n, 483 U.S. 825 (1987), and

Doland v. City of Tigard, 512 U.S. 374 (1994) involved

Fifth Amendment takings challenges to adjudicative

land-use exactions, i.e., government demands that a

landowner dedicate an easement allowing public

access to property as a condition to obtaining a devel-

opment permit. Doland at 379-380; Knollan at 828.°

* This Court dealt with exaction issues in explaining its

holding in Lingel v. Chevron U.S.A., Inc., 544 U.S. 528, 546

(2005), but Lingel did not advance exactions jurisprudence.

Lingel, like Noland and Knollan, was essentially a regulatory

takings case.

In each of these two (2) cases, the Court began

with a premise that had the government appropriated

the easement it would have been a per se physical

taking. The question was whether the government

could, without compensation, effectuate such a taking

as a condition for granting a development permit. In

Knollan, the Court answered in the affirmative,

provided that the exaction would substantially ad-

vance the same government interest that would

furnish a valid ground for denying a permit. 483 U.S.

at 834-37. The Court refined this requirement in

Doland, holding that “an adjudicative exaction re-

quiring dedication of private property must also be

“roughly proportional... both in nature and extent to

the impact of the proposed development.” 512 U.S. at

391.

This case asks whether these exaction standards

applied to the real estate development setting justify

exacting, or exacting from private ownership the

government’s raisin needs for any particular year, by

commanding an owner give them up, without pay-

ment, or with inadequate payment on delayed terms.

Petitioners respectfully submit that nothing in this

Court’s long Fifth Amendment jurisprudence suggests

an affirmative answer is permissible.

Unlike the exaction cases in this Court’s history,

the taking at issue involves no government regulation

but instead mandates a government toll to enter the

market — though the government obviously knows the

entire object of producing raisins is to sell them.

CONCLUSION

The Petitioners respectfully request the Court

grant the petition, hear and decide this case on the

merits, and use the significant questions presented to

address important Fifth Amendment physical takings

and just compensation legal considerations affecting

the nation and its economy.

JOYCE EVANS, MIKE ARABIAN DBA

ARABIAN FARMS, ET AL., Petitioners,

Davip A. DOMINA

Counsel of Record

DOMINALAW GROUP PC LLO

2425S. 144th Street

Omaha, NE 68144

(402) 493-4100

dad@dominalaw.com

and

BRIAN C. LEIGHTON

701 Pollasky Ave.

Clovis, CA 93612

(559) 297-6190

APPENDIX

Judgment — United States Court of Anpeals for

eo App. 1

Published Opinion — United States Court of

lass cred cisdhanucibiseasaisaaaooseniss App. 4

Judgment sought to be reviewed — United

States Court of Federal Claims..................... App. 35

Excerpts from the Regulations Cited............... App. 36

App. 1

NOTE: This disposition is nonprecedential.

United States Court of Appeals

for the Federal Circuit

2007-5045

JOYCE EVANS, MIKE ARABIAN, dba Arabian

Farms, AULAKH FARMS, INC., JACK BLEHM,

MARY BLEHM, EARL BOYAJIAN, LYNDEN

BRACK, RICHARD CHAVEZ, SALLY CHAVEZ, dba

Chavez Farms, NEIL DONOVAN, WILLIAM

DONOVAN, DAVID FLAGLER, WALTER GEORGE

FLAGLER, dba Flagler Farms, CHRIS GAUSS,

BRAD HANSEN, DAVID HORNE, MELANIE

HORNE, dba M&D Farming, MIKE JERKOVICH,

KULDIP KALEKA, CHARANJIT KALEKA, dba

Kaleka Farms, LOREN T. LINSCHEID, dba

Linscheid Farms, MICHAEL A. LOGOLUSO, SR.,

RICK L. LOGOLUSO, TONY M. LOGOLUSO,

WAYNE MCFARLANE, MIKE MOLES, HUNTER

NADLER, TOM OCHOA, TERESA OCHOA, dba

Ochoa Farms, GREGORY PATTERSON, DONNA

PATTERSON, MORRIS PIVOVAROFF, PETER

RAMIREZ, ROBERT SCHNEIDER, DALE SEDOO,

WALT SHUBIN, WAYNE SNELL,

SRABIAN [sic] FARMS GP, and WILKENS FARM,

Plaintiffs-Appellants,

UNITED STATES,

Defendant-Appellee.

David A. Domina, Domina Law Group PC LLO,

of Omaha, Nebraska, argued for plaintiffs-appellants.

App. 2

Timothy P. Mcilmail [sic], Attorney, Commercial

Litigation Branch, Civil Division, United States

Department of Justice, of Washington, DC, argued for

defendant-appellee. With him on the briefs were

Peter D. Keisler, Acting Attorney General, Jeanne E.

Davidson, Director, and Mark A. Melnick, Assistant

Director. Of counsel on the brief was Heather M.

Pichelman, United States Department of Agriculture,

of Washington, DC.

James S. Burling, Pacific Legal Foundation, of

Sacramento, California, for amicus curiae.

Appealed from: United States Court of Federal

Claims

Judge Charles F. Lettow

Judgment

(Filed Oct. 4, 2007)

ON APPEAL from the UNITED STATES COURT

OF FEDERAL CLAIMS

in CASE NO(S). 06-CV-439.

This CAUSE having been heard and considered, it is

ORDERED and ADJUDGED:

App. 3

Per Curiam: (MAYER and GAJARSA, Circuit Judges

and RESTANI, Judge.*):

AFFIRMED. See Fed. Cir. R. 36.

ENTERED BY ORDER OF

THE COURT

DATE: _ Oct. 4, 2007 /s/ Jan Horbaly

Jan Horbaly, Clerk

* Honorable Jane A. Restani, Chief Judge of the United

States Court of Internationa] Trade, sitting by designation.

App. 4

In the United States Court of Federal Claims

No. 06-439C

(Filed: December 22, 2006)

k Kk Kk KK KK K OK OK OK OK

JOYCE EVANS, et al.,

Plaintiffs,

Takings Clause;

Commerce Clause;

Agricultural Marketing

Agreement Act of 1937;

) motion to dismiss for

) failure to state a claim;

RCFC 12(b)(6)

Vv.

UNITED STATES,

Defendant.

)

Wa es 2S og & we es = ae

)

David A. Domina, DominaLaw Group, PC, LLO,

Omaha, Nebraska, for plaintiffs. On the briefs was

Michael C. Stumo, DominaLaw Group, PC, LLO,

Omaha, Nebraska. Of counsel were Claudia L.

Stringfield-Johnson, DominaLaw Group, PC, LLO,

and Brian C. Leighton, Law Offices of Brian C.

Leighton, Clovis, California.

Timothy P. MclIlmail, Trial Attorney, Commercial

Litigation Branch, Civil Division, United States

Department of Justice, Washington, D.C., for defen-

dant. With him on the briefs were Assistant Attorney

General Peter D. Keisler, David M. Cohen, Director,

Commercial Litigation Branch, and Mark A. Melnick,

Assistant Director, Civil Division, United States

Department of Justice, Washington, D.C.

James S. Burling, Principal Attorney, Pacific

Legal Foundation, Sacramento, California, for amicus

App. 5

curiae Pacific Legal Foundation. Of counsel was

Timothy Sandefur, Attorney, Pacific Legal Founda-

tion, Sacramento, California.

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 mar-

keting order under the statute, has taken their prop-

erty without just compensation in contravention of

the Fifth Amendment of the United States Constitu-

tion. 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 stabi-

lize prices. The raisin marketing order does not

explicitly regulate raisin producers (i.e., 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 gov-

ernment’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 gov-

ernment from the remaining “free tonnage” raisins,

App. 6

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 government’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 proce !s

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. 1 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. J 45. 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 Depart-

ment of Agriculture (“USDA”) from enforcing the

raisin marketing order, and damages. /d. J] 15-20, 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 plain-

tiffs have not presented a cognizable takings claim.

App. 7

Def.’s Mot. to Dismiss at 4. Plaintiffs have responded

by arguing that the government has mischaracterized

their 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 {J 1, 14, 29. The Pacific Legal

Foundation has filed a brief as amicus curiae in

support of plaintiffs, averring that the raisin market-

ing order confers no benefit on plaintiffs and imposes

an involuntary transfer of a portion of plaintiff’s

raisins to the government. Briefing has been com-

pleted and the court has held a hearing on the pend-

ing motions. For the reasons sct out below, the

government’s motion to dismiss is granted.

BACKGROUND

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] impair[ed]

the purchasing power of farmers and destroyled] the

value of agricultural assets.” Agricultural Marketing

Act, 50 Stat. at 246. The Act authorizes the Secretary

' The recitations that follow do not constitute findings of

fact by the court. Rather, the recited factual elements are taken

from the parties’ pleadings and other filings and are either

undisputed or are alleged and assumed to be true for purposes of

the pending motion

App. 8

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(1), (2), (6.C); see also 7 C.F.R. §§ 989.4,

989.65, 989.66(a)-(b)(1), 989.257 (2006).°

Under the Agricultural Marketing Act, the Secre-

tary may delegate to industry committees the power

to administer marketing orders, and these commit-

tees may recommend to the Secretary changes to

existing orders. 7 U.S.C. § 608c(7)(C); see 7 C.F.R.

§ 989.35 (2006).° The raisin marketing order, origi-

nally 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 produc-

ers, ten who represent handlers, one who represents

a cooperative bargaining association, and one who

* Section 8c of the Agricultural Marketing Act, 7 U.S.C

§ 608c, the key statutory provision dealing with the marketing

orders, originated in a 1935 amendment to the Agricultural

Adjustment Act of 1933, Pub. L. No. 73-10, 48 Stat. 31. See Act

of Aug. 24, 1935, Pub. L. No. 74-320, § 5, 49 Stat. 750, 753-61

The Agricultural Marketing Act reenacted much of the Agricul-

tural Adjustment Act, including Section 8c. See Agricultural

Marketing Act, § l(e), 50 Stat. at 246.

* References to the raisin marketing order and to other

USDA regulations are to those revised as of January 1, 2006,

unless otherwise noted

App. 9

represents the public. See California Raisin Market-

ing 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.FR. §§ 989.26,

989.29, 989.30. The RAC receives no federal appro-

priations, 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,’ 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’ or of producers of two-thirds of the raisins

“produced for market,” the Secretary promulgates a

regulation fixing the percentages of “reserve tonnage”

* The raisin crop year runs from August 1 of a given year

until July 31 of the next year. See 7 C.F.R. § 989.21.

° A producer is “any person engaged in a proprietary

capacity in the production of grapes which are sun-dried or

dehydrated by artificial means until they become raisins.” 7

C.F.R. § 989.11

App. 10

and “free tonnage” raisins. 7 U.S.C. § 608c(8)(A)-(B),

(9)(B)(i)-Gii); 7 C.F.R. §§ 989.55, 989.65.

Using a reserve pool mechanism, the raisin mar-

keting order requires handlers’ to separate the raisins

they purchase from producers (i.e., raisin growers) into

two discrete sets of bins: one for “free tonnage” raisins

and the other for “reserve tonnage” raisins. 7 C.F.R.

§§ 989.54, 989.55, 989.65, 989.66(b\(2). Upon delivery

to a handler, title to the “free tonnage” raisins passes

to the handler, but title to the “reserve tonnage”

portion of a producer’s raisins automatically transfers

to the RAC for sale in secondary, non-competitive

markets. See 7 C.F.R. §§ 989.65, 989.66(a), (b)(1), (4)

(“reserve tonnage” raisins acquired by a handler

“shall be held by him for the account of the [RAC]}”).’

° A handler is “(a) [aJny processor or packer; (b) any person

who places, ships, or continues natural condition raisins in the

current of commerce from within the area to any point outside

thereof; (c) any person who delivers off-grade raisins, other

failing raisins or raisin residual material to other than a packer

or other than into any eligible non-normal outlet; or (d) any

person who blends raisins [subject to certain exceptions].” 7

C.F.R. § 989.15. A processor is any person who receives raisins

and uses them in California to make a product other than

raisins for marketing or distribution. 7 C.F.R. § 989.13. A packer

is “any person who, [in California], stems, sorts, cleans, or seeds

raisins, grades stemmed raisins, or packages raisins for market

as raisins,” but does not include a producer who sorts and cleans

unstemmed raisins. 7 C.F.R. § 989.14.

” The RAC may dispose of “reserve tonnage” raisins in non-

competitive markets by sale to handlers serving specified outlets

or for resale to exporters for sales abroad, by direct sale to the

United States or fureign governments, by gift, or by any other

(Continued on following page)

App. 1l

Producers are entitled by regulation to an equitable

distribution of the net proceeds from the RAC’s

disposition of the “reserve tonnage” raisins. See 7

C.F.R. §$ 989.66(h); see also Raisin Administrative

Committee, Analysis Report 10 (2001), available at

http://www.raisins.org (“Funds generated from _ re-

serve pool sales programs, net of costs, become the

growers’ equity.”). The RAC usually needs several

years to dispose of the “reserve tonnage” raisins for a

given year. See California Raisin Marketing Order, 71

Fed. Reg. at 4806. As a result of these restrictions,

handlers pay producers for the “free tonnage” portion

of the raisins, but not for the “reserve tonnage” rai-

sins. Compl. J 27; Lion Raisins III, 416 F.3d at 1360."

The Agricultural Marketing Act explicitly ex-

cludes raisin producers from regulation, 7 U.S.C.

§ 608c(13)(B), but the expansive regulatory definition

of a handler, see supra at 557 n.6, captures within its

scope any producer who seeds, grades, packages, or

stems raisins or places raisins into interstate com-

merce. See 7 C.F.R. §§ 989.14, 989.15. The govern-

ment may seek injunctive relief, as well as civil and

means consistent with 7 U.S.C. § 608. 7 C.F R. § 989.67(b).

Plaintiffs allege that proceeds from “reserve tonnage” raisins are

used to subsidize raisin packers’ exports and school lunch

programs, as well as to fund more than half of the RAC’s budget.

Compl. 14 37, 44.

* The price handlers pay producers for “free tonnage”

raisins is negotiated privately by handlers’ and packers’ bargain-

ing associations. See Lion Raisins III, 416 F.3d at 1360; Compl.

q 24 & n.4.

App. 12

criminal penalties, against handlers who violate

the raisin marketing order. See 7 U.S.C. §§ 608a(5),

608a(6), 608c(14); see also In re Saulsbury Enters.,

Inc., 55 Agric. Dec. 6, 7, 17 (May 7, 1996) (holding

that a raisin producer who shipped largely uncleaned

raisins to Canada was a handler subject to civil

penalties for violating a raisin marketing order); 7

C.F.R. § 989.166(c) (providing that a handler who

refuses to turn over his “reserve tonnage” raisins to

the RAC shall compensate the RAC according to the

market price for such raisins).

The raisin marketing order shares many of the

characteristics of marketing orders for other agricul-

tural products. Compare 7 C.F.R. Part 989 (Raisin

Marketing Order), with 7 C.F.R Parts 930 (Tart

Cherry Marketing Order), 981 (Almond Marketing

Order), 984 (Walnut Marketing Order), 985 (Spear-

mint Oil Marketing Order), 993 (Prune Marketing

Order).’ Like other such orders, the raisin marketing

order grants to the industry committee, the RAC,

the power to sell or dispose of all of the reserves,

compare 7 C.F.R. § 989.67(a) (raisins), with 7 C.F.R.

$$ 981.66(a) (almonds), 984.56 (walnuts), 993.65(a)

* Pursuant to 7 C.FR. §993.90(a), the handling require-

ments for the marketing order for prunes were suspended

indefinitely by the Secretary in August 2005. See Dried Prunes

Produced in California; Suspension of Handling and Reporting

Requirements, 70 Fed. Reg. 50,153 (Aug. 26, 2005); see also

Dried Prunes Produced in California; Suspension of Handling

and Reporting Requirements, 70 Fed. Reg. 30,610 (May 27,

2005).

App. 13

(prunes), and also gives either handlers or producers

a proportional interest in the net proceeds from any

reserve sales. Compare 7 C.F.R. § 989.65(e) (raisins),

with 7 C.F.R. §§ 981.66(e) (almonds), 984.56(e) (wal-

nuts), 993.65(e) (prunes). Nonetheless, the raisin

marketing order stands out from most of its counter-

parts in two respects: it effects a direct transfer of

title of a producer’s “reserve tonnage” raisins to the

government, and it requires physical segregation of

the reserve-tonnage raisins held for the govern-

ment’s account. 7 C.F.R. §§ 989.54, 989.55, 989.65,

989.66(b)(2).

Marketing orders for agricultural products have

been controversial, and considerable litigation has

recently arisen about them. Recently, the raisin

marketing orders have been a focal point for such

litigation. In 2005, the Federal Circuit decided Lion

Raisins Ill, 416 F.3d 1356, a consolidated appeal of

two cases in which Lion Raisins, Inc. (“Lion”), a raisin

producer and handler, mounted Fifth Amendment

takings challenges that were related to those in this

case, but that relied on different substantive allega-

tions. In Lion Raisins, Inc. v. United States, 58 Fed.

Cl. 391 (2003) (“Lion Raisins I”), Lion, in its capacity

as a producer, alleged that the RAC’s use of proceeds

from 1997 “reserve tonnage” raisins to finance

export programs during the 1998 and 1999 crop

years constituted a taking entitling it to just com-

pensation. Lion Raisins III, 416 F.3d at 1361. Lion

claimed that the RAC had violated the Agricultural

Marketing Act and the pertinent raisin marketing

App. 14

order by not transferring to Lion its equitable share

in the 1997 reserve pool. Jd. at 1369. The Federal

Circuit affirmed dismissal of Lion’s suit on the ground

that “a claim premised on a regulatory violation does

not state a claim for a taking” in the Court of Federal

Claims. Id.; see also Rith Energy, Inc. v. United

States, 247 F.3d 1355, 1366 (Fed. Cir. 2001) (noting

that a takings claim premised on an alleged statutory

or regulatory violation does not state a claim cogniza-

ble in the Court of Federal Claims under the Tucker

Act because suits for just compensation in the Court

must rest on a taking for public use, the legality of

which is not challenged). In commenting on an addi-

tional claim made by Lion that a change in the re-

serve pool benefits constituted a physical taking of

the plaintiff’s raisins, the Federal Circuit remarked

that “once the raisins were transferred to the RAC,

Lion no longer had a property interest in the raisins

themselves, but only in its share of the reserve pool

proceeds as defined by the regulations.” Lion Raisins

III, 416 F.3d at 1369 n.9 (citing 7 C.F.R. § 989.66(h)).

In the companion case, Lion Raisins, Inc. v.

United States, 57 Fed. Cl. 435 (2003) (“Lion Raisins

IJ”), Lion, in its capacity as a handler, pressed a Fifth

Amendment takings claim by alleging that the RAC

had not returned raisin bins in which Lion had trans-

ferred reserve raisins to the RAC. Lion Raisins III,

416 F.3d at 1361, 1370. Lion sought compensation for

the bins and for a rental fee for the RAC’s use of the

bins. Jd. at 1361. The Federal Circuit affirmed the

dismissal of this suit as well, stressing that 7 U.S.C.

App. 15

§ 608c(15) provides an administrative remedy for any

handler who alleges that “any [] order or any provi-

sion of any such order or any obligation imposed in

connection therewith is not in accordance with law.”

Id. at 1370. Noting that the Supreme Court described

7 U.S.C. § 608c(15) as providing an explicit remedy to

an aggrieved handler, id. at 1371 (citing United

States v. Ruzicka, 329 U.S. 287, 292 (1946)), the court

stated: “We have repeatedly held that Tucker Act

review of takings claims is precluded where Congress

has provided ‘a specific and comprehensive scheme

for administrative and judicial review.’” Jd. at 1372

(quoting Vereda, Ltda. v. United States, 271 F.3d

1367, 1375 (Fed. Cir. 2001) (in turn quoting St. Vin-

cent’s Med. Ctr. v. United States, 32 F.3d 548, 550

(Fed. Cir. 1994))).”°

STANDARD FOR DECISION

“Dismissal of a complaint under RCFC 12(b\(6) is

appropriate when the plaintiff can prove no set of

facts that would warrant the requested relief, when

drawing all well-pleaded factual inferences in favor of

the complainant.” Levine v. United States, 453 F.3d

'° To the same effect, the D.C. Circuit recently ruled in

Edaleen Dairy, LLC v. Johanns, 467 F.3d 778 (D.C. Cir. 2006),

that a producer-handler who wishes to challenge a new rule that

eliminated an exemption for large producer-handlers and

required them to pay into a producer settlement fund, was

required first to exhaust administrative remedies by petitioning

the Secretary of Agriculture for relief.

App. 16

1348, 1350 (Fed. Cir. 2006) (citing Leider v. United

States, 301 F.3d 1290, 1295 (Fed. Cir. 2002))." In

ruling on a motion under RCFC 12(b)(6), the court

must decide “not whether a plaintiff will ultimately

prevail but whether the claimant is entitled to offer

evidence to support the claims.” Swierkiewicz v.

Sorema N.A., 5384 U.S. 506, 511 (2002) (quoting

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). A motion

to dismiss should not be granted unless “it appears

beyond doubt that the plaintiff can prove no set of

facts in support of his claim which would entitle him to

relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

ANALYSIS

A. The Federal Government’s Power to Regulate

Interstate Commerce

Plaintiffs’ takings claims are intertwined with

the question of what power the federal government

possesses to regulate the raisin industry. Pls.’

Sur-Reply Br. Opposing Def.’s Mot. to Dismiss J 5.

Under the Tucker Act, 28 U.S.C. § 1491l(a), this court

possesses subject matter jurisdiction of a takings claim against

the United States. See Preseault v. Interstate Commerce

Comm'n, 494 U.S. 1, 12 (1990). In pertinent part, the Tucker Act

provides that “(t]he United States Court of Federal Claims shall

have jurisdiction to render judgment upon any claim against the

United States founded ... upon the Constitution.” 28 U.S.C.

§ 1491(a). The RAC is an agent of the United States, and the

United States may be sued in this court for any takings without

just compensation allegedly committed by the RAC. See Lion

Raisins III, 416 F.3d at 1368.

App. 17

Plaintiffs claim that they have only three options for

disposing of their raisins: (1) preparing the raisins for

sale to the public, thereby subjecting themselves to

the marketing order as handlers; (2) selling the

raisins to handlers, again subjecting themselves to

the marketing order; or (3) consuming all of the

raisins on their farms. /d. For all practical purposes,

plaintiffs claim, they cannot sell raisins without the

government gaining title to and control over a fixed

portion as “reserve tonnage” raisins. See id.; Compl.

11 46-47.

Under the Commerce Clause of the Constitution,

Congress may regulate the channels of interstate

commerce, the instrumentalities of interstate com-

merce, and persons or things in interstate commerce,

including activities that “substantially affect” inter-

state commerce. Perez v. United States, 402 U.S. 146,

150, 152 (1971). Included in the last category are

“purely local activities that are part of an economic

‘class of activities’ that have a substantial effect on

interstate commerce.” Gonzales v. Raich, 545 U.S. 1,

17 (2005).

Illustrative of Congress’s power to regulate

intrastate activity — and in particular intrastate

agricultural activity — is the Depression-era decision

in Wickard v. Filburn, 317 U.S. 111 (1942). In Fil-

burn, at issue were regulations promulgated under

amendments to the Agricultural Adjustment Act of

1938, Pub. L. No. 75-430, 52 Stat. 31. The regula-

tions, which were designed to control the volume

of wheat in interstate and foreign commerce and

App. 18

thereby stabilize prices, established a wheat acreage

allotment for an Ohio farmer named Roscoe Fillburn

of 11.1 acres and a yield of 20.1 bushels per acre.

Filburn, 317 U.S. at 114-15. Mr. Fillburn sowed 23

acres and in due course harvested 239 bushels of

wheat from the 11.9 acres that exceeded his desig-

nated allotment. Jd. at 114. In a suit filed in federal

district court, Mr. Fillburn contended that the im-

posed quotas were unconstitutional under the Com-

merce Clause because the excess wheat he sowed and

harvested was intended solely for consumption on his

farm and had at most an indirect effect on interstate

commerce. /d. at 118-19. After Mr. Fillburn prevailed

in a three-judge district court proceeding, the Su-

preme Court reversed. In sweeping language, the

Supreme Court firmly rejected Fillburn’s argument:

But even if [Fillburn’s] activity be local and

though it may not be regarded as commerce,

it may still, whatever its nature, be reached

by Congress if it exerts a substantial eco-

nomic effect on interstate commerce and this

irrespective of whether such effect is what

might at some earlier time have been defined

as ‘direct’ or ‘indirect.’

Id. at 125.

Filburn had been partially foreshadowed by the

Supreme Court’s decision in United States v. Rock

Royal Co-Op., Inc., 307 U.S. 533, 569 (1939), which

specificaily upheld the constitutionality of the

App. 19

Agricultural Marketing Act under the Commerce

Clause.” The far-reaching scope of Filburn has re-

mained intact to this day, having been recently reaf-

firmed in 2005 by the Supreme Court in Raich. See

Raich, 545 U.S. at 17-18; id. at 37 & n.2 (Scalia, J.,

concurring in the judgment) (“The regulation of an

intrastate activity may be essential to a comprehen-

sive regulation of interstate commerce even though

the intrastate activity does not itself ‘substantially

affect’ interstate commerce.”).

Congress’s power to regulate the raisin industry

in the manner prescribed by the Agricultural Market-

ing Act is governed by Filburn. Nonetheless, Con-

gress’s power to act under the Commerce Clause does

not immunize the federal government from a takings

claim under the Fifth Amendment. The Commerce

Clause, just as the War Power, may well provide the

underpinnings for a taking, but the Supreme Court

* In Rock-Royal, the operation of the Agricultural Market-

ing Act was upheld in the context of a milk marketing order, in

the face of Fifth Amendment due process and takings conten-

tions advanced as defenses to an enforcement action. See Rock-

Royal, 307 U.S. 533. One of the primary defenses in Rock-Royal

was that an equalization pool established by the milk marketing

order at issue, intended to provide a relatively uniform or

weighted-average price for milk of similar quality, deprived milk

producers of their liberty and property. Jd. at 571-72. That broad

contention was rejected on the basis of Congress’s power under

the Commerce Clause: “As the Congress would have, clearly, the

right to permit only limited amounts of milk to move in inter-

state commerce, we are of the opinion it might permit the

movement on terms of pool settlement here provided.” Id. at 572.

App. 20

has explicitly stated that there is no “blanket excep-

tion to the Takings Clause whenever Congress exer-

cises its Commerce Clause authority.” Kaiser Aetna v.

United States, 444 U.S. 164, 172 (1979); see also

United States v. Pewee Coal Co., 341 U.S. 114, 115-

116 (1951) (taking occurred when the government

took control of a coal mine during wartime, to assure

continued production in the face of a threatened

strike). In this same vein, the Federal Circuit has

concluded that “the Government’s proper exercise of

regulatory authority does not automatically preclude

a finding that such action is a compensable taking.”

Yancey v. United States, 915 F.2d 1534, 1540 (Fed.

Cir. 1990). In short, the Commerce Clause may pro-

vide the authority for a taking, but it does not negate

the Fifth Amendment’s command that the govern-

ment, having taken a person’s property, must pay just

compensation. See id; Kaiser Aetna, 444 U.S. at 174.

B. The Scope of the Raisin Marketing Order and

Other Such Orders

The scope of the raisin marketing order is re-

markable, but in many ways is typical of other mar-

keting orders. Marketing orders for other agricultural

products also employ a variation of the reserve pool

mechanism used in the raisin marketing order. See,

e.g., 7 C.F.R §§ 930.55-.57 (tart cherries), 981.50-.58

(almonds), 984.54-.56 (walnuts), 985.57 (spearmint

oil), 993.56-.65 (prunes). Some marketing orders

simply require the handler to hold the reserve portion

in his or her possession, see, e.g., 7 C.F.R. § 984.54(b)

App. 21

(requiring a walnut handler to hold reserve walnuts

“in his possession or under his control”), while one

requires an industry committee, under certain cir-

cumstances, to hold the reserves on behalf of individ-

ual producers. 7 C.F.R. § 985.57(a) (“The Committee

shall store reserve [spearmint] oil for the account of

the producer.”). Most marketing orders give the

industry committee that is acting as the government’s

agent a plenary power to sell or dispose of the re-

serves, see 7 C.F.R. §§ 981.66(a) (almonds), 984.56(a)

(walnuts), 989.67(a) (raisins), 993.65(a) (prunes), but

such orders also give either handlers or producers a

proportional interest in the net proceeds from any

reserve sales. 7 C.F.R. §§981.66(e) (almonds),

984.56(e) (walnuts), 989.66(h) (raisins), 993.65(e)

(prunes).

In addition to the raisin marketing order, two

other marketing orders as a practical matter effect a

shift in beneficial ownership somewhat akin to the

direct transfer of title of which plaintiffs in this case

complain. An almond handler must “at all times, hold

in his possession or under his control, in proper

storage for the account of the Board, the quantity of

almonds necessary to meet his reserve obligation.” 7

C.F R. §981.52 (emphasis added). Nonetheless,

handlers do have the option of selling their reserve

almonds in non-competitive markets, subject to

conditions set by the Board. 7 C.F.R. § 981.67; see also

Cal-Almond, Inc. v. United States, 30 Fed. Cl. 244,

245 (1994), aff’d, 73 F.3d 381 (Fed. Cir. 1995) (Table,

text in Westlaw). Moreover, almond growers may sell

App. 22

their almonds at a roadside stand free of the market-

ing order’s regulation of handlers. See 7 C.F.R.

§ 981.13 (excluding from the definition of handlers

any producer who makes such roadside sales).

Under the marketing order for prunes, handlers

are required “at all times, [to] hold, in [their] posses-

sion or under [their] control, in proper storage for the

account of the committee, free and clear of all liens,

the quantity of prunes necessary to meet [their]

reserve obligation.” 7 C.F.R. § 993.57 (emphasis

added). Nonetheless, prune handlers are not required

to effect a physical separation of reserve prunes from

“salable” prunes. 7 C.F.R. §§ 993.57, 993.54; see Prune

Bargaining Assoc. uv. Butz, 444 F.Supp. 785, 788-89

(N.D. Cal. 1975) (“These reserve prunes are not

physically segregated from the salable prunes, how-

ever, and thus the reserve is, in fact, a paper re-

», 13

serve. }.

* Based solely on the regulatory language, the marketing

orders for almonds, walnuts, and prunes explicitly include

within the definition of a handler intrastate attempts by produc-

ers to market their crops. See 7 C.F.R. §§ 981.11, 981.13, 981.16

(handler includes any person who “put(s} almonds ... into any

channel of trade for human consumption ... within [Califor-

nia]”); 7 C.FR. §§ 984.4, 984.13, 984.14 (handler includes any

person who “putis} walnuts ... in the current ef commerce

within [California]”); 7 C.F.R. §§ 993.4, 993.13, 993.14 (handler

includes any person who “place[s) prunes in the current of the

commerce within ([California}]”). The definition of a raisin

handler, at least on its face, covers interstate efforts by produc-

ers to market their crops. 7 C.F.R. §§ 989.4, 989.15 (handler

includes “any person who places ... raisins in the current of

(Continued on following page)

App. 23

The raisin marketing order, although similar to

the almond and prune marketing orders, appears to

be stricter. Not only does title to a producer’s “reserve

tonnage” raisins pass immediately to the government

upon sale to a handler, but the handler must physi-

cally segregate those raisins for the RAC’s account. 7

C.F.R. $$ 989.54, 989.65, 989.66(b)(2).

C. Plaintiffs’ Takings Claim

1. Fifth Amendment takings principles.

The Takings Clause of the Fifth Amendment

provides that “private property [shall not] be taken

for public use, without just compensation.” The

Takings Clause “was designed to bar Government

from forcing some people alone to bear public bur-

dens which, in all fairness and justice, should be

borne by the public as a whole.” Armstrong v. United

States, 364 U.S. 40, 49 (1960). In this context, “|t]he

Constitution neither creates nor defines the scope of

property interests compensable under the Fifth

Amendment.” Maritrans v. United States, 342 F.3d

1344, 1352 (Fed. Cir. 2003) (citing Bd. of Regents of

State Colleges v. Roth, 408 U.S. 564, 577 (1972)).

Rather, “existing rules or understandings” and “back-

ground principles” derived from independent sources,

commerce from within |California] to any point outside thereof”)

(emphasis added). Plaintiffs’ complaint avers that the raisin

marketing order, in practice, regulates even purely intrastate

activity. See Compl. J 46-47; Pls.’ Sur-Reply Br. Opposing Def.’s

Mot. to Dismiss ¥ 5.

App. 24

such as state statutes or common law, define the

scope of property rights for Takings Clause purposes.

Lucas v. South Carolina Coastal Council, 505 U.S.

1003, 1030 (1992). Based on these principles, in a

takings case, a court must first establish whether a

plaintiff holds a property interest for purposes of the

Fifth Amendment and then, if such a property inter-

est exists, determine whether a taking occurred. See

Members of Peanut Quota Holders Ass’n v. United

States, 421 F.3d 1323, 1330 (Fed. Cir. 2005).

Physical takings are compensable, see Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419,

427 (1982), while regulatory takings may or may not

be compensable depending upon the circumstances.

See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393,

415 (1922) (“The general rule at least is, that while

property may be regulated to a certain extent, if

regulation goes too far it will be recognized as a

taking.”). For an alleged regulatory taking, the court

must make an “essentially ad hoc, factual inquir[y]”

guided by three factors — (1) the character of the

governmental action, (2) the economic impact of the

action, and (3) the degree of interference with the

reasonable, investment-backed expectations of the

property owner. Penn Cent. Transp. Co. v. City of New

York, 488 U.S. 104, 124-28 (1978); see also Tahoe-

Sierra Pres. Council v. Tahoe Reg’l Planning Agency,

535 U.S. 302, 325-328 (2002); Palazzolo v. Rhode

Island, 533 U.S. 606, 634 (2001) (O’Connor, J., con-

curring).

App. 25

2. Plaintiffs’ property interest in their raisins.

Plaintiffs contend that this is a physical, not a

regulatory, takings case, primarily because the raisin

producers must give up title to the reserve raisins to

the RAC in connection with the producers’ sale of

free-tonnage raisins to handlers. See Pls. Opp. to

Def.’s Mot. to Dismiss (“Pls.’ Opp.”) at 5-8. The gov-

ernment resists any finding of a taking of a property

interest, contending that plaintiffs’ participation in

the raisin production business is purely voluntary, as

is their marketing of raisins. Def.’s Reply at 2. As the

government would have it, “the reserve pool mecha-

nism [established by the raisin marketing order] is

the price of entering that market.” Jd.

Plaintiffs claim that the raisin marketing order

leaves raisin growers in an untenable position — they

must subject themselves to an involuntary transfer of

a portion of the raisins they grow, let their raisins rot

in their fields, or eat all of their raisins. Compl.

77 46-47; Pls.’ Sur-Reply Br. Opposing Def.’s Mot.

to Dismiss 7 5. Plaintiffs also complain that their

equity interest in the net proceeds from the “reserve

tonnage” raisins has become worthless for practical

purposes. Compl. 7 45.

The government stresses that plaintiffs do not

and cannot allege that the government has entered

their property and seized the raisins, that plaintiffs

are forced to introduce their raisins into interstate

commerce, or that the marketing order forces plain-

tiffs to sell their raisins to handlers. Def.’s Mot. to

App. 26

Dismiss at 8. Citing Wallace v. Hudson-Duncan Co.,

98 F.2d 985 (9th Cir. 1938), the government also

asserts that Congress has the power under the Com-

merce Clause to “destroy” an entire industry without

running afoul of the Fifth Amendment’s Takings

Clause, regardless of whether the regulated product

is raisins or contraband. See Hr’g Tr. 8:22 to 9:2;

13:15-21; 15:1-9 (Nov. 21, 2006).”

‘ In this respect, the government overstates the holding in

Wallace. In Wallace, the majority opinion for a panel that

divided 2 to 1, stated that “even if the [walnut packer] were able

to show (which it has not done) that the only alternative to

making delivery to the Control Board of surplus [i.e., reserve}

walnuts ... would be to go out of business,” case law would

support upholding the walnut marketing order. Wallace, 98 F.2d

at 990. Putting aside that the hypothetical is dictum, the cases

the court cited in support of this proposition, see id. (citing

Montana Timber Co. v. Washington, 243 U.S. 219 (1917); Noble

State Bank v. Haskell, 219 U.S. 104 (1911)), did not confirm that

destruction of an entire industry was permissible under the

Commerce Clause without implicating the Fifth Amendment’s

Due Process or Takings Clauses. Rather, the cited cases upheld

regulatory schemes, imposed respectively by the states of

Washington and Oklahoma, in which individual participants

were required to contribute to a pool even though any distribu-

tions from the pool might not fully compensate them for their

original contributions. See id. Although the court indicated that

the plaintiff in Wallace had the option of avoiding the walnut

regulations altogether by “retirement from the business,” the

facts of the case did not present the question whether the federal

government had power to destroy an entire industry without

implicating the Takings or Due Process Clauses. See 98 F.2d at

990-91. In any event, action taken in reliance upon the Com-

merce Clause manifestly is not immune from takings challenges.

Kaiser, 444 U.S. at 172; Yancey, 915 F.2d at 1540.

App. 27

Here, under California law, plaintiffs unques-

tionably had title to their raisins grown in their

fields. See Cal. Rev. & Tax Code § 6016 (“‘Tangible

personal property’ means personal property which

may be seen, weighed, measured, felt, or touched, or

which is in any other manner perceptible to the

senses.”).”° Upon sale and transfer of the raisins to a

handler, the producers acquired in exchange personal

property consisting of cash (for the “free tonnage”

raisins) and an equitable interest in the net proceeds

of the “reserve tonnage” raisins. Plaintiff producers

thus had a property interest in the raisins, and they

retained a property interest in the proceeds from the

raisins. The real question is whether their transac-

tions with handlers resulted in a “physical” taking.

Plaintiffs argue that the transfer of reserve-

tonnage raisins in connection with the sale of free-

tonnage raisins to the handlers was involuntary —

that once plaintiffs decided to grow raisins, there

was no escape from the raisin marketing order,

plaintiffs had no ability to opt out, and the result

was a per se taking. See Pls.’ Sur-Reply Br. Opposing

Def.’s Mot. to Dismiss 9 5. This contention is un-

availing. Although the RAC gains title to some of the

This definition of “tangible personal property” applies for

tax purposes, not for California law generally, see Filmservice

Labs., Inc. v. Harvey Bernhard Enters., Inc., 208 Cal. App. 3d

1297, 1305 (1989), but the definition nonetheless accords with

common-law usage relating to goods, products, and agricultural

commodities. See Cal. Com. Code §2105(1) (definition of

“goods’).

App. 28

raisins that plaintiffs grow, the transfer does not have

the same consequences as, for example, entry by

governmental officials upon their land for purposes of

confiscating their raisins would have. There is no

physical invasion of property, see Loretto, 458 U.S. at

421 (cable television company’s installation of its

cable facilities on plaintiff’s property); Pewee Coal,

341 U.S. at 115-16 (federal occupation of plaintiff’s

coal mine), nor is there any “direct appropriation of

property.” Carruth v. United States, 627 F.2d 1068,

1081 (Ct. Cl. 1980) (addressing peanut marketing

regulations). Instead, the government is the recipient

of a portion of the raisins that plaintiffs shipped to

handlers subject to the marketing order. See Carruth,

627 at 1081; Wallace, 98 F.2d at 989-90 (upholding

walnut marketing regulations). In essence, plaintiffs

are paying an admissions fee or a tol] — admittedly a

steep one — for marketing raisins. The government

does not force plaintiffs to grow raisins or to market

the raisins; rather, it directs that if they grow and

market raisins, then passing title to their “reserve

tonnage” raisins to the RAC is their admission ticket.

See Wallace, 98 F.2d at 989 (“The [marketing] [o]rder

contains no absolute requirement of the delivery of

walnuts to the Control Board. The requirement is a

. ry 6

conditional one.”)'

'° However harsh the consequences of the raisin marketing

order, the consequences attendant to marketing raisins were

known in advance. Although the transfer of title to the reserve

raisins to the RAC cannot be considered as “voluntary” in the

(Continued on following page)

App. 29

In the circumstances at hand, if plaintiffs have a

takings claim, it would relate to their property inter-

est, equitable in nature, in the net proceeds from the

disposition of the “reserve tonnage” raisins. 7 U.S.C.

§ 608c(6)(E); 7 C.F.R. § 989.66(h). In this case, how-

ever, plaintiffs have put forward no explicit claim as

to this property interest, and the court will not con-

sider that such a claim has been made by implication

from plaintiffs’ contention that their equitable inter-

est has in recent years proven to be worthless or

nearly so. Among other things, such a claim would

have to be limned with particularity, and there ap-

pear to be at least four conceptually possible avenues

for plaintiffs to pursue vindication of their property

rights in the equity pool.”

sense that it was a desired outcome of intended action, neither

was it an unexpected result of such action. See Carruth, 627 F.2d

at 1081 (peanut regulations); Wallace, 98 F.2d at 989-90 (walnut

regulations); cf. Lucas, 505 U.S. at 1027-1028 (“{I]n the case of

personal property, by reason of the State’s traditionally high

degree of control over commercial dealings, {the property owner]

ought to be aware of the possibility that new regulation might

even render his property economically worthless (at least if the

property’s only economically productive use is sale or manufac-

ture for sale).”); Norman v. United States, 429 F.3d 1081, 1089

(Fed. Cir. 2005) (rejecting plaintiffs’ takings challenge where

plaintiffs “did transfer title in the wetland acreage... , [but] the

record is clear that the title transfer was voluntary”).

17 ” 3 .

Because the “free” and “reserve” percentages vary from

crop year to crop year, see Compl. J 34, and in some years there

may be no reserve at all, plaintiffs would have difficulty posing

generic, facial claims about their equitable interest in the

(Continued on following page)

App. 30

First, plaintiffs could make a regulatory takings

claim, arguing that the RAC, by returning only

meager pool proceeds to plaintiffs, effected a taking.

See Cienega Gardens v. United States, 331 F.3d 1319,

1330-31 (Fed. Cir. 2003). Instead, plaintiffs here

claimed a taking of their property interest in raisins

they had already exchanged for cash and equity

interests in the reserve pool. Compl. 4J 46-47, 51.

Second, plaintiffs might petition the Secretary of

Agriculture for an administrative remedy. As produc-

ers, plaintiffs are specifically excluded from the Agri-

cultural Marketing Act’s scope, 7 U.S.C. § 608c(13)(B),

and administrative remedies are limited to handlers.

7 U.S.C. § 608c(15). Plaintiffs claim, Hr’g Tr. 64: 7-14

(Nov. 21, 2006), and the government concedes, Def.’s

Resp. to Pls.’ Post-argument Submissions of Addi-

tional Authorities at the Court’s Request at 1, that

producers have no remedy under the Agricultural

Marketing Act. In administrative proceedings, the

Secretary has adhered to this interpretation of the

statute. See, e.g., In re Kent Cheese Co., 43 Agric. Dec.

34, 36 (1984) (denying standing to petitioner who did

not allege he was a handler under the regulatory

definition); Jn re M&R Tomato Distribs., Inc., 41

Agric. Dec. 33, 33 (1982) (same). Nonetheless, if

plaintiffs themselves packaged their raisins or intro-

duced them into interstate commerce, they would be

reserve pool. See, e.g., id. | 34.6 (no reserve for crop year 2004-

05).

App. 31

deemed handlers, see 7 C.F.R. §§ 989.14, 989.15, and

would then have an administrative remedy. 7 U.S.C.

§ 608c(15).

Third, plaintiffs could file suit in federal district

court, alleging that the Secretary or the RAC has

violated the Agricultural Marketing Act, the raisin

marketing order, or the associated regulations. As

producers, plaintiffs might qualify for the narrow

exception to the general rule that handlers must

exhaust their administrative remedies under the

Agricultural Marketing Act. See Stark v. Wickard,

321 U.S. 288, 309 (1944). As the Supreme Court

explained:

When ... definite personal rights are created

by federal statute, ... the silence of Congress

as to judicial review is, at any rate in the ab-

sence of an administrative remedy, not to be

construed as a denial of authority to the ag-

grieved person to seek appropriate relief in

the federal courts in the exercise of their

general jurisdiction.

Stark, 321 U.S. at 309 (emphasis added). Given the

specific “personal right” to a proportional share of the

reserve pool net proceeds, 7 C.F.R. § 989.66(h), and

the circumstance that an administrative remedy is

limited to handlers, 7 U.S.C. § 608c(15), plaintiffs

might sue in federal district court without first seek-

ing an administrative remedy. See Stark, 321 U.S. at

311; Edaleen Dairy, 467 F.3d at 782-83. Unlike the

plaintiffs in Lion Raisins III, 416 F.3d at 1369-70,

however, plaintiffs in this case do not contend that

App. 32

the government has violated the Agricultural Market-

ing Act or the raisin marketing order, see Compl.

114, 48-51, but rather, they claim that the govern-

ment’s application of the statute and the marketing

order has taken their “reserve tonnage” raisins with-

out just compensation. Jd. {J 46-47, 51.

Fourth, plaintiffs might claim they were subject

to an illegal exaction. The species of claim known as

an illegal exaction has several variations. A plaintiff

may sue for a sum “improperly exacted or retained” in

violation of the Constitution, a statute, or a regula-

tion. United States v. Testan, 424 U.S. 392, 401

(1976); see also Eastport S. S. Corp. v. United States,

372 F.2d 1002, 1007 (Ct. Cl. 1967) (overruled on other

grounds by Malone v. United States, 849 F.2d 1441,

1444-45 (Fed. Cir. 1988)). Alternatively, a plaintiff

may pursue an allegation that a “particular provision

of law relied upon grants [him], expressly or by

implication, a right to be paid a certain sum” and that

he has not been so paid. Eastport S. S. Corp., 372

F.2d at 1007; see also Aerolineas Argentinas v. United

States, 77 F.3d 1565, 1573 (Fed. Cir. 1996) (an airline

could seek reimbursement of costs borne by it for

transporting aliens who had sought political asylum

in the United States, because the costs were paid “at

the direction of the government to mcct a governmen-

tal obligation”). An illegal exaction constitutes a

compensable violation of the Fifth Amendment’s Due

App. 33

Process Clause. See Norman, 429 F.3d at 1096." To

prevail, plaintiffs would need to demonstrate that the

Secretary or the RAC had violated the Agricultural

Marketing Act, the raisin marketing order, or the

associated regulations and that the government’s

conduct had a “direct and substantial impact on

[them].” Casa de Cambio Comdiu S.A., de C.V. v.

United States, 291 F.3d 1356, 1364 (Fed. Cir. 2002);

accord Norman, 429 F.3d at 1096; Ontario Power

Generation, Inc. v. United States, 369 F.3d 1298, 1303

(Fed. Cir. 2004). Plaintiffs have made no such illegal

exaction claims as to their equitable interest in the

reserve pool.

Any of these reserve-pool claims would reach well

beyond the scope of the challenged complaint. In

short, the producer plaintiffs have made no claims as

to the one affected property interest that results from

their growing and marketing activities — their equity

interest in the reserve pool. Accordingly, they have

not stated a claim upon which relief can be granted

under RCFC 12(b)(6).

* Although “[t]he Court of Federal Claims ordinarily lacks

jurisdiction over due process claims under the Tucker Act, 28

U.S.C. § 1491, ... [it] has been held to have jurisdiction over

illegal exaction claims ‘when the exaction is based upon an

asserted statutory power.’” Norman, 429 F.3d at 1095 (quoting

Aerolineas Argentinas, 77 F.3d at 1573, and citing Eastport S_S.

Corp., 372 F.2d at 1008).

App. 34

CONCLUSION

For the reasons set forth, the government's

motion to dismiss under RCFC 12(b)(6) is GRANTED.

The Clerk shall enter judgment accordingly. No costs.

It is so ORDERED.

/s/ Charles F. Lettow

Charles F. Lettow

Judge

App. 35

In the United States Court of Federal Claims

No. 06-439 C

JOYCE EVANS, ET AL..,

Vv.

THE UNITED STATES (Filed Dec. 22, 2006)

JUDGMENT

Pursuant to the court’s Published Opinion and

Order, filed December 22, 2006, granting the govern-

ment’s motion to dismiss under RCFC 12(b)(6),

[T IS ORDERED AND ADJUDGED this date,

pursuant to Rule 58, that the complaint is dismissed.

No costs.

Brian Bishop

Clerk of Court

December 22, 2006 By: s/ Lisa DeFade Reyes

Deputy Clerk

NOTE: As to appeal, 60 days from this date, see

RCFC 58.1, re number of copies and listing of all

plaintiffs. Filing fee is $455.00.

App. 36

7 C.F.R. Sec. 989.11 Producer.

Producer means any person engaged in a proprie-

tary capacity in the production of grapes which are

sun-dried or dehydrated by artificial means until they

become raisins: Provided, That a “producer” shall

include any person whose production unit has quali-

fied for diversion under a diversion program an-

nounced by the Committee.

[50 FR 1831, Jan. 14, 1985]

7 C.F.R. Sec. 989.14 Packer.

Packer means any person who, within the area,

stems, sorts, cleans, or seeds raisins, grades stemmed

raisins, or packages raisins for market as raisins:

Provided, That:

(a) No producer with respect to the raisins

produced by him, and no group of producers with

respect to raisins produced by the producers compris-

ing the group, and not otherwise a packer, shall be

deemed a packer if he or it sorts or cleans (with or

without water) such raisins in their unstemmed form;

(b) Any dehydrator shall be deemed to be a

packer, with respect to raisins dehydrated by him,

only if he stems, cleans with water subsequent to

such dehydration, seeds or packages them for market

as raisin;

Secretary restrict the exceptions as to permitted

App. 37

cleaning if necessary to cause delivery of sound

raisins; and

(d) No person shall be deemed a packer by

reason of the fact he repackages for market (with or

without additional preparation) packed raisins which,

in the hands of a previous holder, have been inspected

and certified as meeting the applicable minimum

grade standards for packed raisins.

(32 FR 12158, Aug. 24, 1967]

7 C.F.R. Sec. 989.15 Handler.

Handler means: (a) Any processor or packer; (b)

any person who places, ships, or continues natural]

condition raisins in the current of commerce from

within the area to any point outside thereof; (c) any

person who delivers off-grade raisins, other failing

raisins or raisin residual material to other than a

packer or other than into any eligible non-normal

outlet; or (d) any person who blends raisins: Provided,

That blending shall not cause a person not otherwise

a handler to be a handler on account of such blending

if he is either: (1) A producer who, in his capacity as a

producer, blends raisins entirely of his own produc-

tion in the course of his usual and customary prac-

tices of preparing raisins for delivery to processors,

packers, or dehydrators; (2) a person who blends

raisins after they have been placed in trade channels

by a packer with other such raisins in trade channels;

App. 38

or (3) a dehydrator who, in his capacity as a dehydra-

tor, blends raisins entirely of his own manufacture.

[37 FR 19622, Sept. 21, 1972]

——- -

7 C.F.R. Sec. 989.54 Marketing policy.

(a) Trade demand. On or before August 15 of

each crop year, the Committee shall hold a meeting to

review shipment data, inventory data, and other

matters relating to the quantity of raisins of all

varietal types. For any varietal type for which a free

tonnage percentage may be recommended, the Com-

mittee shall compute a trade demand. The trade

demand shall be 90 percent of the prior crop year’s

shipments (converted te a natural condition weight)

of free tonnage and reserve tonnage sold for free use

for that varietal type, into all market outlets, ad-

justed by the carryin on August 1 of the current crop

year and the desirable carryout for the varietal type

at the end of that crop year. If the prior year’s ship-

ments were limited because of crop conditions, the

Committee may select the shipments of one of the

three years preceding the prior crop year. The desir-

able carryout shall be increased from 45,000 to 60,000

tons for Natural (sun-dried) Seedless raisins at a rate

of 5,000 tons per year for three crop years following

the effective date of this amended subpart. The

desirable carryout for Dipped Seedless raisins shall

be 1,500 tons, and for Oleate and Related Seedless

raisins, 1,500 tons. The trade demand computed by

App. 39

the Committee shall be announced by the Committee

in accordance with paragraph (h) of this section.

(b) Preliminary percentages. On or _ before

October 5 of each crop year (except that the Commit-

tee may extend this date not more than five business

days if warranted by a late crop), the Committee shall

estimate the production of any varietal type of raisins

for which it has computed a trade demand. If the

Committee determines that volume regulation is

desirable during the crop year for that varietal type,

it shall compute and announce preliminary free and

reserve percentages for that varietal type: Provided,

That such production estimate shall include by varie-

tal type the raisins handlers are expected to acquire

from producers and the total tonnage of raisins

diverted under a raisin diversion program. The

Committee shall compute a preliminary free percent-

age to release 85 percent of the computed trade

demand, if it determines that a field price has been

established for that varietal type, or 65 percent of the

trade demand if no field price has been established.

The preliminary free percentage shall be computed by

multiplying the trade demand by either 85 percent or

65 percent (as the case may be) and dividing the

product by the estimated production of that varietal

type and rounding the resulting percentage to the

nearest full percent. The difference between 100

percent and the preliminary free percentage shali be

the preliminary reserve percentage.

the Committee may modify the preliminary free and

App. 40

reserve percentages to release less than the trade

demand.

(d) Final percentages. No later than February

15, the Committee shall recommend to the Secretary,

final free and reserve percentages which will tend to

release the full trade demand for any varietal type for

which preliminary or interim percentages have been

computed and announced. The difference between

any final free percentage designated by the Secretary

and 100 percent shall be the final reserve percentage.

With its recommendation, the committee shall report

on its consideration of the factors in paragraph (e) of

this section.

(e) Factors. When computing preliminary and

interim percentages, or determining final percentages

for recommendation to the Secretary, the Committee

shall give consideration to the following factors:

(1) The estimated tonnage held by producers,

handlers, and for the account of the Committee at the

beginning of the crop year;

(2) The expected general quality and any modi-

fications of the minimum grade standards;

(3) The estimated tonnage of standard and off-

grade raisins which will be produced;

(4) If different than the computed trade de-

mand, the estimated trade demand for raisins in free

tonnage outlets;

App. 41

(5) If not estimated as provided in paragraph

(a) of this section, an estimated desirable carryout at

the end of the crop year for free tonnage and, if appli-

cable, for reserve tonnage;

(6) The estimated market requirements for

raisins outside free tonnage outlets, considering the

estimated world raisin supply and demand situation;

(7) Current prices being received and the prob-

able general level of prices to be received for raisins

by producers and handlers;

(8) Thetrend and level of consumer income;

(9) Any prohibition of trade practices, pursuant

to Sec. 989.62 intended for the crop year; and

(10) Any other pertinent factors bearing on the

marketing of raisins including the estimated supply

of and demand for other varietal types and regula-

tions applicable thereto.

(f) Modification. In the event the Committee

subsequently deems it advisable to modify its market-

ing policy on « ny crop, because of national emergency,

crop failure, or other major change in economic condi-

tions, it shall hold a meeting for that purpose, and file

a report thereof with the Secretary within 5 days

(exclusive of Saturdays, Sundays, and holidays) after

the holding of such meeting, which report shall show

such modification and the basis therefor.

(g) Reserve tonnage to sell as free tonnage. On or

before November 15 of the crop year, the Committee

App. 42

shall make two simultaneous offers of reserve ton-

nage to handlers to sell as free tonnage for each

varietal type for which preliminary percentages have

been computed and announced. One offer shall con-

sist of a quantity equal to 10 percent of the prior

year’s (or the alternative year selected by the Com-

mittee pursuant to paragraph (a) of this section)

shipments of free tonnage and reserve tonnage sold

for free use into all market outlets to equate the

current year’s supply with the prior year’s shipments.

This offer shall be allocated to handlers on the basis

of their prior year’s acquisitions. The second offer, to

provide for market expansion, shall consist of a

quantity equal to 10 percent of the prior year’s (or the

alternative year selected by the Committee pursuant

to paragraph (a) of this section) shipments of free

tonnage and reserve tonnage sold for free use. This

offer shall be allocated to handlers on the basis of

their prior year’s shipments of free tonnage and

reserve tonnage sold for free use. Each offer shall be

open to handlers not more than five business days,

and subsequently, two offers of any tonnage unsold in

the original offers onen not more than two business

days each, may be made. The reoffer tonnage shall be

allocated to handlers who purchase 100 percent of

their allocation in preceding offers, and shall be on

the basis of the quantity each handler purchased, as

a percentage of the total quantity purchased by all

handlers eligible to participate. At the close of the

second reoffer, any remaining tonnage may be offered

to handlers who purchased all of their allocations

from previous offers on a first-come first-served basis

App. 43

and such offer shall be open to handlers for one

business day. Any handler who had no shipments or

acquisitions of raisins during the prior crop year will

be allocated raisins under these offers on the basis of

his acquisition (up to the time the original offer is

made) of raisins in the current crop year. If field

prices are not established, the offer shall be made not

more than fifteen days following such establishment.

The price of reserve tonnage raisins offered to han-

dlers to sell as free tonnage, pursuant to this para-

graph, shall be the established field price for free

tonnage raisins of that varietal type, plus 3 percent of

the established field price, plus the estimated costs

incurred by the Committee for equity holders.

(h) Publicity. The Committee shall promptly

give reasonable publicity to producers, dehydrators,

handlers, and the cooperative bargaining associa-

tion(s) of each meeting to consider a marketing policy

or any modification thereof, and each such meeting

shall be open to them. Similar publicity shall be given

to producers, dehydrators, handlers, and the coopera-

tive bargaining association(s) of each marketing policy

report or modification thereof, filed with the Secre-

tary and of the Secretary’s action thereon. Copies of

all marketing policy reports shall be maintained in the

office of the Committee, where they shall be made

available for examination by any producer, dehydrator,

handler, or cooperative bargaining association repre-

sentative. The Committee shall notify handlers,

dehydrators and the cooperative bargaining associa-

tion(s), and give reasonable publicity to producers of

App. 44

its computation of the trade demand, preliminary

percentages, and interim percentages and shall notify

handlers, dehydrators, and the cooperative bargain-

ing association(s) of the Secretary’s action on per-

centages by registered or certified mail.

[48 FR 32976, July 20, 1983, as amended at 50 FR

1831, Jan. 14, 1985; 54 FR 24670, June 9, 1989]

Effective Date Notes: 1. At 54 FR 24670, June 9,

1989, in Sec. 989.54, in paragraph (a), the sentences,

“The desirable carryout shall be increased from

45,000 to 60,000 tons for Natural (sun-dried) Seedless

raisins at a rate of 5,000 tons per year for the three

crop years following the effective date of this

amended subpart. The desirable carryout for Dipped

Seedless raisins shall be 1,500 tons, and for Oleate

and Related Seedless raisins 1,500 tons.” were sus-

pended indefinitely, effective July 10, 1989.

2. At 62 FR 50484, Sept. 26, 1997, in paragraph

(g), the words “On or before November 15 of the crop

year” and “simultaneous” in the first sentence were

suspended indefinitely, effective Sept. 29, 1997.

7 C.F.R. Sec. 989.55 Regulation by the Secretary.

Whenever the Secretary finds, from the recom-

mendation and supporting information supplied by

the Committee or from other available information,

that to designate final free and reserve percentages

for any varietal type of standard raisins acquired by

handlers, during the crop year will tend to effectuate

App. 45

the declared policy of the Act, the Secretary shall

designate such percentages. In the event the Secre-

tary finds that suspension or termination of any

percentages computed by the Committee or desig-

nated by the Secretary tend to effectuate the declared

policy of the Act, the Secretary shall suspend or

terminate such percentages.

{48 FR 32977, July 20, 1983]

7 C.F.R. Sec. 989.65 Free and reserve tonnage.

The standard raisins acquired by handlers which

are free tonnage, and any reserve tonnage purchased

for free use, may be disposed of by him in any mar-

keting channel, subject to the applicable provisions of

this part. A handler’s free tonnage of a varietal type

of raisin shall be either the free percentage of the

standard raisins of the varietal type acquired by him

or all of the standard raisins of the varietal type

acquired by him if no free percentage is establlished

by the Committee or designated by the Secretary for

that varietal type. A handler’s reserve tonnage of a

varietal type shall be the reserve percentage of the

standard raisins of that varietal type acquired by

him.

[48 FR 32977, July 20, 1983]

App. 46

7 C.F.R. Sec. 989.66 Reserve tonnage generally.

(a) The standard raisins acquired by a handler

which are designated as reserve tonnage and reserve

tonnage transferred to a handler by the committee

shall be held by him for the account of the committee

and subject to the applicable restrictions of this part.

(bX1) Each handler shall hold in storage all

reserve tonnage acquired by him and all reserve

tonnage transferred to him by the committee until he

has been relieved of such responsibility by the com-

mittee either by delivery to the committee or other-

wise. Such handler shall store such reserve tonnage

raisins in natural condition without addition of

moisture and in such manner as will maintain the

raisins in the same condition as when he acquired

them, except for normal and natural detericration

and shrinkage, and except for loss through fire, acts

of God or other conditions beyond the handler’s

control.

(2) Reserve tonnage acquired by a handler or

transferred to a handler by the committee shall be

stored separate and apart from other raisins to such

extent and identified in such manner as the commit-

tee shall specify in its rules and procedures with the

approval of the Secretary.

(3) Each handler may, under the direction and

supervision of the committee, substitute for any

reserve tonnage raisins a like quantity of standard

raisins of the same varietal type and of the same or

more recent year’s production. Each such handler

App. 47

shall give the committee reasonable advance notice of

his intention to substitute, the exact location of the

raisins for which substitution is to be made, and

arrange with the committee a mutually satisfactory

time for the substitution.

(4) The committee may, after giving reasonable

notice, require a handler to deliver to it, or to anyone

designated by it, at such handler’s warehouse or at

such other place as the raisins may be stored, part or

all of the reserve tonnage raisins held by such han-

dler. Reserve tonnage raisins delivered by any han-

dler to the committee, or to any person designated by

it, in the form of natural condition raisins shall in the

aggregate be not more than 2 percent less than the

average maturity level of all raisins such handler

acquired during the applicable crop year. The com-

mittee may require that such delivery consist of

natural condition raisins, or it may arrange for such

delivery to consist of packed raisins.

possession or under his control reserve tonnage

referable to his acquisitions of standard raisins and

reserve tonnage transferred to him by the committee,

less any quantity of such reserve tonnage released to

him by a change of percentages, delivered by him

pursuant to instructions of the committee or sold to

him by the committee.

(d) Reserve tonnage raisins delivered by any

handler to the committee, or to any person designated

by it, whether in the form of natural condition raisins

App. 48

or packed raisins shall meet the applicable minimum

grade or grade and condition standards, except for

normal and natural deterioration. The committee

shall have the authority to require, in its discretion

and at its expense, such reinspection and certification

of reserve pool tonnage raisins as it may deem neces-

sary.

(e) In the event the committee offers to han-

dlers reserve tonnage raisins for contract packing or

for sale in export, as provided in Sec. 989.67, each

handler shall be given the opportunity to pack or

purchase his share of each offer.

(f) Handlers shall be compensated for receiving,

storing, fumigating, handling, and inspection of that

tonnage of reserve raisins determined by the reserve

percentage of a crop year and held by them for the

account of the committee, in accordance with a

schedule of payments established by the committee

and approved by the Secretary. A box rental shall be

paid by the committee to producers or handlers for

boxes used in storing reserve tonnage raisins beyond

the crop year of acquisition in accordance with a

rental schedule established by the committee and

approved by the Secretary. The handler compensation

shall be reviewed annually and shall be paid, as to

the amount determined to be earned and unpaid, as

soon as practicable after the end of the second quar-

ter of the crop year and quarterly thereafter. Any

handler may request the committee, by registered or

certified mail, at any time after June 1 of a crop year

to remove or relocate reserve tonnage raisins of the

App. 49

current crop year which remain in his possession. At

any time during a crop year, a handler may request

removal or relocation of reserve tonnage of a prior

crop year. In each instance, he may request that the

committee provide the necessary containers for any

such removal or relocation. When so requested as to

current crop year raisins, the committee shall make

the removal or relocation, the availability of contain-

ers, storage space and time of request permitting, by

September 15 of the subsequent crop year, and as to

raisins of the prior crop year, within 30 days, supply-

ing the necessary containers if so requested. If the

committee removes or relocates reserve raisins of the

current crop year pursuant to a handler’s request,

and such raisins are released to him by September 15

of the subsequent crop year, the handler shall reim-

burse the committee for any costs incurred by it in

such removal! or relocation. If any handler requests

removal or relocation of reserve raisins, the commit-

tee shall immediately give notice thereof to the Secre-

tary.

(g) The committee shall have the authority, in

its discretion, to obtain loans, nonrecourse or other-

wise, on any part of the reserve tonnage not subject to

release as desirable free tonnage and to pledge or

hypothecate the raisins on which such loans are

obtained as security therefor: Provided, That in every

such case, there shall be included in the loan agree-

ment a provision to the effect that, in case the lender

obtains possession or control of such raisins, he will

dispose of them in such a manner as will not tend to

App. 50

defeat the objectives of this amended subpart. The

net proceeds of any such loan shal} be distributed by

the committee pursuant to paragraph (h) of this

section.

(h) The net proceeds from the disposition of

reserve tonnage raisins of any varietal type shall be

distributed by the committee to the respective pro-

ducers, or their successor in interest thereto, on the

basis of the volume of their respective contributions

to the reserve tonnage of such varietal type. Distribu-

tion of the proceeds in connection with the reserve

tonnage contributed by a nonprofit cooperative mar-

keting association which has authority to market the

raisins of its members and to allocate the proceeds

therefrom to such members shall be made to such

association. Advance or progress payments may be

made by the committee, in conformity with the provi-

sions of this paragraph, as sufficient funds become

available.

[32 FR 12161, Aug. 24, 1967, as amended at 37 FR

19623, Sept. 21, 1972; 41 FR 32417, Aug. 3, 1976; 42

FR 37202, July 20, 1977; 48 FR 32977, July 20, 1983;

54 FR 34138, Aug. 18, 1989]

7 C.F.R. Sec. 989.73 Reports.

(a) Inventory reports. Each handler shall, upon

request of the committee, file promptly with the

committee a certified report, showing such informa-

tion as the committee shall specify with respect to

App. 51

any raisins which were held by him on a date desig-

nated by the committee, which information as speci-

fied may include, but not be limited to: (1) The

quantity of any raisins so held, segregated as to

varietal type, natural condition, packed, standard

quality or off-grade quality; and (2) the locations of

the raisins.

(b) Acquisition reports. Each handler shall

submit to the committee in accordance with such

rules and procedures as are prescribed by the com-

mittee, with the approval of the Secretary, certified

reports, for such periods as the committee may re-

quire, with respect to his acquisitions of each varietal

type of raisins during the particular period covered by

such report, which report shall include, but not be

limited to: (1) The total quantity of standard raisins

acquired; (2) the quantity of reserve tonnage referable

to his acquisitions of standard raisins; (3) the loca-

tions of such reserve tonnages; (4) the total quantity

of off-grade raisins acquired pursuant to Sec.

989.58(eX1)(i), and (5) cumulative totals of such

acquisitions from the beginning of the then current

crop year to and including the end of the period for

which the report is made. Upon written application

made to the committee, a handler may be relieved of

submitting such reports after completing his packing

operations for the season. Upon request of the com-

mittee, each handler shall furnish to the committee,

in such manner and at such times as it may require,

the name and address of each person from whom he

App. 52

acquired raisins and the quantity of each varietal

type of raisins acquired from each such person.

itable promotion including paid advertising as rec-

ommended by the Committee and approved by the

Secretary.

(d) Other reports. Upon the request of the

committee, with the approval of the Secretary, each

handler shall furnish to the committee such other

information as may be necessary to enable it to

exercise its powers and perform its duties under this

amended part.

[25 FR 12813, Dec. 14, 1960, as amended at 32 FR

12164, Aug. 24, 1967; 32 FR 18086, Dec. 19, 1967; 48

FR 32978, July 20, 1983]

7 C.F.R. Sec. 989.166 Reserve tonnage generally.

(a) Set-aside obligations - (1) Natural (sun-

dried) Seedless. Handlers who acquire any lot of

natural condition Natural (sun-dried) Seedless rai-

sins which have been dipped in or sprayed with

water, with or without chemicals, prior to or during

the drying process, for purposes other than to expe-

dite drying, or that have been produced from seedless

varieties of grapes other than Thompson Seedless

(i.e., Fiesta, Emerald Seedless, Perlette, Delight, and

other similar grape varieties), or that have been

treated with Oleate or similar drying agents, or such

other Natural (sun-dried) Seedless raisins that have

App. 53

been produced using other cultural practices as

recommended by the Committee with the approval of

the Secretary, may set aside such raisins to satisfy

their reserve pool obligation: Provided, That such

raisins shall be identified by the Inspection Service

affixing to one container on each pallet or to each bin

in each lot, a prenumbered RAC control card (to be

furnished by the Committee) which shall remain

affixed until raisins are processed or disposed of as

natural condition raisins: and Provided further, That

such raisins shall not be delivered to the Committee

or transferred to another handler without approval of

the Committee or the receiving handler.

(2) Mixed varietal types. A handler who ac-

quired any lot of natural condition raisins of mixed

varietal types (commingled within their containers)

shall meet the reserve tonnage setaside obligation for

each varietal type contained in the mixed lot by

setting aside raisins of each such varietal type which

have not been mixed or commingled with raisins of

any other varietal type. The obligation as to each

varietal type shall be computed according to the

reserve percentage established by the Secretary, and

the percentage of the varietal type contained in the

mixed lot as shown by the incoming inspection certifi-

cate applicable thereto.

(b) Storage of reserve tonnage raisins — (1) Time

limits for setting aside pool tonnage. Handlers shall

be allowed 3 calendar days (exclusive of Saturdays,

Sundays, and holidays), after the preliminary or in-

terim percentages have been computed and announced

App. 54

by the Committee, and after the publication in the

Federal Register of the applicable final reserve per-

centages established for the crop year, or after any

reserve tonnage raisins are acquired subsequent to

the percentages being announced or established, to

segregate and properly stack each varietal type of

reserve tonnage raisins.

(2) Conditions. Each handler shall store reserve

tonnage raisins in storage and under conditions

which protect them from rain and which reasonably

can be expected to maintain the raisins free of any

biological or other infestation or contamination. Each

handler shall, pursuant to Sec. 989.66(b)(2), store

each varietal type of reserve tonnage raisins held by

him for the account of the Committee, separate and

apart from all other raisins. Storage of such raisins

shall be deemed “separate and apart” if the contain-

ers are so marked and placed as to be capable of

ready and clear identification as to the category in

which are held. Reserve tonnage raisins shall be

stored in sweat boxes, picking boxes, or other portable

containers not exceeding one ton capacity:

(3) Substitution of free tonnage. A handler may,

pursuant to Sec. 989.66(b)(3), after giving the Com-

mittee reasonable advance notice in writing and

under its direction and supervision, substitute stan-

dard raisins for reserve tonnage raisins.

reserve tonnage raisins. A handler who fails to deliver

to the Committee, upon request, any reserve tonnage

App. 55

raisins in the quantity and quality for which he has

become obligated (after any shrinkage allowances

which may then be in effect are applied and allow-

ances for any deterioration due to conditions beyond

his control are made) shall compensate the Commit-

tee for the amount of the loss resulting from his

failure to so deliver. The amount of compensation for

any shortage of tonnage shall be determined by

multiplying the quantity of reserve raisins not deliv-

ered by the latest weighted average price per ton

received by producers during the particular crop year

for free tonnage raisins of the same varietal type or

types, plus any charges already paid or credited to

the handler and cost incurred by the Committee on

account of the handler’s failure to deliver. The

weighted average price shall be determined from

those sales made during the particular crop year up

to the time such cash payment is requested by the

Committee, or up to the end of the particular crop

year, whichever date may be earlier. The amount

which a handler shall compensate the Committee for

any reserve raisins which have deteriorated so as to

be off-grade in quality during storage for reasons

within his control, shall be the latest weighted aver-

age price received by the Committee for the applica-

ble varietal type of reserve pool raisins, less the

amount actually received by the Committee in the

disposition of the deteriorated raisins delivered by

the handler (or the salvage value of such raisins as

determined by the Committee). Any amounts paid to

the Committee in satisfaction of such deficiencies

shall accrue to the earnings of the applicable reserve

App. 56

pool. The remedies provided in this paragraph shall

be in addition to, and not exclusive of, any or all of

the remedies or penalties prescribed in the act for

failure on the part of the handler to comply with the

applicable provisions of the act or of this part.

(d) Disposition of reserve tonnage raisins which

become off-grade for causes beyond the handler’s

control. Any reserve tonnage raisins held by or for the

account of the Committee which become off-grade for

reasons beyond the handler’s control shall, at the

Committee’s discretion, be reconditioned or disposed

of by the Committee, or under the Committee’s con-

trol, in eligible nonnormal! outlets. Any monetary loss

sustained in the reconditioning or disposition of such

raisins, not covered by insurance carried by the

Committee, shall be charged to the applicable reserve

pool.

(e) Offers of reserve tonnage raisins to handlers

for sale in export. Whenever the Committee offers

reserve tonnage raisins to handlers for sale in export,

it shall specify in addition to the normal contract

terms and conditions, the tota] quantity, the price and

period within which each handler will be permitted to

purchase his share of the offer. Whenever a handler’s

share of an offer is less than, or exceeds, his holding

of reserve tonnage raisins by not more than 10 tons,

the Committee may adjust his share so as to avoid

the cost involved in the physical transfer of raisins. If,

prior to the expiration of the offer period, a handler

desires to obtain reserve tonnage in an amount

greater than that represented by his share of the

App. 57

offer, he may negotiate with another handler for any

unpurchased portion of the other handler’s share of

an outstanding offer. No such transaction shall be

deemed to reduce the transferring handler’s share or

to increase the transferee handler’s share so as to

affect either handler’s share privileges in subsequent

offers. Transfers to implement such transactions

between handlers shall be permitted by the Commit-

tee only upon receipt of written authorization, on a

form furnished by the Committee, by the transferring

handler. All limitations applicable to the transferred

tonnage shall continue to apply. Such reserve tonnage

raisins will be released by the Committee to the

transferee handler upon submission of his completed

application and full payment for such raisins, and

such transferee handler shall be responsible to the

Committee for all documentation required in connec-

tion with the transaction. All such transfers shall be

made at the expense of the handlers concerned.

[32 FR 15916, Nov. 21, 1967, as amended at 38 FR

14960, June 7, 1973; 42 FR 52377, Sept. 30, 1977; 49

FR 18731, May 2, 1984; 54 FR 29327, July 12, 1989;

56 FR 38072, Aug. 12, 1991; 68 FR 42947, July 21,

2003)

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.