The U.S. Court of International Trade in New York declined yesterday to overturn the Reagan administration's price-inflating quotas on sugar imports, which could raise annual consumer costs by $3 billion or more.
Rejecting a suit by the U.S. Cane Sugar Refiners' Association, Judge Bernard Newman held that President Reagan acted legally last month when he announced plans to limit imports of low-cost sugar.
The independent refiners, who use large quantities of imported sugar, contended that the president did not have the authority to use quotas as well as duties for restricting imports and protecting domestic producers.
"While I appreciate the unfortunate economic consequences of the quotas for plaintiff's members and sympathize with their plight, I must sustain the president's proclamation," Newman said. Refiners' president Nicholas Kominus said yesterday that his group was considering an appeal.
The court ruling seemed certain to intensify the efforts of consumerists and free-trade advocates in Congress to abolish the sugar price supports that led to the imposition of quotas.
The support program was resurrected last year by Congress, under heavy pressure from cane and sugar beet growers, as part of its new farm bill. It provided for outright federal purchases of sugar in the first year and price-support loans in later years to prop up growers.
Aides to Rep. Peter A. Peyser (D-N.Y), who has twice derailed the program, said Friday that he will push new legislation to kill the support scheme. Sens. Dan Quayle (R-Ind.) and Paul E. Tsongas (D-Mass.) are promoting an identical bill in the Senate.
Peyser described the administration's quota system as "a $3 billion fraud....Quotas will increase the price of sugar by 10 cents a pound, costing the consumer approximately $3 billion a year and providing domestic sugar producers a sweet windfall profit."
Hewing to its free-market line, the administration initially opposed supports because of their impact on inflation and foreign trade. But the president reversed himself and agreed to go along with the supports in return for congressional help on his budget package.
To push domestic prices high enough to avert more federal spending, the administration first increased import fees on foreign sugar. Last month it imposed the quotas, which also are under fire by foreign growers whose access to the U.S. market will be restricted.
U.S. producers, meanwhile, have been conducting their own campaign to press the administration to stick with the quotas. Apparently this effort includes advising the government that they will sell it far more sugar than is actually available.
Producers have told the government they intend to sell the Commodity Credit Corp. 862,778 tons of sugar, much of which already has been contracted for and sold elsewhere.
Agriculture Department regulations governing sugar supports make false certifications subject to criminal penalties, but USDA officials last week declined to speculate on what action, if any, they might take in the case.
At the support price of 16.75 cents a pound, the sugar the producers say they intend to sell the CCC would cost about $289 million. Sugar traders speculate that the producers and processors overestimated the amount of sugar they actually will sell to the CCC in an attempt to stiffen the government's determination to force consumer prices to levels that would obviate new federal spending.
No game-playing is going on, insisted Horace Godfrey, a former federal sugar administrator who now lobbies for some of the Florida and Texas cane growers who have provided the sale-intention figures to USDA.
Godfrey said, "It is merely insurance for those producers. Even though that sugar might be under contract, nobody knows what will happen to a contract. It's only as good as the two people involved. If anyone asked me, I'd tell them to sign a purchase agreement with the Department of Agriculture and then hope it isn't needed."
Some producers apparently have done that, leading some USDA officials to speculate that federal expenditures for sugar may soar far beyond the budget.
USDA figures show, for example, that Florida processors intend to sell 161,000 tons of cane sugar to the CCC. But Fred Hill, an official of the Florida Sugar Marketing and Terminal Association, confirmed Friday that virtually all of that already has been sold.
Texas cane growers have indicated they will put 32,000 tons of their sugar into the purchase program. All of that sugar, however, already has been sold to a refiner and could not go into federal stocks. Earlier, in what was termed "a mistake," the Texans had indicated they would sell the CCC 124,000 tons--more than they produce.
Hill said the Florida producers signified their government sales intentions when prices were appreciably lower and large amounts of the 1981-82 crop remained unsold.
Art Beckwith, president of the Rio Grande Valley Sugar Growers, a cooperative whose members include the father and brother of Sen. Lloyd Bentsen (D-Tex.), said his group signed up "because it's a regulation and the sugar is for next year....The program sets a floor under our prices." In fact, the purchase program is voluntary and is for this year only.