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USDA and others defending Black farmer loan forgiveness

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Black farmers file intervention in Texas court disputing the preliminary injunction which stopped the $4 billion in forgiveness.

Earlier this year, Congress in the American Rescue Plan offered $4 billion debt relief to Black farmers and other farmers of color. To date, only four farmers received payments as a court injunction prohibited USDA from providing further payments as the agency and others join in defense of the validity of the program.

In Miller v. Vilsack, five white Texas farmers filed a lawsuit against the USDA alleging that loan forgiveness payments violate the U.S. Constitution. This case is one of many ongoing lawsuits involving Section 1005 in other jurisdictions, including Florida, where a federal court issued a preliminary injunction against the program. Plaintiffs specifically argued that Section 1005 of the American Rescue Plan of 2021 violates the equal protection rights promised under the Constitution for farmers and ranchers who stand eligible for USDA loans but do not qualify for debt relief under the program.

In an exclusive interview with Farm Service Agency Administrator Zach Ducheneaux, he explains USDA has countless filings in courts all across the country in an attempt to build its case for the district court challenge in Texas. However, the preliminary injunction has the agency’s “hands tied” in getting payments to producers.

“The preliminary injunction allows us to continue to send letters out notifying folks of what was authorized by Congress in March and what their payment would be in the event that we are able to go forward with that payment,” Ducheneaux says.

“The frustration that we experience not being able to deliver that much needed assistance is real,” he adds, as the FSA department remains in a holding pattern. “We're in a hurry up and wait posture.”

The definition used by USDA of socially disadvantaged producers has not been defined by race, and historically included women. Ducheneaux says other options are on the table legislatively to account for the Constitutional concerns addressed in the court filings.

He says, “There are legislative solutions being contemplated by Congress that maybe are of a race neutral nature to try to get this aid out to those historically underserved producers and others who are in economic distress.”

The National Sustainable Agricultural Coalition reports that leaked text for the reconciliation package being worked on by Congress includes debt relief provisions for small and socially disadvantaged producers in a manner designed to address concerns the courts have raised over race-specific debt relief for farmers of color included in the American Rescue Plan Act. The debt relief provisions are structured as an update or amendment to the aforementioned debt relief provisions in the ARPA; essentially replacing the ARPA program with a new debt relief program.

The new debt relief program would write off 100% of outstanding USDA loan indebtedness for “economically distressed borrowers.” The provision includes a long list of criteria defining “economically distressed borrowers.” For borrowers that do not fit the definition of “economically distressed,” eligible farm debt relief is also available but is capped at $200,000 per farm/ranch, minus the amount of payments (if any) the producer received from the USDA Coronavirus Food Assistance Program or the Market Facilitation Payment program. Both of those options are written in a way that does not have a cap on available funding. 

NSAC says overall, it has been estimated to cost about $11 billion, $5 billion of which comes from the original ARPA debt relief provisions that were not spent due to lawsuits and court decisions, and the remaining $6 billion is reconciliation funding. 

The USDA is also provided with an additional $1 billion for payments or loan modifications focused on at-risk and limited resource farmers and ranchers.  This intends to provide USDA with some flexibility and the ability to offer additional relief beyond what the previously discussed provision allowed. 

NSAC says in addition to the debt relief programing, this section includes a number of other related investments, most of which were included in the original ARPA version: $200 million for technical assistance and financial assistance for underserved farmers and ranchers; $255 million to address land loss and improve land access, including addressing heirs property issues; $10 million to fund the equity commission recently announced by USDA; $200 million to fund related agricultural research, education and scholarships; $350 million in financial assistance to farmers, ranchers and foresters who have suffered discrimination in USDA lending programs; and lastly, $35 million for administrative costs to implement the debt relief and related provisions discussed above. 

Ducheneaux explains FSA is also working with its loan officers to help all producers who may be considered a distressed borrower to allow them to take advantage of favorable interest rates or extend the terms of their notes “instead of having to just be in that holding pattern with us.”

Legal challenge

On behalf of the Federation of Southern Cooperatives/Land Assistance Fund, the Lawyers’ Committee for Civil Rights Under Law, Public Counsel, and pro bono counsel Winston & Strawn LLP filed an intervention motion in favor of USDA’s actions. The motion was filed in the United States District Court for the Northern District of Texas in Miller v. Vilsack.

“The USDA has a documented history of discriminating against Black people and communities of color. The federal government’s attempt to rectify this injustice should be applauded, not stopped,” says Damon Hewitt, president and executive director of the Lawyers’ Committee for Civil Rights Under Law. “If this critical assistance is not provided soon, Black farmers and other farmers of color who have struggled to overcome decades of discrimination and the economic impacts of the global pandemic will face the threat of losing their land and their livelihoods.”

Farmer declarations included in the intervention cite multiple instances of discrimination, including:

  • Misplaced loan paperwork and approval delays of more than two years;
  • Inability to sell equipment to repay loans due to vandalism at the auction house in the form of racist graffiti on the tractors up for bid;
  • Loan paperwork being filed on time but funds chronically arriving too late for planting season;
  • Inaccurate advice about whether FSA loans could be restructured; and
  • Receiving loan funds weeks later in the season than white farmers in the same area, providing them with an unfair advantage in planting and harvesting a profitable crop.

“The Federation was encouraged by USDA’s and Congress’s attempt to address the disproportionate impact of the debt burden that farmers of color face because of historic and ongoing race-based discrimination in agricultural credit,” adds Cornelius Blanding, executive director of the Federation of Southern Cooperatives/Land Assistance Fund. “Black farmers have always honored their commitments to their communities and our nation; our hope is that the department will be allowed to honor its commitment to our farmers and other farmers of color.”

 

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