USDA Responds to Litigation Against Loan Cancellation for Minority Farmers and Ranchers

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Farmers and ranchers in the state return to USDA local service centers to declare their Native American status. The USDA has informed farmers that they need to have a 2047 AD form to indicate their race or ethnicity.

Even though Oklahoma may have benefited the most from the loan, members of the Oklahoma Farmers Bureau see it as a controversial condition, according to group president Rodd Moselle.

“From the point of view of our state, this is probably a huge opportunity for economic development and a chance to bring more money to the economy of our state,” Moselle said. “But when I am in a district meeting, we have a lot of members who are concerned that increasing discrimination is not the best way to address past discrimination.”

At least seven federal lawsuits filed across the country by white farmers challenge the constitutionality of the USDA program, which stems from Section 1005 of the American Rescue Plan, passed by Congress in March. The grant provided debt relief for up to 120% of marginalized farmers with USDA Agricultural Services Agency loans. The bailout plan will repay approximately $ 2.67 billion in loans to minority farmers that were on account prior to January 1, 2021, as well as an additional $ 414.9 million in arrears to minority farmers. With an additional 20% added to cover tax liabilities, this equates to about $ 3.7 billion in aid from some 16,000 minority farmers.

In Wisconsin, US District Judge William Griesbach issued a temporary restraining order earlier this month in a case filed by 12 white farmers with an FSA loan. White farmers’ attorneys at the WILL want the USDA to issue a preliminary injunction on loans pending a court ruling on whether USDA should pay debts to white farmers as well.

If the USDA loses its case, the cost of the debt relief plan would rise to about $ 31.7 billion for nearly 145,000 borrowers.

In its response, the Biden administration cited evidence from Congress that minority farmers were largely outside the scope of recent pandemic funding and assistance. Minority farmers were also at higher risk of delinquency and foreclosure on their farms during the global pandemic. The USDA and the Justice Department are of the opinion that the preliminary injunction should be dismissed. The note said that white farmers who filed a lawsuit “cannot do irreparable harm.” Because the funds provided under the aid plan are “unlimited and non-expiring,” plaintiffs can seek post-case cash assistance if they are eligible.

Instead, the Biden administration says the injunction “will seriously harm minority farmers: those involved in bankruptcy proceedings will not receive debt relief, those seeking future FSA loans will have a delay in closure, and those who are disproportionately at risk being in foreclosure could lose their farms. “

The USDA adds that the evidence for prior discrimination against minority farmers in the department’s loan program is “overwhelming.” The summary cites reports from the US Civil Rights Commission dating back to the early 1980s, indicating a decline in the number of black farmers and problems with loan applications, a decline in loans, and faster repayment schedules. From 1920 to 1978, the number of minority farmers in the country fell from 926,000 to less than 60,000. In fact, almost 15,000 minority farmers annually ceased operations during this time.

Congress also highlighted the history of discrimination against minority farmers in USDA programs. In passing Section 1005, Congress recognized “systematic discrimination against … colored farmers by the USDA,” citing House Agriculture Committee Chair David Scott, Georgia Democracy, speaking.

On Monday, Scott issued a statement criticizing the USDA lawsuit and arguing that debt cancellation is necessary for black farmers to survive. Scott said he is 100% supportive of the USDA’s anti-litigation efforts. “This infamous lawsuit represents the worst racial discrimination against black farmers in our country and socially disadvantaged farmers – and I’m not saying this lightly because white farmers already own 98% of all farmland in the United States, and black farmers only own 1% – said Scott.

The government note indicated that minority farmers are more likely to ditch direct loans or face foreclosures and land losses, the government note said citing a 2019 report from the National Coalition of Young Farmers. A 2019 congressional hearing also indicated that black farmers were subject to 13% of USDA loan foreclosures, despite only representing 3% of loan recipients.

The USDA also cited pandemic relief figures showing that “nearly all of the $ 9.2 billion in USDA’s first Coronavirus Food Assistance Program (CFAP) last year went to non-minority farmers. The same applies to the $ 25.1 billion in aid for the Market Assistance Program (MFP) in 2018 and 2019. Senate Agriculture Committee Chair Debbie Stabenow, Michigan, noted that the deterioration in relations between minority farmers and the USDA was such that nearly three-quarters of black farmers did not even know about coronavirus relief programs last year. Aid is provided to large farmers and their crops, which are mostly owned by white farmers.

The Biden administration added that there is strong evidence of continued discrimination in USDA agricultural lending programs. The department pointed to congressional hearings in 2019, as well as a State Records report released earlier this year that looked at racial and income disparities in access to financial services, including “minority farmers and ranchers.”

In issuing a temporary restraining order, the Biden administration referred to Griesbach’s reliance on the plaintiffs’ arguments, “but respectfully, this statement is erroneous.” Griesbach also concluded that the USDA had not established that the loan forgiveness program targeted a specific episode of past or present discrimination. However, the administration cites past decisions of the Supreme Court, which recognize that the government has an interest in addressing the continuing effects of discrimination.

Earlier this year, the USDA deferred foreclosure on direct loans and asked guaranteed lenders to suspend all adverse actions against borrowers of PCA-guaranteed loans – although the USDA cannot prevent these lenders from seeking foreclosure. The USDA also noted that about 300 people eligible for debt relief are currently in the process of bankruptcy.

The National Black Farmers ‘Association and the American Indian Farmers’ Association also filed a joint memo supporting the Biden administration’s position and opposing any injunction.

Pending debt relief, the Wilsons see an opportunity to expand their cow breeding business once the loan is paid. “The main thing we can probably do if we get the cow payments is maybe we can buy some land,” said Jared Wilson. Sheila Wilson added: “My father always told me that cows can pay for themselves or for land, but they cannot pay for both.”

Chris Clayton can be contacted at: Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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