Minority Loan Relief Blocked

USDA Minority Debt Relief Put in Doubt by Judge's Injunction

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A federal judge in Florida granted a preliminary injunction against USDA from paying off loan debt for minority farmers. The judge's injunction indicates the white farmer who brought the lawsuit would win on the merits of the case. (DTN file photo)

OMAHA (DTN) -- A second federal district judge has blocked USDA from providing as much as $4 billion in loan debt relief to minority farmers.

U.S. District Judge Marcia Morales Howard in the U.S. District Court for Middle Florida issued a preliminary injunction Wednesday against USDA, blocking the department from sending out the debt relief while the legal battle over the program continues in litigation across the country.

The Florida case was brought by Scott Winn, a white farmer from Jennings, Florida, who grows sweet potatoes, corn and cattle. Winn has federal farm loans of $300,000 but he is not eligible for debt relief. Winn is represented in the case by the Pacific Legal Foundation, which has spearheaded cases against the loan repayment program in multiple court districts.

Howard's preliminary injunction goes beyond the temporary restraining order granted earlier this month by U.S. District Judge William Griesbach in the U.S. District Court for Eastern Wisconsin in a case filed by 12 white farmers with Farm Services Agency (FSA) loan debt. That lawsuit drew national attention as dozens of groups across the political spectrum and involved in agriculture filed amicus briefs supporting or opposing the motion for a preliminary injunction.

A restraining order is viewed in courts as a more temporary measure until a judge can hold a hearing or wait to rule until after all sides have filed briefs in a case. An injunction goes further and often demonstrates greater likelihood that a court would rule in favor of the side that sought the injunction. As Howard noted, a preliminary injunction is "an extraordinary and drastic remedy" and often shows that the plaintiff "is likely to succeed on the merits of the case" and "is likely to suffer irreparable harm in the absence of preliminary relief."

The injunction prevents USDA from paying off debt for socially disadvantaged farmers who have direct loans through FSA or FSA guaranteed loans through private lenders. USDA announced those debt-relief payments would begin this month and sent out letters to thousands of borrowers. Howard's injunction also requires USDA and lawyers for Winn to submit a proposed expedited schedule for the case to the court by June 29.

At least seven federal lawsuits filed across the country by white farmers are challenging the constitutionality of USDA's program, which stems from Section 1005 of the American Rescue Plan, passed by Congress in March. The provision provided up to 120% debt relief to socially disadvantaged farmers with USDA FSA loans. The relief plan would pay off roughly $2.67 billion in loans for minority farmers that were on the books before Jan. 1, 2021, along with another $414.9 million in delinquent debt to minority farmers. With the extra 20% added in to cover tax liability, that comes to about $3.7 billion in aid for an estimated 16,000 minority farmers.

If courts were to rule the Biden administration must pay off debt relief for all farmers with outstanding FSA loans, the cost of the debt relief plan would increase to about $31.7 billion for nearly 145,000 borrowers.

Howard's ruling states "Section 1005's rigid, categorical, race-based qualification for relief is the antithesis of flexibility. The debt relief provision applies strictly on racial grounds irrespective of any other factor."

Every person who identifies himself or herself as falling within a socially disadvantaged group who has a qualifying farm loan with an outstanding balance as of Jan. 1, 2021, receives up to 120% debt relief "and no one else receives any debt relief," Howard stated.

The Biden administration argued in court that Congress had evidence minority farmers were largely left out of recent funding and pandemic relief. Minority farmers also were at higher risk of delinquency and foreclosure on their farms during a global pandemic. USDA and the Department of Justice maintain the preliminary injunction should be denied. The brief said the white farmers who sued "cannot show irreparable harm." Because the funds granted under in the relief plan "are not limited and will not expire," the plaintiffs can seek monetary relief at the conclusion of the case if they are entitled to it.

An injunction would instead "impose grave harms on minority farmers: those in bankruptcy proceedings would not get debt relief, those seeking future FSA loans will have their closings delayed, and those disproportionately at risk of foreclosure could lose their farms," the administration argued in court filings.

Despite arguments from the Biden administration that the loan relief is "narrowly tailored to reach small farmers or farmers on the brink of foreclosure," Howard noted that the debt relief does not consider farm size. Socially disadvantaged farmers receive the relief regardless of whether they are having the most profitable year ever and not remotely in danger of foreclosure, Howard added. "Yet a small white farmer who is on the brink of foreclosure can do nothing to qualify for debt relief. Race or ethnicity is the sole, inflexible factor that determines the availability of relief," Howard wrote.

Howard acknowledged USDA "had a dark history of past discrimination against minority farmers," but the debt relief program leads to "present discrimination to remedy past discrimination."

John Boyd Jr., president of the National Black Farmers Association, told the New York Times after Wednesday's ruling that he is disappointed USDA did not start sending out payments to minority farmers before the ruling. "I'm prepared to fight for debt relief for Black farmers and other farmers all the way to the Supreme Court. I'm not going to stop fighting this."

In a statement to DTN, an attorney for the National Black Farmers Association and the Association of American Indian Farmers said the debt relief program is one of several programs aimed at farmers in need, most of which are available to any farmer regardless of history. Still, USDA has a long history of discriminating against people of color, said David Muraskin, a lawyer for Public Justice.

"That history has distorted who is an agricultural producer and which producers can grow and thrive, favoring whites," Muraskin said. "That USDA took a small step towards correcting that is something that should be applauded. The groups filing these lawsuits are pushing an agenda that simply acknowledging past discrimination is unconstitutional. That will only maintain entrenched, biased power structures. This view is disturbing and is certainly not legally constitutionally required, as these groups claim."

More details about the loan debt relief program and litigation, and its impact on Native American farmers: https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

Chris Clayton