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Debt Relief Payments to “Socially Disadvantaged” Farmers On Hold Pending Lawsuit By White Farmers

Updated: Jul 15, 2021

Image is above a tractor going across a field
Image by Edwin Remsberg

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Co-Author: Ellis Collier, Senior Legal Research Associate for ALEI at UMES

If you follow this blog, then you know we’ve been covering the historic debt relief program for "socially disadvantaged" farmers. But, as of June 10th, the payments that were expected to start being issued last month have been put on hold pending a lawsuit brought by white farmers. To learn more about what’s happening, keep reading.

The Lawsuit

The USDA is currently facing a class action lawsuit from white farmers who each have FSA loan debt, and who claim the debt relief program authorized by Congress as part of the COVID-19 stimulus loan forgiveness program in the The American Rescue Plan Act of 2021 (ARPA) is unconstitutional. The plaintiffs, farmers from Wisconsin, Minnesota, South Dakota, Illinois and Ohio, filed the suit against the Secretary of Agriculture (Tom Vilsack) and the Administrator of the Farm Service Agency (FSA) (Zach Ducheneaux) asserting that section 1005 of the ARPA denies the plaintiffs equal protection of the law in violation of the Fifth Amendment Due Process Clause because eligibility to participate in the debt-relief program is based solely on race. The plaintiffs argue they are ineligible to participate in the program only because they are white.

Under Section 1005, Congress granted the USDA the authority to “provide a payment in an amount up to 120 percent of the outstanding indebtedness of each socially disadvantaged farmer or rancher as of January 1, 2021, to pay off the loan directly or to the socially disadvantaged farmer or rancher.” (American Rescue Plan Act of 2021 § 1005(a)(2)). The loans that are eligible are direct or guaranteed farm loans made to a socially disadvantaged farmer or rancher. In section 1005(b)(3), the term “socially disadvantaged farmer or rancher'' is defined based on the meaning in the Food, Agriculture, Conservation and Trade Act of 1990 (the Act). The Act defines the term “socially disadvantaged farmer or rancher” as a farmer or rancher who is a member of a socially disadvantaged group. The term “socially disadvantaged group” means a group whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities. (American Rescue Plan Act of 2021 § 1005(a)(2)). The USDA has broadly defined the term “socially disadvantaged farmer or rancher” as “those who identify as one or more of the following: Black, American Indian/Alaska Native, Hispanic, Asian, and Hawaiian/Pacific Islander.”

In their lawsuit, the plaintiffs are ultimately seeking a declaration from the court that “the racial classifications under Section 1005 of ARPA are unconstitutional.” They want the court to issue an order “permanently” stopping the USDA from “applying racial classifications when determining eligibility for loan modifications and payments under Section 1005 of ARPA.”

More immediately, the plaintiffs have asked the court to enter a temporary restraining order (TRO) and a preliminary “injunction” while the litigation proceeds, to prevent USDA from applying racial classifications when determining eligibility for loan modifications and debt relief payments under Section 1005. In other words, the plaintiffs want to stop USDA from paying off the loans until the court rules on whether the program is constitutional.

Why Have Payments Been Stopped?

The payments have stopped because on June 10th, the court granted the plaintiff’s request for a TRO to stop the USDA from forgiving loans pursuant to section 1005 of the ARPA until the court’s final ruling on the constitutionality of the program. The purpose of a TRO is to preserve the status quo before the court's final judgment. In this case, the plaintiffs requested the TRO because, they argued (and the judge agreed), if these payments were allowed, then the farmers would be excluded from these relief packages because the government would have essentially used the resources that the plaintiffs would have otherwise been eligible to receive.

What Happens Now?

The TRO only halted payments. In his order granting the TRO, Judge Griesbach stated that USDA and FSA may continue to identify eligible recipients, mail notices, and accept and review applications. While the TRO is in place, however, USDA must halt issuing payments.

The TRO could be lifted if the USDA is successful in defending against the plaintiffs’ request for the court to issue a preliminary injunction. The USDA filed its reply brief to the plaintiffs’ request for a preliminary injunction on June 18th arguing that a preliminary injunction should be denied because, among other things, the plaintiffs “seek to further delay pandemic relief designated for minority farmers, despite failing to provide any basis to question Congress’s conclusion that minority farmers were largely left out of prior relief efforts.” As of the time of this posting, Judge Griesbach has until July 23, 2021, to decide on the preliminary injunction. If the court denies the plaintiffs’ request for a preliminary injunction, then the USDA should be able to resume making payments while the litigation proceeds on the plaintiffs’ requests for the court to declare the program unconstitutional.

Is This Case The Only One?

The USDA is also defending the constitutionality of the program in a handful of other lawsuits, including a lawsuit that was filed by Texas Ag Commissioner Sid Miller. In that case, the plaintiffs allege that the USDA’s definition of socially disadvantaged ranchers and farmers has failed to address racial discrimination because it excludes white ethnic groups. They note that under the statutory definition of “socially disadvantaged groups,” white ethnic groups that have experienced past racial or ethnic prejudice should be included into these minority groups. The plaintiffs have urged the court to declare that USDA’s current interpretation of “socially disadvantaged group” violates the statutory language by excluding white ethnic groups that have been subjected to racial and ethnic prejudice, and it should enjoin Secretary Vilsack and his successors from excluding Irish, Italians, Germans, Jews, eastern Europeans, and any other ethnic group that has suffered racial and ethnic prejudice, from the definitions of “socially disadvantaged group” and “socially disadvantaged farmer or rancher.”

How To Keep Up On Developments?

USDA has provided more information about the litigation, including USDA’s response, at its American Rescue Plan Litigation Update webpage.

You can also keep up by continuing to read this blog. We will be sure to keep you updated on any and all developments as these cases unfold.


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