FORT WORTH, TEXAS (July 6, 2021)–A US District Court judge has halted President Joe Biden’s US Department of Agriculture’s loan program. Judge Reed O’Connor ruled “This prohibition encompasses: (a) considering or using an applicant Class Member’s race or ethnicity as a criterion in determining whether that applicant will obtain loan assistance, forgiveness, or payments; and (b) considering or using any criterion that is intended to serve as a proxy for race or ethnicity in determining whether an applicant Class Member will obtain loan assistance, forgiveness, or payments.”
Judge O’Connor joined the court in 2007 after being nominated by President George W. Bush.
Judge O’Connor was the judge in the case of Texas et al. v. United States of America et al.. The case revolved around the Affordable Care Act or Obamacare. A group of twenty Republican state attorneys general and governors brought the case, arguing that the elimination of the law’s tax penalty for not purchasing health insurance meant that its individual mandate was no longer a valid exercise of congressional power.
Judge O’Connor ruled that the Affordable Care Act’s individual mandate was unconstitutional and, because it was a critical feature of the law, “the remaining provisions of the ACA are inseverable and therefore invalid.”
“Judge O’Connor is a conservative judge whose opinions are frequently affirmed in the Fifth Circuit, as are most district court opinions,” says Haynes and Boone litigation partner Anne Johnson. “The most recent statistics published by the Fifth Circuit show an overall reversal rate of 7.2 percent.
“Judge O’Connor has sided with the conservative position in several highly contentious, partisan cases and, not surprisingly, those kinds of cases continue to be brought in his court,” says Johnson, who specializes in appellate litigation.
The Biden’s administration’s excluded White farmers ethnic groups that have experienced discrimination and individuals who have any discernible trace of minority ancestry in their loan program because they are not a “socially disadvantaged farmer or rancher.” .The program ” held qualifying FSA loans” for disadvantage farmers on January 1, 2021 but excluded White farmers making them ineligible for the funds under the Act.
That Act appropriated funds to the USDA and required the Secretary 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 qualifying Farm Service Agency (FSA) loans.
To be eligible under the program, an applicant must be a “socially disadvantaged farmer or rancher” as
defined in section 2501(a) of the Food, Agriculture Conservation, and Trade Act of 1990. That statute provides that a “‘socially disadvantaged farmer or rancher’ means a farmer or rancher who is a member of a socially disadvantaged group.”
It defines “socially disadvantaged group” as “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.”
Biden USDA’s Minority Program:
In announcing a Notice of Funds Availability, the USDA stated that those groups include but are not limited to “American Indians or Alaskan Natives,” “Asians,” “Blacks or African Americans,” “Native Hawaiians or other Pacific
Islanders,” and “Hispanics or Latinos.” Notice of Funds Availability, 86 Fed. Reg. 28,330 (May 26, 2021).
According to Judge The White Farmers “have carried their burden to show that they will adequately represent the
interests of class members similarly situated in zealously pursuing the requested relief. All indications are that Plaintiffs are willing and able to control the litigation and to protect the interests of absent class members. But the government argued “that both proposed classes are imprecise.”
“For the first class, the Government submits that it is unclear whether it would include, for example, individuals who fall within the definition of a socially disadvantaged farmer or rancher but claim discrimination based on other factors, such as accessibility to program services.”
“As for the second class, the Government argues that it “is not limited to those who have suffered any injury as a result of the fact that they do not fall within the definition of a ‘socially disadvantaged farmer or rancher.’”
“The Government concedes its prioritization scheme is race- based but maintains that it is allowed to use racial classification to remedy the lingering effects of past racial discrimination against minority groups—a “well-established” compelling government interest.”
“The Government also submits that Congress narrowly tailored the law to achieve that compelling interest, considering the history of discrimination against minority farmers and specific gaps in pandemic-related funding for those racial groups.”
The Government’s Argument Failed:
“It is the Government’s burden to establish that its race-based distribution of taxpayer money is narrowly tailored to achieve a compelling interest.” The Court ruled that the government failed to present a “strong basis in evidence for
its conclusion that remedial action was necessary.”
The Court ruled that the Biden’s administration failed to present evidence but “instead of demonstrating a strong basis, the Government’s evidence of a compelling interest is a mixed bag. On the one hand, the Government points to cases where the USDA settled claims for past discrimination, leading Congress to enact special legislation addressing the civil rights complaints.”
The Court further stated “on the other hand, the Government admits that the USDA is not currently discriminating against any socially disadvantaged farmers or ranchers. See Inj. Hearing Tr. Instead, it points to evidence of past intentional discrimination that, it argues, has produced lingering effects that continue to negatively affect these groups.”
The government wrongfully citied “for example, it cites a 1982 report from the United States Commission on Civil Rights to show that the Farmers Home Administration (FmHA), the predecessor to the FSA, provided inferior loans
and services to blacks as compared to whites.” “However, the same report details that the FmHA provided its loans based on credit-worthiness and did not have “jurisdiction to make loans for social purposes,” the Court added.
“Likewise, evidence from a 2011 investigation highlighted statistics on racial disparities in access to USDA programs and services and racial under-representation in USDA employment.” “While this investigation yielded “concerns as to both inequitable service delivery, . . . employment discrimination” and “negative impact[s]” on minority farmers and ranchers, lacking was direct evidence of causation tying these results to government discrimination.”
The same is true for evidence cited by the Government showing that a disproportionately low number of black farmers were aware of and provided funds from the USDA’s Market Facilitation Program and first Coronavirus Food
Assistance Program administered during the Trump administration.”
“All of this evidence shows disparate impact but requires an inference of intentional discrimination by the USDA or its agencies.” During a hearing the Court found that “to find intentional discrimination, then, requires a logical leap, as well as a leap back in time. In sum, the Government’s evidence falls short of demonstrating a compelling interest, as any past discrimination is too attenuated from any present-day lingering effects to justify race-based remedial action by Congress.”
The Court ruled “even if the evidence clearly established historical governmental discrimination to give rise to a compelling interest, the Government must then show that its proposed remedy in the race-exclusionary program is narrowly tailored.”
Judge Howard ruled “in any event, the Government’s evidence does not support the conclusion that these disparities are the result of systemic discrimination justifying the use of race classifications here.”
“As pointed out by Judge Howard considering the same issue, the loan-forgiveness program is simultaneously over-inclusive and under-inclusive: over-inclusive in that the program provides debt relief to individuals who may never have experienced discrimination or pandemic-related hardship, and under-inclusive in that it fails to provide any relief to those who have suffered such discrimination but do not hold a qualifying FSA loan.”
Judge Howard ruled that “the Government again fails to adequately explain how the exclusion of certain races and
ethnicities from consideration for loan forgiveness benefits the already eligible socially disadvantaged farmers and ranchers or the public at large. Even if it could, the inherent harm from an unlawful government-run racially discriminatory program is detrimental to the public interest.”
Read the entire Court’s Order here.