The Biden administration's efforts to provide the debt relief to minority producers called for by Congress suffered another legal setback on Friday with an order from the Northern District of Texas prohibiting payments based on race and certifying the case as a class action.

“As other courts to consider this issue already have, the court concludes that plaintiffs are likely to succeed on the merits of their claim that the government’s use of race- and ethnicity-based preferences in the administration of the loan-forgiveness program violates equal protection under the Constitution,” U.S. District Judge Reed O’Connor said in a ruling released Thursday afternoon.

USDA quickly filed a "notice" Friday, July 2, about the scope of the injunction, noting that courts in Wisconsin and Florida that have halted payments have allowed USDA to continue some work on the program, which it intends to keep doing.

"Those injunctions prohibited USDA from making payments under Section 1005, but they permitted USDA to take preparatory steps to enable the agency to be in a position" to make them "in the event the injunctions are lifted," USDA said in the document, citing as an example "sending offer letters to eligible borrowers, to enable prompt payments if later permitted."

USDA said it "understands the continuation of this pre-payment preparatory work to be consistent with this court’s order as long as no payments are made, but USDA respectfully submits this notice to advise the court of its interpretation and intended implementation of the court’s order."

Judges in Wisconsin and Florida already have issued orders prohibiting the distribution of funds under the $4 billion program, under which African American, Asian American, Native Hawaiian or Pacific Islander, Native American or Native Alaskan, and Latino or Hispanic producers are eligible for 120% debt relief. Under the program, recipients of direct and guaranteed loans can have 100% of their debt forgiven with the remaining 20% of the payment meant to cover taxes associated with the relief.

O’Connor cited the decision from Judge Marcia Morales Howard in Florida in writing the “loan-forgiveness program is simultaneously overinclusive and underinclusive: overinclusive in that the program provides debt relief to individuals who may never have experienced discrimination or pandemic-related hardship, and underinclusive in that it fails to provide any relief to those who have suffered such discrimination” but do not hold a qualifying Farm Service Agency loan.

The plaintiffs in the Texas case include Texas Agriculture Commissioner Sid Miller, suing in his personal capacity, and four other white farmers or ranchers.

As the other judges said in their decisions, O'Connor determined the government had not made its case “that its race-based distribution of taxpayer money is narrowly tailored to achieve a compelling interest.”

He also certified two classes of producers to be represented by the plaintiffs:

  • “All farmers and ranchers in the United States who are encountering, or who will encounter, racial discrimination from [USDA] on account of section 1005 of the American Rescue Plan Act.”
  • “All farmers and ranchers in the United States who are currently excluded from the definition of ‘socially disadvantaged farmer or rancher,’ as defined in 7 U.S.C. § 2279(a)(5)–(6) and as interpreted by the Department of Agriculture.”

In their brief seeking class certification, the farmers said the "common characteristics" of the first class of producers "are that they are all white farmers or ranchers who have loans directly with or guaranteed by [USDA], and who have been disqualified for loan forgiveness" under the American Rescue Plan because they are white. Based on USDA figures, the brief says "the nationwide class comprises at least 21,000 farmers, and over 1,000 in Texas alone." 

The second class's "common characteristics" are that the producers "are all white (or mostly white) farmers or ranchers who are encountering discrimination from [USDA] on account of their race," the brief said, estimating that class as being between 200,000 and 250,000 white farmers and ranchers.

Said the brief: "The representative plaintiffs seek to litigate a question of law common to all members of each of the two classes: does the [USDA] violate the Constitution and Title VI of the Civil Rights Act of 1964 by limiting eligibility for government benefits to 'socially disadvantaged farmers or ranchers'? This question affects all class members because each of them is subject to discrimination on account of their race."

“Resolution of the alleged conflict between, on the one hand, programs for ‘socially disadvantaged farmers or ranchers’ and, on the other, Constitutional equal protection provides a common answer to a narrow question of law based in a specific alleged injury ‘in one stroke.’” O’Connor concluded, citing a 2020 Supreme Court decision. “Accordingly, plaintiffs have satisfied the commonality requirement for certification of both classes.”

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Stephen Miller, a former aide to President Donald Trump who founded a legal group representing the farmers, said, America First Legal has secured for its clients a historic victory against the Biden Administration’s illegal and unconstitutional assault on Americans’ fundamental civil rights. This preliminary injunction and class certification sends a powerful message that the federal government’s discrimination against American citizens based on their race will not be tolerated — and will be defeated. America First Legal is proud to stand at the forefront of the legal battle to uphold civil rights, protect equal justice, and dismantle government-sponsored racism.”

A spokesperson for the Department of Agriculture did not immediately respond to a request for comment. Ag Secretary Tom Vilsack has previously defended the program in public comments, saying socially disadvantaged producers "did not have the full benefit," of previous USDA programs, "and the result is the system makes it very difficult for them ever to close that gap, ever to have a fair shot.” 

Under the previous rulings from Florida and Wisconsin, USDA has been allowed to continue receiving and processing applications for debt relief but has been prohibited from making payments under the program.

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This story was updated to include USDA's July 2 court filing.