Judge Challenges 2022 ERP Payments

OMAHA (DTN) -- A federal judge in Texas has ruled that USDA discriminated against white farmers in the way it set up the 2022 Emergency Relief Program.

Judge Matthew Kacsmaryk of the U.S. District Court of Northern Texas, a 2019 appointee by former President Donald Trump, issued an injunction June 7 against USDA from making or increasing payments or providing additional relief for "socially disadvantaged farmers or ranchers" or "underserved farmers or ranchers."

The impact of the ruling is unclear given that all the funding from the 2022 Emergency Relief Program (ERP), about $3.2 billion, has already been distributed to producers.

While USDA programs for socially disadvantaged farmers go back more than three decades, Kacsmaryk suggested in his injunction that those programs discriminate based on race and gender.

The injunction comes from a lawsuit filed by four farmers who argued that USDA harmed their operations by providing more aid to other producers based on race and gender.

The four farmers, represented by the Southeastern Legal Foundation and Mountain States Legal Foundation, argued USDA changed the disaster payment program under the 2022 ERP from a "flat-rate relief model" to a "progressive payment factor," which was a major shift in how USDA calculated disaster payments to producers.

In his ruling, Kacsmaryk focused on racial and sex discrimination, stating both classifications are "presumptively unconstitutional," and the 2022 ERP discriminated on the basis of race and gender by favoring minorities and women.

Kacsmaryk, in his injunction, said "there is little question that ERP 2022, which is an ongoing program, is racially discriminatory."

A USDA spokesman told DTN Political Correspondent Jerry Hagstrom, "As a general rule, USDA does not comment on pending litigation."

USDA's definition of "socially disadvantaged farmers" goes back to the 1990 farm bill and the language has been used mainly to provide lower interest on USDA loans and loan guarantees, though it offers benefits for conservation programs as well. Those groups include African Americans, American Indians or Alaskan natives, Hispanics, and Asians or Pacific Islanders. The language has been maintained in every farm bill since then. Kacsmaryk cited that USDA's justification for socially disadvantaged benefits "consistently fail when challenged in court." Kacsmaryk cited rulings against USDA in 2021 over a provision passed by Congress that would have wiped out loan debt for black farmers.

Farm groups and members of Congress complained last year when USDA worked the progressive payment factor into the ERP, which paid farmers for disasters in 2022. A dozen Republican senators wrote the Government Accountability Office calling for an investigation into the program. USDA maintained that a formula was needed because Congress provided $3.2 billion in disaster aid to cover as much as $10.5 billion in uncovered losses in 2022, according to an American Farm Bureau Federation analysis of disaster losses.

Under the progressive payment factor, farmers with smaller losses received a higher percentage of their claims. Farmers with losses below $30,000 received higher payments than farmers with losses higher than $30,000.

USDA issued a total of 344,773 payments under the 2022 ERP. The Farm Service Agency cited last December that 278,834 farmers received higher payments than they otherwise would have received while 65,939 farmers received lower payments than if the flat-rate factor was used.

USDA also released statistics showing more farmers actually received higher payments, but larger farmers received fewer payments under the 2022 ERP.

Farmers Alan and Amy West, Bryan Baker and Rusty Strickland sued USDA over the program arguing that the department unlawfully provided more aid to farmers based on race and gender.

Kacsmaryk in his injunction against USDA noted the plaintiffs received only one-tenth of the payments they would have otherwise received if they had been considered socially disadvantaged.

The Farm Service Agency also provided underserved producers -- beginning farmers, socially disadvantaged farmers and veterans -- refunds on their crop insurance premiums.

Under the 2022 ERP, Rusty Strickland received $7,272.71 in payments while his wife, considered a socially disadvantaged farmer, received $71,900.96 -- a major difference was based on the refund of insurance premiums.

USDA cited justification for returning insurance premiums to socially disadvantaged farmers under the program because they are "more likely to lack financial reserves and access to capital."

Kacsmaryk cited that USDA "lacks a compelling interest" to racially discriminate against white farmers in the disaster program.

The Wests also had applied to USDA's Natural Resources Conservation Service (NRCS) to replace a pair of center pivots through the Environmental Quality Incentives Program (EQIP). They were told that whether a farmer was socially disadvantaged was a ranking factor in whether they received funding. With that, Kacsmaryk cited that an injunction could "redress Plaintiffs' stigmatic harm in their ongoing applications to USDA programs." Still, Kacsmaryk tailored his injunction to only apply to the 2022 ERP payments.

Also see, "USDA Pushes Back on Congressional Criticism of ERP Payment Math," https://www.dtnpf.com/…

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

Follow him on social platform X @ChrisClaytonDTN

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