IRA's attempt to bypass ARPA discrimination lawsuits faces possible legal challenges

Struggling farmers, including Natives who were promised 120 percent loan forgiveness by USDA and Congress, feel left in the dark.

(Getty Images)

WASHINGTON — A little known section of the Inflation Reduction Act (IRA), signed into law by President Joe Biden earlier this month, is turning out to be a major concern for socially disadvantaged farmers, many of whom are Native American producers.

A growing number of impacted individuals say that IRA provisions meant to help farmers who’ve faced discrimination and pandemic-related financial setbacks are a far cry from the 120 percent loan forgiveness promised to them by the Biden administration’s U.S. Department of Agriculture and the U.S. Congress that last year passed Section 1005 of the American Rescue Plan Act (ARPA).

The IRA effectively eliminates Section 1005 and its substantial relief provisos for approximately 15,000 financially distressed farmers and ranchers.

“We need Congress and the president to provide protection and clear leadership on next steps and ramifications of the IRA repealing Section 1005,” Kara Brewer Boyd, president of the Association of American Indian Farmers, tells Indigenous Wire.

Since its pandemic-rooted inception, Section 1005 was mired in conflict. White farmers challenged it in several jurisdictions nationwide, arguing it violated anti-discrimination clauses of the U.S. Constitution. Courts in multiple states ended up issuing injunctions, preventing any relief from going out. The resulting legal process has been slow and continues to this day.

An added wrinkle: Soon after Section 1005 passed, Native, Hispanic and Black farmers were informed by the Biden administration that ARPA's loan forgiveness was good to go, and many of these farmers and ranchers made business decisions based on the promised pandemic relief. If they had not been led to believe that the loan forgiveness was definitely going to happen, they would have made different financial decisions, many have said.

It quickly became clear to all that the legal challenges were going to prevent any speedy relief. The USDA ultimately created a website noting the litigation, and spokespersons for the department said they could not talk about the program’s status while it was being litigated.

Inflation Reduction Act to the rescue?

In what is turning out to perhaps be a poorly thought out way to bypass and/or address the lawsuits against ARPA's Section 1005, Democratic senators, including Cory Booker (D-NJ) and Raphael Warnock (D-GA), encouraged Senate Majority Leader Chuck Schumer (D-NY) to include a section within the IRA that would attempt to rectify the problem and get some aid out to disadvantaged farmers.

The Democratic legislators were trying to do a good thing by getting money unstuck that wasn’t moving due to the Section 1005 lawsuits, according to legislative and tribal sources.

One of the results, included within the IRA, was to provide up to $500k to any farmers who have faced discrimination, regardless of their race.

When Brewer Boyd learned of the change — about which she says Congress did not consult impacted constituents — she was discouraged for many reasons.

“Native American farmers have suffered harm from first the legal delay and [now the] repealing of ARPA Section 1005, and [the IRA provisions are] in no way comparable to 120 percent debt relief,” Brewer Boyd said.

“Most of the 15,000 [impacted] farmers are not even aware Section 1005 has been repealed and what that means for them,” she added. 

What it means, in short, is that a major promise from Congress and the Biden administration — that 120 percent of their loans would be forgiven — has been quietly taken away within a law that many Democrats have largely promoted as the savior of our times for the climate and the environment.

Native-focused agricultural experts say they are expecting litigation from many farmers based in part on the IRA’s repeal of the Section 1005 promises.

USDA’s response

Agricultural experts and lawyers have been told by Biden administration officials that it may take at least until October for the USDA to get all the details of the IRA sorted out.

That means distressed farmers who have already been trying to survive through the pandemic, droughts, and other climate impacts will have to wait longer to find out if they will be eligible for a chunk of relief from the new law.

USDA has $3.1 billion in the IRA to distribute in addition to $2.2 billion for discrimination claims.

Agriculture Secretary Tom Vilsack said yesterday that the department “is not ready to spell out the rules” on how the funds will be released but that the information would likely come this fall.

As recently as last month, Vilsack was still personally defending the lawfulness of Section 1005 of ARPA, and people familiar with his thinking said he was not prepared for the IRA’s total upending of the Section 1005 socially disadvantaged plan for loan forgiveness.

Related: Vilsack delays update on minority-serving ARPA funding

A USDA official tells Indigenous Wire that provisions of the IRA are “designed to ensure all of our direct and guaranteed borrowers have the opportunity to keep farming.”

“This is unrelated to the provisions in section 1005 of the ARPA, which were designed to forgive debt to a certain group of (Farm Service Agency) borrowers,” the official said. ”The Biden-Harris Administration has been focused on ensuring the assistance we deliver goes to those who need it most, and this legislation allows USDA to continue our efforts to provide assistance to farmers most in need.”

The official added that the USDA is trying to “expeditiously provide relief for distressed USDA borrowers whose agricultural operations are at risk” and that the IRA “substantially increases funding” to address discrimination compared to Section 1005, which the official said “provided a minimum of $50 million for this purpose.”   

Brewer Boyd and other farmers say they feel that politicians in D.C. are downplaying the amount of relief that was truly available to Native, Hispanic and Black farmers under Section 1005 now that it has been wiped away by the IRA.

Still, the USDA official says the agency “will move quickly to carry out…new programs that address two pressing needs: 1) financial relief for distressed agricultural producers with operations at risk at a time when we need every farmer to contribute to reducing food inflation, feeding the nation and the world; and 2) justice for producers who have been experienced discrimination in USDA’s loan programs.” 

USDA is also noting for taxpayers that the repeal of Section 1005 offsets the costs associated with the IRA.

A new legal challenge

USDA probably wants to act fast, impacted farmers say, especially since word is arriving through legal channels that lawsuits against the IRA’s anti-discrimination funding are already said to be forthcoming.

Lawyers who have been defending Section 1005 in court have recently been informed that the same folks in Texas who sued claiming discrimination in ARPA are now planning to proceed with litigation against the IRA provisions, claiming that they, too, violate the Equal Protection Clause.

Plaintiffs haven’t presented their arguments in court yet, but legal observers suspect they are going to argue that the IRA’s discrimination-focused payments should be regarded as racial classifications.

Brewer Boyd — well-aware that another legal challenge will take more time and resources to battle — is now pushing for increased federal transparency and action.

Congress and Biden might be wise to listen. After all, Brewer Boyd and her husband John Boyd, a well-known African-American farming advocate, have been correct before when it comes to funding for disadvantaged farmers.

When Section 1005 was being negotiated in Congress, they warned that White farmers may legally object on discrimination grounds, and they tried unsuccessfully to get Congress to change its ARPA language to prevent legal challenges. The law passed along Democratic lines, however, and lawsuits soon followed, just as they had predicted.

Brewer Boyd and several farming advocates are now calling on the Biden administration and Congress to support an “emergency farm foreclosure moratorium” that goes beyond October in order to protect all farm loans, including direct, guaranteed, and those from other agricultural private lenders.

They argue that such a moratorium is needed because they believe the impact of repealing Section 1005 is going to have a devastatingly negative impact on the majority of the thousands of farmers who were told they were going to receive 120 percent debt forgiveness.

They also plan to hold Majority Leader Schumer personally accountable, especially after he indicated he would work to secure such a moratorium during a recent podcast appearance.

“Farmers need funding as we speak to buy feed, hay, diesel fuel, equipment, equipment repairs, etc. These are all costs that must be paid upfront,” Brewer Boyd said. “Many of our farmers are in areas that have been declared state of emergencies due to drought.”  

“Any corrective actions are going to require time on behalf of the USDA, private lenders and borrowers to sort through all viable options,” she added. “To require farmers to make hasty financial decisions will only further damage the relationship and mistrust between farmers of color and USDA.”  

“Honesty is the best path forward.”