Federal Judge Approves $1.25 Billion Settlement to Repay Black Farmers for Past Discrimination

by Frederick H. Lowe

At least 40,000 black farmers are expected to apply for government compensation after a federal judge approved a $1.25 billion settlement between the farmers, the U.S. Department of Agriculture (USDA) and the U.S. Justice Department.

The deal to repay victims for decades of race discrimination by the USDA is the second agreement in 12 years to compensate black farmers for discriminatory denial of  loans and other financial assistance.

In his 70-page decision, Judge Paul Friedman noted that blacks were promised 40 acres and a mule at the end of the Civil War but that the promise was never kept. He said USDA and county commissioners bore much of the responsibility for the broken promise.

"Historical discrimination cannot be undone,” Friedman wrote in his decision that was filed Oct. 27 in the U.S. District Court for the District of Columbia. “And because Congress was willing to appropriate $1.25 billion to help further redress the historic discrimination against African-American farmers, the court is pleased to approve the settlement agreement proposed by the plaintiffs and endorsed by the United States, as fair, reasonable, and adequate."

The judge added that 40,000 plaintiffs already have filed complaints in the case and that tens of thousands more may be entitled to benefit from the litigation.

President Barack Obama said Judge Friedman's certification of the settlement addresses another unfortunate chapter in the Department of Agriculture's civil rights history.

"This agreement will provide overdue relief and justice for African-American farmers, and brings us closer to the ideals of freedom and equality that this country was founded on," President Obama said in a statement issued by the White House. 

Judge Friedman certified the financial settlement known as Pigford II, which refers to the original agreement, Pigford v. Glickman that was finalized in a consent decree filed on April 14, 1999. The National Black Farmers Association reported that the USDA awarded 16,000 black farmers a total of $1 billion in Pigford v. Glickman.  The farmers received direct loan payments, loan forgiveness and tax relief.

Pigford II refers to those black farmers the USDA excluded from the 1999 consent decree because they missed the Oct. 12, 1999, filing deadline to claim any compensation. Congress waived the statue of limitations on Pigford v. Glickman, and the excluded farmers filed the second lawsuit. The USDA, Justice Department and the farmers announced they had reached a settlement on February 18, 2010.

President Obama praised Tom Vilsack, secretary of the USDA, and U.S. Attorney General Eric Holder Jr., for their work in reaching a settlement.

"I especially want to recognize the efforts of Secretary Vilsack and Attorney General Holder, without whom this settlement would not have been reached," the president said. 

Holder said the settlement “allows the Department of Agriculture and African-American farmers to focus on the future and brings us one step closer to giving these farmers a chance to have their claims heard."

Vilsack added, "Court approval of the Pigford settlement is another important step to ensure some level of justice for black farmers and ranchers who faced discrimination when they were trying to obtain services from the USDA."

The USDA has a long history of discrimination against black farmers, according to a report prepared in November 2009 by the Congressional Research Service for members of Congress.

The report, "The Pigford Case: USDA Settlement of a Discrimination Suit By Black Farmers," found that 65 percent of the largest USDA loans went to white-male farmers, compared with 29 percent of loans to black farmers.

Loans to black-male farmers averaged $4,000 or 25 percent less than loans given to white-male farmers, the report said. It also found that 97 percent of USDA disaster payments went to white-male farmers and less than 1 percent went to black-male farmers.

In light of growing evidence of racial discrimination against black farmers, the United States Senate on Nov. 30, 2010, appropriated funds for the settlement, and President Obama signed the claims resolution into law on Dec. 8, 2010.

The government will not automatically award the funds to the farmers who were part of the class-action lawsuit; each farmer must prove that the USDA rejected his or her applications for loans, disaster relief or other compensation because of racism.

According to the certification, black farmers who are seeking financial claims against the USDA can proceed on two tracks—Track A and Track B.

 Farmers who chose Track A and prove their claims of discrimination in a USDA credit program to a neutral third party, are entitled  to a maximum of $50,000 in cash, forgiveness of certain categories of debt to the USDA and tax relief equal to one-quarter of the combined value of the awarded cash and debt relief. 

To prevail under Track B, a plaintiff-class member must show that he or she is an African American who farmed or attempted to farm between Jan. 1, 1981, and Dec. 31, 1996 and who applied for specific farm credit or non-credit benefits at the USDA office between Jan. 1, 1981, and Dec. 31, 1996. The farmer must show that the USDA office denied the loan or benefits or provided the loan or benefits late, resulting in  sustained economic damages to the farmer.

 The farmer also must prove that he or she complained to a U.S. government official about the  treatment by the USDA. A Track B claimant also must show that he or she received less favorable treatment than a similarly situated white farmer.

If he or she is successful, the farmer will be entitled to a maximum of his or her proven damage, or $250,000, whichever is less. USDA officials will not participate in the hearings, and all of the awards are final and cannot be appealed.

Dr. John Boyd Jr., president of the 60,000-member National Black Farmers Association, said, "No payments will be made until all claims are heard and adjudicated. This is not likely to occur before late 2012 and perhaps even later than that."