Faust v. Vilsack

519 F.Supp.3d 470

Adam P. FAUST, et al., Plaintiffs,

v.Thomas J. VILSACK, et al., Defendants.

Case No. 21-C-548

United States District Court, E.D. Wisconsin.

Signed June 10, 2021

Katherine D. Spitz, Luke N. Berg, Richard M. Esenberg, Daniel P. Lennington, Wisconsin Institute for Law & Liberty, Milwaukee, WI, for Plaintiffs.

Emily Sue Newton, Kyla Snow, United States Department of Justice, Washington, DC, Christian R. Larsen, United States Department of Justice (ED-WI) Office of the US Attorney, Milwaukee, WI, for Defendants.

DECISION AND ORDER GRANTING PLAINTIFFS’ MOTION FOR A TEMPORARY RESTRAINING ORDER

William C. Griesbach, United States District Judge

Twelve plaintiffs, who reside in nine different states, including Wisconsin, brought this action against the Secretary of Agriculture and the Administrator of the Farm Service Agency (FSA), seeking to enjoin officials of the United States Department of Agriculture (USDA) from implementing a loan-forgiveness program for farmers and ranchers under Section 1005 of the American Rescue Plan Act of 2021 (ARPA). Plaintiffs assert that Section 1005 denies them equal protection of the law because eligibility to participate in the program is based solely on racial classifications. This matter comes before the Court on Plaintiffs’ motion for a temporary restraining order pursuant to Rule 65 of the Federal Rules of Civil Procedure. For the following reasons, the motion will be granted.

The American Rescue Plan Act of 2021 was enacted on March 11, 2021. H.R. 1319, 117th Cong. (2021). As part of the ARPA, Congress appropriated "such sums as may be necessary" to pay for the cost of loan modifications and payments to "socially disadvantaged" farmers and ranchers. § 1005(a)(1). Under Section 1005, "the Secretary shall 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 the loan directly or to the socially disadvantaged farmer or rancher." § 1005(a)(2). Loans eligible for forgiveness include direct farm loans made by the Secretary or farm loans guaranteed by the Secretary. Id. The term "socially disadvantaged farmer or rancher" has the meaning given in 7 U.S.C. § 2279(a). § 1005(b)(3).

Under that statute, "socially disadvantaged farmer or rancher" means a farmer or rancher who is a member of a "socially disadvantaged group." § 2279(a)(5). "Socially disadvantaged group" is then defined 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." § 2279(a)(6). In other words, the loan forgiveness program is based entirely on the race of the farmer or rancher.

Defendants have interpreted "socially disadvantaged farmer or rancher" to include individuals "who are one or more of the following: Black/African American, American Indian, Alaskan native, Hispanic/Latino, Asian, or Pacific Islander." American Rescue Plan Debt Payments , U.S. DEPARTMENT OF AGRICULTURE , available at https://www.farmers.gov/americanrescueplan (last visited June 7, 2021). The USDA describes how the loan-forgiveness plan will be administered on its website. It explains, "Eligible Direct Loan borrowers will begin receiving debt relief letters from FSA in the mail on a rolling basis, beginning the week of May 24.... After reviewing closely, eligible borrowers should sign the letter when they receive it and return to FSA." Id. It advises that, in June 2021, the FSA will begin to process signed letters for payments, and "about three weeks after a signed letter is received, socially disadvantaged borrowers who qualify will have their eligible loan balances paid and receive a payment of 20% of their total qualified debt by direct deposit, which may be used for tax liabilities and other fees associated with payment of the debt." Id.

Plaintiffs are twelve white farmers and ranchers from nine different states. Plaintiffs moved for a temporary restraining order seeking to enjoin the purportedly unconstitutional race-based program before all of the money is distributed. Defendants responded to the motion on June 8, 2021, and Plaintiffs filed a reply brief the following day. The motion is now ripe for the Court's consideration.

A temporary restraining order, as opposed to a preliminary injunction, is sought and heard on an emergency basis. The purpose of a temporary restraining order is to preserve the status quo pending the complete briefing and consideration of a motion for a preliminary injunction. See Geneva Assurance Syndicate, Inc. v. Med. Emergency Servs. Assocs. , 964 F.2d 599, 600 (7th Cir. 1992) ("The essence of a temporary restraining order is its brevity, its ex parte character, and ... its informality."). In general, the showing required for a temporary restraining order and a preliminary injunction are the same. Specifically, a plaintiff must show that "(1) without this relief, it will suffer ‘irreparable harm’; (2) ‘traditional legal remedies would be inadequate’; and (3) it has some likelihood of prevailing on the merits of its claims." Speech First, Inc. v. Killeen , 968 F.3d 628, 637 (7th Cir. 2020) (quoting Courthouse News Serv. v. Brown , 908 F.3d 1063, 1068 (7th Cir. 2018) ). If a plaintiff makes such a showing, the court proceeds to a balancing analysis, to determine whether the balance of harm favors the moving party or whether the harm to other parties or the public sufficiently outweighs the movant's interests. Id. A temporary restraining order "is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Goodman v. Ill. Dep't of Fin. & Prof'l Regulation , 430 F.3d 432, 437 (7th Cir. 2005) (internal quotation marks and citations omitted).

Plaintiffs challenge the USDA's use of race classifications for allocating funds under the loan-forgiveness program as violative of the equal protection guarantee in the United States Constitution. They assert that they are likely to succeed on their claim. "The liberty protected by the Fifth Amendment's Due Process Clause contains within it the prohibition against denying to any person the equal protection of the laws." United States v. Windsor , 570 U.S. 744, 774, 133 S.Ct. 2675, 186 L.Ed.2d 808 (2013). "Government policies that classify people by race are presumptively invalid." Vitolo v. Guzman , 999 F.3d 353, 360 (6th Cir. May 27, 2021) (citing U.S. Const. amend. XIV ; Adarand Constructors, Inc. v. Pena , 515 U.S. 200, 234–35, 115 S.Ct. 2097, 132 L.Ed.2d 158 (1995) ). "[W]hen the government distributes burdens or benefits on the basis of individual racial classifications, that action is reviewed under strict scrutiny." Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. No. 1 , 551 U.S. 701, 721, 127 S.Ct. 2738, 168 L.Ed.2d 508 (2007) (citations omitted). Under this standard, "the government has the burden of proving that racial classifications ‘are narrowly tailored measures that further compelling governmental interests.’ " Johnson v. California , 543 U.S. 499, 505, 125 S.Ct. 1141, 160 L.Ed.2d 949 (2005) (quoting Adarand , 515 U.S. at 227, 115 S.Ct. 2097 ). Because the program grants privileges to individuals based solely on their race, strict scrutiny applies.

Defendants assert that the government has a compelling interest in remedying its own past and present discrimination and in assuring that public dollars drawn from the tax contributions of all citizens do not serve to finance the evil of private prejudice. Dkt. No. 17 at 16. "The government has a compelling interest in remedying past discrimination only when three criteria are met." Vitolo , 999 F.3d at 361 ; see also City of Richmond v. J.A. Croson Co. , 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989) (plurality opinion). The Sixth Circuit recently summarized the three requirements as follows:

First, the policy must target a specific episode of past discrimination. It cannot rest on a "generalized assertion that there has been past discrimination in an entire industry." J.A. Croson Co. , 488 U.S. at 498, 109 S.Ct. 706.... Second, there must be evidence of intentional discrimination in the past. J.A. Croson Co. , 488 U.S. at 503, 109 S.Ct. 706. Statistical disparities don't cut it, although they may be used as evidence to establish intentional discrimination.... Third, the government must have had a hand in the past discrimination it now seeks to remedy. So if the government "shows that it had essentially become a ‘passive participant’ in a system of racial exclusion practiced by elements of a local industry," then the government can act to undo the discrimination. J.A. Croson Co. , 488 U.S. at 492, 109 S.Ct. 706. But if the government cannot show that it actively or passively participated in this past discrimination, race-based remedial measures violate equal protection principles.

Vitolo , 999 F.3d at 361 (alterations omitted).

Here, Defendants lack a compelling interest for the racial classifications. Defendants assert that "Congress targeted the debt payments in Section 1005 to the minority groups that it determined had suffered discrimination in the USDA programs and that had been largely left out of recent agricultural funding and pandemic relief." Dkt. No. 17 at 17. But Defendants have not established that the loan-forgiveness program targets a specific episode of past or present discrimination. Defendants point to statistical and anecdotal evidence of a history of discrimination within the agricultural industry. Id. at 16–17. But Defendants cannot rely on a "generalized assertion that there has been past discrimination in an entire industry" to establish a compelling interest. J.A. Croson Co. , 488 U.S. at 498, 109 S.Ct. 706 ; see also Parents Involved , 551 U.S. at 731, 127 S.Ct. 2738 (plurality opinion) ("remedying past societal discrimination does not justify race-conscious government...