Pride v. U.S. Dep't of Agric.

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LARRY PRIDE, et al., Plaintiffs, v. U.S. DEPARTMENT OF AGRICULTURE, et al., Defendants.

Civil Action No. 23-2292 (LLA)

United States District Court, District of Columbia

August 23, 2024

MEMORANDUM OPINION AND ORDER

LOREN L. ALIKHAN, United States District Judge.

Plaintiffs Larry Pride, Marvin Roddy, Victor Lee, Gary Harris, and Chris Anderson are Black farmers from Mississippi and Arkansas. ECF No. 1 ¶¶ 12-16. They sue Defendants-the U.S Department of Agriculture (“USDA”), the Farm Service Agency (“FSA”), USDA Secretary Thomas J Vilsack, and FSA Administrator Zach Ducheneaux-in this putative class action, alleging that the USDA employed racially discriminatory practices in administering its direct lending program and its (now defunct) Market Facilitation Program. Id. ¶¶ 2, 17-20, 136-39, 143-47. Defendants move to dismiss. ECF No. 31. For the reasons explained below, the court will GRANT in part and DENY in part Defendants' motion.

I. Factual Background

The court turns first to the direct loan program, and then to the Market Facilitation Program. In resolving Defendants' motion to dismiss, the court accepts the facts alleged in Plaintiffs' complaint as true. Ashcroft v Iqbal, 556 U.S. 662, 678 (2009).

A. Allegations Concerning the Direct Loan Program

1. The Direct Loan Program

The USDA, through the FSA, offers direct loans to family farmers and ranchers who cannot obtain commercial loans. ECF No. 1 ¶¶ 21-22. The goal of the program is “to provide progression lending and management assistance to eligible farmers to become owners or operators . . . of family farms, to continue such operations when credit is not available elsewhere, or to return to normal farming operations after sustaining substantial losses as a result of a . . . disaster.” 7 C.F.R. § 761.1(c). A recipient might use her USDA loan to, for example, buy or enlarge a farm or ranch, construct or improve buildings, or purchase livestock, seed, or equipment. ECF No. 1 ¶¶ 24-26; see 7 U.S.C. §§ 1922, 1941. As Plaintiffs put it, “[a]gricultural lending is the indispensable fuel of the farm economy”-and the USDA is the lender of last resort. ECF No. 1 ¶¶ 3, 89.

To be eligible for a USDA direct loan, an applicant must (1) be a U.S. citizen; (2) be a current or prospective owner or operator of a “family farm”; (3) be unable to obtain sufficient credit elsewhere on reasonable terms; and (4) have enough farming experience or training “to assure reasonable prospects of success.” See 7 U.S.C. §§ 1922(a)(1), 1941(a)(1); ECF No. 31-1, at 2. The applicant submits a number of documents, including a description of their farm training and experience, three years of farm financial and production records, documentation showing that they cannot obtain credit elsewhere, and a farm operating plan. See 7 C.F.R. § 764.51; ECF No. 31-1 at 2. The USDA delegates the administration of its direct loan programs to local FSA officials. See 7 C.F.R. § 761.1; ECF No. 1 ¶ 29; ECF No. 31-1, at 2. Local FSA staff review loan applications and decide, subject to certain criteria, whether to grant or deny them. ECF No. 31-1, at 2-3; see 7 C.F.R. § 764.401.

There is a long and well-documented history of racial discrimination in the USDA's direct lending programs. Plaintiffs cite a series of government-issued and commissioned reports- beginning in 1965 and stretching into 2021-cataloguing racial disparities and outright discrimination in the USDA's lending practices. See ECF No. 1 ¶¶ 31-51. To name just a few: a 1982 report by the United States Commission on Civil Rights observed a “broad range of discriminatory actions” by the USDA, including denying Black farmers the opportunity to submit loan applications, taking “inordinate time” to process their applications, and subjecting Black farmers to “disrespect, embarrassment, and humiliation.” Id. ¶ 37 (quoting U.S. Comm'n on C.R., ED222604, The Decline of Black Farming in America 84, 134 (1982)). A 1997 USDA report recognized “persistent problems” in the agency's treatment of minority farmers and acknowledged that, “[d]espite the fact that discrimination in program delivery . . . has been documented and discussed, it continues to exist to a large degree unabated.” Id. ¶ 39 (quoting U.S. Dep't of Agric., Civil Rights at the United States Department of Agriculture: A Report by the Civil Rights Action Team 2, 57 (1997)). A 2005 report by the USDA Office of the Inspector General (“USDA OIG”) “found that FSA loan decisions for the previous eight years had disproportionately benefitted nonminority farmers.” Id. ¶ 40. A 2011 report commissioned by the USDA found that agency employees “recognize[d] the inequitable customer service” provided to socially disadvantaged customers, “but d[id] not see it as a problem because ‘it ha[d] always been done this way' and there [wa]s no penalty for continuing to do so.” Id. ¶ 47. In 2019 and again in 2021, the Government Accountability Office issued reports identifying “racial and income disparities in access to financial services and availability of credit” to the detriment of women and minority farmers. Id. ¶¶ 48-49. And there is an equally long history of litigation challenging these practices as racially discriminatory. See, e.g., Pigford v. Glickman, 206 F.3d 1212 (D.C. Cir. 2000) (approving consent decree in class action brought by Black farmers); ECF No. 1 ¶ 41 n.42 (summarizing cases filed on behalf of Native American, Hispanic, and women farmers, several of which ended in settlement).

This history-and its devastating impacts on Black farmers-is not in dispute. Defendants themselves state that “Congress and the [USDA] have long acknowledged historical discrimination that has contributed to disparities between non-minority and minority farmers.” ECF No. 31-1, at 1. In 2021, Secretary Vilsack testified before Congress that “the history of discrimination against Black [f]armers by USDA . . . has prevented numerous African-Americans . . . from fully realizing the same level of prosperity and success as their white counterparts.” ECF No. 1 ¶ 54. Instead, the parties dispute whether USDA's well-documented historical discrimination against Black farmers continues today.

2. Plaintiffs' allegations

Plaintiffs are Black farmers who have applied or attempted to apply for USDA loans but have been stymied by alleged racial discrimination. Broadly, they allege two types of discriminatory treatment: (1) “unjustified loan denials” and (2) “obstruction, including processing delays and admonitions that discourage applications altogether.” Id. ¶ 111.

Plaintiff Larry Pride has farmed in Panola County, Mississippi since 1985. Id. ¶ 12. He owns 600 acres and produces soybeans, corn, beef cattle, and timber. Id. Mr. Pride recently pursued a USDA loan to purchase 160 acres of land. Id. ¶ 106. The USDA told Mr. Pride that he would have “to secure the loan with his entire farming operation and land as collateral”-even though his land and operation were worth more than the 160 acres he sought to buy. Id. “Well-aware of the USDA's long history of aggressive foreclosure actions against Black farmers, Mr. Pride was unwilling to risk his farm that he has spent a career building from scratch.” Id. Without the USDA loan, Mr. Pride lost the opportunity to acquire the land. Id. Plaintiffs allege that “Mr. Pride's experience is consistent with longstanding USDA practices of imposing unreasonably onerous lending requirements on and otherwise discouraging Black farmers seeking capital loans.” Id.

Plaintiff Marvin Roddy grew up in a farming family. Id. ¶ 13. After retiring from the Army Corps of Engineers, he sought to return to farming. Id. Mr. Roddy leased 300 acres in Tunica County, Mississippi to cultivate row crops such as soybeans. Id. Ten years ago, he applied for a USDA loan and was “summarily” denied, “forcing him to borrow from his retirement account to self-fund his operation.” Id. ¶ 107. In 2020, Mr. Roddy tried again. Id. He applied for a crop loan and was denied, “despite a 10-year track record of regularly paying back” such loans. Id. While Mr. Roddy has been approved for other USDA loans, “the approvals arrive[d] too late in the growing season to impact the productivity of his operation.” Id. Limited access to USDA lending “continues to undermine the profitability of [Mr. Roddy's] operation, as he cannot afford to raise more profitable crops, invest in crop inputs to maximize yields, or buy land.” Id.

Plaintiff Victor Lee has farmed in McGehee, Arkansas since 2015. Id. ¶ 14. He leased and planted roughly 700 acres to produce row crops such as soybeans-but, due to lack of access to USDA loans, “he lost his lease and has been forced to reduce his operation to 80 acres.” Id. ¶¶ 14, 108. “In recent years, the USDA has delayed loan approvals into the planting season even when it has approved crop loans, which has crippled the profitability of Mr. Lee's operation.” Id. ¶ 108. Further, “[p]rior to the 2023 planting season, the USDA informed Mr. Lee that it would not lend to him for a period of three years.” Id. This decision “was made without a full review of his loan application and for considerations that have nothing to do with the merits of his loan application.” Id. In fact, “Mr. Lee has been told that he has been placed on a blacklist by his USDA office.” Id. He fears that his farming operation may not survive. Id.

Plaintiff Chris Anderson has farmed in McGehee, Arkansas since 1990 Id. ¶ 15. He has leased and planted as many as 400 acres and produced row crops such as soybeans, wheat, milo, and corn. Id. Mr. Anderson cites two instances of discriminatory treatment by the USDA in the last five years. Id. ¶ 109. In 2019, he applied for a consolidation loan. Id. “The USDA responded with repeated and unwarranted ...