Section 1005 of the American Rescue Plan Act (ARPA) authorizes the USDA to pay up to 120 percent of certain eligible loans balances to “socially disadvantaged farmers and ranchers” (SDFR). SDFR includes producers who are a member of socially disadvantaged groups such as “Black, American Indian/Alaskan Native, Hispanic, Asian, and Pacific Islander.” See 7 U.S.C. § 2279(a)(6). A Caucasian farmer from Florida brought this lawsuit claiming that Section 1005 of the ARPA violated both the equal protection component of U.S. Const. amend. V’s Due Process clause and that it should thus be prohibited by the Administrative Procedure Act (APA). The plaintiff petitioned the court for a preliminary injunction.
To obtain a preliminary injunction, the proponent, among other factors, must show that he is likely to succeed on the merits. The plaintiff in this case must prove Section 1005 is unconstitutional. Race-based governmental actions are subject to strict scrutiny review and must be narrowly tailored to meet a compelling government interest. The court will consider factors such as the necessity of relief and effectiveness of alternative remedies; the flexibility of the relief or availability of waiver provisions; and whether the law is over-inclusive or under-inclusive. While remedying past government discrimination is usually a compelling interest, the solution must attempt to remedy a past wrong.
Here, the court held that the law was not narrowly tailored. Neither party contests the USDA’s past discrimination against SDFRs which resulted in lower approval rates among minority farmers or loans with less favorable terms. However, Section 1005 only benefits SDFRs who actually received an eligible USDA loan. Additionally, there was no evidence that Congress attempted to first consider race-neutral alternative remedies.
While the defendant argued that Section 1005 is narrowly tailored to quickly provide monetary assistance to producers near foreclosure, the court disagreed, finding it to be inflexible. Section 1005 does not base qualification upon profitability—or the lack thereof—but only on race. Similarly, it did not provide a waiver provision for a non-SDFR to qualify.
Next, the court held that Section 1005 is both over-inclusive and under-inclusive. It does not require a past showing of USDA discrimination, which is the past wrong Congress intended to remedy. It also provided relief to certain groups for which there was little evidence of USDA farm loan discrimination. Alternatively, the court found Section 1005 was under-inclusive because it failed to provide relief for producers who specifically experienced USDA discrimination. Therefore, the court found that the plaintiff was likely to succeed on the merits of the case and granted the motion for a preliminary injunction.
Wynn v. Vilsack, 2021 WL 2580678 (M.D. Fla. June 23, 2021).