Native American farmers and ranchers and the U.S. Department of Agriculture (USDA) today announced an historic agreement to settle a nationwide class action lawsuit (Keepseagle v. Vilsack) that alleged discrimination in USDA’s farm loan program dating back to 1981. The agreement brings to an end 11 years of litigation, and marks the beginning of what is expected to be a new partnership between USDA and the Native American community.
Under the agreement, which was unveiled in the U.S. District Court in Washington, D.C. before Judge Emmet Sullivan, USDA will pay $680 million in damages to thousands of Native American farmers and ranchers and forgive up to $80 million worth of outstanding farm loan debt.
The settlement also provides for a host of initiatives that will improve USDA’s farm loan services for Native Americans. Those initiatives include the creation of a Native American Farmer and Rancher Council, where top USDA officials and Native American advocates will collaborate to make USDA’s programs more accessible for Native Americans farmers and ranchers, as well as enhanced delivery of technical assistance to Native American borrowers, the creation of sub-offices on tribal lands, a systematic review of the farm loan program rules to improve accessibility to Native Americans and other measures designed to improve the provision of farm loan services to Native Americans.
“This settlement marks a major turning point in the important relationship between Native Americans, our Nation’s first farmers and ranchers, and the USDA,” says lead plaintiffs’ attorney Joseph M. Sellers, a partner at Cohen Milstein Sellers & Toll, PLLC, in Washington, D.C. “After three decades, Native American farmers and ranchers will receive the justice they deserve, and the USDA has committed to improving the farm loan system in ways that will aid Native Americans for generations to come.”
The Keepseagle action was filed nearly 11 years ago, on the eve of Thanksgiving, 1999. The Plaintiffs alleged that Native American farmers and ranchers were denied the same opportunities as white farmers to obtain low-interest rate loans from USDA. Congress has charged the USDA with serving as the “lender of last resort” for family farmers who can’t obtain credit from commercial banks. According to an expert report prepared by a former USDA economist, Native Americans suffered actual economic losses amounting to $776 million between 1981 and 2007 as a result of receiving less than their fair share of credit opportunities from the USDA.
The settlement was greeted with relief and jubilation by the lead plaintiffs Marilyn and George Keepseagle, who have ranched for decades in Fort Yates, N.D., near Bismarck, N.D. “We have been waiting nearly three decades for this day to come,” said Marilyn Keepseagle. “This settlement will help thousands of Native Americans who are still farming and ranching. But more important, through this settlement we will leave to our children and grandchildren a farm loan system far more responsive to our community than the system we inherited from our parents.”
The settlement has three major components that are expected to become effective in early 2011.
First, it provides a payment of $680 million in damages to class members for the economic losses they suffered due to the denial of loans or loan servicing by the USDA.
Second, the USDA will forgive up to $80 million in debt currently held by class members who succeed in obtaining damages. Once the Court gives preliminary approval to the agreement, the USDA will establish a moratorium on foreclosures, debt accelerations and debt offsets not already referred to the Treasury Department. The moratorium will last until the debt relief process has concluded and class members’ debt has been forgiven. After the debt relief is provided, USDA will engage in a round of loan servicing for all class members who are delinquent on any outstanding USDA farm loan debt.
Third, the settlement agreement provides for changes to USDA’s farm loan program to improve the delivery and responsiveness to Native American farmers and ranchers, including through the creation of the Native American Farmer and Rancher Council, a new federal advisory committee.
“While the damage awards and debt relief are vital elements of this settlement, the Native American Farmer and Rancher Council will help ensure that the reforms to USDA’s programs are lasting and that USDA honors the civil rights of Native Americans for years to come,” said Plaintiffs’ co-counsel David Frantz, partner, Conlon, Frantz & Phelan.
The new Council will have 15 members, 11 of whom will be Native Americans or represent Native American interests and four of whom will be top USDA officials. Members will meet at least twice a year for the next five years to discuss how to make USDA’s programs more accessible for Native Americans farmers and ranchers, including changes to Farm Service Administration (FSA) regulations and internal guidance. The Council will report its recommendations directly to senior UDSA officials.
In addition to the Council, the USDA will: 1) create 10 to 15 USDA regional sub-offices that will provide education and technical assistance to Native American farmers and ranchers and their advocates; 2) undertake a systematic review of its farm loan policies to determine how its regulations and policies can be reformed to better assist Native American farmers and ranchers; 3) create a customer guide on applying for credit from the USDA; 4) create the Office of the Ombudsperson to address concerns of all socially disadvantaged farmers and ranchers; and, 5) regularly collect and report data on how well Native Americans fare under USDA’s farm loan programs.