Debt Relief in the Inflation Reduction Act

Hope and Uncertainty Remain for Farmers of Color

On Tuesday, August 16, President Biden signed the Inflation Reduction Act

RAFI-USA welcomes the climate investments in the Inflation Reduction Act. We are hopeful that the act’s debt provisions will save farms for those who are currently at risk of losing them, and we regret its repeal of race/ethnicity-specific debt relief.

The Inflation Reduction Act contains — among other things — many crucial investments in clean energy, and more than $20 billion to help farmers fight the climate crisis. It also repeals Section 1005 of the American Rescue Plan Act (ARPA ) — which promised debt relief for Black farmers, Indigenous farmers, and other farmers of color (using the USDA term “socially disadvantaged”) who had direct or guaranteed loans1 through the Farm Service Agency (FSA) — and replaces it with a more general provision to provide payments or loan modifications to “distressed” FSA direct or guaranteed borrowers (Section 22006). 

The Inflation Reduction Act also contains amendments to Section 1006 of ARPA, among other things removing or replacing the term “socially disadvantaged” (a term that, while imperfect, still refers to race/ethnicity specifically) with “underserved,” a much broader and not race/ethnicity-specific term. Part of that re-write also includes $2.2 billion for “financial assistance to farmers, ranchers, or forest landowners determined to have experienced discrimination prior to January 1, 2021, in Department of Agriculture farm lending programs,” with payments capped at $500,000 per farmer.

RAFI-USA works with farmers in financial crisis. Since the passage of ARPA promised debt relief for BIPOC farmers, RAFI-USA has been closely tracking the issue. It has been a confusing and worrying road for the farmers who were promised debt relief. We are working with farmers right now who have been negotiating with their guaranteed lenders to fend off foreclosure — farmers who were promised debt relief in the ARPA and by USDA, whom FSA did not have the power to protect through a foreclosure moratorium. Several of those farmers have days or weeks, and not months or years, to find a solution to their predicament before losing their land forever: the lawsuits which attacked and successfully paused the debt relief would have ultimately cost those farmers their farms, regardless of the eventual outcome in the courts. It was on those farmers’ behalf that RAFI-USA advocated with the Senate Agriculture Committee and the USDA to take swift action to address their situation. If implemented quickly and well, the provisions in the IRA could save those farms.

We are counting on USDA now to implement the new loan modification provisions in Section 22006 of the IRA swiftly and effectively to keep these farmers on their land. We were glad to see the explicit inclusion of guaranteed borrowers in the legislation since these farmers have been the most at risk of foreclosure given the USDA’s inability to dictate loan servicing terms to guaranteed lenders. We hope and expect that USDA will interpret “distressed” borrowers to include delinquent borrowers — as we believe is the intent of Congress — since those borrowers are in the most dire circumstances.

At the same time that we are hopeful about possible solutions for farmers of color in immediate crisis, we also maintain that Section 1005 was an important acknowledgment of, and answer to, the decades of racial discrimination experienced by farmers of color. While explicit racism is a part of our legal history, implicit racism is also a part of the implementation of our laws, especially via racial discrimination in the implementation of USDA programs. Even once explicitly racist law shifted to technically race-blind provisions, USDA benefits and resources continued to benefit white farmers disproportionately. While being incomplete (not accounting for farmers of color who never succeeded in getting a loan from FSA due to discrimination, for example), Section 1005 was an appropriately systemic response to a long-standing systemic issue, and a response acknowledged in law. 

The changes in the IRA are clearly an attempt to have an impact in law that will not be vulnerable to litigation or endangered by the current composition of the Supreme Court. It is possible that some portion of long-standing racial injustices will still be redressed by the IRA, and USDA should do all in its power to maximize those effects. However, the lawsuits against the debt relief, in combination with the decisions expected from the current Supreme Court, have both delayed justice for farmers of color, and materially harmed many who were impacted financially by the sequence of events surrounding the debt relief. Farmers of color in our country still deserve explicit acknowledgment and specific, targeted measures of repair.

We also note that this shift in the law means that farmers who were promised debt relief, who are not currently distressed borrowers, can no longer expect the payment they were promised. While we appreciate the additional resources that have been appropriated towards payments for farmers who have experienced discrimination, previous USDA processes to deliver case-by-case justice for farmers who were discriminated against were painstakingly slow and failed to accurately repair/address the harm done to farmers. Implementing this provision, in concert with the non-governmental organization(s) selected to administer it, in a way that does not add frustration and trauma to the farmers who apply, would be one significant way for USDA to show that it is charting a new course. The process should also be simple enough to navigate that a farmer will not need the help of a lawyer or other expert to be successful. Unfortunately, this overall approach still places the burden of proof for systemic harm onto individual farmers.

In implementing the provisions of the Inflation Reduction Act, USDA has an opportunity to set a different course than its historic response to injustice. The agency must do everything in its power to implement the provisions in a way that fulfills the promise that was originally made. Additionally, we believe that implementation will be most successful when done in consultation with the organizations that currently work with farmers of color on financial and credit issues. 

RAFI-USA will stay involved to communicate both with the farmers we serve, and with the administration, to make sure that the justice promised in the American Rescue Plan Act is delivered to the greatest extent possible, by the Inflation Reduction Act and its implementation.

1FSA is involved in two types of lending: direct lending, in which FSA makes loans directly to farmers; and guaranteed lending, in which FSA guarantees a loan made by approved lending institutions to farmers, in case of a loss.

“Our friends at the Farmers’ Legal Action Group have put together a guide on what we currently know—and don’t know—about the debt relief and discrimination financial assistance provisions of the Inflation Reduction Act. This publication was made possible with financial support from the W.K. Kellogg Foundation. Check it out!

Any update to this Guide is available at: www.flaginc.org,


USDA announces temporary suspension of past-due debt collection and foreclosures for direct loan borrowers.

MARCH 11, 2021
ARPA was signed into law. That month, FSA notifies guaranteed lenders of the debt relief and requests they suspend all adverse actions against “socially disadvantaged” borrowers until a process for the debt relief is in place.

MAY 2021
USDA sends letters to eligible BIPOC farm loan borrowers notifying them of the debt relief and confirming their presumed payment amount.

Lawsuits are filed by white farmers claiming the debt relief discriminates against them, and seeking to block it.

JUNE 2021
With other partners, RAFI-USA joins an amicus brief in defense of the debt relief and opposing the longer-term injunction requested by the lawsuits to halt it. However, the injunction is ultimately granted, blocking the debt relief while the lawsuit is litigated.

BIPOC farmers face uncertainty and stress throughout 2021. With the status of the debt relief unknown, they lack the information needed to make financial decisions for their farm businesses. Guaranteed loan borrowers especially face uncertainty: direct loan borrowers are assured by FSA their loans will not be foreclosed on, but FSA lacks the authority to dictate a foreclosure moratorium to guaranteed lenders, so guaranteed borrowers have no such assurances on which to depend. RAFI-USA advocates with both Congress and USDA to take rapid action so that none of those farmers lose their farms.

Throughout 2021, some farmers receive “notice of intent to accelerate” letters from FSA. In February 2022, FSA Administrator Zach Duchenaux clarifies that the suspension on adverse actions is still in place.

MARCH 2022
The motion by the Federation of Southern Cooperatives to intervene in the lawsuit on behalf of Black farmers, and join USDA in the defense of the debt relief provisions, is approved

Planting season approaches and farmers who trusted they would receive the promised debt relief and stopped making payments on their FSA loans — thus becoming delinquent when the debt relief never arrived — are unable to access operating funds for the following season due to their status as delinquent borrowers.

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