Bradshaw v. Vilsack
| Decision Date | 02 September 2021 |
| Docket Number | Civil Action No. 04-1422 (PLF) |
| Parties | Rodney BRADSHAW, Plaintiff, v. Thomas J. VILSACK, Secretary, United States Department of Agriculture, Defendant. |
| Court | U.S. District Court — District of Columbia |
William Leitzsey Monts, III, Sarah C. Marberg, Hogan Lovells US LLP, Washington, DC, for Plaintiff.
Galen Nicholas Thorp, U.S. Department of Justice, Civil Division, Washington, DC, for Defendant Sonny Perdue.
In 2004, Rodney Bradshaw brought suit against the United States Department of Agriculture alleging, among other things, that the Farm Service Agency had discriminated against him on the basis of race in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., in connection with a loan application he submitted in 2002. The matter came before the Court for a bench trial on July 31, 2018; it continued for five full days. Counsel for the plaintiff called the following witnesses to testify at trial: Rodney Bradshaw, the plaintiff; Dr. Thomas Elam, an expert witness on agricultural economics, agricultural management, business planning and financial planning; and Alicia Balthazar, a paralegal at Hogan Lovells, who served as a summary witness with respect to the loan files of assertedly similarly situated white farmers.
Counsel for the defendant, the Secretary of the United States Department of Agriculture ("USDA"), sued in his official capacity, called the following Farm Service Agency employees as witnesses at trial: Arlyn Stiebe, Farm Loan Chief for the State of Kansas; Michael Campbell, District Director for Northwest Kansas; Mark Hendrickson, District Director for South Central Kansas; and Dwight Jurey, Farm Loan Manager for the Oakley, Kansas office.
After the trial had concluded, the parties filed proposed findings of fact and conclusions of law. Upon careful review of the testimony of the witnesses at trial and the exhibits admitted at trial, and having considered the applicable statutes, regulations and case law, the Court finds that the plaintiff has not met his burden to prove that he was discriminated against with respect to a credit transaction on the basis of race. It therefore enters judgment for the USDA.
1. The Farm Service Agency ("FSA") was created in 1994 as a successor to the Farmers Home Administration ("FmHA"). See Pub. L. No. 103-354, 108 Stat. 3209 (Oct. 13, 1994); Pigford v. Glickman, 182 F.R.D. 341, 343 (D.D.C. 1998). There are two main divisions of FSA: the Program Division and the Farm Loan Division. Trial Tr. at 452:22-453:4 (Stiebe). The Program Division deals with non-loan programs that help farmers manage market risk, recover from disasters, and conserve and protect natural resources, such as commodity programs, price support programs, and other types of government payments. Id. at 452:22-453:2 (Stiebe). The Farm Loan Division provides various kinds of loans to farmers, including farm ownership loans and operating loans. Id. at 453:2-4; 458:17-25 (Stiebe).
2. Implementation of FSA programs is largely conducted by state and county offices. See CAROL CANADA , CONG. RSCH. SERV ., R40179, FARM SERVICE AGENCY COMMITTEES : IN BRIEF 1 (2021). Each state office is led by a State Executive Director, who oversees FSA's operations in that state. Id. The State Executive Director supervises the state office staff, as well as District Directors located around the state, who in turn each oversee a portion of county offices in the state. See Trial Tr. at 454:16-455:16 (Stiebe) (distinguishing between county offices and District Directors overseeing those offices).
3. At the county level, FSA programs are overseen by the County Committee, which carries out an array of administrative functions. Farm programs are implemented by the County Executive Director, who is employed by the County Committee. Farm loan programs are implemented by the Farm Loan Manager, who makes and services loans to farmers and ranchers in a designated area. See CAROL CANADA , CONG. RSCH. SERV. , R40179, FARM SERVICE AGENCY COMMITTEES : IN BRIEF 3 (2021); Trial Tr. at 661:14-19 (Jurey). Several counties may share one County Executive Director and one Farm Loan Manager.
4. Both the County Executive Director and the Farm Loan Manager report to the District Director for their region. See Trial Tr. at 455:19-25 (Stiebe); id. at 733:13 (Jurey). Each state office also has a Farm Loan Chief, who provides advice to the Farm Loan Managers but is not in their supervisory chain of command. See id. at 456:12-457:22 (Stiebe); id. at 907:25-908:5 (defense closing argument).
5. FSA rules govern whether a loan or loan-servicing application may be approved by a Farm Loan Manager or whether the Farm Loan Manager instead makes a recommendation for final decision by the District Director or state office staff. See U.S. DEP'T OF AGRIC. , FSA HANDBOOK : GENERAL PROGRAM ADMINISTRATION , 1-FLP (Rev. 1) at 2-20 (2020); Trial Tr. at 478:9-17 (Stiebe); id. at 737:25-738:1 (Jurey).
6. Farm ownership loans are loans made for the purchase or improvement of real estate. Trial Tr. at 458:17-21 (Stiebe); 7 C.F.R. § 1943.16 (2002).2 Operating loans are loans made for the purchase of machinery and equipment, livestock, facilities, and annual operating expenses, such as fuel, fertilizer, seed, and feed. Trial Tr. at 458:17-25 (Stiebe); 7 C.F.R. § 1941.16. Farm ownership and farm operating loans can be "direct loans," whereby FSA makes a loan directly to a borrower and also services the loan. Trial Tr. at 457:24-458:2 (Stiebe). They may also be "guaranteed loans," whereby FSA guarantees a loan made by another lender. Id. at 458:3-6, 19-25 (Stiebe); see 7 C.F.R. § 762.101. FSA also can make direct emergency loans that may be used for various purposes. See 7 C.F.R. §§ 1945.151, 1945.166.
7. Farmers who wish to apply for a loan from FSA must submit a written application, 7 C.F.R. § 1910.3(a), and must submit various supporting documents and information in order for the application to be considered complete, 7 C.F.R. § 1910.4(b). "The loan approval official must approve or disapprove applications within 60 days after receiving a complete application." 7 C.F.R. § 1941.33(c).
8. In addition to submitting a written application, an applicant must meet eligibility criteria as set forth in the relevant regulations. See 7 C.F.R. § 1941.12(a) (); id. § 1943.12(a) (); id. § 762.120 (). Among other things, applicants must not be delinquent on any federal debt in order to be granted new federal loans. See 31 U.S.C. § 3720B(a). Accordingly, an applicant is ineligible for an FSA loan unless any such delinquency is resolved at or before the closing of the new loan. 7 C.F.R. §§ 1941.12(a)(11), 1943.12(a)(11). Applicants may also be rendered ineligible for federal loans if there are non-federal delinquencies on the applicant's credit report. See id. § 1910.5(c) ().
9. For borrowers whose FSA loan payments are delinquent, FSA is required to collect other government payments by administrative offset. See 7 C.F.R. § 1951.101 ; 31 U.S.C. § 3716.
10. If an applicant meets basic loan eligibility criteria, FSA must then determine whether the proposed loan is based on a feasible plan and whether the security or collateral is adequate. 7 C.F.R. § 1941.33(b)(1)(iii)-(iv) ; see J. Ex. 7 ().3 A "feasible plan" is "a plan based upon the applicant/borrower's records that show the farming operation's actual production and expenses." Id. § 1941.4. To assist in developing a feasible plan, FSA uses a Farm and Home Plan system "to evaluate loan feasibility and prospects for achieving financial viability." Id. § 1924.56. A Farm and Home Plan is a document prepared by the Farm Loan Manager that lists the borrower's expenses, income, and projections for the upcoming year. See J. Ex. 9; Trial Tr. at 72:2-4 (Bradshaw). The plan includes a balance sheet that lists the value of all farm assets. See, e.g., J. Ex. 11 at B001466-67.
11. FSA also provides loan servicing options to borrowers, including subordination, disaster set-asides, and primary loan servicing. When FSA grants a subordination, it subordinates its mortgage to allow a private creditor to use the secured property as new collateral. See 7 C.F.R. § 1965.12. Under the Disaster Set-Aside Program, borrowers may be permitted to move one annual payment of an FSA loan to the end of the loan term if a borrower located in a designated disaster area is not able to make the payment as scheduled. Id. § 1951.952. And primary loan servicing is available to financially distressed or delinquent borrowers who are not able to make their payments. See id. § 1951.901 et seq.
12. If a borrower becomes delinquent but fails to apply for primary loan servicing, FSA is required to proceed with a notice of intent to accelerate the delinquent loan. See 7 C.F.R. § 1951.907(e). Acceleration makes the entire debt due and payable immediately. See id. § 1955.15(d)(2).
13. Plaintiff Rodney Bradshaw is an African American farmer who lives in Jetmore, a small farming community in Hodgeman County in southwest Kansas.
Trial Tr. at 34:10-35:1 (Bradshaw). He has farmed his own land in southwest Kansas since 1974 or 1975. Id. at 35:11-16, 20-24 (Bradshaw). Mr. Bradshaw received a farm ownership loan in 1979 from the FmHA, which he used to purchase eighty acres of land. See id. at 35:22-24 (Bradshaw); D. Ex. 87 at B001648. Mr. Bradshaw also received loans from FSA in 1979, 1995, and 1996. See D. Ex. 87 at B001648; Second Amended Complaint ("2d...
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