Inflation Reduction Act to Rewrite Embattled Black Farmer Relief Program

WASHINGTON — A $4 billion program to help Black and other “socially disadvantaged” farmers that never got off the ground last year amid legal objections will be replaced with a plan to make relief funds available to farmers who have faced discrimination.

The changes, which are tucked into the climate and tax legislation that is known as the Inflation Reduction Act of 2022, are drawing backlash from the farmers whom the original debt relief program, part of the $1.9 trillion American Rescue Plan of 2021, was intended to help. The new program is the latest twist in an 18-month stretch that has underscored the challenges facing the Biden administration’s attempts to make racial equity a centerpiece of its economic agenda.

Black farmers have been in limbo for months, not knowing if the debt relief they were promised would be granted. Many invested in new equipment after applying last year for money to help defray their debt. Some received foreclosure notices from the Department of Agriculture this year as the program languished.

The legislation, which passed the Senate this week and is expected to pass the House on Friday, would create two new funds to help farmers. One, at $2.2 billion, would provide financial assistance to farmers, ranchers and forest landowners who faced discrimination before 2021. The other would provide $3.1 billion for the Agriculture Department to make payments for loans or loan modifications to farmers who faced financial distress.

The money would replace the $4 billion program that was intended to aid about 15,000 farmers who received loans from the federal government or had bank loans guaranteed by the Agriculture Department. They included farmers and ranchers who had been subject to racial or ethnic prejudice, including those who are Black, American Indian/Alaskan Native, Asian American, Pacific Islander or Hispanic.

Last year’s pandemic relief package included an additional $1 billion for outreach to farmers and ranchers of color and for improving their access to land.

White farmers and groups representing them questioned whether the government could base debt relief on race and said the law discriminated against them. The program was frozen as lawsuits worked their way through the courts.

The program also faced resistance from banks, which argued that their profits would suffer if the loans they had made to farmers were suddenly repaid.

Fearful that the program would be blocked entirely, Democrats rewrote the law to remove race from the eligibility requirements. It is not clear how discrimination will be defined, and the legislation appears to give the Agriculture Department broad discretion to distribute the money as it sees fit.

Groups representing Black farmers, who have faced decades of discrimination from banks and the federal government, are disappointed that the money will no longer be reserved specifically for them.

President Biden “went back on his commitment to help Black farmers,” said John Boyd, the president of the National Black Farmers Association.

Comparing the situation to the broken promise in the 19th century that former slaves would receive 40 acres and a mule, Mr. Boyd added: “Justice doesn’t come in alphabetical order in this country. Black is always last.”

A class-action lawsuit brought by groups of white farmers against the Agriculture Department has been proceeding in Texas this year, and organizations representing Black farmers expressed dismay that the new measure that Democrats are set to pass all but gives up on a legal battle over whether the government can address America’s legacy of racism through legislation.

“It’s unfortunate that the administration kind of led with racial equity being a huge focus and, at the first sign of litigation trouble, they kind of turned their backs on how difficult achieving the work of racial equity actually is,” said Dãnia Davy, the director of land retention and advocacy at the Federation of Southern Cooperatives/Land Assistance Fund.

Ms. Davy said her organization had been caught off guard by the new legislation after months of discussions with lawmakers and the Biden administration over how to help Black farmers.

Democrats and the Biden administration praised the legislation as progress.

Senator Cory Booker of New Jersey said on Twitter this week, “I’m proud the Inflation Reduction Act contains more than $5B dollars that will enable thousands of struggling small farmers to stay on their land, and provide financial assistance to Black farmers and others who have suffered from USDA discrimination.”

Tom Vilsack, the secretary of agriculture, said in a statement that the new law would give his agency tools to help distressed farmers and to provide justice to those who had faced discrimination.

“The Biden-Harris administration is deeply committed to upholding civil rights and advancing equity,” Mr. Vilsack said, “as well as to doing right by agricultural producers, especially small and midsized producers and those who U.S.D.A.’s programs traditionally have shut out or not fully served.”

The Agriculture Department plans to work with nongovernmental agencies to develop the design and process for its part of the program. Among the most challenging tasks will be determining how to define “discrimination” and, therefore, eligibility.

Gene Sperling, who oversees the Biden administration’s pandemic relief programs, said it was good news that money would soon flow to farmers who were in need.

“Anyone taking a sober, realistic view of where things stood,” Mr. Sperling said in a statement, “must recognize that the Senate took a virtually hopeless situation where zero funds were available for distressed farmers or those who were victims of discrimination and turned it into one where there is now $5 billion that can start going out to tens of thousand of farmers.”

It is not clear how quickly the money will be disbursed or if the groups of white farmers who contested the original law will fight the new programs.

Rick M. Esenberg, the president and general counsel of the Wisconsin Institute for Law and Liberty, which represented white farmers in one of the initial lawsuits, said he was reviewing the new legislation.

“Generally speaking, our view is that you can’t condition government benefits on the basis of race,” Mr. Esenberg said.

America First Legal, a group that is led by Stephen Miller, the senior policy adviser in the Trump administration, and that has represented groups of white farmers, said the revision to the legislation was an acknowledgment that the original programs were unlawful.

“Apparently, President Biden and his allies in Congress recognized that their unlawful, unconstitutional, racially discriminatory program has effectively been crushed in court by America First Legal on behalf of its clients,” said Gene Hamilton, a lawyer in the Trump administration who works for America First Legal.

“The final passage of the bill in the House this week will be their public acknowledgment of their defeat,” Mr. Hamilton added, “and we will be ready to beat them in court again regarding any schemes they attempt to replace it with.”