Reopening Black Farmers’ Suits Could Cost Billions

Ben Evans, AP, June 28, 2008

When Congress reopened the government’s discrimination settlement with black farmers, lawmakers budgeted just $100 million for damages. They probably should have handed over a blank check.

With more than 70,000 potential claimants, the liability could exceed $3 billion—three times what was paid out in the original 1999 agreement.

The settlement was reopened thanks to legislation added to the farm bill passed last month. It illustrates how lawmakers often manipulate pay-as-you-go budget rules to give the appearance they are balancing the federal checkbook.

Supporters acknowledge that the $100 million was an arbitrary amount that will not come close to covering the actual cost. Yet the measure ran into little opposition during the monthslong debate on the farm bill, mainly because of the artificially low price tag.

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With a higher estimate, he said, lawmakers probably would have stripped the provision.

The decision to allow new claims comes almost 10 years after the Agriculture Department settled a class-action lawsuit brought on behalf of thousands of black farmers. {snip}

At that time, 22,500 farmers filed claims. Nearly two-thirds were awarded a total of $981 million in damages, including one Virginia farmer awarded $6.6 million.

But an estimated 73,000 others were denied payments because they missed the October 1999 deadline for seeking claims. Many said the six-month filing period was too short and that they were unaware of the settlement until it was too late.

The deadline was extended for nearly a year for those who could show extraordinary circumstances, such as illness. But only a small fraction of late claims qualified, and federal courts repeatedly denied subsequent requests to reopen the settlement.

The farm bill provision gives another chance to anyone who filed late claims.

Just days after it passed, more than 800 people sued in U.S. District Court in Washington. Lawyers working on the case say they expect tens of thousands more.

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Lawyers involved in the case say it remains unclear how the courts will organize the flood of cases or where the money will come from once claims exceed $100 million.

As in the original settlement, claimants can seek expedited damages of $50,000 under a lower threshold of proof than a typical civil case—essentially by showing they applied for and were denied USDA farm assistance.

Claimants also can bypass the expedited process and pursue larger damages, but most are expected to seek the $50,000 payment.

If just half are successful, it would cost $1.8 billion; a two-thirds success rate would cost about $2.5 billion.

Davis argued that the cost is not likely to climb that high because the new legislation requires all claims to go through the courts. That is a far more difficult task than the streamlined administrative process set up for claims under the original settlement.

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