WASHINGTON Lawmakers budgeted just $100 million for damages when they reopened the government's discrimination settlement with black farmers. 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 months-long debate on the farm bill, mainly because of the artificially low price tag.
"The reality is that we had to fix some dollar amount to this provision because that's what the House rules require," said Rep. Artur Davis, D-Ala., a lead sponsor of the proposal.
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. The farmers, mainly from rural areas in the South, alleged that local USDA offices routinely denied them loans, disaster assistance and other aid frequently given to whites practices that often drove them out of business.
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.
An informational session hosted by Davis in mid-June in Tuskegee, Ala., drew more than 1,000 people, including some who traveled by charter bus from Georgia and Mississippi.
Ronnie Clark, 50, was among the first to sue. He said he tried to grow corn and peanuts in the 1980s but gave up after being denied loans from the government. He said he did not know about the original settlement until the deadline had passed and that the government should pay valid claims whether they were late or not.
"I went and tried to get a loan and they talked to me so hateful that I just quit," said Clark, who is from Brundidge, Ala., and now works on a transportation maintenance crew for the state. "They told me I had to own so much land for collateral. I just quit trying to borrow."
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 of claimants are successful in seeking damages, 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.
Given the uncertainty of the final cost, he and other supporters defended the bill as a starting point to be revisited later.
"There's no doubt that there will have to be more money in the future," Sen. Chuck Grassley, an Iowa Republican and lead sponsor of the measure. But, he said, "African-American farmers deserve justice."