This is the accessible text file for GAO report number GAO-02-942 
entitled 'Department of Agriculture: Improvements in the Operations of 
the Civil Rights Program Would Benefit Hispanic and Other Minority 
Farmers' which was released on September 25, 2002.



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Report to Congressional Requesters:



United States General Accounting Office:



GAO:



September 2002:



Department of Agriculture:



Improvements in the Operations of the Civil Rights Program Would 

Benefit Hispanic and Other Minority Farmers:



GAO-02-942:



Contents:



Letter:



Results in Brief:



Background:



Direct Farm Loan Application National Processing Times Were Longer for 

Hispanic Farmers than for Non-Hispanic Farmers but Were Shorter in Most 

States with Large Numbers of Hispanic Borrowers:



USDA Only Has a Policy for Staying Foreclosures When Discrimination 

Complaints Are Filed with OCR:



Office of Civil Rights’ Problems with Processing Discrimination 

Complaints Persist:



Conclusions:



Recommendations:



Agency Comments:



Scope and Methodology:



Appendix I: Scope and Methodology:



Appendix II: Survey of USDA Farm Service Agency State Offices:



Appendix III: Comments from the Office of Civil Rights:



GAO Comments:



Appendix IV: GAO Contacts and Staff Acknowledgments:



Tables:



Table 1: Average Processing Times for Non-Hispanic and Hispanic Farmers 

for Fiscal Years 2000 and 2001 Combined:



Table 2: Percentage of Direct Loan Applications Approved by FSA for 

Fiscal Years 2000 and 2001 Combined:



Figure:



Figure 1: OCR Complaint Processing Cycle:



Abbreviations:



USDA: U.S. Department of Agriculture

FSA: Farm Service Agency

OCR: Office of Civil Rights:



United States General Accounting Office:



Washington, DC 20548:



September 20, 2002:



The Honorable Joe Baca

The Honorable Silvestre Reyes

House of Representatives:



The U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) 

administers a direct loan program[Footnote 1] that, among other things, 

provides loans to farmers who are unable to obtain private commercial 

credit to buy and operate farms. FSA is required to administer this 

program in a fair, unbiased manner. In each of fiscal years 2000 and 

2001, FSA processed about 20,000 loan applications and approved over 

16,000 direct loans to farmers. In each year, about 2,000 of these 

applications came from minority farmers and about 1,400 loans were made 

to this group. For a number of years, some minority and women farmers 

have asserted that USDA officials discriminate against them, treating 

them differently from other farmers during the loan approval process. 

Furthermore, USDA has faced charges that its Office of Civil Rights 

(OCR) has not conducted proper and timely investigations of complaints 

of discrimination. Since 1997, various groups of farmers--including 

African-Americans, women, and Native Americans--have filed class action 

lawsuits against USDA alleging, among other things, a 20-year history 

of improperly denied or delayed farm loans and delayed complaint 

investigations. On October 13, 2000, a group of Hispanic farmers filed

one such class action. Some members of this group have since raised 

concerns that, contrary to past class actions where USDA stayed 

(or suspended) foreclosure actions, USDA is foreclosing against 
Hispanic 

farmers while this lawsuit is still pending.



In light of these concerns, you asked us to (1) compare the processing 

times and approval rates for direct loans for Hispanic farmers with 

those for non-Hispanic farmers, (2) describe USDA’s policies for 

staying foreclosures and how these policies have been implemented, and 

(3) assess USDA’s progress in addressing previously identified problems 

associated with untimely processing of discrimination complaints and 

human capital issues within USDA’s Office of Civil Rights.



Our review focused on USDA’s actions during fiscal years 2000 and 2001, 

the most recent years for which data are available. To address the 

first objective, we analyzed FSA’s direct loan data for Hispanic and 

non-Hispanic farmers. To address the second objective, we surveyed FSA 

farm loan officials in all 50 states and three territories to collect 

national information about the total number of loans made to all 

farmers and to Hispanic farmers--as well as the number of foreclosures-

-during our time frame. We also visited the four states that received 

the largest number of direct loan applications from Hispanic farmers 

during fiscal year 2001--California, New Mexico, Texas, and Washington-

-to gather information about instances in which Hispanic borrowers’ 

direct loans were foreclosed during fiscal years 2000 and 2001. To 

address the third objective, we analyzed OCR’s program discrimination 

complaint data for fiscal years 2000 and 2001 and interviewed OCR 

officials about complaint processing times and human capital issues. We 

also interviewed FSA and the OCR officials and reviewed regulations, 

policies, and procedures for processing direct loans and discrimination 

complaints. We performed our work between October 2001 and August 2002 

in accordance with generally accepted government auditing standards. 

Appendix I provides additional details on our scope and methodology.



Results in Brief:



During fiscal years 2000 and 2001, FSA took, on average, 4 days longer 

to process loan applications from Hispanic farmers than it did for non-

Hispanic farmers: 20 days versus 16 days. However, the processing times 

in three of the four states with the highest number of Hispanic 

borrowers was faster than it was for non-Hispanic borrowers in those 

states. We also found that the Farm Service Agency’s direct loan 

approval rate was somewhat lower for Hispanic farmers than that for 

non-Hispanic farmers nationwide, 83 and 90 percent respectively. 

Although FSA monitors variations in loan processing times and approval 

rates between minorities and non-minorities, it does not have 

established criteria for determining when variations are significant 

enough to warrant further inquiry. In addition, while FSA conducts 

periodic field reviews of state offices’ performance in civil rights 

matters and suggests improvements, it does not require the state 

offices to implement the recommendations and does not monitor offices’ 

follow-up efforts.



USDA’s policies for staying foreclosures when discrimination has been 

alleged depend on the method used to lodge complaints. When an 

individual has a discrimination complaint accepted by the Office of 

Civil Rights, USDA’s Farm Service Agency’s policy is to automatically 

issue a stay of foreclosure until the complaint has been resolved. 

During fiscal years 2000 and 2001, we tracked 26 Hispanic farmers from 

California, New Mexico, Texas, and Washington who filed discrimination 

complaints with USDA’s Office of Civil Rights regarding their direct 

loans. In 24 of the cases, the Farm Service Agency took no foreclosure 

actions, but--contrary to USDA policy--did in the other 2 cases. These 

two loans were not handled in accordance with USDA’s policy because of 

miscommunication between the Office of Civil Rights and the Farm 

Service Agency in reconciling their respective lists of complainants. 

When the Farm Service Agency learned that complaints had been filed 

with the Office of Civil Rights, it stayed its foreclosure actions, 

and, as of August 2002, no further collection actions were taken 

against the two farmers.



For discrimination claims made in a class action, USDA officials told 

us that the department does not have a similar policy for staying 

foreclosures for the individuals who are potential class members. The 

officials told us that they make these foreclosure decisions on a 

case-by-case basis, considering the merits of each class action. Since 

1997, USDA has issued stays of foreclosure for two class action groups 

that alleged the Farm Service Agency discriminated against them. 

However, the stay of foreclosure has expired for one of these groups 

and USDA has not issued stays for farmers associated with the two other 

ongoing class action lawsuits, including the Hispanic farmers’ suit, 

because the agency believes that the circumstances did not warrant a 

stay.



Because the Farm Service Agency does not maintain centralized, 

historical information on foreclosures, we surveyed all Farm Service 

Agency state offices to determine whether Hispanic farmers were 

disproportionately represented among foreclosure actions. Our survey 

revealed that during fiscal years 2000 and 2001, the Farm Service 

Agency foreclosed on the loans of approximately 600 borrowers 

nationwide. While Hispanic farmers make up about 4 percent of the 

agency’s direct loan portfolio, 3 percent of these foreclosures 

involved Hispanic farmers. In light of the frequent charges of 

discrimination it faces, the Farm Service Agency officials acknowledge 

that it would be extremely useful for the agency to maintain 

centralized information on foreclosure actions over time.



USDA’s Office of Civil Rights has made modest progress in the length of 

time it takes to process discrimination complaints. USDA requirements 

direct OCR to complete its processing up through the investigative 

phase of complaints within 180 days of acceptance. It does not, 

however, have a time requirement for all of the phases of complaint 

processing. In fiscal year 2000, OCR took an average of 365 days to 

complete just the investigation phase. Although OCR slightly improved 

this to 315 days in fiscal year 2001, this continues to far exceed the 

department’s internal 180-day requirement. More importantly, because 

USDA does not have a processing time requirement for all phases of 

complaint resolution, it lacks a meaningful way to measure its overall 

performance. When all stages of complaint resolution are accounted for, 

average processing time was 772 days for fiscal year 2000 and 676 days 

for fiscal year 2001.



The Office of Civil Rights has implemented many recommendations made in 

the past by USDA’s Inspector General and agency task forces. Further, 

OCR significantly reduced its inventory of complaints from the 

beginning of fiscal year 2000 to the end of fiscal year 2001. These 

actions, however, have not resolved fundamental, underlying problems 

adversely affecting the office’s ability to process complaints in a 

timely manner. Of most significance, the office continues to experience 

problems in obtaining and retaining staff with the requisite skills 

needed to process complaints. High staff turnover is evidenced by the 

fact that of the complaint processing staff on board in September 2000, 

only two-thirds were still processing complaints in July 2002. 

According to Office of Civil Rights officials, severe morale problems 

and poor working relationships among staff has exacerbated these 

turnover problems and hinders the Office of Civil Rights’ ability to 

significantly improve its timely processing of complaints.



To help reduce problems and confusion surrounding stays of foreclosure 

in cases where discrimination has been alleged, we are recommending 

ways to improve communication between the Farm Service Agency and the 

Office of Civil Rights; the development of a policy statement that 

explains how USDA makes stay of foreclosure decisions when class action 

lawsuits have been filed; and the retention of historical information 

on foreclosures. To help improve the timeliness of processing 

discrimination complaints filed by farmers, we are recommending that 

the Office of Civil Rights establish time-frame requirements for all 

stages of the complaint process and develop an action plan to address 

ongoing staffing and morale problems.



We provided USDA with a draft of this report for review and comment. 

FSA and USDA’s Office of General Counsel provided a few technical 

comments that we incorporated into the report as appropriate. OCR 

generally agreed with our recommendations but believed that the report 

should present more information on recent improvements made by the 

office. These comments and our response are presented in appendix III.



Background:



Among other things, FSA is responsible for implementing USDA’s direct 

and guaranteed loan programs. FSA’s county office staff administers the 

direct loan program and has primary decision-making authority for 

approving loans. As of September 30, 2001, there were about 95,000 

borrowers with direct loans outstanding, with an unpaid principal 

balance of about $8.5 billion. FSA farm loan managers are responsible 

for approving and servicing these loans. The factors FSA staff consider 

in approving or denying a loan include the applicant’s eligibility, 

(i.e., operates a family-size farm in the area), credit rating, cash 

flow, collateral, and farming experience. Once a farm loan application 

is complete, FSA officials have 60 days to approve or deny the 

application and notify the applicant in writing of the decision.



Once FSA approves a direct loan, it helps borrowers develop financial 

plans; collects loan payments; and, when necessary, restructures 

delinquent debt. Direct loans are considered delinquent when a payment 

is 30 days past due. When a borrower’s account is 90 days past due, FSA 

county staff formally notify him or her of the delinquency and provide 

an application for restructuring the loan. To be considered for loan 

restructuring, borrowers must complete and return an application within 

60 days. FSA staff process the completed application and notify the 

borrowers as to whether they are eligible for loan restructuring. If a 

borrower does not apply or is not eligible for loan restructuring, and 

the loan continues to be delinquent, FSA notifies the borrower that it 

will take legal action to collect all the money owed on the loan 

(called loan acceleration). If the borrower does not take action to 

settle their account within a certain period of time, FSA can start 

foreclosure proceedings.



When farmers believe that FSA has discriminated against them, they may 

file a discrimination complaint with USDA’s OCR. For the complaint to 

be accepted, it must:



* be filed in writing and signed by the complainant;



* be filed within 180 days of the discriminatory event; and:



* describe the discriminatory conduct of an employee of a USDA agency 

or discriminatory effect of a policy, procedure, or regulation.



Farmers may also seek compensation for violations of their civil rights 

by filing individual or class action lawsuits. In 1997, African 

American farmers filed a class action against USDA (Pigford v. 

Glickman). In 1999, this suit resulted in a multimillion-dollar 

settlement agreement for the farmers. Since then, women and other 

minority farmers have also filed class actions against USDA.



To elevate the attention of civil rights matters at USDA, in the 2002 

Farm Bill the Congress created the position of Assistant Secretary of 

Agriculture for Civil Rights.



Direct Farm Loan Application National Processing Times Were Longer for 

Hispanic Farmers than for Non-Hispanic Farmers but Were Shorter in Most 

States with Large Numbers of Hispanic Borrowers:



Although the average direct loan application processing time was longer 

for Hispanic farmers than for non-Hispanic farmers during fiscal years 

2000 and 2001, over 90 percent of loan applications from Hispanic 

farmers (and 94 percent from non-Hispanic farmers) were processed 

within the agency’s 60-day requirement. We also found that the direct 

loan approval rate for Hispanic farmers was slightly lower than for 

non-Hispanic farmers, 83 and 90 percent, respectively. FSA officials 

maintain that approval rate differences were not significant and 

attribute them to differences in the applicants’ ability to repay the 

loans they requested.



During fiscal year 2000 and 2001, the national average processing time 

for direct loans from Hispanic farmers was 20 days--4 days longer than 

for non-Hispanic farmers--but well within FSA’s 60-day requirement. At 

the state level, loan processing time differences were more distinct. 

For example, in the four states that account for over half of all 

Hispanic applications, processing times for Hispanic farmers were 

faster than for non-Hispanic farmers in three states and slower in the 

fourth state. However, all times fell well within FSA’s 60-day 

requirement. Table 1 shows the average processing times for non-

Hispanic and Hispanic applications nationwide and for the four states, 

both fiscal years combined.



Table 1: Average Processing Times for Non-Hispanic and Hispanic Farmers 

for Fiscal Years 2000 and 2001 Combined:



National; Non-Hispanic farmers: Number of applications: 39,725; Non-

Hispanic farmers: Average processing time: 16; Hispanic farmers: Number 

of applications: 793; Hispanic farmers: Average processing time: 20.



California; Non-Hispanic farmers: Number of applications: 635; Non-

Hispanic farmers: Average processing time: 21; Hispanic farmers: Number 

of applications: 99; Hispanic farmers: Average processing time: 15.



New Mexico; Non-Hispanic farmers: Number of applications: 172; Non-

Hispanic farmers: Average processing time: 24; Hispanic farmers: Number 

of applications: 49; Hispanic farmers: Average processing time: 15.



Texas; Non-Hispanic farmers: Number of applications: 3,395; Non-

Hispanic farmers: Average processing time: 24; Hispanic farmers: Number 

of applications: 194; Hispanic farmers: Average processing time: 22.



Washington; Non-Hispanic farmers: Number of applications: 514; Non-

Hispanic farmers: Average processing time: 27; Hispanic farmers: Number 

of applications: 69; Hispanic farmers: Average processing time: 37.



Source: FSA direct loan data.



[End of table]



The vast majority--91 percent--of all direct loan applications from 

Hispanic farmers were processed within FSA’s 60-day requirement. 

However, the loan approval rate for Hispanic farmers was lower than for 

non-Hispanic farmers during this 2-year period--83 and 90 percent, 

respectively. Nonetheless, as shown in table 2, in three of the four 

states that received the largest number of Hispanic applications in 

fiscal year 2001, direct loan approval rates were similar.



Table 2: Percentage of Direct Loan Applications Approved by FSA for 

Fiscal Years 2000 and 2001 Combined:



National; Non-Hispanic farmers: Number of applications: 35,685; Non-

Hispanic farmers: Loan approval rate: 90; Hispanic farmers: Number 

of applications: 678; Hispanic farmers: Loan approval rate: 83.



California; Non-Hispanic farmers: Number of applications: 530; Non-

Hispanic farmers: Loan approval rate: 89; Hispanic farmers: Number

of applications: 82; Hispanic farmers: Loan approval rate: 88.



New Mexico; Non-Hispanic farmers: Number of applications: 156; Non-

Hispanic farmers: Loan approval rate: 93; Hispanic farmers: Number 

of applications: 48; Hispanic farmers: Loan approval rate: 92.



Texas; Non-Hispanic farmers: Number of applications: 2,099; Non-

Hispanic farmers: Loan approval rate: 87; Hispanic farmers: Number 

of applications: 142; Hispanic farmers: Loan approval rate: 85.



Washington; Non-Hispanic farmers: Number of applications: 491; Non-

Hispanic farmers: Loan approval rate: 80; Hispanic farmers: Number 

of applications: 76; Hispanic farmers: Loan approval rate: 61.



Note: The number of applications in table 2 is different than those 

shown in table 1 because some of the applications were not approved or 

denied in the year in which they were received.



Source: FSA direct loan data.



[End of table]



As part of FSA’s assessment of its civil rights performance, the agency 

monitors differences between minority and non-minority loan processing 

times and approval rates at both the national and state levels. In 

addition, FSA sends teams out to state offices to conduct civil rights 

reviews. The teams review loan files to verify compliance with FSA 

policies and procedures and, if warranted, provide written 

recommendations to remedy problems identified. Up through fiscal year 

2001, each state was reviewed once every 3 years; beginning in fiscal 

year 2002, state offices will be reviewed every other year.



As shown in tables 1 and 2, Washington was the only state in our review 

that had both slower processing times and lower approval rates for 

Hispanic farmers. This disparity also surfaced during a 2001 FSA field 

review. Specifically, the final report noted that the time period from 

the completion of loan applications to the applications’ approval was 

significantly longer for minorities in three of the four FSA service 

centers it reviewed. Although the review found that the state properly 

documented its reasons for rejecting loan applications from minority 

farmers, FSA recommended that the office director emphasize to staff 

the importance of treating prospective borrowers equally and of the 

need to properly document reasons for denying loan requests when there 

may be the appearance of disparate treatment.



While FSA monitors variations in loan processing times and approval 

rates between minorities and non-minorities, it does not have 

established criteria for determining when observed variations are 

significant enough to warrant further inquiry. In addition, while FSA 

conducts periodic field reviews of state offices’ performance in civil 

rights matters and suggests improvements, it does not require the 

offices to implement the recommendations and does not monitor state 

follow-up efforts. FSA is currently considering requiring state offices 

to provide information on how they addressed weaknesses noted during 

reviews.



USDA Only Has a Policy for Staying Foreclosures When Discrimination 

Complaints Are Filed with OCR:



USDA has a policy for issuing stays of foreclosure in cases where 

discrimination has been alleged in individual complaints filed with 

OCR, but not in response to individual or class action lawsuits with 

similar allegations. In cases where individuals file an administrative 

discrimination complaint with USDA’s OCR, agency policy is to 

automatically issue a stay of adverse action--including foreclosures--

until the complaint has been resolved. During fiscal years 2000 and 

2001, this policy was followed in 24 out of the 26 applicable cases 

involving Hispanic borrowers. The policy was not followed in the 

remaining two cases because of miscommunication between OCR and FSA in 

reconciling their respective lists of complainants. When the Farm 

Service Agency learned that complaints had been filed with the Office 

of Civil Rights, it stayed its foreclosure actions, and, as of August 

2002, no further collection actions were taken against the two farmers. 

Although future data system improvements should alleviate this problem, 

OCR and FSA officials acknowledge that improvements could be made in 

the interim.



USDA does not have a similar policy for issuing stays related to 

discrimination claims raised in an individual or class action lawsuit. 

Instead, FSA makes decisions on whether to issue stays on a case-by-

case basis based on the advice of USDA’s General Counsel and the 

Department of Justice. Since 1997, USDA has issued stays of 

foreclosures related to African-American and Native American farmers’ 

class action discrimination lawsuits involving FSA loan programs. In 

contrast, USDA did not issue stays of foreclosure for other class 

action discrimination lawsuits involving FSA loan programs because the 

agency believes that they circumstances did not warrant a stay. These 

class action lawsuits and how USDA handled stays of foreclosure are 

discussed in greater detail below.



* In October 1997, African-American farmers filed a class action 

lawsuit against the Secretary of Agriculture (Pigford v. Glickman) 

alleging racial discrimination by USDA in its administration of federal 

farm programs. On October 9, 1998, the court certified the class--

issued the criteria for class eligibility. [Footnote 2] On January 5, 

1999, USDA entered into a 5-year consent decree with the claimants of 

the suit to settle it. The federal district court approved the consent 

decree and a framework for the settlement of individual claims in April 

of the same year. As of 

July 31, 2002, almost 23,000 claims had been filed under the consent 

decree. Of those, 21,539 were accepted for processing, and 1,146 claims 

were rejected based on a determination that the claimant was not a 

member of the class. As part of the consent decree, USDA agreed to 

refrain from foreclosing on real property owned by a claimant or 

accelerating their loan account.[Footnote 3]



* In November 1999, Native American farmers filed a class action 

lawsuit against the Secretary of Agriculture (Keepseagle v. Glickman) 

alleging that USDA willfully discriminated against Native American 

farmers and ranchers when processing applications for farm credit and 

farm programs. Further, claimants alleged that class members previously 

filed discrimination complaints with USDA and that the department 

failed to thoroughly investigate the complaints. In December 1999, USDA 

issued a notice to FSA offices informing them that they were not to 

accelerate or foreclose on any direct loans held by Native American 

borrowers before the end of 2000, unless the national office, with the 

concurrence of the Office of General Counsel, specifically authorized 

such action against an individual. As scheduled, this directive expired 

at the end of 2000.



* In October 2000, Hispanic farmers (Garcia v. Glickman) and women 

farmers (Love v. Glickman) each filed class action lawsuits against 

USDA alleging similar claims that USDA willfully discriminated against 

them in processing applications for farm credit and farm programs. 

Specifically, they alleged that loans were denied, provided late, or 

provided with less money than needed to adequately farm. In addition, 

the plaintiffs alleged that when they filed discrimination complaints 

about the handling of their loan applications, USDA failed to 

investigate them. The department has not issued stays of foreclosure in 

either of these lawsuits.



In June 2001, USDA’s Acting General Counsel wrote a memo that explained 

the department’s reasoning for issuing stays of foreclosure in response 

to some class action lawsuits, but not others. The memo stated that the 

stay of foreclosure agreement included in the Pigford consent decree 

was reached only in the context of litigation and only to settle a 

lawsuit in which a class action had already been certified by the 

district court. The memo went on to say that the stay of foreclosure 

policy issued in response to the Keepseagle lawsuit was implemented 

during the infancy of the lawsuit while USDA and the Department of 

Justice evaluated how to proceed in defending it. In addition, the memo 

stated that USDA did not intend to continue a stay of foreclosure 

beyond the evaluation. Further, the Acting General Counsel wrote that 

in all three of the pending lawsuits--Keepseagle, Garcia, and Love--no 

adequate factual bases have been alleged to support the claim of 

discrimination made even by most of the named plaintiffs. As a result, 

the department saw no reason to implement a policy to halt foreclosures 

and other similar actions affecting borrowers potentially involved in 

these lawsuits. As of August 2002, a class has been certified for the 

Keepseagle lawsuit, but not for the Garcia suit. USDA has not issued 

any further stays of adverse action for participants in any of these 

lawsuits.



Although USDA has not issued a stay of foreclosure for potential class 

members in Garcia, relatively few Hispanic farmers have been affected 

by this decision. According to our survey results, FSA accelerated the 

direct loans for almost 1,500 borrowers during fiscal years 2000 and 

2001; only 41 of these borrowers were Hispanic. Six of these 41 farmers 

also had their loans foreclosed on by FSA during this period. In 

addition to these 

41 borrowers, 10 other Hispanic borrowers who had their loans 

accelerated in prior years were foreclosed on during fiscal years 2000 

and 2001. To put these figures into context, during this period, FSA 

foreclosed on approximately 600[Footnote 4] borrowers, 16 (or 3 

percent) of whom were Hispanic. During this period, Hispanic farmers 

made up about 4 percent of the agency’s direct loan portfolio.



FSA does not maintain historic information on accelerations or 

foreclosures in a manner for this information to be retrieved or 

analyzed readily. FSA officials acknowledged that such information is 

needed in light of the frequent charges of discrimination it faces.



Office of Civil Rights’ Problems with Processing Discrimination 

Complaints Persist:



Despite implementing many improvements recommended by 

USDA’s Inspector General and task forces, OCR has only made modest 

progress in its timely processing of complaints. Additional progress 

has been hindered because OCR has yet to address underlying, severe 

human capital problems. In addition, USDA’s criterion for timely 

processing only covers a portion of the three major stages of complaint 

processing. OCR officials acknowledge that without time requirements 

that address all phases of processing, it lacks a meaningful way to 

measure timeliness or to identify and address problem areas and 

staffing needs.[Footnote 5]



OCR has adopted many recommendations made in the past by 

USDA’s Inspector General and agency task forces. For example, in 2000, 

a USDA task force identified 54 tasks to help address problems with the 

OCR’s organization and staffing, database management, and complaint 

processing. As of July 2002, the office has fully implemented 42, or 

nearly 80 percent, of these recommendations and plans to complete 

actions on most of the others by October 2002. In addition, OCR has 

made some organizational modifications--such as creating separate 

employment and program directorates, which report under separate lines 

of supervision, and adding three new divisions to the current 

structure--Program Adjudication, Program Compliance, and Resource 

Management Staff. Further, from the beginning of fiscal year 2000 to 

the end of fiscal year 2001, OCR has made significant progress in 

reducing its inventory of complaints from 1,525 to 594.



Despite these actions, however, OCR continues to fail to meet USDA’s 

requirement that program complaints be processed in a timely manner. 

Specifically, USDA’s internal requirements direct OCR to complete its 

investigative reports within 180 days after accepting a discrimination 

complaint. However, during fiscal years 2000 and 2001 it took OCR on 

average 365 days and 315 days, respectively, to complete its 

investigative reports. Furthermore, as shown in figure 1, the 180-day 

requirement only covers a portion of the three major stages of the 

entire processing cycle. Accordingly, even if the 180-day requirement 

was met, it could still take OCR 2 years or more to complete the 

processing of a complaint. In fact, when all phases of the complaint 

resolution are accounted for, it took OCR an average of 772 and 676 

days for fiscal years 2000 and 2001, respectively, to completely 

process complaints through the entire complaint cycle and issue the 

final agency decision.



Figure 1: OCR Complaint Processing Cycle:



[See PDF for image]



Source: USDA Office of Civil Rights.



[End of figure]



OCR has made only modest progress in improving its timely processing of 

complaints because it has yet to address severe, underlying human 

capital problems. According to USDA officials, the office has had long-

standing problems in obtaining and retaining staff with the right mix 

of skills. The retention problem is evidenced by the fact that only 

about two-thirds of the staff engaged in complaint processing in fiscal 

year 2000 was still on board 2 years later. OCR officials also pointed 

out that this staffing problem has been exacerbated because management 

and staff have been intermittently diverted from their day-to-day 

activities by such things as responding to requests for information 

from the courts. OCR officials stated that this pattern of disruption 

has been continuous since 1997.



Furthermore, severe morale problems have exacerbated staff retention 

problems and have adversely affected the productivity of the remaining 

staff. Management officials told us that they spend an inordinate 

amount of time and resources addressing internal staff complaints. In 

fact, during fiscal years 2000 and 2001, OCR had one of the highest 

rates within USDA of administrative complaints filed by employees. This 

atmosphere has led to frequent reassignments or resignations of OCR 

managers and staff. According to OCR’s Deputy Director of Programs, the 

problem has reached the point where some staff have even threatened 

fellow employees or sabotaged their work. Although OCR’s Director 

believes that the situation has improved over the past few years, he 

acknowledges that some of the more serious morale problems have not 

been resolved.



Conclusions:



The purpose of USDA’s direct loan program is to provide loans to 

farmers who are unable to obtain private commercial credit. Over the 

past decade, USDA has continuously been faced with allegations of 

discrimination in its making direct loans to farmers. To help guard 

against such charges, FSA needs to improve its monitoring and 

accountability mechanisms and make its systems and decision processes 

more consistent and transparent. Although FSA monitors variations in 

loan processing times and approval rates, it lacks criteria for 

determining when discrepancies warrant further inquiry. Similarly, 

while FSA conducts periodic reviews of its state offices’ civil rights 

conduct and makes suggestions for improvement, it cannot ensure that 

these suggestions have been effective--or even adopted--without a 

requirement that state offices implement its recommendations or if not, 

explain their reasons for not doing so. In addition, USDA has also been 

criticized for its handling of the allegations themselves--whether they 

were handled through litigation or the agency’s complaint processes. In 

the case of class action lawsuits, the agency has been charged with 

treating different minority groups inequitably because it grants stays 

of foreclosures to some groups but not to others. Without a standard, 

transparent policy that lays out the factors USDA considers in deciding 

whether or not to issue stays, the agency faces the continued problem 

of having its decisions viewed as unfair. Furthermore, if USDA does not 

improve its process of reconciling its lists of complainants, it runs 

the risk of violating its policy of not taking foreclosure actions 

against farmers with pending discrimination complaints. In addition, 

without maintaining historical information on foreclosures, USDA lacks 

an important tool to help it understand its equal opportunity 

performance.



In the case of USDA’s processing of complaints, its Office of Civil 

Rights continues to be untimely. Also, without a time requirement that 

covers all stages of complaint processing, USDA lacks a meaningful way 

to measure performance or to identify and remedy problem areas and 

staffing needs. Furthermore, until USDA addresses long-standing human 

capital problems within OCR, it is unlikely that the timeliness of 

complaint processing will significantly improve.



Recommendations:



To help resolve issues surrounding charges of discrimination in FSA’s 

direct loan program, we recommend that the Secretary of Agriculture:



* establish criteria for determining when discrepancies between 

minority and non-minority loan processing times and approval rates 

warrant further inquiry; and:



* require state offices to implement recommendations made as a result 

of FSA field reviews or explain in writing their rationale for not 

doing so.



To help address problems related to FSA foreclosures, we recommend that 

the Secretary of Agriculture:



* develop and promulgate a policy statement that lays out the factors 

USDA considers in issuing stays of foreclosure in class action 

lawsuits;



* maintain historic information, by race, on foreclosures completed by 

FSA; and:



* direct FSA and OCR to improve communications to ensure that 

foreclosure actions are not taken against borrowers with pending 

complaints.



To help address long-standing problems related to OCR’s untimely 

processing of complaints, we recommend that the Secretary of 

Agriculture:



* establish time requirements for all stages of the complaint process 

and monitor OCR’s progress in meeting these requirements; and:



* develop an action plan to address ongoing problems with obtaining and 

retaining staff with needed skills, establish performance measures to 

ensure accountability, and monitor OCR’s progress in implementing the 

plan.



Agency Comments:



We provided a copy of a draft of this report to USDA’s Farm Service 

Agency, Office of General Counsel, and Office of Civil Rights for their 

review and comment. FSA and OGC generally agreed with the information 

in the report and provided technical and clarifying comments. We have 

incorporated these comments, as appropriate. OCR commented that they 

were in general agreement with our recommendations but wanted us to 

give more prominence to the progress it has made in notifying FSA about 

filed complaints, improving complaint processing, and addressing morale 

problems. We have revised the report to more clearly reflect OCR 

progress in certain areas. These comments and our response are 

presented in appendix II.



Scope and Methodology:



To compare the processing times for direct loans for Hispanic farmers 

with those for non-Hispanic farmers, we analyzed FSA data and obtained 

FSA officials’ explanations for differences we observed. To analyze 

USDA’s policies for staying foreclosures and how they have been 

implemented, we obtained relevant USDA policies and memoranda, and, 

through file reviews (in California, Texas, New Mexico, and 

Washington), determined the extent to which these policies were 

followed. To assess USDA’s progress in addressing previously identified 

problems associated with slow processing of discrimination complaints 

and resolution of human capital issues within USDA’s Office of Civil 

Rights, we reviewed USDA status reports and obtained senior managers’ 

views on why previously identified problems persist. (App. I contains a 

more detailed discussion of our scope and methodology.):



We performed our review from October 2001 through August 2002 in 

accordance with generally accepted government auditing standards.



As agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days 

from the date of this letter. At that time, we will send copies of this 

report to congressional committees with jurisdiction over farm 

programs, the Secretary of Agriculture, the Director of the Office of 

Management and Budget, and other interested parties. We will also make 

copies available to others upon request. In addition, the report will 

be available at no charge on the GAO Web site at http://www.gao.gov.



If you have any questions about this report, please contact me at 

(202)-512-3841. Key contributors to this report are listed in appendix 

IV.



Lawrence J. Dyckman

Director, Natural Resources and Environment:



Signed by Lawrence J. Dyckman



[End of section]



Appendix I: Scope and Methodology:



To compare the processing times for direct loans for Hispanic farmers 

with those for non-Hispanic farmers, we interviewed FSA officials at 

the national, state, and county level about the types of direct loans 

that FSA provides as well as the steps that are followed in the loan-

making process. We also reviewed FSA regulations and procedures related 

to direct loan processing. Because of completeness and reliability 

issues with FSA’s direct loan data, we were not able to perform 

detailed analyses of loan processing times for Hispanic and non-

Hispanic farmers using a download of FSA loan data. Instead, we 

analyzed direct loan processing times using FSA reports based on 

historical data for fiscal years 2000 and 2001. We calculated loan 

processing times from the date the farm loan application was complete 

to the date of the agency decision to approve or reject the loan 

application. We compared the average processing times for all complete 

applications from Hispanic farmers to those from non-Hispanic farmers. 

We also calculated loan approval rates using FSA historical loan data. 

We were unable to provide information about the loan amount requested 

and received by borrowers for comparison purposes because this data has 

not been tested by FSA for completeness and reliability.



To identify USDA’s policies for staying foreclosures and to determine 

how they have been implemented, we interviewed officials from USDA’s 

Office of Civil Rights, Office of General Counsel, FSA’s Civil Rights 

staff, and FSA state offices. We reviewed policies and procedures for 

implementing stays of foreclosure, where available. In those instances 

where written guidance was not available, we relied on interviews with 

officials from USDA’s Office of General Counsel and written 

correspondence regarding the department’s actions. In reviewing FSA’s 

implementation of its stay of foreclosure policy in response to 

administrative complaints, we limited our work to the four states that 

received the largest number of Hispanic loan applications during fiscal 

year 2001--California, New Mexico, Texas, and Washington. To identify 

Hispanic farmers who had had filed discrimination complaints against 

FSA and whose complaints were processed during fiscal years 2000 and 

2001, we obtained a list of Hispanic farmers from the OCR and reviewed 

available FSA state office direct loan and complaint files to determine 

whether the FSA farm loan chiefs had been notified when a farmer had 

filed a complaint and whether or not FSA had implemented a stay of 

adverse action. In addition, we followed up with FSAís Office of Civil 

Rights, with regard to those complainants who did not have a state loan 

file or a stay of adverse action notice in the state complaint file, to 

determine whether the office had sent out notices to stay adverse 

actions.To obtain previously unavailable national data for fiscal years 

2000 and 2001 about the number of FSA accelerations and foreclosures of 

direct loans made to Hispanic and non-Hispanic farmers, we surveyed FSA 

Farm Loan Chiefs in all 50 states, as well as Guam, the Virgin Islands, 

and Puerto Rico. The response rate to our survey was 100 percent.



To assess USDA progress in addressing previously identified problems 

with its civil rights office’s organizational structure, staff 

turnover, and complaint processing times, we reviewed reports from 

USDA’s Office of Inspector General, internal agency task forces, the 

U.S. Commission on Civil Rights, and the Congress. We discussed 

problems and recommended remedies with officials from OCR and FSA. We 

also examined budget justification documents, USDA departmental 

regulations, and OCR procedures. Due to problems with OCR’s program 

complaint database, we relied on, but were unable to verify, processing 

information published in USDA’s annual program performance reports for 

fiscal years 2000 and 2001. As noted in the 2001 report, USDA modified 

the method it used for calculating processing times that year. If its 

prior method had been used, processing times would have increased by 14 

percent.



We conducted our review from October 2001 through August 2002 in 

accordance with generally accepted auditing standards.



[End of section]



Appendix II: Survey of USDA Farm Service Agency State Offices:



[See PDF for image]



[End of section]



Appendix III: Comments from the Office of Civil Rights:



TO: Larry Dyckman:

Director, Natural Resources and Environment, U.S. General Accounting 

Office:



FROM: David Winningham, Director:

Office of Civil Rights:



SUBJECT: U.S. General Accounting Office Draft Report, GAO-02-942, 

“Improvements in the Operations of the Civil Rights Programs Would 

Benefit Hispanic and Other Minority Farmers”:



Please find attached the response to the subject report GAO submitted 

the Secretary of Agriculture on August 26, 2002.



If you have any questions or require any assistance in this matter, 

please feel free to contact Farook Sait, Special Assistant, at 720-

5212.



U. S. General Accounting Office Draft Report, GAO-02-942, “Improvements 

in the Operations of the Civil Rights Programs Would Benefit Hispanic 

and Other Minority Farmers”:



The Office of Civil Rights (OCR) is in general agreement with the 

recommendations made by GAO regarding the need to formalize time frames 

for all phases of the complaint process and the need to increase 

capital and human resources to the complaint function. However, there 

is key information not mentioned regarding OCR’s accomplishments and 

plans for complaint processing. Additionally, there is some information 

which is in error and some information which is inappropriately 

characterized. Therefore, GAO needs to make appropriate changes in its 

report reflecting the information in this document.



The report states that according to the Farm Service Agency’s (FSA) 

policy, foreclosures are stayed when an individual files a complaint of 

discrimination and it is accepted by the OCR, until the final agency 

decision is issued. During Fiscal Years (FY) 2000 and 2001, there were 

26 Hispanic farmers from California, New Mexico, Texas, and Washington, 

who had filed complaints with the OCR. The foreclosure action was 

stayed in 24 cases. Foreclosure proceedings were initiated in 2 

complaints because FSA was not aware that discrimination complaints had 

been accepted by the OCR. These actions were stopped when FSA was 

informed that the OCR had accepted the complaints.



The GAO has concluded that the initiation of foreclosure proceedings by 

FSA against the 2 Hispanic borrowers was a result of poor communication 

between the OCR and FSA. However, OCR in response to an Office of 

Inspector General (OIG) audit recommendation, in early 2000, 

established a procedure to avoid such a situation, by holding monthly 

meetings with agency officials to reconcile the complaint information 

between OCR and the agency. These meetings are held every month with 

FSA staff and the complaint information is reconciled between the two 

agencies.



The report also states that OCR has made “modest” progress in the 

processing time for complaints.



Average time to complete the investigation:



FY 2000: 365 days

FY 2001: 315 days (14% improvement):



Average time to issue final action on complaint:



FY 2000: 772 days

FY 2001: 676 days (14% improvement):



The fact is, at the beginning of FY 2000 OCR had an inventory of 1525 

complaints. At the end of FY 2001 OCR had reduced the complaint 

inventory to 594. OCR believes that a reduction of approximately 60 

percent of the complaint inventory and 14 percent improvement in 

processing time deserves better than to be described as “modest.”:



The report states that the internal regulations of OCR require an 

investigation to be completed within 180 days from the date of 

acceptance. However, OCR does not have a time requirement for other 

phases of complaint processing. As such, GAO makes the following 

recommendations:



* improve communication between CR and FSA;

* CR should establish time requirements for all stages of the complaint 

process; and develop an action plan to address ongoing staffing and 

morale problems:



OCR held a staff and management retreat in FY 2000 to address work 

processing, budget requirements, staffing requirements, teamwork and 

morale problems. From this retreat was formed a working group composed 

of managers, specialists and support staff, who developed the Long Term 

Improvement Plan (LTIP), a copy of which is attached. The LTIP 

identified the deficiencies noted by the OIG audits and the instant GAO 

report, and delineated steps and methods to correct them.



Specifically, LTIP identified the problem of low employee morale and 

determined that a major factor to address it would be to address the 

following essential needs:



* redirect improperly placed staff;

* necessary and continuing training; 

* proper alignment of the organization;

* increased funding for systems; 

* increased funding for additional staff; 

* improved file maintenance system;

* and improve systems and tracking mechanisms.



OCR recognized the need to reconfigure the organization, and to 

establish a unit dedicated to complaint intake. The Programs 

Directorate was assigned 9 additional positions to help improve its 

performance.



The GAO report on page 13 states as follows:



“OCR has made only modest progress in improving its timely processing 

of complaints because it has yet to address severe, underlying human 

capital problems. According to USDA officials, the Office has had long-

standing problems in obtaining and retaining staff with the right mix 

of skills. The retention problem is evidenced by the fact that only 

about two-thirds of the staff engaged in complaint processing in fiscal 

year 2000 was still on board 2 years later. OCR officials also pointed 

out that this staffing problem has been exacerbated because management 

and staff have been intermittently diverted from their day-to-day 

activities by such things as responding to requests for information 

from the courts or the Equal Employment Opportunity Commission. OCR 

officials stated that this pattern of disruption has been continuous 

since 1997.”:



The highlighted portion of the above statement is incorrect, as the 

staff working on program discrimination complaints have not been 

transferred or diverted from their responsibilities to work on any 

requests for information from the courts or the Equal Employment 

Opportunity Commission. The work of processing Equal Employment 

Opportunity (EEO) complaints is done by a dedicated staff in a 

different division.



The following chart shows the processing of EEO complaints:



Number of complaints closed; FY 2000, 697; FY 2001, 625.



Average number of days; FY 2000, 750; FY 2001, 627.



Number of investigations completed; FY 2000, 305; FY 2001, 681.



[End of table]



As can be seen, the average processing time for EEO complaints was 

reduced by 123 days (16.4%), and the number of investigations increased 

by 123 percent!! This does not address the many other areas of 

improvement in OCR activities. Therefore, to describe the improvements 

by OCR as “slight” or “modest” and focus on unsubstantiated statements 

by individuals is unfair to the agency.



The report continues on page 13 as follows:



“Furthermore, severe morale problems have exacerbated staff retention 

problems and have lowered the productivity of the remaining staff. 

Management officials told us that they spend an inordinate amount of 

time and resources addressing internal staff complaints. In fact, OCR 

has a higher rate of administrative complaints filed by employees than 

any other agency within USDA. This atmosphere has led to frequent 

reassignments or resignations of OCR managers and staff. According to 

OCR’s Deputy Director for Programs, the problem has reached the point 

where some staff have even threatened fellow employees or sabotaged 

their work.”:



Again, this portion of the report is incorrect. The report shows an 

improvement in the - time frames for completion of investigations and 

final resolutions, which contradicts the statement that the problem of 

employee morale has “lowered the productivity of the remaining staff.” 

Also, since GAO’s focus was on the processing of program discrimination 

complaints, a reference to the number of EEO complaints by OCR 

employees and other employee issues which occurred prior to the LTIP is 

misleading.



It is OCR’s position that there is already an established system for 

monthly meetings between OCR and FSA to ensure reconciliation of 

complaint information. OCR already has a plan for resource allocation, 

staff training, staff realignment, performance improvement, and all 

other aspects of agency enhancement addressed in the LTIP. OCR will 

formalize time frames for all aspects of complaint processing.



Attached is a copy of the LTIP and the Strategic Work Plan. We request 

that GAO take this information and make the necessary changes in its 

report to reflect more accurately the efforts of OCR.





GAO Comments:



The following are GAO’s comments on the Office of Civil Rights’ letter 

dated September 11, 2002.



Since early 2000, OCR has coordinated on a monthly basis with FSA to 

reconcile their respective lists of complainants. However, OCR’s Long 

Term Improvement Plan (LTIP)--issued in October 2000--noted that 

current procedures had not ensured that FSA was notified about newly 

filed complaints in time to prevent foreclosures or other adverse 

actions against complainants. In addition, one of the cases we noted in 

our report occurred in 2001--well after the implementation of the 

monthly meetings. When asked about this and another case, FSA officials 

told us that the current procedures still needed improvement. (As we 

noted in the report, foreclosure actions were halted once FSA was 

informed that OCR had accepted the complaints.) Given the importance of 

halting foreclosure actions once a complaint has been filed, we believe 

that OCR and FSA need to improve communications about borrowers with 

pending complaints.



We have added information about OCR’s reduction of its inventory of 

complaints. However, unless OCR reduces the time it takes to process 

complaints, the inventory will expand once again. While we acknowledged 

that OCR has made modest progress in reducing its processing time, it 

still exceeds its own interim goals for timeliness by 75 percent in 

fiscal year 2001.



The seven essential needs cited by OCR, for the most part, involve 

improving the office’s work processes. Although these improvements 

should indirectly help improve morale, they do not directly address the 

severe problems cited by the Deputy Director, such as staff threatening 

fellow employees or sabotaging their work. We revised the report to 

reflect the director’s belief that the situation has improved over the 

past several years and his acknowledgment that some of the more serious 

morale problems have yet to be resolved.



During the course of our review, several senior OCR managers referred 

to the increased workloads created by the courts’ requests for files 

and other information needed to resolve pending lawsuits. In addition, 

OCR’s October 2000 LTIP noted that investigative staff had been 

assigned to a variety of non-investigative projects, which delayed the 

processing of complaints. We have removed the reference regarding the 

Equal Employment Opportunity Commission.



Our report focused on the timeliness of processing program complaints 

and not on EEO complaints filed by USDA employees.



GAO did not mean to imply that OCR’s productivity is declining. Rather, 

we are making the point that serious morale problems adversely affect 

productivity and have revised the report accordingly. While the number 

of EEO complaints filed by OCR employees has declined between fiscal 

years 2000 and 2001, OCR continues to have one of the highest complaint 

rates within USDA.



[End of section]



Appendix IV: GAO Contacts and Staff Acknowledgments:



GAO Contacts:



Lawrence J. Dyckman (202) 512-3841

Gregory A. Kosarin (202) 512-6526:



Acknowledgments:



In addition to those named above, Natalie H. Herzog, Jacqueline A. 

Cook, Lynn M. Musser, Robert G. Crystal, and George H. Quinn Jr. made 

key contributions to this report.



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FOOTNOTES



[1] Under a number of statutes, FSA provides both direct and guaranteed 

loans. For direct loans, farmers apply and receive loans directly from 

FSA. For guaranteed loans, farmers apply and receive loans from 

commercial lenders, with FSA acting as a guarantor for up to 95 percent 

of any loss.



[2] The class is defined as African-Americans who: (1) farmed, or 

attempted to farm, between January 1, 1981, and December 31, 1996; (2) 

applied to USDA during that time for participation in a federal farm 

credit or benefit program and who believed they were discriminated 

against on the basis of race in USDA’s response to that application; 

and (3) filed a discrimination complaint on or before July 1, 1997, 

regarding USDA’s treatment of their credit or benefit application.



[3] During the Pigford case, a general stay of foreclosure was in 

effect. On December 18, 1996--before the Pigford lawsuit was filed

--the Secretary of Agriculture, in response to concerns about 

inconsistencies and discrimination in USDA programs, ordered FSA to 

stay foreclosures until a determination could be made in each case 

as to whether there was evidence of discrimination in program lending.



[4] In responding to the GAO survey about direct loan foreclosures, 

some states provided estimates of the total number of borrowers 

affected, instead of exact numbers.



[5] According to OCR’s Deputy Director of Programs, additional time 

requirements for complaint processing were developed in July 2002. 

However, the requirements will not go into effect until proposed office 

restructuring takes place. In addition, OCR has yet to establish time 

requirements that address all stages of complaint processing.