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. 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. 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. 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 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. 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. 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.