Hog farm judgment halts loan backers
U.S. agencies get 1-year deadline
The Small Business Administration and the Farm Services Agency have one year to comply with two federal environmental acts, and their loan guarantees to C&H Hog Farms will be on hold in the meantime, a federal judge ordered Tuesday.
The two federal agencies had agreed to back up $3.4 million in private loans made to C&H Hog Farms in Mount Judea after the farm was found to have insufficient collateral, meaning that the agencies would foot the bill for the farm’s loans if the farm ever defaulted on them.
But in October, U.S. District Judge D. Price Marshall Jr. ruled that the environmental assessment used by the agencies in determining whether to provide loan guarantees was faulty.
On Tuesday, Marshall ordered a halt to any payments on the loans while the agencies work to comply with the Endangered Species Act and the National Environmental Policy Act. The agencies aren’t making any payments currently.
“It’s good news for us,” said Gordon Watkins, president of the Buffalo River Watershed Alliance. “We’re real pleased with the results.”
The alliance, a plaintiff in the case, formed in 2013 in response to the Arkansas Department of Environmental Quality’s granting C&H Hog Farms a permit to operate. The Arkansas Canoe Club, the National Parks Conservation Association and the Ozark Society are the other plaintiffs.
Watkins said he believes the order will pressure the Small Business Administration and the Farm Services Agency to be more careful
when conducting future environmental assessments and more stringent about doing them in the first place.
The Small Business Administration, which guaranteed $2.3 million of the $3.4 million in private loans, did not conduct its own environmental assessment, which Marshall said violated federal law requiring such an assessment for any loan allocating more than $300,000 in “construction, reconstruction, and/or land acquisition.”
Although Marshall wrote in his order that the loan guarantees were crucial in getting the farm up and running, the order won’t affect C&H Hog Farms unless it defaults on its loans, Watkins said.
The scope of the lawsuit was limited to the loan guarantees, and C&H Hog Farms co-owner Jason Henson said Tuesday that he doesn’t anticipate the farm defaulting.
Henson said he hasn’t been consulting with an attorney about what would happen if the farm did default.
Mark Nichols, attorney for the lender — Farm Credit Services of Western Arkansas — said he would not comment on the case or “speculate” on the order’s effect.
C&H Hog Farms is located on Big Creek just 6 miles from where it meets the Buffalo National River and has been criticized by nearby residents and environmental groups upset about the perceived risk of pollution from hog waste.
It’s classified as a large concentrated animal feeding operation and is permitted to hold 2,500 sows and 4,000 piglets.
The order acknowledges “one of the more egregious and obvious errors in how this whole thing has unfolded” in addressing the faulty environmental assessments, Watkins said.
An Arkansas Farm Bureau spokesman said in October that the lawsuit wouldn’t change what happened to C&H Hog Farms but likely just made getting a loan harder for new farms, regardless of their location.
In November, the plaintiffs and defendants had argued over what they believed the scope of the injunction against the loan guarantees should be.
Attorneys for the plaintiffs had argued for a 12-month review process for complying with the National Environmental Policy Act, the preparation of an environmental impact statement and a 30to 90-day consultation with the U.S. Fish and Wildlife Service on the Endangered Species Act.
Attorneys for the defendants, which include the U.S. Agriculture Department, the Small Business Administration, the Farm Services Agency and officials with those agencies, asked that the court not impose a deadline on the analyses and not specify how the agencies should conduct their reviews, such as requiring an environmental impact statement. The attorneys argued that a deadline would hinder compliance.
The order follows “generally” the terms suggested by the plaintiffs, Marshall wrote, except that the agencies must comply within one year and consult with the U.S. Fish and Wildlife Service.
Marshall also issued a judgment that allows the plaintiffs to receive “reasonable” compensation for the case.
“The Court imposes the deadline because everyone — the parties, interested non-parties such as C&H and Farm Credit Services of Western Arkansas, and the public — needs resolution sooner rather than later,” Marshall wrote.