U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

26–588 PDF 2017

THE STATE OF INFRASTRUCTURE IN RURAL 

AMERICA 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JULY 19, 2017 

Serial No. 115–10 

( 

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

K. MICHAEL CONAWAY, Texas, Chairman 

GLENN THOMPSON, Pennsylvania 

Vice Chairman 

BOB GOODLATTE, Virginia, 

FRANK D. LUCAS, Oklahoma 

STEVE KING, Iowa 

MIKE ROGERS, Alabama 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

SCOTT DESJARLAIS, Tennessee 

VICKY HARTZLER, Missouri 

JEFF DENHAM, California 

DOUG LAMALFA, California 

RODNEY DAVIS, Illinois 

TED S. YOHO, Florida 

RICK W. ALLEN, Georgia 

MIKE BOST, Illinois 

DAVID ROUZER, North Carolina 

RALPH LEE ABRAHAM, Louisiana 

TRENT KELLY, Mississippi 

JAMES COMER, Kentucky 

ROGER W. MARSHALL, Kansas 

DON BACON, Nebraska 

JOHN J. FASO, New York 

NEAL P. DUNN, Florida 

JODEY C. ARRINGTON, Texas 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

DAVID SCOTT, Georgia 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

MARCIA L. FUDGE, Ohio 

JAMES P. MCGOVERN, Massachusetts 

FILEMON VELA, Texas, Vice Ranking 

Minority Member 

MICHELLE LUJAN GRISHAM, New Mexico 

ANN M. KUSTER, New Hampshire 

RICHARD M. NOLAN, Minnesota 

CHERI BUSTOS, Illinois 

SEAN PATRICK MALONEY, New York 

STACEY E. PLASKETT, Virgin Islands 

ALMA S. ADAMS, North Carolina 

DWIGHT EVANS, Pennsylvania 

AL LAWSON, JR., Florida 

TOM O’HALLERAN, Arizona 

JIMMY PANETTA, California 

DARREN SOTO, Florida 

LISA BLUNT ROCHESTER, Delaware 

MATTHEW S. SCHERTZ, Staff Director 

ANNE SIMMONS, Minority Staff Director 

(II) 

(III) 

C O N T E N T S 

Page 

Bacon, Hon. Don, a Representative in Congress from Nebraska, submitted 

statement and report ........................................................................................... 4 

Conaway, Hon. K. Michael, a Representative in Congress from Texas, opening 

statement .............................................................................................................. 1 

Prepared statement .......................................................................................... 3 

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, opening statement ........................................................................................................ 4 

WITNESSES

Halverson, Ph.D., Thomas, President and Chief Executive Officer, CoBank, 

Washington, D.C.; on behalf of Farm Credit System ........................................ 13 

Prepared statement .......................................................................................... 14 

Coon, Ph.D., Thomas G., Vice President, Division of Agricultural Sciences 

and Natural Resources, Oklahoma State University; Chair, Task Force 

on Deferred Maintenance, Board on Agriculture Assembly, Association of 

Public and Land-grant Universities, Stillwater, OK ......................................... 20 

Prepared statement .......................................................................................... 21 

Calhoun, Richard R., former President, Cargo Carriers, Cargill, Inc., Silver 

Spring, MD; on behalf of National Grain and Feed Association ...................... 24 

Prepared statement .......................................................................................... 26 

Wynn, Curtis, President and Chief Executive Officer, Roanoke Electric Cooperative; Vice President, Board of Directors, National Rural Electric Cooperative Association, Ahoskie, NC ........................................................................... 30 

Prepared statement .......................................................................................... 32 

Submitted questions ......................................................................................... 123 

Otwell, CPA, Jennifer L., Vice President and General Manager, Totelcom 

Communications, LLC, De Leon, TX; on behalf of NTCA—The Rural 

Broadband Association ........................................................................................ 35 

Prepared statement .......................................................................................... 37 

Submitted questions ......................................................................................... 123 

Macmanus, P.E., Brian E., General Manager, East Rio Hondo Water Supply 

Corporation, Rio Hondo, TX; on behalf of Texas Rural Water Association; 

National Rural Water Association ...................................................................... 46 

Prepared statement .......................................................................................... 48 

SUBMITTED MATERIAL

National Family Farm Coalition, submitted statement ....................................... 119 

National Rural Health Association, submitted statement ................................... 120 

(1) 

THE STATE OF INFRASTRUCTURE IN RURAL 

AMERICA 

WEDNESDAY, JULY 19, 2017 

HOUSE OF REPRESENTATIVES, COMMITTEE ON AGRICULTURE, Washington, D.C. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

1300, Longworth House Office Building, Hon. K. Michael Conaway 

[Chairman of the Committee] presiding. 

Members present: Representatives Conaway, Thompson, Goodlatte, Lucas, King, Rogers, Austin Scott of Georgia, Crawford, 

DesJarlais, Hartzler, Denham, LaMalfa, Davis, Yoho, Allen, Bost, 

Rouzer, Abraham, Kelly, Marshall, Bacon, Faso, Dunn, Arrington, 

Peterson, David Scott of Georgia, Costa, Walz, McGovern, Vela, 

Lujan Grisham, Kuster, Plaskett, Adams, Evans, Lawson, 

O’Halleran, Panetta, Soto, and Blunt Rochester. 

Staff present: Bart Fischer, Darryl Blakey, Emily Wong, Matthew S. Schertz, Paul Balzano, Rachel Millard, Stephanie Addison, 

Anne Simmons, Evan Jurkovich, Kellie Adesina, Liz Friedlander, 

Troy Phillips, Nicole Scott, and Carly Reedholm. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A 

REPRESENTATIVE IN CONGRESS FROM TEXAS 

The CHAIRMAN. Good morning. This hearing of the Committee on 

Agriculture entitled, The State of Infrastructure in Rural America, 

will come to order. I would ask Mr. Bacon to open us with a prayer. 

Don. 

Mr. BACON. Ladies and gentlemen, we are praying. Dear Heavenly Father, Lord, we thank you for a beautiful day. We thank you 

for the privilege of living in this country where we are free. And 

we just thank you for our farmers, our ranchers, our agriculture, 

which is such a rich resource for our country. You have blessed us. 

And, Lord, we ask for your wisdom today and for your presence. 

And we just ask you that you help us do a good job for our country. 

In Jesus’ name, amen. 

The CHAIRMAN. Amen. Thank you. 

Well, based on the level of conversation before we started the 

hearing, apparently everybody is excited about our topic today. 

This is good stuff. Again, thank you for being here. I appreciate it. 

There is, perhaps, no current public policy proposal that commands more bipartisan support than the idea of rebuilding America’s public works. We have all heard the news reports about the 

impact aging infrastructure has on our ability to trade, travel, and 

communicate. But perhaps nowhere is the need to renew our infraVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\115-10\26588.TXT BRIAN
2 

structure greater than in America’s heartland. Many Americans 

are familiar with the crumbling bridges and buckling roads that 

are highlighted in the news stories, and the tragic crisis in Flint 

has brought into sharp relief the urgent need to upgrade our water 

supply infrastructure. 

Like urban America, rural America has its share of roads, 

bridges, and water systems in need of repair. We face unique challenges that are different than our neighbors. Rural America produces commodities, those fundamental products on which our modern economy is built. We produce food, fiber, energy, ore, lumber, 

and everything that goes into the products that are made in our 

factories, factories that, in many cases, reside in urban America. 

And transportation is the lifeline that facilitates this partnership. 

If we cannot get the commodities to market, urban manufacturers—— 

[Audio malfunction in hearing room.] 

Mr. YOHO. Mr. Chairman, I don’t believe your microphone is on. 

It is not working. The red light is on. 

The CHAIRMAN. Would you come and read this. 

[Discussion off the record.] 

The CHAIRMAN. All right. Is it working now? 

Okay. Speaking of infrastructure needs: transportation, improved 

communications technology remains a tremendous need in rural 

America. Here in this room we take for granted the awesome power 

of smartphones. Universal instantaneous access to the Internet has 

become essential to our lives. And as communications technology 

races ahead, we need to ensure rural Americans are not being left 

behind. 

Further, many of the gains in rural America over the past 100 

years have been due, in part, to the public investments made in agricultural research [Audio malfunction in hearing room.] 

As we have heard before, the infrastructure on which our world 

class agricultural researchers rely is outdated, crumbling, even as 

other countries are making significant investments. At the root of 

many of these problems is the need for capital to be invested in 

rural America. Our shifting population moving out of rural communities into urban and suburban counties, is also shifting the tax 

base making it difficult for small communities to finance the upgrades they need to continue to be competitive in a modern economy. It is a cycle that seems unbreakable. Services are lacking, so 

families move out. As families move out, the tax base shrinks. And 

as the tax base shrinks, services must be curtailed and upgrades 

must be postponed. 

While it is tempting to think it is a local problem, it is not. Our 

modern economy is built on the free movement of goods and ideas. 

We cannot grow our nation’s economy adequately if 50 million 

rural Americans are unable to participate. 

For 200 years, Congress has debated Federal financing of waterways, highways, electric systems, telephone lines, and research infrastructure. Across all of those debates, we have long understood 

the need to continue to pull all Americans further into the networks of commerce. 

3 

I applaud the President for drawing attention to this important 

issue. Today, we are fortunate to hear from six of over 200 organizations participating in the Rebuild Rural Coalition. 

I want to thank them and the many other coalition partners for 

joining us here today. It is important that your members and our 

constituents are part of this process. 

[The prepared statement of Mr. Conaway follows:] 

PREPARED STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE IN

CONGRESS FROM TEXAS

Good morning and thank y’all for being here today. 

There is perhaps no current public policy proposal that commands more bipartisan public support than the idea of rebuilding America’s public works. We’ve all 

heard the news reports about the impact aging infrastructure has on our ability to 

trade, travel and communicate. But perhaps nowhere is the need to renew our infrastructure greater than in America’s heartland. 

Many Americans are familiar with the crumbling bridges and buckling roads that 

are highlighted in news stories. And the tragic crisis in Flint has brought into sharp 

relief the urgent need to upgrade our water supply infrastructure. Like urban America, rural America has its share of roads, bridges, and water systems in need of repair. But we face unique challenges that are different from our neighbors. 

Rural America produces commodities, those fundamental products on which we 

build our modern economy. We produce food, fiber, energy, ore, lumber, and everything else that gets put into the products made by our factories—factories that, in 

many cases, reside in urban America. And transportation is the lifeline that facilitates this partnership. If we cannot get commodities to market, urban manufacturing centers and rural communities alike face challenges producing the very 

‘‘made in America’’ products that create the jobs and grow our economy. Because 

of that, transportation infrastructure looms larger in rural America. It’s not just 

roads and bridges, it’s also locks and dams and railways and pipelines that allow 

our products to travel to the cities where they are needed. ‘‘Made in America’’ depends on the transportation networks we have built in rural America. 

Like transportation, improved communications technology remains a tremendous 

need in rural America. Here in this room, we take for granted the awesome power 

of smartphones. Universal, instantaneous access to the Internet has become essential to our lives. And as communications technology races ahead, we need to ensure 

rural Americans are not being left behind. 

Further, many of the gains in rural America over the past 100 years have been 

due, in part, to the public investments made in agricultural research. As we have 

heard before, the infrastructure on which our world-class agricultural researchers 

rely is outdated and crumbling, even as other countries make significant investments. 

At the root of many of these problems, is the need for capital to be invested in 

rural America. Our shifting population, moving out of rural counties and into urban 

and suburban counties, is also shifting the tax base, making it difficult for small 

communities to finance the upgrades they need to continue to be competitive in the 

modern economy. It is a cycle that seems unbreakable—services are lacking, so families move out; as families move out, the tax base shrinks; as the tax base shrinks, 

services must be curtailed and upgrades must be postponed. 

While it’s tempting to think this is a local problem, it is not. Our modern economy 

is built on the free movement of goods and ideas. We cannot grow our nation’s economy if 50 million rural Americans are unable to participate. 

For 200 years, Congress has debated Federal financing of waterways, highways, 

electric systems, telephone lines and research infrastructure. Across all of those debates, we have long understood the need to continue to pull all Americans further 

into the networks of commerce. 

I applaud the President for drawing attention to this important issue. Today, we 

are fortunate to hear from six of the over 200 organizations participating in the Rebuild Rural Coalition, and I want to thank them and many other coalition partners 

for joining us here today. It is important that your members—our constituents—are 

a part of this process. 

With that, I yield to Mr. Peterson for any additional comments he might have. 

The CHAIRMAN. With that, I would like to yield to Mr. Peterson 

for any comments he would like to make 

4 

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A 

REPRESENTATIVE IN CONGRESS FROM MINNESOTA 

Mr. PETERSON. Thank you, Mr. Chairman. And I want to thank 

the witnesses for being with us. And apologize. I have to go down 

the hall and testify on my wolf de-listing bill. I will be back, but 

I might miss a little bit. 

Anyway, as the Chairman said, it is no secret that we have infrastructure issues, and we have been in decline. Our roads and 

bridges are in need of repair. And if we don’t do it now, it will just 

cost more later. Our rural economy, in particular, faces unique infrastructure challenges. And it was said that strong infrastructure 

is necessary in rural America because it is so remote, and we depend on it to get our products to market. 

I know it is surprising to a lot of folks, but in my district and 

others like it, there are large areas that lack broadband service. 

And there are USDA programs to build more broadband. But the 

problem is we don’t have a sustainable long-term funding source. 

And we need something like the Universal Service Fund that we 

had when we built out the telephones. That is the only reason we 

got telephones out to every part of rural America. And, in my opinion, unless we have something like that in place, that can be relied 

on, we are not going to get this broadband done, it will be in fits 

and starts, with states doing things and so forth. Somehow or another, we have to figure out how to do this. It is not as easy to do 

on the broadband as it was with telephones, but I think we can do 

it. 

There are a lot of components that are overseen by different Federal agencies. And if we are truly going to rebuild and keep our 

rural infrastructure strong, all these pieces need to work together. 

I appreciate the witnesses being here today, and I look forward to 

their testimony. And I yield back. 

[Audio malfunction in hearing room.] 

The CHAIRMAN. The chair requests that other Members submit 

their comments for the record so witnesses may begin the testimony. 

[The prepared statement of Mr. Bacon follows:] 

PREPARED STATEMENT OF HON. DON BACON, A REPRESENTATIVE IN CONGRESS FROM

NEBRASKA

I ask that The U.S. Infrastructure Advantage report be included in the record for 

the hearing on the state of infrastructure in rural America. I applaud the Association of Equipment Manufacturers for their continued commitment to the future of 

our nation’s infrastructure. The work of industry leaders including my constituent 

Leif Magnusson of CLAAS to produce The U.S. Infrastructure Advantage report is 

an import step to shaping our discussion about infrastructure in Congress. Strong 

infrastructure of all kinds will ensure that U.S. companies in all sectors remain 

competitive. I look forward to working with my colleagues to improve our infrastructure systems in the United States. 

ATTACHMENT

The U.S. Infrastructure AdvantageTM

Introduction 

The backbone of America’s economy is its infrastructure. To have the strongest, 

most resilient economy in the world, America must have the best infrastructure in 

the world. In short, we must have an Infrastructure Advantage. 

5 

America’s competitors around the world understand this. They are making unprecedented infrastructure investments and working hard to overtake the United 

States. Meanwhile, America is underinvesting, and is on the verge of squandering 

the Infrastructure Advantage we inherited from the investments made by our grandparents and great-grandparents. 

It is time for America to rebuild and modernize its vast infrastructure network— 

our roads, highways, bridges, transit systems, ports, waterways, locks and dams, 

water and wastewater pipelines, as well as broadband. We must renew and 

strengthen our Infrastructure Advantage if we are to have the world’s preeminent 

economy in the 21st Century and beyond. 

As equipment manufacturers representing the agriculture, construction, forestry, 

mining, and utility sectors in North America, several factors impact our ability to 

manufacture and sell our products to customers inside and outside of the United 

States. These factors include labor force skill, trade policies that facilitate commerce 

in overseas markets, and Federal tax credits that boost reinvestment and expansion. 

Another important factor, which is the focus of this report, involves the maintenance 

and modernization of the U.S. infrastructure system. 

What makes American manufacturers competitive is not so different from what 

makes the country economically competitive, and maintaining our infrastructure in 

a good and updated state of repair is yet another shared factor. In the 2016–2017 

Global Competitiveness Report by the World Economic Forum, the United States remained in third place behind Switzerland and Singapore. More ominously, the U.S. 

ranked 11th in infrastructure competitiveness, with the report noting that ‘‘stagnating productivity has called for a downward revision of growth prospects, highlighting the need for a renewed competitiveness agenda.’’ 

If the United States is to remain a global economic leader, its infrastructure competitiveness ranking must be improved. The gradual demotion and stagnation of the 

United States’ world infrastructure ranking is a direct consequence of an inability 

to strategically act on the opportunities that people, industry, and technology 

present in rethinking U.S. infrastructure. 

This report makes the case for making U.S. infrastructure number one in the 

world and reclaiming the United States’ Infrastructure Advantage. It outlines the 

consequence of not taking meaningful steps to regain this advantage, and offers five 

policy areas that lawmakers and infrastructure stakeholders should reference when 

considering infrastructure policy proposals for modernizing U.S. infrastructure and 

identifying a sustainable funding source. Rather than re-litigate our infrastructure 

problems, this document offers solutions and moves the conversation forward. 

The Infrastructure Advantage 

For the past 2 years, AEM and its member companies have sought opinions from 

a broad range of diverse infrastructure stakeholders. Based on this feedback it is 

clear that the United States must support and promote the following vision in order 

to reclaim its Infrastructure Advantage—the safe and efficient movement of people 

and goods, connectivity between and within rural and urban America, as well as 

strong economic growth and robust job creation. To effectively compete in the global 

marketplace, America’s infrastructure must be the best in the world. That is the Infrastructure Advantage. 

Why is the Infrastructure Advantage Important? 

Rebuilding and modernizing America’s core infrastructure to reestablish an Infrastructure Advantage is not only important, it is essential if the United States is to 

maintain its position as the world’s strongest economy. It makes America more competitive internationally and puts domestic industry on the path to higher economic 

growth, greater productivity, and stronger private-sector job creation. 

In today’s global marketplace, U.S. companies must compete with companies from 

around the world, including ones located in countries with much lower labor costs 

and regulatory costs than the United States. This puts U.S. companies at a competitive disadvantage, and it creates incentives for U.S. companies to move their operations to countries with lower costs in order to compete more effectively. 

To level the playing field, the United States must invest in strengthening its comparative advantages. The smartest area to do this is through the country’s infrastructure system, which is central to international competitiveness. It is critical to 

moving goods, ideas, and workers quickly and efficiently and providing a safe, secure, and competitive climate for business operations. 

Our competitors around the world understand this. They are spending enormous 

sums and expanding their infrastructure, with China and India leading the way. 

Meanwhile, America is headed in the opposite direction. America’s infrastructure 

was once the envy of the world and gave U.S. companies a big competitive boost 

6 

i American Society of Civil Engineers, ‘‘Failure to Act.’’ 2016. http:// 

www.infrastructurereportcard.org/wp-content/uploads/2016/05/2016-FTAReport-Close-theGap.pdf. iiTRIP, ‘‘The Interstate Highway System Turns 60: Changes to Its Ability to Save Lives, Time 

and Money.’’ June 27, 2016. http://www.tripnet.org/docs/Inter- state_Highway_System_TRIP_Report_June_2016.pdf. iii American Automobile Association, American Trucking Associations, U.S. Chamber of Commerce, Joint Congressional Letter. January 26, 2015. http://newsroom.aaa.com/2015/01/aaaata-u-s-chamber-ask-congress-fund-roads-bridges/. iv Yu, T.E., B.C. English and R.J. Menard. Economic Impacts Analysis of Inland Waterway 

Navigability on the Transportation of Corn and Soybeans. Staff Report #AE16–08. Department 

of Agricultural and Resource Economics, University of Tennessee. September 2016. 

in the international marketplace. But in recent years we have been underinvesting 

in our infrastructure, resulting in a decline in our roads and bridges, transit systems, air traffic control systems, airports, railroads, ports and dams, and water infrastructure. 

If America’s businesses are to grow and remain competitive, and if foreign investors are to invest in businesses in the United States, then America needs to reclaim 

its Infrastructure Advantage. America must modernize and rebuild its infrastructure 

so that it is once again the envy of the world and ranks first in infrastructure competitiveness. 

China, India, and other countries with low labor and regulatory costs are looking 

to the future by building a 21st century infrastructure capable of supporting a 

strong 21st century economy. This should be a wake-up call for the United States. 

It is time to accept the challenge. It is time to rebuild and modernize our infrastructure to ensure that America’s 21st century economy is the world’s strongest economy. 

In the short term, significant investment will be required to modernize and rebuild America’s core infrastructure. This infrastructure investment will create tens 

of thousands of jobs across a range of industries. 

In the long term, the most important economic impact of the investment needed 

to create the Infrastructure Advantage comes as the investments are completed. The 

economic benefits of this investment are long-term competitiveness, productivity, innovation, lower prices, and higher incomes. 

Consequences of Losing the Infrastructure Advantage 

Every day Americans see the impact of underinvestment in our core infrastructure—congestion, potholes, transit outages, water main breaks, a sluggish economy, 

and the list goes on. This should not come as a surprise. 

The United States is currently investing 1⁄2 of what it spent on transportation infrastructure more than 50 years ago as a percentage of the gross domestic product— 

close to 1.5% now compared with nearly 3% in the early 1960’s. 

America is at a crossroads. We either significantly increase investment in the infrastructure that has driven our economy in the past, or we continue to underinvest. 

If we increase our investment to levels sufficient to reclaim an Infrastructure Advantage, the benefits will be significant. 

But what if we instead simply maintain the status quo? 

Over time, these impacts will affect businesses’ ability to provide well-paying jobs, 

further reducing incomes. If this investment gap is not addressed throughout the 

nation’s infrastructure sectors by 2025, the economy is expected to lose almost $4 

trillion in GDP, resulting in a loss of 2.5 million jobs in 2025.i

Upon completion of the Interstate Highway System, business logistics costs, as a 

percentage of United States GDP, were cut in 1⁄2 with a decrease from 16 percent 

in 1980 to eight percent in 2014.ii Failure to maintain and upgrade this system over 

the past 37 years has instead increased transportation costs for a variety of products, across many sectors. Congestion caused by highway systems that are at capacity and in disrepair cause 141 million hours to be wasted in freight truck productivity.iii

Failure to take meaningful action on upgrading United States infrastructure could 

also impact agricultural product transportation. Currently, America enjoys a trade 

surplus with it agricultural exports. However, steps are need to repair and upgrade 

the locks and dams system along U.S. inland waterways. These waterways serve as 

critical transportation channels that alleviate congestion on roads and rail by transporting agriculture commodities such as corn and soybean. For example, the agriculture sector could hypothetically see a 40% decrease in economic activity as the 

result of just one major lock disruption along the Upper Mississippi River and Illinois Waterway.iv

7 

Steps To Reclaim the Infrastructure Advantage 

This report outlines five areas that should be leveraged in any plan to reclaim 

the United States’ Infrastructure Advantage. Within each area, this report includes 

infrastructure-related policy and regulatory suggestions that could be leveraged to 

facilitate promotion and implementation. 

Focus on Networks and Systems 

To achieve maximum efficiencies and benefits, infrastructure must be addressed 

on a network-wide and system-wide basis. A ‘‘project here and project there’’ approach will not work. America must tackle its infrastructure problems on a bigger 

scale. For example, the Interstate Highway System would not have produced the 

economic benefits that it has if it was simply a series of disconnected segments. The 

benefits are derived from the fact that it is a connected network. The same can be 

said for our national rail network. And this is especially the case when talking 

about the movement of freight. 

As manufacturers, AEM and its member companies understand the importance of 

timely and reliable delivery—both in the transportation of finished products as well 

as in the parts and pieces that go into manufacturing those final products. As such, 

any proposal or plan must consider the effective and safe movement of people and 

goods as a primary objective. This requires efficient and well-designed networks and 

systems. 

In the short term, AEM supports future implementation of dedicated transportation funding and policies that specifically target intermodal—ship to train to 

truck—network bottlenecks such as what was included in the 2015 Federal surface 

transportation reauthorization. Establishing a dedicated multi-modal freight discretionary grant program will ensure that authorized funding will go to freight-focused 

projects only. Further, user fees generated from freight providers would go towards 

this dedicated revenue stream. 

In the long-term, the creation of a dedicated freight network will facilitate more 

efficient movement of products and goods, and directly alleviate personal vehicle 

congestion. AEM and its member companies support the continued development and 

implementation of a national freight plan. 

Headquartered in West Fargo, North Dakota, and with U.S. manufacturing 

facilities in Bismarck, Gwinner, and Wahpeton, as well as Litchfield, Minnesota, and Statesville, North Carolina, Doosan Bobcat North America knows 

how reliant manufacturers are on the surrounding infrastructure system—both 

in getting raw materials to its facilities that produce loaders, excavators, utility 

work machines, hydraulic cylinders, as well as attachments for its heavy wheel 

loaders and excavators, but also getting those component parts and final products out to customers. That process must be efficient, cost-effective and reliable 

from start to finish. 

‘‘We depend on predicable and economical transportation and delivery options 

in getting our products and our attachments to domestic and overseas markets,’’ 

said Doosan Bobcat North America and Oceania President Rich Goldsbury. ‘‘The 

infrastructure advantage afforded by our facility locations was a principal factor 

in choosing where we expanded and located our U.S.-based manufacturing operations. In certain cases, our manufacturing facilities are operating along a twolane highway. As we identify new markets and products lines, it will be critical 

for us to have a plan and adequate resources both at the state and Federal level 

to build that supporting physical infrastructure so that operations continue 

smoothly and our product delivery to other facilities and our customers is seamless—both logistically and economically.’’ 

Maximize Use of Smart Technology 

The integration of technology and infrastructure is already underway, but that integration is currently being implemented without a broad strategic plan in place. 

AEM and its member companies support the development and implementation of a 

national plan to upgrade and retrofit existing infrastructure systems with the latest 

in smart infrastructure technology. The need for this is two-fold: (1) to ensure that 

U.S. infrastructure is equipped to capitalize on the benefits that will come with 

technological advancements in areas such as embedded sensors, Information and 


11510025.eps
8 

Communication Technology, automation, and unmanned aerial vehicle use, and (2) 

to ensure geographic parity across the country, particularly in rural areas. 

In the short-term, the United States can help reassert its Infrastructure Advantage by auditing cross-agency research and development activities in the context of 

how they advance infrastructure innovation in this country. Currently, innovations 

are produced and assessed in silos and opportunities are missed. Collaborative policies need to be put in place that facilitate idea sharing and innovative partnerships 

across all agencies, levels of government, and the private-sector. 

In the long-term, authorization for new federally supported infrastructure construction, maintenance or repair efforts must be contingent upon plans for technological upgrades and infrastructure adaptation. For example, self-driving cars and 

the need for sensor implementation is paramount to fully leveraging our infrastructure in a way that takes advantage of the advancements being made in the technological space across a range of industries. Roads, highways, bridges, and pipelines 

can and should do more for users. Federal infrastructure policy should require 

states and localities to demonstrate their commitment to implementing smart infrastructure across all assets and modalities. Infrastructure policy must put a premium 

on next generation infrastructure that takes full advantage of technological advancements that improve upon how current and future assets perform. 

As an innovation company with its corporate headquarters in Silicon Valley, 

and locations across the country, Trimble integrates the digital and physical 

worlds by combining the Internet of Things, sensor-based monitoring, automation and data analytics into transformative solutions in a wide range of sectors 

including construction, agriculture, utilities, and transportation. The 

functionality and effectiveness of Trimble data-enabled solutions rely on a robust deployment of an expansive and reliable broadband infrastructure. To be 

effective the broadband network must provide ubiquitous and reliable 

connectivity from locations as diverse as a highway in Los Angeles to a peanut 

farm in Sylvester, Georgia. 

‘‘Increasingly, infrastructure must be integrated with technologies such as 

GPS,’’ said Steve Berglund, Trimble’s CEO. ‘‘Updating infrastructure assets 

must involve retrofitting them with technology that is going to enhance 

connectivity and circumstantial awareness. The need will intensify with more 

widespread adoption of autonomous vehicles, precision farming techniques, and 

automated work tools and machines. Our updated infrastructure will need to 

provide extended utility by actively interacting with the other elements that increase productivity, improve safety, or enhance quality of life—whether they are 

our personal devices, our vehicles, or our tools and machines. The end result 

will be an infrastructure that is smarter both in terms of performance but also 

its upkeep.’’ 

Ensure Rural-Urban Connectivity 

Our transportation networks and systems must be developed and improved in a 

way that provides connectivity between and within urban and rural America. For 

example, it is rural America that feeds and fuels America. The food, fuel, and fiber 

produced in rural areas must, however, move to urban areas and to world markets. 

This only happens if America’s transportation networks and systems provide 

connectivity. It is imperative that policies recognize this and act accordingly. 

In the short-term, agriculture product transportation must not be overlooked, 

and future implementation and resource allocation of a national freight plan must 

involve other infrastructure assets beyond surface transportation such as waterways, rail, locks, dams and ports. These assets are also critical economic drivers and 

should be included in the freight funding category assigned in future surface transportation solutions. 

In the long-term, a plan and commitment to ensure rural America is able to 

take full advantage of autonomous transportation and sensor technology must also 

be a part of a national infrastructure plan. Rural communities of populations of 

50,000 or less stand to benefit from these technologies, as well as the broadband 

network they rely upon to function. Rural America must be included in any national 

plan to retrofit existing or new infrastructure with technologies such as embedded 

sensors. Much like the Federal support needed for public works projects, adapting 


11510026.eps
9 

v Common Good, ‘‘Two Years Not Ten Years: Redesigning Infrastructure Approvals.’’ Philip K. 

Howard. September 2015. 

rural infrastructure to technological advancements must be a part of the next wave 

of ensuring parity and connectivity between urban and rural America. 

As a global manufacturer of farm equipment such as combines, forage harvesters, balers, hay tools, and tractors, CLAAS North America not only manufactures equipment critical to agriculture production, an economic driver for 

rural communities, but also operates facilities in the very rural communities 

that rely on this equipment. It’s a company that contributes doubly to the rural 

community. 

‘‘Rural infrastructure and the critical connectivity it provides in feeding America and the world is just one reason why it must be a part of a larger, national 

infrastructure plan,’’ commented CLAAS Global Sales America President Leif 

Magnusson. ‘‘We look very closely at logistic costs when looking at the larger 

production picture, and if we can keep that cost lower it means that we can provide our product to our customers—farmers and ranchers in rural communities—at a more competitive price.’’ 

Broadband connectivity is also an important infrastructure component when 

considering rural development planning. The Internet of Things (IoT) is transforming agriculture and working to help producers become more resourceful, 

sustainable, and productive. Closing the digital divide in rural America must 

be the focus of legislators and government agencies to enable rural communities 

to compete in the digital age. 

‘‘Well over 35% of rural America remains without fixed broadband support,’’ 

said Magnusson. ‘‘We manufacture farm equipment that can transmit mission 

critical data for analytics that then turns into actionable decisions. Connected 

machinery, fleet vehicles, weather stations, and soil sensors are just some of the 

early stages of connected farm innovations taking place. The ingenuity of tomorrow’s farm starts with the infrastructure investments of today.’’ 

Expedite Project Delivery 

Modernizing and rebuilding America’s core infrastructure is costly and takes time. 

Approvals today can take a decade, sometimes longer. Delay dramatically adds to 

costs, and prevents projects from getting off the drawing board. Delay also prolongs 

bottlenecks which waste time and energy, causing America to lag behind global competitors. The impact of keeping project delivery on time extends beyond the life cycle 

of a project, allowing for all industries to anticipate the economic benefits that come 

with infrastructure update and increased capacity. 

In the short-term, Congress must tackle reforming existing and yet-to-be-determined regulations that impact the most pressing infrastructure assets. These include, but are not limited to, automated vehicle guidance, water and wastewater rehabilitation standards, and big data usage and privacy protection guidance. Tackling these regulations now will empower the private sector to continue to innovate. 

It will also provide state and local governments with helpful guidance in preparing 

for future Federal funding opportunities. 

In the long-term, AEM supports a 2 year or less environmental approval process 

for future infrastructure project delivery plans.v A legally enforceable deadline from 

approval of funds to a final permitting decision must complement this timeline so 

that project completion can be anticipated and appropriately planned for by state 

and local entities. AEM and its member companies support deputizing one agency 

to oversee large-scale, interstate infrastructure project approvals across all modalities and assets—from transportation to utilities. 


11510027.eps
10 

Calder Brothers Corporation manufactures Mauldin Paving Products at its 

Taylors, South Carolina facility, offering a line of construction equipment such 

as asphalt pavers, asphalt distributors, motor graders, rollers, and water tank 

trucks—equipment that is integral in any road or highway worksite. In this 

case, manufacturer and contractor depend on a project approval and regulatory 

process that is streamlined and efficient. 

‘‘Predictability in project approvals over a multiyear horizon helps our customers determine if and when to place new orders, first and foremost,’’ commented Calder Brothers Corporation Executive Vice President Glen Calder. ‘‘If 

a contractor can reliably predict when projects will be approved, we both can 

plan accordingly to make sure they have the right equipment to handle these 

infrastructure challenges. Equally important is the confidence this multiyear 

predictably gives us as manufacturers to invest in research and development, 

as well as plan for future facility expansion and job growth.’’ 

Provide Adequate and Reliable Resources 

AEM and its member companies understand how important it is for U.S. infrastructure to have a funding mechanism that is reliably and responsibly resourced. 

As varied as infrastructure is, and as varied as its uses are, it is appropriate to consider multiple funding proposals based on the user, the mode, the product carried, 

and the frequency of use. What might work for highways may not work for waterways, and what is suitable for urban public transit may not be suitable for funding 

the infrastructure priorities of rural communities. As such, Federal lawmakers must 

consider a range of options. 

In the short-term, this should include the widespread adoption of user fees, such 

as a gas tax, for all publicly supported infrastructure assets, not just ports, waterways, toll roads, or high-occupancy-vehicle lanes in urban areas. The solvency of the 

Highway Trust Fund depends on identifying and supporting a sustainable funding 

solution. 

In the long-term, AEM and its members support infrastructure financing policies that encourage partnerships with the private sector (P3s), and recognize that 

this must also be coupled with a strong Federal investment, as many important and 

necessary projects are unable to generate a revenue stream sufficient to support P3 

financing. In addition, one of the barriers to fully leveraging the P3 model is that 

not all 50 states have strong enabling legislation to fully facilitate these partnerships. While recognizing individual state and project needs, steps should be taken 

to standardize basic P3 enabling legislation at the state level. 

With manufacturing facilities in Pella, Iowa, Vermeer Corporation produces 

a line of underground infrastructure solutions used on a range of utility infrastructure projects. These ‘‘unseen’’ infrastructure networks are critical to the ensuring urban and rural communities thrive. However, for many of these underground networks, public funds are essential and badly needed to complete 

much-needed repairs and new installations, either as the sole source or as a 

means to leverage private investment. 

‘‘Just like with road and highway construction, the utility construction sector 

needs funding and financing certainty with its projects,’’ said Vermeer President 

and CEO Jason Andringa. ‘‘Utility infrastructure doesn’t always attract private 


11510028.eps 11510029.eps
11 

investment and that’s why Federal dollars play such an important role. Navigating a utility infrastructure project from start to finish requires using every 

option you have. This has to be the funding and financing approach we take 

to modernizing and repairing United States infrastructure.’’ 

Conclusion 

For the better part of a decade, stakeholders have painstakingly detailed the pitiful state of American infrastructure, highlighted the rising costs of inaction, and 

made continual appeals to decision makers at the Federal level to do something— 

settling for piecemeal and short-term fixes—to stem the structural and functional 

decline of roads, bridges, ports, locks, dams, and water pipelines. Indeed, the path 

for the United States to retake the lead in the global infrastructure race appears 

steep. 

What are the next steps in reclaiming the U.S. Infrastructure Advantage and 

making our infrastructure great once again? 

AEM and equipment manufacturers will continue to push for a long-term plan to 

rebuild and modernize our infrastructure and help us reclaim the Infrastructure Advantage. This includes supporting efforts at the Federal, state and local levels intended to make U.S. infrastructure the priority it should be. 

On a parallel track, AEM and its member companies will urge lawmakers to consider the five policy priorities outlined in this document in short-term as well as 

long-term legislative efforts. It is time to stop restricting the policy making process 

to the question of funding the infrastructure systems of the 1980s and push forward 

with efforts to retrofit the existing system in a way that will ensure the safe and 

efficient movement of people and goods, facilitate connectivity between urban and 

rural America, and promote economic growth and job creation. 

AEM and its member companies will continue to encourage greater dialogue and 

collaboration among a broad variety of infrastructure stakeholders about the next 

big national project, whether it is above or below ground, on a magnetic levitation 

guideway, an autonomous vehicle revolution, platooning trucks, or technological upgrades to our once-impressive network of intermodal assets. It is time for the United 

States to reclaim its Infrastructure Advantage and meet the needs of the 21st century global economy. 

About AEM 

AEM is the North American based international trade association providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 

950 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, 

Wisconsin, with offices in Washington, D.C.; Ottawa, Canada; and Beijing, China. 

About the U.S. Infrastructure AdvantageTM

The U.S. Infrastructure AdvantageTM was developed by a task force of executives 

from the equipment manufacturing industry after 2 years of engaging in discussions 

with, and soliciting ideas from, a wide range of infrastructure stakeholders. It will 

guide the strategic direction for AEM’s ongoing infrastructure advocacy efforts and 

serve as a tool to assess infrastructure policy proposals at state and Federal Government levels. Those contributing include: 

Jason Andringa, President & CEO, Vermeer Corporation, Pella, Iowa 

Steve Berglund, President and CEO, Trimble Inc., Sunnyvale, California 

Glen Calder, Executive Vice President, Calder Brothers Corporation, Taylor, 

South Carolina 

Ron De Feo, President, Kennametal, Pittsburgh, Pennsylvania 

Rich Goldsbury, President, Doosan Bobcat North America and Oceania, West 

Fargo, North Dakota 

John Grote, Global Vice President of Marketing and Sales, Grote Industries, 

Madison, Indiana 

Dennis House, Vice President of Marketing, Topcon Positioning Systems, Livermore, California 

Jerry Johnson, President, Farm, Ranch, & Agriculture Division, Blount International, Oregon, Illinois 

Shan Kirtley, Vice President of Sales & Marketing, Ditch Witch, Perry, Oklahoma 

David Koppenhofer, Executive Director, OEM Sales & Support, Cummins, Inc., 

Indianapolis, Indiana 

Leif Magnusson, President, CLAAS Global Sales America, Inc., Omaha, Nebraska 

12 

Kevin Smith, President, HammerHead Trenchless Equipment, Lake Mills, Wisconsin 

Jim Wessing, President, Kondex Corporation, Lomira, Wisconsin 

The CHAIRMAN. And with that, I would like to welcome our witnesses to the table. 

First, we have Tom Halverson, President and CEO, CoBank. Mr. 

Lucas, have you a witness you would like to introduce? 

Mr. LUCAS Thank you, Mr. Chairman. We have Dr. Tom Coon, 

Vice President of the Division of Agricultural Sciences and Natural 

Resources of Oklahoma State University; on behalf of APLU. He is 

responsible for the extension service experiment stations. He is a 

wonderful asset, and I look forward to his comments today. 

[Audio malfunction in hearing room.] 

The CHAIRMAN. Have you a witness you would like to introduce? 

Ms. ADAMS. Thank you, Chairman Conaway. I am pleased to introduce Mr. Curtis Wynn, from my State of North Carolina. He is 

the President and CEO of Roanoke Electric Cooperative, and the 

Vice President for the National Rural Electric Cooperative Association. Mr. Wynn is nationally recognized in Roanoke, and does work 

to support local communities. They have developed and implemented pioneering financing community solar, and broadband service programs. Mr. Wynn is a perfect voice to help this Committee 

navigate the complexities of the development. I am looking forward 

to hearing his testimony 

The CHAIRMAN. Thank you, Ms. Adams. 

We also have Ms. Jennifer Otwell from District 11, which is kind 

of near and dear to my heart. Jennifer is the Vice President and 

General Manager of Totelcom Communications, LLC, De Leon 

Texas, on behalf NCTA—The Rural Broadband Association. And 

Mr. Vela, would you like to introduce our witness? 

Mr. VELA. Yes. Thank you, Mr. Chairman, for this hearing and 

bringing our attention to the needs of rural America. Brian 

Macmanus is the general manager of the Rio Hondo Water Supply 

Cooperation. He was [Audio malfunction in hearing room.]—authority where he serves as Vice President. Additionally, Brian 

serves as Vice President of the Texas Rural Water Association 

Board of Directors and President of the South Texas Water Utility 

Managers Association. I am happy to have you here today, Brian, 

and thankful that you are here to highlight the water needs of 

south Texas and of all rural America. 

The CHAIRMAN. I thank our witnesses. We are going to have to 

take about a 7 to 8 minute break to reboot the system. Please, everybody, stay where you are. We will reboot and try to move on. 

Everybody hang with us. 

If this problem persists, we will simply turn it all off. I will ask 

the witnesses to speak loudly so the stenographer can capture what 

you are saying. And we will not be able to broadcast this thing out 

further than that. But we will move forward. 

So with that, Dr. Halverson 5 minutes. 

Oh, by the way, given this delay, given the importance of this 

and how much all of our Members are interested in this, I am 

going to be really strict on the 5 minute clock. If you see the red 

light go on and I start banging the gavel up here, then I will need 

you to wind it up really quickly. And then, Members, please underVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
13 

stand, you have 5 minutes, and then I am going to have to move 

on to the next person. 

So with that, Dr. Halverson, your 5 minutes. 

STATEMENT OF THOMAS HALVERSON, PH.D., PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, COBANK, WASHINGTON, D.C.; ON 

BEHALF OF FARM CREDIT SYSTEM 

Dr. HALVERSON. Well, good morning, Chairman Conaway, Ranking Member Peterson, and Members of the Committee. Thank you 

for calling this hearing today. My name is Tom Halverson. I am the 

President and CEO of CoBank, and I am testifying today on behalf 

of the Farm Credit system. 

We are proud to be helping to organize the Rebuild Rural Coalition, engaging more than 200 organizations from across the country 

that are dedicated to highlighting the unique infrastructure needs 

of agriculture and rural communities and advocating for investment in America’s rural infrastructure. 

We are grateful for the Committee’s interest in rural infrastructure, and we ask that, as infrastructure legislation moves forward 

in this Congress, that you work aggressively to address the important needs of agriculture in rural communities. 

As Rebuild Rural points out, our nation’s ability to produce food 

and fiber, and transport it efficiently across the globe, is a critical 

factor in America’s global competitiveness. Infrastructure that supports rural communities and links them to the global market has 

helped make the United States the unquestioned leader in agricultural production. 

People in rural communities have seen their infrastructure deteriorate jeopardizing jobs, the competitiveness of American agriculture and the quality of life for rural families and communities. 

The scope of the investment that is needed is staggering, and government resources cannot fill that need entirely. 

Creative solutions that pair government investment with private 

sources of capital hold great promise. We stand ready to work with 

you and the Trump Administration on this important initiative. 

Among the Farm Credit institutions, CoBank is uniquely chartered 

to directly lend to rural infrastructure providers. CoBank’s $31.5 

billion in loan commitments to rural infrastructure includes community facilities, rural water and wastewater treatment companies, rural electric cooperatives, and rural communications service 

providers. 

CoBank partners with many Farm Credit associations to finance 

an additional $9.4 billion in loan commitments to rural infrastructure. We partner with commercial banks to add $1.6 billion more 

in commitments to that sum. And as a cooperative owned by our 

customers who live and work in rural America, our primary interest is maximizing the quality and the availability of infrastructure 

to rural communities. Hospitals, senior care centers, walk-in clinics, schools, and other community facilities are critical to the viability of rural communities and are important contributors to the 

quality of life for rural families. In many rural communities, those 

essential facilities are not available or need modernization. 

A pilot program authorized by our regulator, the Farm Credit 

Administration, helped to address the need for community facility 

14 

investment. Farm Credit was able to invest $733 million in 210 

rural communities, catalyzing commercial bank investment of an 

additional $315 million on almost 1⁄2 of those projects. That pilot 

program expired in 2014, and we would hope that this Committee 

will encourage the Farm Credit Administration to facilitate a new 

sustainable program to resume these critical partnerships between 

Farm Credit, commercial banks, and the USDA to support rural 

community facilities. 

GAO estimates that almost $190 billion is needed to cover the 

cost of replacing outdated rural water and wastewater infrastructure. There continues to be a well-publicized digital divide between 

urban and rural broadband subscribers. The Federal Communications Commission estimated that nearly 40 percent of rural Americans do not have access to the current FCC target for ideal minimum Internet service. That lack of access slows the deployment of 

technology, hampering efficiency on our farms, limiting other business opportunities, and threatening our local and rural communities. 

Rural America helped pull the country out of the Great Recession, thanks to the strength of agricultural exports and rural energy production. In recent years, however, the rural economy has 

suffered, due to low commodity prices and other difficulties. All of 

us should be looking for ways to support the health and the vitality 

of the rural economy during this period of challenge. And infrastructure investment is one of the best strategies to do that. 

Thank you, Mr. Chairman, for the opportunity to testify today. 

And I very much look forward to your questions. 

[The prepared statement of Dr. Halverson follows:] 

PREPARED STATEMENT OF THOMAS HALVERSON, PH.D., PRESIDENT AND CHIEF

EXECUTIVE OFFICER, COBANK, WASHINGTON, D.C.; ON BEHALF OF FARM CREDIT

SYSTEM

Good morning, Chairman Conaway, Ranking Member Peterson, and Members of 

the Committee. Thank you for calling this hearing today to explore the infrastructure needs of rural communities and agriculture. 

My name is Tom Halverson and I am President and CEO of CoBank. Today, I 

am testifying on behalf of the Farm Credit System. CoBank, is a proud member of 

the Farm Credit System, and we share the Farm Credit mission to support rural 

communities and agriculture. 

Farm Credit is proud to be helping organize the Rebuild Rural Coalition, engaging 

more than 200 organizations from across the country focused on U.S. agricultural 

producers, rural communities, businesses, and families. Rebuild Rural is dedicated 

to advocating for investment in rural America’s infrastructure and understands that 

rural America’s infrastructure needs are fundamentally unique. 

On behalf of the Coalition, we are grateful for the House Agriculture Committee’s 

interest in rural infrastructure and ask that as infrastructure legislation moves in 

this Congress, as part of the farm bill or other legislation, this Committee work aggressively to ensure that the unique needs of agriculture and rural communities are 

specifically addressed. 

As the Rebuild Rural Coalition pointed out earlier this year. those in rural communities have seen our infrastructure deteriorate, jeopardizing jobs, our agricultural 

competitiveness, the health of rural families and communities. Past public-sector infrastructure initiatives often focused on urban and suburban infrastructure improvements while ignoring or inadequately addressing the unique needs of rural communities. 

American agriculture truly feeds the world and creates millions of jobs for U.S. 

workers. Our nation’s ability to produce food and fiber and transport it efficiently 

across the globe is a critical factor in U.S. global competitiveness and economics. Infrastructure that supports rural communities and links them to global markets has 

15 

helped make the U.S. the unquestioned world leader in agricultural production. Our 

deteriorating rural infrastructure threatens that leadership position. 

Transportation infrastructure improvement is the most obvious need in rural communities, though not the only one. Highways, bridges, railways, locks and dams, 

harbors and port facilities all need major investment if we are to continue efficiently 

moving U.S. agricultural products to domestic and global markets. For example, 1⁄4

of our road system’s bridges require significant repair, or cannot efficiently handle 

today’s traffic and many of the 240 locks and dams along the inland waterways are 

in need of modernization. Most of our locks and dams have outlived their useful life. 

Those waterway corridors supported $128 billion in agricultural exports in 2015. Importantly, 74% of bridges and 73% of roads are in rural areas. Additionally, critical 

needs exist in providing clean water for rural families, expanding broadband and 

other communications capabilities to connect rural communities to the outside 

world, and enhancing the ability to supply affordable, reliable and secure electric 

power for the rural economy. 

The scope of the investment needed to sustain and upgrade our rural infrastructure is staggering. Clearly the Federal Government must continue to play an important role in providing funding and we believe that those Federal investments should 

increase. However, Federal resources likely cannot fill the need entirely. Creative 

solutions that pair Federal investment and state/local government investment with 

private sources of capital hold promise for raising a portion of the funds necessary 

to do the job. 

The members of Rebuild Rural, including all of us in Farm Credit, stand ready 

to work with Congress and the Trump Administration on this important initiative. 

In fact, the Farm Credit System has a long history of supporting rural infrastructure and CoBank has traditionally led those efforts. 

Farm Credit and Infrastructure 

Unlike most Farm Credit institutions, CoBank doesn’t directly lend to individual 

farmers. Instead, we provide funding to 23 farmer-owned Farm Credit associations 

that, in turn, finance more than 70,000 agricultural producers in 23 states in the 

Northeast, Plain States, and West. As a cooperative, CoBank is owned by those 

Farm Credit associations along with our infrastructure and agribusiness customers 

throughout the country. 

CoBank is unique in Farm Credit in that we finance or facilitate the export of 

more than $9 billion worth of U.S. farm products annually—by our estimate more 

than 15% of U.S. bulk and intermediate agricultural exports—around the world. 

CoBank also lends to farmer-owned cooperatives, agribusinesses, and rural infrastructure providers that are essential to the financial success of farmers and economic success of rural America. The importance of that infrastructure lending is 

what brings me before you today. 

I appreciate that you have called this hearing to examine The State of Infrastructure in Rural America. As you know, the infrastructure needs of the nation are substantial and exist in every state. But the needs in rural America differ considerably 

from our urban centers and their suburbs. Those unique needs deserve a second 

look and this hearing is an excellent opportunity to highlight them. 

In the critical area of agricultural research, Rebuild Rural has identified $8.4 billion in funding needs for deferred maintenance in the buildings and infrastructure 

where cutting edge research is conducted. Investment in facilities provides critical 

research for ensuring that U.S. agricultural remains the most productive, sustainable, and economically efficient producer of agricultural products in the world. 

Rural communities also need access to health care, which has become an increasing challenge. Eighty rural hospitals have closed since 2010 and 673 more facilities 

have been identified as vulnerable—that’s over 1⁄3 of the rural health facilities in 

the nation. Funding is needed to address the 77% of rural counties that are in Primary Healthcare Professional Shortage Areas. Telehealth can ease this pressure but 

only with significant additional broadband investment to close the rural-urban digital divide. 

Financing these improvements is a major part of the challenge we face and I 

would like to describe some of our experience in lending in these markets. 

Community Facilities 

Hospitals, senior care centers, walk-in clinics, schools and other community facilities are critical to the viability of rural communities and are important contributors 

to the quality of life for rural families. In many rural communities those essential 

facilities are not available or need modernization. 

Federal investments, made available through USDA’s successful Community Facilities Loan and Grant program continue to be necessary. Attracting private-sector 

16 

investment in these facilities will help speed up the progress of projects and increase the number of community facilities. 

Farm Credit institutions are working to create a scalable solution for financing 

rural community facilities in partnership with community banks and the USDA. 

The partnership will focus on building, modernizing and expanding rural healthcare 

facilities, rural senior care facilities, rural educational facilities and others critical 

to creating vibrant rural communities. 

Farm Credit will identify rural projects and partner with local community and regional banks to create comprehensive financing packages to include short- and longterm bond investments paired with USDA guaranteed and direct loans and grants 

that fund facility construction and provide stable permanent facility financing. 

Previously, under a pilot program authorized by the Farm Credit Administration 

(FCA), Farm Credit institutions invested in bonds issued by the community developing the facility. In creating many of those bond investments, Farm Credit worked 

closely with community banks to include them in the financing package and then 

partnered with USDA’s Community Facility Loan and Grant program to ensure the 

project’s affordability for the community. 

Rural Critical Access Hospital Expansion 

For example, in 2016, Farm Credit institutions partnered with Grand Marais 

State Bank, Central Bank and Trust, CenBank, Security State Bank and the USDA 

to finance a $24.7 million expansion project for Cook County North Shore Hospital 

and Care Center in Grand Marais, Minnesota (population 1,353). The 16 bed critical 

access hospital and 37 bed skilled nursing facility plans to add 26,1502′ and renovate 42,6802′ of existing space. 

Hospital Administrators, county officials and patients break ground on 

North Shore Hospital’s expansion and renovation in 2015. Farm Credit, 

community banks and the USDA partnered to finance the project in Grand 

Marais, MN. 

A year before CoBank and AgStar (a Farm Credit association that recently 

merged with two others to form Compeer Financial) led this effort in Grand Marais, 

they partnered with three community banks, two additional Farm Credit Institutions and a credit union on a hospital improvement in Moose Lake, Minnesota. They 

financed a $38 million addition to Mercy hospital that led to 900 more visits year 

over year after completion, saving the residents an additional hour drive to urban 

medical centers in Duluth. 

Under the FCA pilot program, Farm Credit institutions invested $733 million in 

210 rural community projects across the country. Commercial banks partnered with 

Farm Credit on more than 100 of those projects, catalyzing an additional $315 million of investment. 

The original pilot program at FCA ended in 2014 and now the FCA has to provide 

specific and individual approval for each community facility investment made by 

each Farm Credit institution. This approach has made the community facilities 

partnership non-viable. 

Under current FCA procedures, Farm Credit institutions have to individually 

apply to FCA for permission to make each bond investment. FCA staff reviews the 

investment applications and prepares separate recommendations for action by the 

FCA Board of Directors. The FCA Board then must consider each application separately and formally vote on approval. This process is expensive, slow and does not 

result in the robust, sustainable business model necessary to facilitate partnerships 

between Farm Credit, commercial banks and the USDA that would provide communities with these vital facilities more quickly. 


11510001.eps
17 

Congress should instruct the Farm Credit Administration to create a more comprehensive, efficient and programmatic approach to approving these investment 

partnerships. This would greatly enhance financing options for rural community facilities and result in more projects that provide jobs and offer more benefits for rural 

families. 

CoBank finances infrastructure in every state. Our 1,267 infrastructure customers 

have loan commitments of $31.5 billion with CoBank. That portfolio includes community facilities like those described above; rural water and wastewater treatment 

companies; wholesale electric generation and transmission cooperatives and retail 

electric distribution cooperatives; and providers of rural telephone, Internet, and 

cable television and wireless services. 

Though CoBank leads Farm Credit’s rural infrastructure effort, many more Farm 

Credit institutions are deeply involved. Partnering together, Farm Credit institutions finance an additional $9.4 billion in infrastructure. We partner with commercial banks to fund another $1.6 billion in infrastructure. This Farm Credit partnership means that rural America has a powerful financial ally in supporting its 

unique infrastructure needs. And, as a cooperative—owned by our customers who 

live and work in rural America—our primary interest is maximizing the quality and 

availability of infrastructure to rural communities. 

Water 

There are approximately 54,000 community water systems in the United States. 

The vast majority are small systems with less than 1,000 taps. Supporting rural 

communities and the businesses that provide their economic lifeblood is a key role 

for water providers. Without the capacity to deliver enough safe water, communities 

can’t grow, businesses can’t expand, and opportunities for new employers to revitalize rural areas are lost. There is significant need for capital in this sector to continue to deliver clean and safe water and to properly treat waste water to ensure 

environmental safety. The price tag for this investment is high. In 2015 the U.S. 

Government Accountability Office (GAO) released the results of their study of rural 

water infrastructure. They found that many communities have a hard time covering 

the cost of water system improvements or enhancements, in part because of their 

smaller number of residents and businesses. The GAO estimates that almost $190 

billion is needed to cover the costs of replacing water and waste water infrastructure in rural communities. 

The Federal Government is by far the largest provider of capital to rural water 

systems and will play a vital role for the foreseeable future. The government is able 

to provide grants and loans with repayment terms of up to 40 years. This allows 

smaller water systems to make improvements to their infrastructure in a cost effective manner. CoBank offers a variety of loan products to compliment EPA and 

USDA financing, such as bridge financing, interim financing and long-term loans. 

We also believe innovative public-private partnerships can also play a vital role in 

meeting the unique and vast funding needs for rural water systems. 

The EPA has estimated that over the next 20 years more than $384 billion is 

needed to repair or update the drinking water systems across the country. Another 

$271 billion is needed for the wastewater and storm-water systems. More than 10% 

of that need is to help systems comply with Safe Drinking Water Act regulations. 

Approximately $64.5 billion of that sum would be needed just for the smallest systems in the nation, which make up 83% of the number of community water systems 

that need improvements. That is where many rural systems fit in. And for 90% of 

our nation’s water utilities, that need is just to keep delivering safe drinking water 

to their customers. 

Talquin Electric Co-op and Talquin Water and Wastewater serve 53,000 customers in the Florida Panhandle. Their location necessitates preparation and specialized construction to address powerful storm impacts. CoBank helped Talquin finance a new sewer main and pumping station to serve Wakulla County residents. 

The station was deliberately located away from the coastline to minimize the risk 

of storm damage and associated environmental liabilities. To help the cooperative 

reduce costs, CoBank provided almost $22 million in financing to enhance the water 

and wastewater infrastructure and refinance some of the long-term debt to reduce 

interest rates. Our leasing subsidiary provides Talquin with leases for their fleet vehicles. With a variety of services, Farm Credit helps Talquin reduce costs to hold 

rates steady for its customers in four Florida counties. 

In Texas, CoBank financing has allowed rural water and waste systems address 

immediate needs to address severe drought. CoBank is a primary source of financing for emergency wells and lines of credit for emergency situations. We provide gap 

funding for grant-funded projects and provide construction financing for USDA 

18 

projects. We have also helped save utilities significant money by refinancing old expensive debt. 

Energy 

CoBank provides a variety of loan and leasing products to companies that generate and distribute reliable, reasonably priced electricity, natural gas, and other essential energy-related services to rural communities. We have relationships with 58 

of the 64 Generation and Transmission (G&T) cooperatives in the U.S. The G&Ts 

generate electricity and transmit it to our electric distribution customers under 

long-term power purchase agreements. The electric distribution cooperatives then 

distribute this electricity to serve their local members. 

The USDA’s Rural Utilities Service (RUS) is a major provider of capital to our 

electric distribution customers and CoBank frequently partners with RUS under 

joint mortgage agreements to ensure that our customers are able to fund their extensive capital spending needs. CoBank also maintains a Project Finance division 

which makes loans directly to independent power producers that specialize in producing electricity for sale to utilities and corporations under power purchase agreements or into the wholesale power markets. Many of our electric distribution cooperative customers are also deploying broadband in their service territories and 

CoBank leverages its long experience in the communications industry in support of 

these important initiatives that are helping to close the digital divide. CoBank has 

lent nearly $60 million to electric co-ops in districts represented on the Committee 

to support broadband delivery. 

While we continue to see demand for traditional fossil-fuel fired generation, especially natural gas-fired plants, renewable energy is one of the fastest growing sectors in the economy. Our Project Finance division finances many wind and solar 

projects. Moreover, our G&T and regulated utilities customers are increasingly investing in renewable energy as costs come down, reliability improves, and customer 

preference for renewable energy increases. Many of our electric distribution cooperatives are also investing in renewable energy projects to reach their own sustainability goals and reduce their reliance on power purchased from others. Bloomberg 

New Energy Finance analysts estimate that U.S. power infrastructure spending will 

total $283 billion over the next 10 years: 70% of this is expected to come from renewables, with about 1⁄2 of that from solar and the other 1⁄2 from wind. 

Communications 

Mr. Chairman, there is not a staffer (and probably not many Members, either) 

who is not regularly checking their smartphone during this hearing. Like your staff, 

their friends, family and classmates in college became accustomed to high levels of 

service from their communications technology. But when some returned to their 

rural hometowns and farms, their broadband service did not follow them. 

There continues to be a well-publicized ‘‘digital divide’’ between urban and rural 

broadband subscribers. The FCC’s 2016 Broadband Progress Report estimated that 

nearly 40% of rural Americans do not have access to Internet speeds of 25 Mbps, 

which is the current FCC target for ideal minimum service. 25% lack access to 10 

Mbps. Contrast that with urban areas where less than 5% lack access to 25 Mbps 

and only about 2% lack access to 10 Mbps. 

That lack of access slows the deployment of technology; thus, hampering efficiency 

on our farms. It stands in the way of adopting telemedicine to manage costs and 

improve health outcomes for our rural residents. It limits the availability of our 

rural students to access the Internet to enhance their education, and that in turn 

is preventing some people from bringing their skills and their families to rural communities. It hinders businesses from locating in rural areas, thereby reducing economic activity and rural employment opportunities. 

Estimating the costs of closing the digital divide vary according to assumed minimum required speeds. However, most analysts put the cost of meaningfully closing 

the digital divide at as much as $100 billion at the 25 Mbps level. 100% coverage 

of all Americans at the 25 Mbps could cost upwards of $300 billion. By anyone’s estimate, it is an enormous task and private capital providers, including CoBank, cannot do it alone. Government grants, loans or loan guarantees, public-private partnerships, and a stable regulatory regime that supports adequate cost recovery mechanisms for rural broadband operators will be essential in closing the digital divide. 

While the cost of expanding broadband in rural communities is great, the cost of 

inaction that results in lost jobs and lost communities is even greater. 

President Trump emphasized that importance in Iowa last month as he committed to a provision in his infrastructure proposal to promote and foster enhanced 

broadband access for rural America also, saying, ‘‘We have to make sure American 

farmers and their families, wherever they may be, wherever they may go, have the 

19 

infrastructure projects that they need to compete and grow.’’ Access to enhanced 

broadband infrastructure is essential to the long-term capacity of American farmers 

to compete globally in marketing their production and manage their farming operations to high degree of efficiency and sustainability. On farm technology has skyrocketed over the past 10 years, and the most effective use of this technology requires access to enhanced communications connectivity. 

CoBank provides a variety of loan and leasing products to help communications 

companies ensure that rural Americans have access to advanced broadband services. 

CoBank provides funding to all types of communication providers including rural 

local exchange carriers, cable companies, wireless carriers, and other data infrastructure and telecommunication services companies. The RUS is a major provider 

of capital to rural communications companies. CoBank partners with RUS in many 

situations, providing short-term interim financing for capital spending projects until 

permanent financing through RUS is arranged and longer-term financing for important projects that may not qualify for RUS funding. CoBank also partners with 

other private-sector lenders to catalyze additional capital to finance our communication customers. 

Farm Credit firmly believes that a sustainable cost-recovery mechanism is imperative to support the financing of rural broadband in high cost areas. If communication companies don’t have a sufficient, sustainable predictable level of support, deploying affordable broadband in high cost areas is not economically viable and therefore, not financeable. In addition to the high costs associated with constructing 

broadband infrastructure in rural areas, there are ongoing costs associated with 

maintaining and upgrading these networks to accommodate growth of data traffic. 

The broadband network is a dynamic infrastructure, subject to frequent technological advances that require upgrades and capital spending. 

One of CoBank’s Customers is Big Bend Telephone in Alpine, Texas, serving 5,000 

telephone lines and 2,800 broadband customers. This small family-owned company 

has operated for 67 years and serves along 485 miles of the Texas-Mexico Border. 

Their customers include farmers and ranchers, the U.S. Border Patrol, state and 

local law enforcement, schools, medical providers the world renowned McDonald Observatory and even Big Bend National Park. 

Serving this huge, sparsely populated territory of 17,5932 miles is difficult and expensive. There are just 0.333 customers per square mile. In New York City, there 

are 27,000 customers per square mile! For their capital needs they rely on the Federal Communications Commission’s Universal Service Funds and Farm Credit. 

CoBank worked with the Farm Credit Bank of Texas and Capital Farm Credit to 

finance Big Bend. According to Big Bend’s General Manager, Rusty Moore, this financing ensures that Big Bend can . . . ‘‘deliver the vast array of technology-centric 

solutions required to keep our nation’s southern border secure and our country 

stronger as a whole.’’ 

Conclusion 

As I have discussed, the infrastructure needs in rural America are significant and 

unique. While Farm Credit and others are helping to finance these needs, more 

needs to be done. As advocated by the Rebuild Rural Coalition, infrastructure legislation by Congress should specifically address the unique needs of agriculture and 

rural communities. We also recognize that the Federal Government needs strong 

private investor engagement to partner with to meet the infrastructure needs in 

rural America. Farm Credit stands ready and capable to do its part and work closely with the Federal Government and private investors to meet rural infrastructure 

funding needs. 

I appreciate the big job before you in addressing these challenges and opportunities and the Farm Credit System looks forward to working with the Committee as 

you begin writing and advancing the farm bill. 

Thank you for this opportunity to testify and I look forward to your questions. 

The CHAIRMAN. Thank you, Tom. 

Apparently, the clocks and the lights are not working for the witnesses. With 30 seconds left, I will give you a tap on the gavel as 

a heads-up. 

So with that, Mr. Coon, 5 minutes. 

Dr. COON. Thank you. 

The CHAIRMAN. Dr. Coon. Excuse me. 

Dr. COON. That is fine. Tom. That is what my mom called me. 

20 

STATEMENT OF THOMAS G. COON, PH.D., VICE PRESIDENT, 

DIVISION OF AGRICULTURAL SCIENCES AND NATURAL 

RESOURCES, OKLAHOMA STATE UNIVERSITY; CHAIR, TASK 

FORCE ON DEFERRED MAINTENANCE, BOARD ON 

AGRICULTURE ASSEMBLY, ASSOCIATION OF PUBLIC AND 

LAND-GRANT UNIVERSITIES, STILLWATER, OK 

Dr. COON. Thank you, Chairman Conaway, Ranking Member 

Peterson, and Congressman Lucas and other honorable Members. 

I am honored to represent Oklahoma State University and the Association of Public and Land-grant Universities, or APLU, here 

today. I also want to thank the Rebuild Rural Coalition for including agricultural research infrastructure in their initiative. The 

Farm Credit Council, the American Farm Bureau Federation, and 

other members of the coalition, clearly see the connection between 

the innovation that comes from agricultural research at the nation’s public schools of agriculture and the positive influence that 

research has on economic development in rural America. The Rural 

Prosperity Task Force lead by Secretary Perdue also calls attention 

to the challenges that our rural communities face today. Because 

most agricultural production takes place in America’s rural landscape, research that strengthens agriculture’s future helps to support strong school systems, healthcare systems, and thriving businesses in rural America. 

My message is simple: First, prosperity in agriculture in rural 

communities has depended on public investment and research at 

our agriculture schools. Second, the future of that infrastructure is 

at risk. Those of you on the Biotechnology, Horticulture, and Research Subcommittee heard testimony from Dr. Jay Akridge of Purdue University in March about the importance of Federal funding 

in support of agricultural research. In the 19th and 20th centuries, 

that support transformed American agriculture and made our industry a world leader of innovation. 

In June, deans from public and land-grant universities in Florida, California, Alabama, and Texas described ways they have leveraged the Federal investment in agricultural research with state, 

local, and private funds to continue growth and innovation in their 

state’s agricultural economy. 

In 2015, the APLU commissioned a study to document the state 

of research facilities at public schools of agriculture. The study collected data from 91 schools and included nearly 16,000 buildings 

and 79 million gross square feet of space. The replacement value 

of that space is $29 billion. The total value of deferred maintenance 

across the 91 institutions is $8.4 billion. Of this, $6.7 billion, or 80 

percent, is in facilities that are more than 25 years old. Agriculture 

colleges are funding maintenance at about 60 percent below the 

university average. And because buildings require more maintenance as they age, the combination of older infrastructure and 

under-funded maintenance is undermining the productivity and dependability of our research enterprise. The USDA Agricultural Research Service works closely with public universities. And, in fact, 

30 percent of the research is conducted in facilities of their cooperators, most of which are universities. 

In 2012, the ARS released a capital investment strategy that is 

complementary to the APLU study. The ARS has facilities valued 

21 

at $3.7 billion. The report stated a need for $148 million in annual 

maintenance funding, and another $100 million in annual expenditures to replace aging facilities. 

It is clear that public agricultural universities need to tackle 

these facility challenges on two fronts: One is that we need to take 

better care of our facilities; and the other is that we need to replace 

much of that outdated infrastructure. 

Deans tend to fund faculty lines at the expense of infrastructure 

needs, and that needs to be recalibrated. In addition, we need to 

be honest and transparent about the real cost of research. For example, the USDA limit on facility and administration costs that 

can be recovered is set at 50 to 60 percent of the federally negotiated F&A rate, and that undermines our investment in facility 

maintenance. 

We need to invest aggressively in new facilities and major renovations. We proposed a funding mechanism whereby Federal 

funds are used to leverage other investments into our research infrastructure needs. 

Federal funding is especially important for addressing research 

needs in the national interest. Federal funds should come with 

some expectations and contingencies. They should be competitive. 

They should address national or regional needs, and they should be 

matched with state, local, university and/or private funds. 

The need is great. We project a need to replace $20 billion in infrastructure over the next 10 years. If our Federal partners can invest 1⁄2 of that, it is incumbent on us as deans to raise the other 1⁄2 through our other partnerships. 

The competitiveness of our agriculture sector, the security and 

safety of our citizens’ food supply and, in large part, their health, 

as well as the health of our environment, depends on the research 

our scientists produce. The challenging investments that the partnership made in our research infrastructure in the 20th century 

have created a dynamic, innovative, and job creating food and agriculture industry and a safe and secure food supply today. 

We owe it to future generations to make the investments that 

will ensure they benefit from the bounty of our tremendous natural 

resources, and uniquely American collaboration between scientists 

and the farmers, ranchers, and workers in our nation’s food and agriculture systems. Thank you. 

[The prepared statement of Dr. Coon follows:] 

PREPARED STATEMENT OF THOMAS G. COON, PH.D., VICE PRESIDENT, DIVISION OF

AGRICULTURAL SCIENCES AND NATURAL RESOURCES, OKLAHOMA STATE

UNIVERSITY; CHAIR, TASK FORCE ON DEFERRED MAINTENANCE, BOARD ON

AGRICULTURE ASSEMBLY, ASSOCIATION OF PUBLIC AND LAND-GRANT UNIVERSITIES, 

STILLWATER, OK 

Introduction 

Thank you, Chairman Conaway, Ranking Member Peterson, Congressman Lucas 

and other Honorable Members. I am honored to represent Oklahoma State University and the Association of Public and Land[-g]rant Universities (APLU) today. 

I also want to express my appreciation for the inclusion of agricultural research 

infrastructure needs in the Rebuild Rural Coalition—The Farm Credit Council, 

American Farm Bureau Federation and other members of the coalition clearly see 

the connection between the innovation that derives from agricultural research at the 

nation’s public agriculture colleges and the positive influence that has on economic 

development in rural America. 

22 

The Rural Prosperity Task Force that is being led by Agriculture Secretary Sonny 

Perdue also calls attention to the challenges that our rural communities face today. 

Because so much agricultural production takes place in America’s rural landscape, 

research that strengthens agriculture’s future helps to support strong school systems, health care delivery systems, and thriving businesses. 

Perhaps I can summarize my message in this way: prosperity in food, agriculture 

and rural communities has depended on public investment in research that supports 

food and agriculture industries, and we stand at a crossroads of commitment for the 

future of the infrastructure that has supported publicly funded research. 

Investments in Research Fuel Innovation in Rural America 

I have been fortunate to work with farmers, ranchers and natural resource managers in my native Iowa, and in California, Minnesota, Michigan, Missouri and 

Oklahoma. In every case, I have worked with university colleagues who see their 

role as being in support of those front line producers and managers. Our scientists 

push the envelope of discovery to develop new insights and new technologies that 

enhance the yield of our rich natural heritage for food, fiber and environmental benefits for all Americans. 

Just as roads, electricity, water and other infrastructures support and sustain 

people in our rural communities, the innovations from research have helped rural 

residents build individual and community wealth, whether through improved plant 

and animal genetics, in healthy soils and clean water, the latest irrigation scheduling application software or improved food safety practices on the farm or in the 

market. 

Those of you on the Biotechnology, Horticulture, and Research Subcommittee 

heard testimony from Dr. Jay Akridge of Purdue University in March about the importance of Federal funding in support of agricultural research. In the 20th Century, that support transformed American agriculture and made our industry a leader of innovation. Dr. Akridge pointed out that other nations have followed our lead, 

and as public support for agricultural research has stagnated in the U.S., other nations have surpassed us. As of 2011, the nations of Brazil, India and China together 

spend $2.15 for every $1.00 that the U.S. invests in public agriculture research and 

development. 

In June, a number of my colleagues from public and land-grant agriculture colleges in Florida, California, Alabama and Texas expanded on how they have leveraged the Federal investment in agricultural research with state, local and private 

funds to continue growth and innovation in their state’s agricultural economy. One 

of the great strengths of the American food and agriculture system is the tremendous diversity of environments we use, the yields our farmers and ranchers produce 

and the processed food and fiber products consumers can purchase. The Federal 

partnership with state and local governments and with industry and non-government organizations has created a unique engine of innovation across the breadth 

of that diversity. 

We have a similar heritage of resourcefulness and productivity in Oklahoma, 

where in spite of diminished purchasing power of Federal funds and recent declines 

in state funding, we continue to develop and release new varieties of hard red winter wheat and forage crops developed for the unique soil and farm management 

practices of the southern plains, our scientists develop and release new software applications to help manage beef cattle herd health and our scientists are creating 

faster and more definitive technologies for detecting and eliminating pathogens in 

food supply chains. 

Research Depends on Modern Facilities 

One of the hallmarks of our agricultural colleges at public universities has been 

the infrastructure dedicated to research, teaching and extension in agricultural and 

natural resource sciences. That includes laboratories on university campuses as well 

as field stations for research and extension demonstrations. The Hatch Act of 1887 

recognized the need for specialized facilities dedicated to research on agricultural 

topics, and many states have used the Federal capacity funds they receive through 

the farm bill to build and maintain those facilities. 

However, those facilities are aging, and with stagnant or reduced Federal and 

state funding, many of the facilities that helped to drive innovation in agriculture 

have deteriorated to the point of limiting their usefulness and safety for conducting 

21st century research. 

In 2015, the APLU commissioned a study to document the state of research facilities at public colleges of food, agriculture and natural resources. The study was conducted by an independent organization, Sightlines, and they queried 101 institutions and received responses from 91 of them. The study included data from 15,596 

23 

buildings, which contain 87 million gross square feet of space. They estimate the 

replacement value of this space, based on a larger database that Sightlines maintains, at $29 billion. 

Our study followed one completed by the USDA Agricultural Research Service in 

2012. In that study, they classified the status of 122 major research facilities owned 

by the ARS, which totaled $3.7 in capitalization value. That study applied an industry standard of annual capital expenditures equal to 4% of the capitalization value 

to conclude that $148 million would be needed annually for maintaining the ARS 

facilities and another $100 million per year for replacement of outdated facilities. 

As much as 30% of the ARS research is conducted in facilities of cooperators, most 

of which are public universities, and not in ARS facilities. The Capital Investment 

Strategy of the ARS is complementary to the proposal we have developed based on 

the APLU study. Indeed, implementation of the recommendations from the APLU 

study will benefit ARS research as well. 

One of the more noteworthy findings to emerge from the APLU study is that the total value of deferred maintenance across the 91 institutions is $8.4 billion. Annual 

capital spending in agriculture research infrastructure is estimated to be $1.82/GSF, 

which is 41% of the public university average ($4.40/GSF). Of this, $6.7 billion (80%) 

is in facilities that are more than 25 years old. Because buildings require more 

maintenance as they age, the combination of older infrastructure and under-funded 

maintenance is undermining the ability of our research enterprise to provide the information needs of today and the future. 

The APLU study estimated the Net Asset Value of the infrastructure—in other 

words the replacement cost minus the cost of deferred maintenance to be at 71%. 

Moreover, the current deferred maintenance figure of $95/GSF puts us very close 

to the threshold of $100/GSF that is associated with a greater likelihood of building 

systems failures—such as HVAC or electrical systems—that can result in catastrophic losses of research findings. 

Our study at Oklahoma State was reflective of the national study: Of our facilities 

on campus, 49% of the square footage was assessed as being in need of major repair 

or past useful life. Of our facilities at our research farms in Stillwater, 38% was 

in that state of disrepair. 

In some respects, our faculty are being penalized for being too resourceful. One 

of our hallmark programs at Oklahoma State is our Wheat Improvement Team, 

which includes a wheat breeder, a molecular geneticist, two entomologists, a plant 

pathologist, a soil nutrient agronomist, a commodity market economist, and a cereal 

biochemist. Together, they have developed a number of varieties of hard red winter 

wheat well suited to the agronomic practices and environmental conditions of the 

southern Great Plains. For the crop that was harvested this summer, we had 15 

OSU varieties of wheat available for growers to plant, and those comprised about 

1⁄2 of the acreage planted in Oklahoma. Our wheat team continues to perform in 

a way that is meeting the agronomic demands of our growers and the wheat quality 

demands of millers. They are doing this in a greenhouse complex that was constructed before World War II and in field laboratory buildings that were constructed 

before I was born. We are extremely proud of their accomplishments, but we also 

wonder how much more successful they might be with modern facilities. 

Addressing the Challenge 

A group of administrators and scientists from APLU developed a set of recommendations for following up on the findings of the facility survey. Those include 

two primary directions: one is that we need to be better stewards of our facilities. 

Clearly, the greatest assets of our Agricultural Experiment Station resources are the 

faculty, technicians and students who carry out the research. As universities have 

faced stagnant and declining budgets, the tendency has been to protect faculty positions as the top priorities. I think there has been a tendency to interpret a decrease 

in funding as a temporary phenomenon and so facility maintenance and upgrades 

are put off until the funding picture improves. In the meantime, faculty are expected to bring in funding through competitive grants and industry contracts to help 

finance the additional personnel and operating costs of their research. In many 

cases, the optimism that funding will return hasn’t been fulfilled, and so the facility 

maintenance delays become permanent deferrals and we end up asking our scientists to ‘‘get by’’ with diminished capacity and increased unreliability of our facilities. 

University administrators need to be more disciplined in adopting best management practices for facility maintenance and replacement. We need to direct more of 

the funding for Facilities and Administration—or Indirect Costs—into implementing 

those best management practices. In addition, we need to clearly communicate with 

our funding partners the real costs of research. Most Federal agencies pay a negoVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00027 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
24 

tiated F&A rate for university-conducted research. Those rates are carefully scrutinized by the funding agencies and each university. However, the U.S. Department 

of Agriculture is authorized to fund less than the full indirect costs rate, yet we 

need those funds in order to carry out the necessary stewardship of our research 

facilities. 

Even improved stewardship will not fix the problems that the APLU study has 

demonstrated. Some of the facilities we are using are simply outdated and cannot 

be brought up to 21st century standards. The other key recommendation from the 

APLU task force is to invest aggressively in new facilities or major renovations to 

upgrade and modernize our research infrastructure. There is still a great public 

good that comes from research in food, agriculture and natural resource management. The nation’s interest depends on research findings that are made available 

to all participants in the food, agriculture and natural resource economy. The same 

is true for each state and local governmental entity. At the same time, many private 

interests, from producers to processors to wholesalers and retailers derive benefits 

from publicly funded and publicly available research findings. They have a part to 

play in financing investments in America’s public agricultural research infrastructure. 

We propose a funding mechanism whereby Federal funds are used to leverage 

state, local, private industry, and private philanthropic investments into our research infrastructure needs. Our very successful public agricultural research enterprise has been built on this multi-partner model of collaborative funding. 

Federal funding is especially important for addressing research needs in the national interest. It would seem important to provide Federal funds with some contingencies, such as a required match with some combination of state, local, industry 

and/or non-governmental organization support. In addition, Federal funds should be 

contingent on demonstrating that the research will address national or regional 

needs and that it will build on a record of accomplishment in research among the 

faculty and programs that will use the facilities. Collaboration across universities 

should be favored over duplicative programs in neighboring states. 

Based on the findings in the APLU study, we determined that we would need to 

replace 68% of the research infrastructure over the next 10 years in order to position our scientists to be successful in addressing food security, food safety, agricultural productivity and environmental stewardship needs for the 21st century. The 

estimated replacement cost of all research facilities included in the APLU study is 

$29 billion, and 68% of that is $20 billion. A Federal program of investing $1 billion 

per year over 10 years would help to stimulate the other investments needed to 

complete this initiative and would position the U.S. agriculture research system to 

be on par with other nations who are competing in the world food and agriculture 

markets. 

This proposed level of funding is large. Whether our Federal and other partners 

are up to this challenge, it is important to recognize that the need is real and it 

is of strategic importance. The competitiveness of our agriculture sector, the security 

and safety of our citizens’ food supply—and in large part their health—as well as 

the health of our environment depends on the research our scientists produce. The 

challenging investments that Federal and state funding made in our research infrastructure in the 20th century have created a dynamic, innovative and job-creating 

food and agriculture industry and a safe and secure food supply today. We owe it 

to future generations to make the investments that will ensure they benefit from 

the bounty of our tremendous natural resources and uniquely American collaboration between scientists and the farmers, ranchers and workers in our nation’s food 

and agriculture systems. 

The CHAIRMAN. Thank you, doctor. 

Mr. Calhoun for 5 minutes. 

STATEMENT OF RICHARD R. CALHOUN, FORMER PRESIDENT, 

CARGO CARRIERS, CARGILL, INC., SILVER SPRING, MD; ON 

BEHALF OF NATIONAL GRAIN AND FEED ASSOCIATION 

Mr. CALHOUN. Good morning. I am Rick Calhoun, the immediate 

past Chairman of the Waterborne Commerce Committee of the National Grain and Feed Association on whose behalf I testify today. 

The NGFA was established in 1896, and consists of 1,050 member companies that handle approximately 70 percent of the U.S. 

grain and oilseed crops. The importance of infrastructure to the 

25 

success of U.S. farmers in competing to provide Americans agricultural bounty to consumers is undisputed. But by numerous markers, America’s infrastructure is falling behind. We have fallen out 

of the top ten in the World Economic Forum’s global competitiveness report. We used to be able to ship soybeans to China for nationally $80 a metric ton, cheaper than Brazil. Today they have 

narrowed the transportation gap by about 75 percent to just $20 

a metric ton. 

The American Society of Civil Engineers’ most recent infrastructure report card doled out the following grades: Roads, D; inland 

waterways, D; and bridges, C+. NGFA appreciates the renewed 

sense of urgency by Congress and the Trump Administration to 

enact an infrastructure package that includes a reliable funding 

mechanism to recapitalize our dilapidated inland waterways and 

restore our rural roads and bridges. Today, I will focus on the 

12,000 mile inland waterway system, which supports 540,000 jobs, 

and provides the lowest cost, most fuel efficient, and environmentally friendly way to transport grain and ag products. 

Most of our locks and dams have exceeded their 50 year life design, and it is starting to show. During the past decade, work stoppages for repairs have increased 700 percent. In 2005, Hurricane 

Katrina halted our ability to ship on the inland waterways and 

ports, sending barge rates up as much as 50 percent and causing 

basis values on corn to decline 40¢ to 70¢ per bushel. 

We appreciate that Congress has begun to respond. Thank you 

for passing the WRDA Acts in 2014 and 2016 to streamline projects 

and for increasing operation and maintenance funding for locks 

and dams. 

Also, President Trump recently visited the Ohio River to put an 

unprecedented presidential spotlight on the state of our locks and 

dams. 

But to bring our waterway system into the 21st century, a new 

approach is needed. Here are some ideas that we believe would 

help you get the biggest bang for your buck. Priority one, support 

stronger Federal investment in U.S. locks and dams. Currently, 

there is a portfolio of 25 critical inland waterways projects that 

need to be funded to modernize the system at a cost of $8.75 billion. Also, the Harbor Maintenance Trust Fund has a $9 billion 

surplus, and Congress should ensure these funds be spent to maintain U.S. ports and harbors through dredging. 

Priority two, support the existing public-private partnership to finance our locks and dams and oppose unworkable tolling and lockage fees. The inland waterway system benefits from the successful 

3P, where the barge and towing industry, but ultimately the U.S. 

farmer, pays 50 percent of the cost of the inland waterways 

projects through a 29¢ per gallon diesel fuel tax, which is matched 

by Federal dollars. Perennial calls to impose lockage fees and tolling on the inland waterways by past Administrations have consistently been rejected on a bipartisan basis by Congress. 

Commercial users of the inland waterway locks and dams are the 

only private entities that pay into this trust fund even though the 

benefits are freely enjoyed by numerous other stakeholders. Therefore, the question should not be how much more can we extract 

26 

from those who pay, but rather how can we get the other beneficiaries of the system to support it? 

Rural America also relies heavily on roads, bridges, and highways to transport ag products from farm to market and provide access to education, jobs, healthcare, and social services. But the 

roads and bridges that connect the country’s rural areas face several significant challenges, including inadequate capacity to handle 

commerce, limited connectivity, and deteriorated conditions. 

Congress should explore prioritizing increases in Federal funding 

and/or reclassification of rural roads and bridges to be eligible for 

funding. 

One concept that may warrant your consideration is to develop 

a system of block grants where states and localities with feedback 

from rural and ag stakeholders could prioritize road and bridge 

projects they deem most important. 

One final thought: By 2050, the world will be challenged to feed 

nine billion people. If we maintain the status quo on infrastructure 

investment we will fall short of meeting that demand. 

We need to be pragmatic. Let’s not allow under $9 billion in waterways investments to stand in the way of our ability to better 

feed our country and the soon-to-be nine billion people around the 

globe. 

Thank you for the opportunity. I look forward to answering your 

questions. 

[The prepared statement of Mr. Calhoun follows:] 

PREPARED STATEMENT OF RICHARD R. CALHOUN, FORMER PRESIDENT, CARGO

CARRIERS, CARGILL, INC., SILVER SPRING, MD; ON BEHALF OF NATIONAL GRAIN

AND FEED ASSOCIATION

Good morning, Chairman Conaway, Ranking Member Peterson, and Members of 

the House Committee on Agriculture. Thank you for the opportunity to testify at 

this important hearing examining The State of Infrastructure in Rural America. 

I am Rick Calhoun, the immediate past Chairman of the Waterborne Commerce 

Committee of the National Grain and Feed Association (NGFA), on whose behalf I 

testify today. The NGFA was established in 1896, and consists of 1,050 member 

companies that operate 7,000 facilities that handle approximately 70 percent of the 

U.S. grain and oilseed crop. NGFA also consists of 34 state and regional associations. I also previously served as NGFA’s elected industry Chairman and am a past 

Chairman of Waterways Council Inc., the national organization representing barge 

and tow-boat operators, shippers, conservation groups, as well as labor organizations that focuses on the modernization, rehabilitation, and operation and maintenance of our nation’s inland waterways’ locks and dams. I retired June 30, 2017, 

after working my entire 41 year career at Cargill Inc., most recently as President 

of Cargo Carriers, the company’s barge and marine business, and as Senior Vice 

President of Cargill’s Grain and Oilseed Supply Chain North America. 

Throughout my industry career, I witnessed first-hand how important infrastructure is to the success of U.S. farmers, ranchers and agribusinesses in competing to 

provide America’s agricultural bounty to U.S. and world consumers. But over the 

last decade, I also have witnessed an alarming decline in historical competitive advantage that our transportation infrastructure has provided U.S. agriculture, and 

the corresponding increase in investment in critical infrastructure being made by 

our foreign competitors. 

The NGFA appreciates and agrees with the renewed sense of urgency by this Congress and the Trump Administration to enact a comprehensive infrastructure package that includes a predictable and reliable funding mechanism to recapitalize our 

dilapidated inland waterways system, as well as to restore our rural roads and 

bridges. Both are essential to the future vibrancy of rural communities and competitiveness of U.S. agriculture. 

I want to focus primarily on the 12,000 mile inland waterways system, which supports more than 540,000 jobs and provides the lowest-cost, most fuel-efficient and 

27 

most environmentally friendly and sustainable way to transport grains, oilseeds and 

other agricultural products. The U.S. inland waterways are used to transport about 

2⁄3 of the U.S. grains and oilseeds destined for export while U.S. ports help move 

more than 90 percent of U.S. grain and oilseed exports. In addition, U.S. inland waterways and ports are essential arteries for farm inputs. For example, 33% of fertilizer relies on this infrastructure in order to get essential nutrients to farmers for 

their crops. Our country exports about 25 percent of its total grain production, with 

nearly 50 percent of U.S. soybeans, more than 40 percent of U.S. wheat, and about 

15 percent of U.S. corn exported each year. On the meat and poultry side, the U.S. 

exports approximately ten percent of its beef, 20 percent of its pork, and 15 percent 

of its poultry production. 

The U.S. transportation system is used more by agriculture than any other business sector. In 2012, agriculture accounted for 22 percent of all tons transported, 

and 31 percent of all ton-miles moved. Thanks to our transportation system, U.S. 

agricultural exports will contribute $21.5 billion to the U.S. balance of trade this 

fiscal year. Exports invigorate the rural economy, support more than one million 

jobs on and off the farm, and provide farmers with 20 percent of net farm income. 

The Challenge 

Earlier this year, during testimony before the House Transportation and Infrastructure Committee on the importance of infrastructure, Cargill’s Chairman and 

CEO referenced a BusinessWeek article from 1964 that still rings true today about 

the indispensable role transportation infrastructure plays in the success of U.S. agriculture. The excerpt reads, ‘‘What the grain division does is buy grain at a point 

of surplus and carry it to a point of deficit. Or buy it at a time of surplus and carry 

it over to a time of deficit. Our profit comes from being able to do this at a lower 

cost than our competitors.’’ 

Historically, the United States has been blessed with a transportation system 

where the four major modes (truck, rail, barge and ocean-going vessels) complement 

and to an extent compete with one another. Utilizing the inland river system relieves congestion and wear and tear on our highways and helps discipline rail rates. 

The result is a highly efficient, balanced system that provides an edge in a fastchanging market which saw U.S. agricultural exports double from 2006 to 2016. For 

America to avoid losing this edge, we must be strategic and willing to make stronger 

investments in our transportation system. However, as a percentage of gross domestic product (GDP) the U.S. is spending less on its transportation infrastructure than 

at any point since World War II and our major trading partners are besting us when 

it comes to infrastructure investment. 

As a result, our competition is catching up. USDA data show that in 2007, the 

total transportation costs to move a metric ton of soybeans from Davenport, Iowa, 

to Shanghai, China, was $82.83. That compared to a total transportation cost of 

$161.30 to get that same metric ton of soybeans from North Mato Grosso, Brazil, 

to Shanghai. 

Fast forward a decade and our competitive advantage is slipping. In the first 

quarter of 2017, it cost $90.83 to ship a metric ton of soybeans from Davenport to 

Shanghai and $111.80 to transport a metric ton from Mato Grasso to Shanghai. 

Brazil has closed the transportation cost gap by $57 or 73 percent per metric ton! 

Also of concern, Brazil and China just announced a joint $20 billion effort in which 

China will invest billions in Brazilian infrastructure projects. 

By numerous markers, America’s infrastructure is falling farther and farther behind. For instance, the United States has declined to 11th in infrastructure in the 

World Economic Forum’s most recent Global Competitiveness Report. We were seventh as recently as 2008. The American Society of Civil Engineers’ 2017 infrastructure report card doled out the following grades to American Infrastructure: Roads, 

‘‘D’’; Inland Waterways, ‘‘D’’; and Bridges ‘‘C+’’. I wouldn’t have fared very well 

bringing home a report card with those kinds of grades. 

A sense of urgency also is warranted given most of our inland waterway locks and 

dams were built in the 1930s and have far exceeded their 50 year design life. We’re 

in a high-stakes game of rolling the dice: 

• During the past decade, there has been a 700 percent increase in unscheduled 

work stoppages for repairs. 

• A recent University of Tennessee study (http://economics.ag.utk.edu/publications/logistics/EconomicImpactsInlandWaterwaysDisruptions092016.pdf) concluded that disruptions at Mississippi River Lock 25 would result in a loss of 

7,000 jobs and $2.4 billion in reduced economic activity. 

• Hurricane Katrina in 2005 also demonstrated the economic damage that results 

when the ability to ship on the inland waterways and ports is halted, as barge 

28 

rates increased by as much as 50 percent (to 900 percent of tariff) and basis 

values on corn declined 40¢ to 70¢ per bushel, and rippled temporarily throughout the country—affecting not just farmers located near the Mississippi River 

and the tributaries that feed into it. Higher transportation costs resulted in significantly lower prices paid to farmers, and complicated rail and truck movements, as well. 

We appreciate that Congress has begun to respond! Congress is to be commended 

for enacting Water Resources Development Acts (WRDA) in both 2014 and 2016 to 

help streamline inland waterway renovation projects, as well as consistently increasing operations and maintenance funding for locks and dams stewarded by the 

U.S. Army Corps of Engineers. President Trump also is to be applauded for recently 

visiting the Ohio River to put an unprecedented presidential spotlight on the dilapidated state of our locks and dams and the need to fix them. 

But to truly bring our waterways system in to the 21st century, a new approach 

is needed. Thus, as Congress develops priorities for an infrastructure package with 

up to $1 trillion in public and private funds, I’d like to take this opportunity to 

share several ideas on where we believe it could get the biggest bang for the buck: 

Priority No. 1: Supporting Stronger Federal Investment in U.S. Locks, 

Dams and Ports 

Currently, there exists a portfolio of 25 critical inland waterways modernization 

projects that need to be funded to modernize the system at a cost of $8.75 billion. 

This includes a project of utmost importance to American agriculture: The Navigation and Ecosystem Sustainability Program (NESP). NESP already has been authorized by Congress and includes construction of seven top-priority 1,200′ locks (LaGrange, Peoria, Upper Mississippi River Locks 20, 21, 22, 24 and 25) at the most 

congested locations on the Upper Mississippi River System and Illinois Waterway. 

In addition, the Harbor Maintenance Trust Fund (HMTF) which is supported via 

a 0.125% tax on the value of shipped cargo has a $9 billion surplus. Unlike the highway trust fund, the HMTF can only be drawn on when Congress makes an appropriation. We believe Congress should direct that these funds be spent to maintain 

U.S. ports and harbors, including dredging activities. We appreciate that Congress, 

through WRDA 2014, is directing that an increasing percentage of these funds be 

used for their intended purpose. 

Priority No. 2: Supporting the Existing Public-Private Partnership To Finance Renovation of the Inland Waterways Locks and Dams without 

Imposing Counterproductive, Inequitable and Ultimately Unworkable 

Tolling, Lockage or Tonnage Fees 

Since 1978, the inland waterways system has benefited from a successful publicprivate partnership through the Inland Waterways Trust Fund (IWTF). The barge 

and towing industry (but ultimately mostly the U.S. farmer) pays 50 percent of the 

cost of inland waterway construction and major rehabilitation projects, while Federal appropriations are used to finance the remaining 50 percent. 

The private-sector’s contribution is made through the assessment of a 29¢ per gallon diesel fuel tax paid into the IWTF. In the highly competitive global agricultural 

market, transportation costs typically cannot be passed on to the ultimate customer, 

so they are reflected primarily in the price paid for commodities at the point of production—the U.S. farmer. It’s important to emphasize that in 2014, U.S. farmers, 

agribusinesses and the barge industry raised their collective hands and successfully 

advocated that Congress approve legislation to increase this user fee by 45 percent 

to increase private-sector investment in the inland waterways system. 

Unfortunately, commercial users of the inland waterways locks-and-dams are the 

only private entities that pay into this trust fund, even though the benefits of the 

inland waterways are enjoyed freely by numerous other stakeholders, including recreational users, those who receive hydropower, municipal and agriculture water systems, and those who benefit from flood control. 

As this Committee is painfully aware, no effort to contribute more to deficit reduction or offer to have your user-fees raised to support the system goes unpunished. 

Perennial calls to impose lockage fees and tolling on the inland waterways date to 

the Clinton Administration. The Agricultural Transportation Working Group which 

is comprised of 40 diverse associations representing the ag value chain, including 

NGFA, believe this is a mistaken approach for several reasons. 

First, the waterways system differs from the highway system, where a driver can 

choose between the new capacity provided by a toll road or continue to rely on previously existing non-toll roads. Further, unlike highways, major beneficiaries of the 

inland waterways noted previously would not be subject to tolls. 

29 

We encourage Congress to continue its bipartisan opposition to such a concept. 

Imposing additional costs on those utilizing commercial barge transportation—on 

top of the 50 percent cost-share that farmers and the private sector already pays 

into the IWTF—would risk diverting traffic from the most efficient mode of transportation available to U.S. agriculture, further congesting U.S. highways and resulting in higher rail freight rates ultimately paid by farmers. 

In 2015, the Illinois Corn Growers Association conducted a study to examine alternative private financing options for Illinois Waterway Projects and determined 

that this could result in an additional user fee or lockage fee of $0.014 to $0.036 

a bushel. This means that one 15 barge tow carrying 875,000 bushels of corn could 

cost an additional $31,500 per lock. Again, this would be on top of the fuel tax industry already pays. 

As Congress and the Administration debate how to finance infrastructure projects, 

the NGFA believes the question should not be ‘‘how much can we extract from those 

who already pay?’’ but rather, ‘‘how can we get other beneficiaries of the system to 

support it financially?’’ That is the essence of equity and provides an opportunity 

to greatly modernize the inland waterways system to benefit all users. 

Finally, to enhance efficiency and reduce costs of upgrading the inland waterways, 

it will be important that any future funding mechanism be reliable and predictable. 

Projects that are plagued by stops and starts because of funding shortfalls create 

inefficiencies that dramatically increase total costs. 

Rural Roads and Bridges 

Rural America, the home of 60 million Americans, also relies heavily on roads, 

highways and bridges, which constitute the first step in transporting agricultural 

products from farm to market and provide access to education, jobs, health care and 

other social services, and encourage tourism and movement of goods and services. 

Transportation also is a critical factor in a company’s decision on where to locate 

new businesses. 

The nation’s rural areas account for 97 percent of America’s land mass and are 

home to the vast majority of the nation’s 2.2 million farms. As this Committee 

knows well, production agriculture, by necessity, is geographically dispersed because 

the sources of production cannot simply be relocated to be closer to customers. Without functioning rural road and bridges, farmers and ranchers cannot get their harvests to consumers both domestically or internationally. 

Roads and bridges that serve and connect the country’s rural areas face several 

significant challenges, including inadequate capacity to handle growing levels of 

traffic and commerce, heavier truckloads, limited connectivity, deteriorated road and 

bridge conditions, and a traffic fatality rate that is far greater than more urban 

roads and highways. 

Funding and Overall Condition 

Road construction and maintenance primarily is a function of government, with 

more than 80 percent of the financing derived from fuel taxes, other fees and tolls. 

Needs and demands for maintenance and construction of roads and bridges are outpacing current and projected funding, creating a need to identify additional funding 

sources. According to 2012 Federal data, 74 percent of bridges, 73 percent of the 4 million 

miles of public roads, and 33 percent of all vehicle miles traveled (VMT) are in rural 

areas. But only 44 percent of rural road mileage is eligible for Federal grants, with 

the rest maintained by state and local funding. Meanwhile,15 percent of the nation’s 

major rural roads consists of pavement rated in poor condition, while an additional 

21 percent is rated in mediocre condition. 

Of the more than 445,000 bridges in rural areas, only 43 percent are eligible for 

Federal aid. More than 20 percent of rural bridges are rated either structurally deficient or functionally obsolete. Combined, nearly 69,000 bridges on local and minor 

collector highways in rural areas (not eligible for Federal aid) either are structurally 

deficient or functionally obsolete. More than 32,000 bridges in rural areas that are eligible for Federal aid either are structurally deficient or functionally obsolete. 

Potential Solution for Rural Roads and Bridges 

To ensure rural Americans have access to adequate and safe bridges and roadways, Congress should explore prioritizing increases in Federal funding, and/or reclassification of rural roads and bridges to be eligible for funding. One concept that 

may warrant consideration is to develop a system of block grants with guidelines 

under which states and localities could prioritize those road and bridge projects that 

they deem most important. The NGFA would recommend that local rural and agricultural stakeholders be required to be consulted as part of a state’s deliberations 

to ensure that the needs of farmers, ranchers and rural communities are considered 

30 

fully. Congress also should direct agencies to account for the unique needs those 

rural roads and bridges present to ensure they are eligible for Federal grants and 

funding. Finally, identifying adequate long-term funding sources would provide certainty, enable better long-term planning, and improve efficiency in road maintenance and construction. 

Conclusion 

I’d close with a final thought. As you know, by 2050 the world will be challenged 

to feed nine billion people. If the United States maintains the status quo on maintaining our transportation infrastructure, it will fall far short of meeting that demand. The critical waterways projects I’ve discussed today will take several years 

to construct and complete. So, we cannot wait until the moment is upon us to get 

started. The road to feeding a growing country and world population will be met 

by looking forward, not through the rear-view mirror. Let’s not allow just under $9 

billion stand in the way of our ability to feed our country and the soon to be nine 

billion people around the globe. 

Thank you for this opportunity to provide our thoughts on the current state of 

the transportation supply chain and its infrastructure that is of vital importance to 

rural America. We look forward to working with this Committee, Congress and the 

Administration to pursue enactment of a comprehensive infrastructure package that 

will make a real, positive difference to rural communities, U.S. economic growth and 

job creation, and world food security for decades to come. 

The CHAIRMAN. Thank you, Mr. Calhoun. 

Mr. Wynn, 5 minutes. 

STATEMENT OF CURTIS WYNN, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, ROANOKE ELECTRIC COOPERATIVE; 

VICE PRESIDENT, BOARD OF DIRECTORS, NATIONAL RURAL 

ELECTRIC COOPERATIVE ASSOCIATION, AHOSKIE, NC 

Mr. WYNN. Thank you, Chairman Conaway and Ranking Member Peterson, for inviting me to testify today. My name is Curtis 

Wynn, and I am the President and CEO of Roanoke Electric Cooperative. We are a member-owned, not-for-profit distribution cooperative, and we serve 14,000 rural customers, in some of the poorest 

parts of our state. That is why above and beyond just delivering 

electricity, we have a calling to provide a broad set of services and 

support to help our community thrive. 

Among our biggest challenges, going forward, are adapting to 

changes and consumer demand, accommodating an evolving generation mix, and protecting against cyber threats. I am going to 

talk today about some investments that my co-op is making to 

modernize and meet these needs. 

I am aware that resources will be limited in the upcoming farm 

bills, but I believe a separate infrastructure package gives us a 

great opportunity to make further investments like these to ensure 

the success and stability of rural America in the 21st century. 

For decades, the Rural Utilities Service’s electric loan program 

has been the foundation of what we do, providing low cost financing to co-ops for installing and maintaining the grid. Today, RUS 

also helps us fund more advanced projects to make our systems 

more modern, efficient, and secure. 

We have enjoyed strong support for robust RUS funding because 

we are such a good investment for the Federal Government providing valuable services to our communities and reliably paying 

back our loans. 

We ask that you help us maintain that support. In the 21st century, robust communications infrastructure is just as important to 

31 

our business as are traditional assets like poles, wires, and power 

plants. 

My co-op is currently investing $4 million to lay a fiber communications backbone in our service territory. Our main motivation is 

to take care of our internal operational needs to make our system 

more efficient and secure. However, once this foundation is in 

place, there are lots of things we can do with it. One option could 

be providing broadband Internet to our customers’ homes. Many 

people in our region don’t have access to reliable Internet. That 

puts our consumers, schools, hospitals, and employers at a disadvantage. 

I believe it will take many different types of technologies, partnerships, and engagement from all stakeholders to address this 

challenge. As Congress thinks about infrastructure and telecommunications policy, we believe all potential providers who have 

a community need and a willingness to engage, including some 

electric cooperatives, should have access to a diverse set of tools to 

help bridge this digital divide. 

For years, electric co-ops across the country have provided information and advice to consumers to help them use electricity more 

efficiently and cost-effectively. Because we don’t have a profit motive, we have a unique opportunity to help our consumers use less 

energy and save money. For example, at Roanoke, we have a program called Upgrade to $ave, where we work with our member 

owners to make energy efficient retrofits in their homes, like adding insulation or replacing old HVAC units. 

Customers immediately began to save money without making 

any up-front payments. And by sharing the energy savings, we ensure full cost recovery for our cooperative. We can do all this 

through a $6 million loan from the USDA through a new energy 

efficiency and conservation loan program. 

In the first 18 months of the program, we worked with local contractors to retrofit over 200 homes with an average energy savings 

above 20 percent. That is after the repayment of the note. We also 

recently used a USDA Rural Energy for America Program grant to 

build, through our power provider, a community solar project. Now 

our members have the opportunity to purchase energy from these 

panels investing in clean, renewable energy, and lowering their 

monthly electric bills. 

Last, the Rural Economic Development Loan and Grant Program 

at USDA provides financing so that co-ops can partner with local 

schools, hospitals, emergency services, and businesses to fund 

projects that create jobs and meet our communities’ need. 

Since 2012, North Carolina has been involved with 99 REDLG 

projects that created over 2,600 jobs. Most of our country’s food, 

minerals, energy, and manufactured goods still come from rural 

areas. That is why the health of rural America should be of interest to all Members of Congress and to all Americans. 

You have a great opportunity and an infrastructure package to 

make needed investments that will address our unique challenges. 

We look forward to working with you, and thank you very much 

for this opportunity, Mr. Chairman. 

[The prepared statement of Mr. Wynn follows:] 

32 

PREPARED STATEMENT OF CURTIS WYNN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 

ROANOKE ELECTRIC COOPERATIVE; VICE PRESIDENT, BOARD OF DIRECTORS, 

NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, AHOSKIE, NC 

Thank you, Chairman Conaway and Ranking Member Peterson, for inviting me 

to testify today. My name is Curtis Wynn. I am the President and CEO of Roanoke 

Electric Cooperative headquartered in Aulander, North Carolina. I am also Vice 

President of the Board of Directors for the National Rural Electric Cooperative Association. Roanoke is a member-owned, not-for-profit, electric distribution cooperative 

serving around 14,000 residential, agricultural, commercial and industrial customers in northeastern North Carolina. Our system consists of over 2,000 miles of 

line (about seven members per mile) in seven counties. 

We serve some of the poorest, most rural parts of our state. But despite those 

challenges, we are doing some truly innovative work to improve the quality of life 

for our members. While our first priority is to deliver clean, safe, reliable, affordable 

electricity to our members, we have a calling to be more than just a poles, wires 

and electrons company. Our broader purpose is to provide the services and support 

that empower our communities to thrive. Rural electric cooperatives are much more 

than just electric utilities—we are the engines that drive economic opportunity 

across the heartland and to rural areas everywhere. I am proud of the role we play 

in these communities. 

More than ever, whether you live in a rural area or in a city, we are all connected 

in this country. Rural areas, in particular, still grow most of the food, generate 

much of the power, and manufacture many of the goods that this country consumes. 

When rural areas suffer, the country as a whole suffers. That’s why the state of 

rural infrastructure should be of interest to all Members of Congress, no matter 

what type of district you represent. 

Among our biggest challenges going forward are adapting to changes in consumer 

demand, accommodating an evolving generation mix, and protecting against cyber 

threats. I’m going to talk today about some investments that my co-op is making 

to modernize and meet those needs. I am aware that resources will be limited in 

the upcoming farm bill, but I believe a separate infrastructure package gives us a 

great opportunity to make further investments in these types of projects to ensure 

the success and stability of rural America in the 21st Century. 

Rural Utilities Service (RUS) 

In the early 1900’s, as urban areas began to electrify, rural areas lagged behind. 

Eventually, farmers and ranchers in remote areas took the initiative to form electric 

cooperatives and did it themselves. In the past 80 years, a lot has changed, but the 

same fundamental challenges still exist—how to affordably connect those few customers in low-density, high-cost rural areas. What was then called the Rural Electrification Administration (REA) is now the Rural Utilities Service (RUS) and it is 

as relevant today as it was back then. REA and RUS loans have helped build, expand, and improve the infrastructure across rural America necessary to provide 

power, deliver clean water, and deploy advanced telecommunications technologies to 

rural areas. 

Today, RUS loans help electric co-ops reduce costs and improve reliability for our 

members by financing basic maintenance like replacing poles and wires. But it also 

helps us fund projects to make our systems more modern, efficient, and secure. 

RUS depends on a yearly appropriation from the Agriculture Appropriations bill. 

We have historically enjoyed strong support for robust RUS funding in large part 

because we’re such a good investment for the Federal Government. The President’s 

Budget request for 2018 estimates that the Federal Government could earn up to 

$300 million in net revenue from RUS loans. We ask that you help us maintain that 

support. 

We also ask that you support policies that allow us to use RUS loans to address 

a broad set of co-op needs—whether for advanced utility communications, renewable 

generation, baseload generation, or for making environmental upgrades to existing 

generation. Just as the times have changed and the needs of rural America have 

changed, so too has the RUS loan program. We have appreciated working with the 

Committee over the years to help make the program more streamlined and efficient, 

and we look forward to exploring new ways to continue to improve the program. 

Modernizing the RUS loan program is good for both electric cooperative borrowers 

and taxpayers. The RUS annually reviews and approves billions of dollars of loans, 

and finding ways to more efficiently process those loans reduces burdens on taxpayers while meeting borrowers’ needs more efficiently as well. Another important 

financing option available to electric cooperatives is loans from cooperative banks. 

33 

Co-op banks add healthy competition and a diversity of sources of capital to the 

marketplace. We encourage you to continue that policy. 

Robust Communications Infrastructure 

In the 21st century, robust communications infrastructure is just as important to 

our business operations as traditional generation, transmission and distribution assets. This high-speed communications capability makes our system more efficient, 

it makes our grid more secure, and it has the capability to make our consumers 

more comfortable and productive. 

Roanoke Electric Cooperative is currently undertaking a $4 million project to lay 

a fiber communications ‘‘backbone’’ in our service territory. Our main motivation for 

bringing this broadband technology to the area is to take care of our internal, operational needs. As a result, this project will reduce outage frequency as well as response time to outages while better equipping Roanoke to help member-owners 

manage energy and reduce system losses. We want to ensure that all of our substations can communicate with one another in order that we can better predict and 

manage outages, protect our substations and metering equipment from vandalism 

and theft, and communicate with each individual member-owner about their usage. 

Once this foundation is in place, there are a lot of things we can do with it. One 

option we are currently studying is whether we can leverage this fiber backbone and 

partner to provide broadband Internet to our consumers’ homes. In a world of video 

streaming, telecommuting, video conferencing, online education, and telemedicine, 

connectivity is not a luxury. It’s a necessity. A connected home is also a more efficient, comfortable taking advantage of ‘‘smart’’ technologies like thermostats and hot 

water heaters which assist the cooperative in managing peak load and save money 

for our members. 

Unfortunately, many homeowners and businesses in our region do not have access 

to reliable Internet service. The absence of high-speed Internet denies our memberowners and others in the region access to all the amenities that most urban areas 

enjoy. It also discourages businesses from investing in our communities which results in missed job opportunities. 

Many comparisons are drawn between the lack of access to robust broadband 

service today and the need for electrification in rural areas 80 years ago—with the 

urban areas of the country well-served, and rural areas being left behind. We believe that many different types of solutions will be needed to help rural Americans 

keep pace with their urban counterparts. As Congress contemplates telecommunication and infrastructure policies, we believe that all potential providers including 

electric cooperatives should have access to a diverse set of tools to help bridge the 

digital divide. 

Innovation and Energy Efficiency 

Upgrade to $ave 

For years, electric co-ops across the country have provided information and advice 

to consumers to help them use electricity more efficiently and cost-effectively. As I 

mentioned before, because we don’t have a profit motive, we have a unique opportunity to help our consumers use less energy and save money. 

At Roanoke, we have a program called Upgrade to $ave where we work with our 

member-owners to make investments in energy efficiency in their homes that allow 

them to save money on their bills without making any up-front payments or incurring new debt obligation. In return, participating member-owners share the energy 

savings with the cooperative at a level that assures immediate financial savings for 

our participants and full cost recovery for our cooperative. In addition to improved 

comfort and saving money for our members, the program promotes local jobs by 

using local businesses and contractors to do these building retrofits. 

We can do all this because we received a $6M loan from the Rural Utilities Service through the new Energy Efficiency & Conservation Loan Program (EECLP). In 

the first eighteen months of the program, local contractors completed upgrades to 

over 200 homes with average estimated energy savings above 20%. Most of the 

projects involved air sealing, duct sealing, insulation, efficient lighting, and installation of high efficiency HVAC equipment such as heat pumps. 

In addition to generating energy savings, participants in Upgrade to $ave also 

generate spillover benefits such as reducing demand during periods of extreme 

weather. As a result, our cooperative benefits from lower wholesale costs for both 

peak demand and energy. We use some of the surplus benefits that accrue to all 

member-owners to pay for the cost of administering the program, which is an option 

open to all member-owners. 

34 

Community Solar 

We’re also proud to be partnering with several of our neighbor co-ops to install 

a 360 panel community solar project in our service territory. Our project was created in the same spirit that drove the creation of Roanoke Electric Cooperative. 

More than 75 years ago, electricity was out of reach for residents in our community. 

A group of people joined together to create our electric cooperative and power our 

lives. Today, solar energy is out of reach for a lot of people. Among other barriers, 

it can be expensive to set up and maintain. So we answered our members’ call to 

do something about it. 

Today, our members have the opportunity to purchase the energy output of these 

panels, investing in clean renewable energy and lowering their monthly electric 

bills. We think community solar has a lot of advantages for our members. For example, it can be a cost-effective alternative to installing new panels on your own home, 

and it provides options for renters who don’t own their own property. Our site is 

well suited for a solar installation, so you can be sure you’re getting the most out 

of the sun’s potential. And we take care of the maintenance. 

Today the North Carolina Electric Cooperatives and its consumer members support more than 2MW of community solar at 11 electric cooperatives throughout the 

state. To help make these projects more affordable, we have received four Rural Energy for America Program (REAP) grants from USDA. The total cost of all these 

projects was approximately $5.1 million and the REAP grants offset approximately 

20% of the cost, around $1 million. 

Microgrids 

A microgrid is a group of interconnected loads and resources connected to the 

main electric system, which can connect and disconnect from the grid. North Carolina’s electric cooperatives have the state’s first grid-interconnected microgrid on 

Ocracoke Island and another microgrid in development, the Butler Farms Microgrid. 

We partnered with several organizations, EPRI, Telsa, and Ecobee to implement the 

microgrid. 

The Ocracoke Island microgrid located off the outer banks is an exercise in community resilience, protecting the island that is often in the path of offshore storms, 

and can be used for demand response, energy arbitrage, and ancillary services in 

the PJM power market. The resources in the microgrid include a 3 MW diesel generator, a TESLA 500 kW/1 MWh battery, 15 kW of solar, and 300 Internet-connected consumer devices (thermostats and water heaters). These resources also can 

reduce reliance on the main power grid during times of high demand when the island reaches its peak population in the summer. It also serves as an opportunity 

to test the integration of this technology as the state’s electric cooperatives look to 

use the concept elsewhere. 

The Butler Farms microgrid is an opportunity to integrate swine-waste biofuel 

generation and solar existing on the farm to support the local community. With the 

addition of a Samsung 250 kW/750 kWh battery and distribution controls, the generator can continue to produce energy, even if the main grid has been disconnected. 

Additionally, another first for the state, up to 100 homes in the area can be supported during times of localized outages through these distribution controls. This 

utility-facing consumer microgrid will also be used for demand response to save consumers money when electricity is most expensive. 

The North Carolina Electric Cooperatives are working together on these innovative research projects in order to learn how these technologies can be integrated into 

our distribution systems, while continuing to provide affordable, reliable energy to 

our members. These demonstration projects with successful outcomes can later be 

integrated into the grid through multiple applications modernizing the electric system. 

Rural Economic Development Loans and Grants (REDL&G) 

No matter how successful you are at delivering electricity, if you don’t have an 

economy that supports good jobs, rural America will languish. Under the Rural Economic Development Loan and Grant (REDLG) program, USDA provides zero-interest loans to utilities (including electric co-ops), which, in turn, pass the funds 

through to local businesses and other groups that create jobs in rural areas. This 

positive cycle of business development can strengthen both the co-op and the local 

community by helping stabilize populations and the co-op’s customer base. Since 

REDLG is funded in part by the interest and fees paid by co-op borrowers, it’s a 

good deal for the Federal Government as well. 

North Carolina has utilized REDLG loans and grants better than any other state 

in the country. Since 2012, North Carolina electric cooperatives have used REDLG 

programs to partner with 99 projects for a total investment of nearly half a billion 

35 

dollars which have created over 2600 jobs. REDLG funding has been used for 

weatherization, school construction, libraries, public safety, medical facilities and 

equipment, industrial buildings and equipment, and infrastructure. 

For example, Energy United provided a $2 million loan to Davie County and $1 

million loan to the town of Mocksville which was used to provide infrastructure to 

support the recruitment of Gildan manufacturing. Gildan ultimately invested $116 

million in their new facilities at the site and created 292 jobs. 

Another example of how the REDLG program has benefited rural communities is 

the $950,000 loan made by Lumbee River EMC to the Puppy Creek Fire Department. The fire department is located in a rural area of Hoke County which has 

grown recently due to its location near military bases. Because the fire department 

didn’t have the ability to reach the upper floors of some of the newer, taller buildings, insurance rates were going up for everyone in the neighborhood. We were able 

to facilitate the purchase of a new ladder truck that could better service the community, bringing down insurance premiums for the entire community. 

Regulatory Reform 

Last, we believe electric cooperatives should have broad latitude to take necessary 

actions they need to take to meet their consumer demands. The cooperative model 

of local, democratic control makes us good stewards of our communities. The Federal 

Government should have a reasonable regulatory philosophy that recognizes that relationship. 

We support reforms to the National Environmental Policy Act (NEPA) and to the 

Endangered Species Act (ESA) to promote the development of rural infrastructure. 

In addition, streamlining Federal Government management practices on Federal 

lands will make it easier for electric co-ops to maintain safety and reliability by performing needed vegetation management to prevent threats to power lines and respond to emergencies. 

Conclusion 

We are a healthy nation because we have vibrant, bustling urban cities and because we have verdant, productive rural areas. Unfortunately, whether it’s infrastructure or jobs or access to health care, it seems that too often rural America gets 

the short end of the stick. You have an opportunity to address some of those disparities. 

Electric cooperatives enjoy a productive partnership with the Federal Government 

and with the communities we serve to promote the health of rural America. We look 

forward to continuing to work with you toward that important goal. Thank you 

again for the opportunity to testify here today. I’m happy to answer any of your 

questions. 

CHAIRMAN. Thank you, Mr. Wynn. 

Ms. Otwell, 5 minutes. 

STATEMENT OF JENNIFER L. OTWELL, CPA, VICE 

PRESIDENT AND GENERAL MANAGER, TOTELCOM 

COMMUNICATIONS, LLC, DE LEON, TX; ON BEHALF OF 

NTCA—THE RURAL BROADBAND ASSOCIATION 

Ms. OTWELL. Thank you, Chairman Conaway, Ranking Member 

Peterson, and other Members of the Committee. Thank you for inviting me here today to talk about the importance of rural 

broadband as part of rural infrastructure, how that infrastructure 

is built and maintained, and the needs of rural consumers. 

Totelcom recently built fiber to the only hospital in Comanche 

County, Texas, enabling countless important functions, such as 

sending CT scans and other diagnostic imaging to radiologists in 

faraway metropolitan hospitals. It is essential for our county seniors and other residents to have our hospital nearby, and that 

wouldn’t be possible without a high speed, high capacity broadband 

connection. This is one of many examples I have witnessed during 

my tenure at Totelcom of broadband making the rural way of life 

possible, to say nothing of the agricultural and energy production 

36 

and other rural goods and services that broadband makes more affordable and available to a global market. 

Simply put, broadband is now essential rural infrastructure, yet 

it is an expensive undertaking. Totelcom serves an area of around 

1,1822 miles, with an average of only 3.4 customers per square 

mile. You can do that math. That is not enough customers to recoup the cost of delivering broadband over such a large area. But 

59 percent of Totelcom’s customers have access to speeds of 10 

megabits or greater, and 29 percent of our customers now have access to speeds of up to 1 gigabit, thanks to our recently completed 

Fiber to the Home Project in the Town of De Leon. 

These results are similar to what other small rural telecom providers have achieved around the country, and none of it would be 

possible without support from the USF High-Cost Program, which 

helps rural carriers make the business case for providing the service and securing loans from USDA’s Rural Utilities Service, 

CoBank, and RTFC, which are among the very few lenders committed and willing to finance broadband-capable plants in rural 

America. 

Indeed, our U.S. loans and high cost USF support work in concert to help deploy broadband where it is not sustainable and improve it where it already is. For purposes of a Congressional infrastructure initiative, let me reiterate: The affordable financing is essential to rural broadband deployment, but it is not feasible without the presence of direct support for recovering the cost of providing the service. 

Providing rural broadband is an ongoing effort that requires sustained commitment. We cannot declare success just for the very 

preliminary act of connecting a certain number of locations. 

Congress was quite visionary in calling for reasonably comparable services and rates between rural and urban America in the 

1996 Telecom Act. The FCC was wise to follow this principle by 

drafting rules for USF that mandate robust networks that can be 

readily upgraded over time to meet increasing consumer demands 

and expectations. Anything less would deny rural consumers the 

educational, economic, healthcare, and public safety benefits of 

broadband that other Americans take for granted. 

While USF rules are designed to support robust networks, its 

high cost program budget currently is not as it has been under the 

same hard cap since 2011. Meanwhile, other USF program budgets 

have grown considerably. This hard cap is now driving consumer 

rates higher, deterring rural broadband investment, and even cutting USF support for investments already made. 

The artificially low high-cost budget is the greatest barrier to 

rural broadband deployment today. Because the USF high-cost program is designed well but under-funded, we encourage Congress to 

offset this shortfall via any infrastructure package. This would help 

address the funding shortfall and save time and resources that 

would otherwise go towards creating and administering a new program from scratch. 

Thanks to recent reforms, the high-cost program is already designed to put support where it is needed most and avoid wasteful 

overbuilding of existing networks by targeting very specific locations. Also, efforts to standardize and speed Federal land permitVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
37 

ting processes would free resources for broadband investment, and 

loan processes could be improved by allowing environmental and 

historical reviews to be conducted after funds are obligated but 

prior to disbursements. 

In short, the best funded, best planned networks may never fully 

deliver on their promise if they are caught in regulatory red tape 

and needless delay. While small rural carriers have done a remarkable job of leveraging available resources for broadband deployment, much work does remain. 

Fifteen percent of NTCA member customers don’t yet have access 

to 10/1 broadband, while 90 percent of Americans have affordable 

access to 25/3 service or greater. The broadband industry is eager 

to close this gap by working with Congress and the Administration 

on policy that helps to build and sustain broadband in rural markets that would not otherwise justify such investments and ongoing 

operations. 

Thank you for the honor of testifying today, and I look forward 

to your questions. 

[The prepared statement of Ms. Otwell follows:] 

PREPARED STATEMENT OF JENNIFER L. OTWELL, CPA, VICE PRESIDENT AND

GENERAL MANAGER, TOTELCOM COMMUNICATIONS, LLC, DE LEON, TX; ON BEHALF

OF NTCA—THE RURAL BROADBAND ASSOCIATION

Introduction 

Chairman Conaway, Ranking Member Peterson, and Members of the Committee, 

thank you for this opportunity to testify about the importance of broadband infrastructure to rural areas and how rural broadband networks are deployed and sustained. I am Jennifer Otwell, Vice President and General Manager at Totelcom 

Communications in De Leon, TX. My remarks today are on behalf of Totelcom, as 

well as NTCA—The Rural Broadband Association, which represents approximately 

850 rural community-based carriers that offer advanced communications services 

throughout the most sparsely-populated areas of the nation. 

NTCA members and companies like them serve just under five percent of the U.S. 

population spread across approximately 37 percent of the U.S. landmass; in most 

of this vast expanse, they are the only fixed full-service networks available. Small 

telecom providers connect rural Americans with the world—making every effort to 

deploy advanced networks that respond to consumer and business demands for cutting-edge, innovative services that help rural communities overcome the challenges 

of distance and density. Fixed and mobile broadband, video, and voice are among 

the services that many rural Americans can access thanks to our industry’s networks and commitment to serving sparsely populated areas. 

Totelcom is a local, community-based telecommunications provider with 39 employees serving a 1,1822 mile area with an average of 3.4 customers per square mile. 

But, 19 percent of our customers reside in just 22 miles, while the remaining 81 percent reside in the other 1,1802 miles—so the population density of the more rural 

areas is only 2.75 customers per square mile. We provide just over 4,000 total connections to customers, delivering voice services and broadband using a variety of 

methods. We employ fiber-to-the-home technology and traditional copper-based facilities to provide broadband to most customers, and even fixed wireless point-topoint broadband for the most remote portions of our service area. 

Our networks allow agricultural producers and other rural businesses to communicate with suppliers and sell to new markets, they enable education of our children 

on par with opportunities in urban areas, and they make our communities attractive 

destinations for people and businesses to relocate. In rural America, that translates 

into economic development that produces jobs, not only in agriculture, energy and 

other industries with a strong rural presence, but in the healthcare sector, and just 

about any other retail industry that requires broadband to operate. 

Unique Challenges of Rural Broadband Deployment 

Building broadband networks is capital-intensive and time-consuming; building 

them in rural areas involves a special further set of obstacles. The primary chalVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
38 

lenge of rural network deployment is in crossing hundreds or thousands of miles 

where the population is sparse and the terrain is diverse. 

To complicate further the unique rural challenges of distance and density, when 

crossing Federal lands or railroad rights-of-way in rural America, network operators 

must address environmental and historical permitting concerns or contractual obligations that can delay projects and increase their already high costs. Then, once 

networks are built, they must be maintained over those hundreds or thousands of 

miles—this requires technicians who regularly travel long distances to make service 

calls and customer service representatives trained to deal with questions about 

things like router and device configurations that were unimaginable for legacy ‘‘telephone companies.’’ 

And even the best local networks in rural markets are then dependent upon ‘‘middle mile’’ or long-haul connections to Internet gateways dozens or hundreds of miles 

away in large cities. Reaching those distant locations is expensive as well, and as 

customer bandwidth demands increase—moving from Megabytes to Gigabytes to 

Terabytes of demand per month per customer—so too does the cost of ensuring sufficient capacity to handle customer demand on those long-haul fiber routes that connect rural America to the rest of the world. 

Small telcos are eager to meet and overcome all of these challenges for the rural 

communities in which they live and serve, but it’s important that they have the resources and regulatory stability to do so considering the importance of broadband 

to the current and future success and quality of life of rural America. 

Broadband Is Essential Rural Infrastructure 

Rural Broadband Benefits the Entire U.S. 

Rural broadband has far-reaching effects for both urban and rural America, creating efficiencies in health care, education, agriculture, energy, and commerce, and 

enhancing the quality of life for citizens across the country. A report released last 

year by the Hudson Institute in conjunction with the Foundation for Rural Service 

found that investments by rural broadband companies contributed $24.1 billion to 

the economies of the states in which they operated in 2015. Of this amount, $17.2 

billion was the direct byproduct of the rural broadband companies’ own operations 

while $6.9 billion was attributable to the follow-on impact of their operations. 

The Hudson study also determined that while small telcos provide a range of telecommunications services in rural areas, much of the benefit actually goes to the 

urban areas where the vendors, suppliers, and construction firms that rural telcos 

use are often based. Only $8.2 billion, or 34 percent of the $24.1 billion final economic demand generated by rural telecom companies accrues to rural areas—the 

other 66 percent or $15.9 billion accrues to the benefit of urban areas. 

Additionally, the report found that the rural broadband industry supported nearly 

70,000 jobs nationwide in 2015 both through direct employment and indirect employment from the purchases of goods and services generated in connection with 

broadband deployment and operations. Jobs supported by economic activity created 

by rural broadband companies are shared between rural and urban areas, with 46 

percent in rural areas and 54 percent in urban areas. 

Immense Benefits for Consumers and Communities 

Beyond the direct economic impacts of broadband network investment and operations that I have just described, the broader socioeconomic benefits of broadband 

services for users and communities cannot be ignored. A Cornell University study, 

for example, found that rural counties with the highest levels of broadband adoption 

have the highest levels of income and education, and lower levels of unemployment 

and poverty. Access to healthcare is a critical issue for rural areas, where the lack 

of physicians, specialists, and diagnostic tools normally found in urban medical centers creates challenges for both patients and medical staff. Telemedicine applications help bridge the divide in rural America, enabling real-time patient consultations and remote monitoring, as well as specialized services such as tele-psychiatry. 

One study found that doctors in rural emergency rooms are more likely to alter 

their diagnosis and their patient’s course of treatment after consulting with a specialist via a live, interactive videoconference. 

In Hawkinsville, Georgia, rural provider ComSouth partnered with the county 

public school system to deploy telehealth equipment to connect the school nurses’ 

offices with physicians at Taylor Regional Hospital. Working with the Georgia Partnership for Telehealth, the hospital, the school system, and ComSouth facilitate better health care for students who might not otherwise be able to be seen by a physician in an area where parents can ill afford to miss a half or full day for a doctor 

visit. This is a very simple but elegant telehealth solution—the technologies 

39 

(broadband and the monitoring equipment) are not new, but ComSouth helped put 

the pieces together to improve student health and save everyone time and money. 

Other benefits accrue in the form of distance learning and commerce. A shortage 

of teachers in many areas of rural America means public-school districts rely on 

high-speed connectivity to deliver interactive-video instruction for foreign language, 

science and music classes. Broadband networks also enable farmers and ranchers 

to use the Internet to employ precision agriculture tools and gain access to new markets. 

Retail e-commerce has benefited tremendously from sales in rural America as 

well, where consumers may lack access to local retail outlets, but through the availability of rural broadband networks, can access a variety of shopping options. According to the Hudson Institute, rural consumers generated $9.2 billion in online 

sales in 2015 and if all rural Americans had access to broadband networks, the authors estimate that Internet sales would have been $1 billion higher. A recent Pew 

Study further finds that among those Americans who have looked for work in the 

last 2 years, 79 percent used online resources in their most recent job search and 

34% say these online resources were the most important tool available to them. 

Indeed, job creation appears to abound when fast, high-capacity broadband is deployed in a rural area. In Sioux Center, Iowa, a major window manufacturer recently built a 260,0002′ plant to employ 200 people. The company considered more 

than 50 locations throughout the Midwest, but selected Sioux Center in part because the rural broadband provider enabled this plant to connect with its other locations throughout the U.S. using a sophisticated ‘‘dual entrance’’ system that could 

route traffic to alternate paths, ensuring that the main headquarters 250 miles 

away and other facilities would remain connected. In Cloverdale, Indiana, a rural 

broadband provider met with developers and helped bring an industrial park to its 

service area. Powered by this provider’s broadband, the facility brought more than 

800 jobs to the area. In Havre, Montana, a rural broadband provider is partnering 

with a tribally-owned economic development agency to create a Virtual Workplace 

Suite and Training Center that is expected to create about 50 jobs. These stories 

are repeated throughout NTCA member service areas. 

Consumer Demand, Fiber, and Future-Proof Networks 

Despite these unique rural challenges, small rural telcos have made remarkable 

progress in deploying advanced communications networks. Based in the communities they serve, these companies and cooperatives are committed to improving the 

economic and social well-being of their hometowns through technological progress 

wherever possible. 

A survey of NTCA members conducted last year found that 49 percent of respondents’ customers are served via fiber-to-the-home (FTTH), up 20 percent from 2013. 

Twenty-nine percent of customers are served via copper loops, 15 percent cable 

modem, six percent fiber-to-the-node (FTTN), 0.5 percent fixed wireless, and 0.1 percent satellite. Due in no small part to increased fiber deployment, rural customers 

have access to faster broadband speeds. Per last year’s survey, 85 percent of NTCA 

members’ customers can purchase broadband at speeds of 10 Mbps or higher. Seventy-one percent can now access speeds above 25 Mbps. 

Fifty-nine percent of Totelcom’s customers have access to 10 Mbps or greater service. The remaining forty-one percent are served by long local loops that provide 1 

to 6 Mbps service. 

Totelcom recently completed its first fiber-to-the-home buildout in the town of De 

Leon, Texas. Due to that and other Fiber to the Node construction projects used to 

push high speed connectivity further into the rural areas, 29% of Totelcom’s customers now have access to speeds up to 1 Gigabit. We work with our customers on 

an individual basis to find solutions to their broadband needs. 

Totelcom also serves many important community anchor institutions, including a 

rural hospital and related EMS services, a low-income government medical clinic 

that serves three area towns, three school districts, two public libraries and nine 

public safety entities, including police and rural volunteer fire departments. In 2015, 

Totelcom built fiber to a new wind power facility, which currently operates 87 wind 

turbines that generate enough energy to power 50,000 homes in Texas each year. 

Totelcom also operates our own ‘‘genius bar’’ in the form of the Totelcom Learning 

Center, open weekly to assist customers in a one-to-one setting in a comfortable environment. Customers can bring in their electronic devices and seek assistance with 

email, saving and sending pictures, and even social media. 

As we look to future data needs of our customers and our communities, we have 

taken aggressive steps to focus on the anticipated increase in usage, including establishing a future-proof connection to a statewide fiber network that provides our middle-mile transport. This puts our customers in a great position as data needs grow, 

40 

as we have seen our average data usage increase over 750% within the last 5 years. 

Due to this demand, we continue to employ new technology in our fiber-to-the-node 

and copper networks to meet demand, but also continue to deploy fiber. The speed 

and sustainability of deployment, however, will depend on both reasonable access 

to capital to finance construction and the availability of USF support to make sure 

user rates on these rural networks, once upgraded, are not astronomical and 

unaffordable. 

Much Progress, but Much More Work to Do 

Despite the progress discussed above, many parts of rural America still need better connectivity. Fifteen percent of NTCA member customers don’t have access to 

even 10/1 broadband. In a country where the Federal Communications Commission 

(FCC) has indicated that 90 percent of Americans already have affordable access to 

25/3 Mbps service and many urban consumers and businesses benefit from 100 

Mbps or Gigabit speeds, broadband access in rural America lags behind urban areas 

despite the best efforts, innovation, and entrepreneurial spirit of NTCA’s members. 

And the price of broadband for the consumer must be considered too. As I will 

discuss later in this testimony, it does no good to build a network if no one can afford to make effective use of the services offered atop it. Federal law recognizes this 

by mandating that the Federal Universal Service Fund (USF) ensure reasonably 

comparable services are available at reasonably comparable rates in rural and 

urban areas alike. Yet, in many of the rural areas served by smaller providers 

today, this mandate is simply failing to be achieved, as the combined effect of recent 

USF reforms and USF budget cuts have resulted in prices that are tens or even 

hundreds of dollars more per month for rural Americans than urban consumers. 

Finally, once a network is built, it is not self-effectuating, self-operating, or selfsustaining. Services must be activated and delivered atop it, maintenance must be 

performed when troubles arise, and upgrades must be made to facilities or at least 

electronics to enable services to keep pace with consumer demand and business 

needs. In addition to these ongoing operating costs, networks are hardly ever ‘‘paid 

for’’ once built; rather, they are built leveraging substantial loans that must be repaid over a series of years or even decades. 

All of these factors make the delivery of broadband in rural America an ongoing 

effort that requires sustained commitment, rather than a one-time declaration of 

‘‘success’’ just for the very preliminary act of connecting a certain number of locations. Particularly when one considers that even where networks are available many 

rural Americans pay far more for broadband than urban consumers, it becomes apparent that the job of really connecting rural America—and, just as importantly, 

sustaining those connections—is far from complete. The rural broadband industry 

and our nation as a whole has a great story of success but we also have much more 

work to do—and this is where public policy plays such an important role in helping 

to build and sustain broadband in rural markets that would not otherwise justify 

such investments and ongoing operations. 

A Holistic Approach to Broadband Infrastructure 

The critical role of communications infrastructure is as necessary to the present 

and future needs of rural America as is electricity and other infrastructure that enables the ordinary course of a thriving society. The current Administration expressly 

recognized the importance of advanced communications networks by including ‘‘telecommunications’’ within an initial list of infrastructure priorities prior to taking office, followed by over 100 Members of Congress writing to the President urging him 

to include broadband within any broader infrastructure initiative. President Trump 

indeed recently pledged to include measures to spur rural broadband in his infrastructure proposals. NTCA applauds the apparent consensus already achieved with 

respect to making broadband an infrastructure priority, and welcomes the opportunity to participate in a further discussion on how best to tackle this priority. 

Before turning to specific thoughts on paths forward, it may make sense first to 

outline a few key objectives for consideration with respect to any broadband infrastructure plan: 

• First, the plan should at least account for, if not specifically leverage, what is 

already in place and has worked before. Creating new programs from scratch 

is not easy, and if a new broadband infrastructure initiative conflicts with existing efforts, that could undermine our nation’s shared broadband deployment 

goals. 

• Second, there should be meaningful expectations of those who leverage any resources made available through such an initiative. Looking to providers with 

proven track records in delivering real results makes the most sense, but whomever receives any support should be required to show clearly that they used 

41 

those resources to deliver better, more affordable broadband that will satisfy 

consumer demand over the life of the network in question. 

• Third, any broadband infrastructure plan needs to be carefully designed and 

sufficiently supported to tackle the challenges presented. This is a question of 

both program focus and program scope. 

» From a focus perspective, any infrastructure plan should aim toward getting 

broadband where it is not and also sustaining it where it already is; deployment of duplicative infrastructure in rural areas that are uneconomic—and 

may not even support a single network on their own—will undermine the sustainability of existing network assets. 

» From a scope perspective, deploying and sustaining rural broadband is neither cheap nor easy; we obviously need to recognize that finite resources are 

available to address any number of priorities, but any plan that calls for 

broadband deployment—especially in high-cost rural America—should match 

resources to the size of the problem to be solved. 

• Fourth, any resources provided as part of an infrastructure plan should look 

to get the best return on such long-term investments. For networks with useful 

lives measured in decades—especially private investments that leverage Federal 

dollars—this should mean the deployment of infrastructure capable of meeting 

consumer demands not only today and tomorrow, but for 10 or 20 years. Putting 

resources toward infrastructure that needs to be substantially rebuilt in only a 

few years’ time could turn out to be Federal resources wasted—and still risk 

leaving rural America behind. 

• Fifth, while the economics of deployment are an essential component of any infrastructure plan, a comprehensive approach to promoting deployment is required. Barriers or impediments to broadband deployment must also be addressed as part of any holistic plan to promote and sustain infrastructure investment. Put another way, the best-funded, best-planned networks may never 

deliver fully on their promise if they are caught in regulatory red tape and 

needless delay. 

Universal Service Fund and Rural Broadband Infrastructure 

Any potential path forward with respect to broadband infrastructure policy should 

be evaluated against such criteria. As one example of a policy with promise, and 

as NTCA first outlined in a December 2016 letter to the National Governors Association when that group was evaluating infrastructure priorities in collaboration 

with the Presidential transition team, strong consideration should be given to 

leveraging and supplementing the existing high-cost Federal Universal Service 

Fund (‘‘USF’’) programs under the oversight of the Federal Communications Commission (the ‘‘FCC’’) as a primary means of implementing a broadband infrastructure initiative. 

The USF programs have been in place for years, and the FCC recently reoriented 

them under a ‘‘Connect America Fund’’ (‘‘CAF’’) banner to promote broadband in 

high-cost rural areas. The high-cost USF/CAF programs are essential both in justifying the business case for broadband infrastructure investment in the first instance, and then in keeping rates for services affordable atop the networks once 

they are built. 

The FCC’s high-cost USF programs therefore could represent a logical focal point 

for future broadband infrastructure initiatives. The FCC is the nation’s expert agency in telecom policy, and it is already tackling the broadband challenges described 

above with respect to availability and affordability. Moreover, recent USF reforms 

adopted by the FCC have sought to: (1) reorient the programs toward broadband, 

(2) ensure funding is targeted to where it is needed (i.e., to places where the market 

does not enable service delivery on its own), and (3) define what the FCC considers 

an efficient level of support in each area. 

The reformed program rules now compel significant accountability, to the point 

that support recipients must meet specified deployment obligations and geocode new 

locations to which they deploy broadband leveraging USF support. The FCC is also 

working to finalize rules that make USF resources in wide swaths of rural America 

available for companies of all kinds—cable companies, traditional telcos, wireless 

Internet Service Providers, and satellite providers—to leverage in making the business case for rural broadband investment and service delivery. 

Although some implementation efforts remain ongoing and some questions remain 

outstanding, and while some minor conforming changes would likely be needed to 

implement any resources available as part of a new broadband infrastructure initiative, it would seem more straightforward to coordinate any new initiative as a supVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00045 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
42 

plement to such existing programs than to stand up an entirely new program from 

scratch and then attempt ‘‘on the back end’’ to coordinate that new program with 

ongoing efforts. Indeed, as NTCA has recently described in filings at the FCC and 

elsewhere, additional broadband infrastructure resources, if flowed through the 

high-cost USF programs, could achieve immediate and compelling effects given significant and troubling current budget shortfalls in those programs. 

USF High-Cost Program Budget 

Unfortunately, these otherwise very effective programs are significantly underfunded to achieve their goals as designed, relegating tens of thousands of rural 

Americans to lesser broadband than their urban counterparts (or no broadband at 

all), and leaving millions of other rural Americans paying tens or even hundreds of 

dollars more per month than their urban counterparts do for the same broadband 

services. Such impacts undermine the benefit of building rural broadband infrastructure in the first instance, as well as hindering the value of broadband as a component of a broader economic development strategy. They put at serious risk the 

very ability of our nation to achieve the universal service mission articulated by 

Congress in Communications Act Section 254 for millions of rural consumers and 

businesses—and they will undermine the viability of a broadband infrastructure initiative if not addressed up-front. 

While the Federal Communications Commission (FCC) thankfully took steps to 

provide some level of additional funding earlier this year within the fixed overall 

USF budget for a subset of carriers that elected model-based High-Cost USF support, the funding was insufficient to achieve the goals of the model the FCC designed. An additional $110 million per year is needed to fully fund an alternative 

model that the FCC created to promote broadband deployment. Because of this 

budget shortfall, 71,000 rural locations will receive lower-speed broadband, and 

nearly 50,000 may see no broadband investment at all. 

And the problem is even more dire for those small carrier recipients of High-Cost 

USF that could or did not elect model support. The High-Cost USF has been locked 

at the same budget level overall since 2011, and a lower budget target first adopted 

in 2011 for smaller carriers within that overall budget total is now being enforced 

via a strict budget control mechanism that threatens to wreak havoc on consumer 

rates and network investment. 

Under this tightly constrained USF budget, over the next 12 months, small rural 

network operators will be denied recovery of $173 million in actual costs for private 

broadband network investments that these carriers have already made. In other 

words, small rural network operators and the customers they serve will need to 

come up somehow with $173 million to pay for broadband investments that the USF 

program would have supported just a year ago—and that the rules would still provide for recovery today via USF had it not been for arbitrary ‘‘haircuts’’ made to 

enforce an artificial budget target adopted 6 years ago when the program was oriented toward voice services only. 

Real World Impacts of USF High Cost Budget Cuts 

Because of these support cuts, rural network operators are already increasing 

rural broadband rates for consumers and cutting back on future infrastructure investments. NTCA reports, for example, that one member telco has indicated it cannot justify seeking a $26 million loan to build high-speed broadband infrastructure 

due to the USF cuts; a project that would have delivered approximately 1,000 miles 

of fiber to over 7,000 rural customers is now on indefinite hold. Similarly, due to 

the USF budget cuts, a cooperative in the upper Midwest will put several 2018 new 

construction projects on hold worth several million dollars; these projects would 

have upgraded or delivered broadband for the first time to approximately 500 rural 

consumers and businesses, but the company now needs to scale back future investment because the USF cuts are taking away millions of dollars that were counted 

upon for investments already made in the past. In Mississippi, a small rural provider has been forced to hold off indefinitely on plans for future investments due 

to the USF budget concerns, instead making minimal investments just to keep existing network plant operational rather than upgrading that network for higher-speed 

broadband that would help those areas thrive. In Nebraska, a small company with 

only 12 employees that just recently completed a significant fiber-to-the-home 

project has declined to fill four open positions—effectively cutting its workforce by 

25%—because of concerns with declining USF support and its impact on the ability 

to pay for the network construction already completed. And in Iowa, a small carrier 

has not been able to lower its prices for standalone broadband because the USF 

budget cuts are effectively wiping out any support for such connections, despite the 

intention of the reforms and the repeated calls for such a fix from Congress. 

43 

All of these effects translate to one conclusion—the USF budget cut is hindering 

recovery of prior private investments, deterring future investments, driving up consumer prices, and hurting job creation. These are all directly contrary to the stated 

goal of a broadband infrastructure initiative, and highlight how predictable and sufficient USF is a condition precedent to the success of any such initiative. 

Unpredictability of USF High Cost Support 

Perhaps the most troubling aspect of this budget control is that it not only cuts 

support that the rules indicate should be available, but it does so in unpredictable 

ways. For the last 4 months of last year, the budget control was 4.5% on average; 

for the first 6 months of this year, it rose to 9.1% on average. Now, as of July 1, 

the budget control will on average reduce USF support by 12.3% for the next 12 

months. As if the support losses for investments already made were not bad enough, 

this lack of predictability makes it even harder to justify building going forward. 

If a company does not know whether the budget control will be 5% or 10% or 20% 

next year—and given the growth trends, all we can guess is that the budget control 

will grow—that company cannot make informed decisions to invest in capital-intensive broadband infrastructure. If it does not get fixed soon, we will be looking at 

years of lost rural broadband investment to the detriment of millions of rural Americans. Rather than creating new programs from scratch or taking flyers on untested 

theories of broadband deployment, why not use a program that has a proven track 

record and has just been improved in recent years? Why starve that program’s 

budget while throwing dollars at new initiatives that might not work or, worse still, 

might conflict with this proven program? If rural broadband is really a priority, good 

public policy would indicate we should be building upon what has worked to promote it, rather than neglecting it. 

Congressional Support for Addressing High Cost Budget 

It’s not just NTCA that is concerned about the USF budget shortfall. In May 

2017, nearly 170 Members of Congress—including 22 Members of the House Agriculture Committee—wrote to the FCC expressing serious concern about how the 

USF budget shortfalls will undermine private infrastructure investment and consumer rates. This letter demonstrated the shared bipartisan interest in prompt action on this issue, and a window of opportunity exists. We are hopeful that with 

continued Congressional interest and leadership we can see these issues addressed, 

and the promise of last year’s USF reforms can be realized by the millions of rural 

consumers served by smaller rural network operators. 

Benefits of Shoring Up USF High Cost Program 

Providing additional resources to allow the FCC’s cost models and competitive bidding programs to function as designed could yield measurably improved delivery of 

broadband to tens of thousands of additional locations at higher speeds, and help 

deliver service to many more who currently face the prospect of no broadband at 

all. Industry estimates show that 71,000 more households would be the beneficiaries 

of better broadband infrastructure if the FCC’s cost model were funded as designed, 

while 47,000 households are currently at risk of receiving no broadband at all due 

to a lack of sufficient support. 

Meanwhile, in other rural areas, additional resources could mitigate the fact that 

millions of rural consumers are still forced to pay tens or even hundreds of dollars 

more per month for standalone broadband than their counterparts in urban areas— 

despite the fact that hundreds of Members of Congress wrote to the FCC in 2014 and 

again in 2015 expressly asking for this concern to be resolved. 

A recent survey of NTCA member companies revealed that the average respondent estimates charging $126 per month for standalone broadband under the budget 

control—far more than most rural consumers could afford. Further, the average response predicted charging only $70 per month for standalone broadband if the budget control were not in place and carriers received support for investments under program rules. These numbers reveal that the budget control is preventing the High 

Cost program from helping rural providers offer reasonably comparable services and 

rates as called for in the Communications Act. 

From an infrastructure perspective specifically, it is far harder to justify future 

investments in broadband networks when consumers face prices such as these and 

cannot reasonably afford the services once delivered. These are concerns common to 

many rural consumers, and they are particularly acute of course in areas with significant rural poverty levels and Tribal areas. 

The FCC’s various high-cost USF programs—both the CAF II initiative and the 

programs that enable service delivery in rural areas served by smaller businesses— 

therefore offer a ready-made platform that, with additional resources but with very 

44 

little additional ‘‘heavy lifting’’ or process, could ‘‘hit the ground running’’ and yield 

immediate, measurable benefits for rural consumers. 

Other options for implementing a broadband infrastructure initiative could include alternative grant or capital infusion programs through other agencies, comparable to what several states have used to address ‘‘market failure areas’’—places 

where the business case for investment is difficult, if not impossible, to make without additional resources. At the same time, creating such programs would require 

more administrative effort than leveraging existing programs, and the rules for any 

such new program must still be informed by the objectives I first articulated above 

and any ‘‘lessons learned’’ from similar prior efforts at the Federal and state levels. 

For example, as a matter of program integrity and to ensure the most efficient possible use of resources, it would be necessary to ensure such a capital infusion program is carefully coordinated with the existing USF programs, among other things. 

And although some have alternatively touted tax incentives as offering promise— 

and while there are certainly areas in which such incentives might help—such 

measures are unlikely to make a material impact in most rural areas where distance and density make it difficult, if not impossible, to justify a business case for 

infrastructure investment to start. 

Rural Utilities Service Telecom Financing 

The Strength of RUS Experience 

Deploying a communications network in a rural area requires a large capital outlay due to the challenges of distance and terrain. The number of rural network 

users (as compared with more densely-populated urban areas) is too small to pay 

the costs of deployment and ongoing operations through customer charges. As Congress considers the details of legislation to promote infrastructure deployment, it’s 

important to note that USDA’s Rural Utilities Service (RUS) has long played a crucial role in addressing rural broadband challenges through its telecommunications 

programs that finance network upgrades and deployment in rural areas. 

Since the early 1990s, the RUS telecom programs have financed advanced network plant at a net profit for taxpayers and helped deploy state-of-the-art networks 

to rural Americans left behind by providers unable or unwilling to serve low-population-density markets. With rare exception, RUS, CoBank and RTFC are the primary lenders that small rural providers can turn to for outside financing. Not only 

does RUS help rural America remain connected, its Broadband Loan & Guarantees 

program and traditional Telecommunication Infrastructure Loan & Guarantees program make loans that must be paid back with interest—creating a win/win situation for rural broadband consumers and American taxpayers. 

RUS and USF Work in Concert 

While RUS lending programs finance the substantial up-front costs of network deployment, the USF High Cost Fund helps make the business case for construction 

and sustains ongoing operations at affordable rates. More specifically, USF by law 

aims to ensure ‘‘reasonably comparable’’ services are available at ‘‘reasonably comparable’’ rates. Not to be confused or conflated, RUS capital and ongoing USF support serve distinctly important, but complementary rather than redundant, purposes 

in furthering rural broadband deployment. The availability of USF—the ability to 

make sure that consumers can actually afford to buy services on the networks once 

built—is so essential to the RUS telecom loan calculus that uncertainty in the Federal USF program in recent years has hindered some of the success, momentum, 

and economic development otherwise and previously enabled by the RUS telecommunications programs. 

Farm Bill Considerations 

Apart from infrastructure legislation, the pending expiration of the current farm 

bill affords opportunity to review the farm bill Broadband Loans & Loan Guarantees 

program that was first authorized in the 2002 Farm Bill. Each subsequent farm bill 

has made extensive reforms to the program with the goal of greater accountability, 

efficiency, and effectiveness. Two rounds of program reforms in less than 15 years— 

the first of which was significantly delayed by the ARRA BIP program’s use of the 

Broadband Loan Program mechanism—means that the Broadband Loan Program 

has been almost continuously ‘‘under construction’’ since its inception, rendering the 

program inaccessible to borrowers for long periods of time. While the program isn’t 

perfect, it may be helpful to simply let borrowers use the Broadband Loan Program 

in current form and become familiar with it for a few years before undertaking another extensive reform effort. 

NTCA urges the Committee to continue to support the RUS Broadband Loan program that is subjected to the farm bill reauthorization process at or above current 

45 

funding levels as you formulate recommendations. Furthermore, we urge the Committee to continue its long history of support for the Telecommunications Infrastructure and Community Connect programs that are also vital to the ongoing deployment and maintenance of advanced communications infrastructure throughout rural 

America. 

The Broadband Opportunity Council (BOC), which includes USDA as a member, 

released a report in September 2015 that recommended authorizing more USDA 

programs to make grants and loans for broadband infrastructure. The BOC’s January 2017 progress report affirmed this recommendation. While more resources for 

rural broadband deployment are needed, involving more government entities and 

programs in broadband financing should be undertaken cautiously to avoid duplicating efforts and undermining a coherent, cohesive approach to financing and then 

sustaining rural broadband networks. 

Infrastructure Investment and Barriers to Deployment 

Infrastructure investment depends not only on financing but also on prompt acquisition or receipt of permissions to build networks. Barriers or impediments to 

broadband deployment must also be addressed as part of any holistic plan to promote and sustain infrastructure investment. Such roadblocks, delays, and increased 

costs are particularly problematic for NTCA members, each of which is a small business that operates only in rural areas where construction projects must range across 

wide swaths of land. 

Permitting and access, particularly with respect to Federal lands, can present a 

significant impediment to the deployment of rural broadband infrastructure. Navigating Byzantine application and review processes within individual Federal landmanaging and property-managing agencies can be burdensome for any network provider, but particularly the smaller network operators that serve the most rural 40 

percent of the U.S. landmass. The review procedures can take substantial amounts 

of time, undermining the ability to plan for and deploy broadband infrastructure— 

especially in those areas of the country with shorter construction seasons due to 

weather. 

The lack of coordination and standardization in application and approval processes across Federal agencies further complicates the deployment of broadband infrastructure. While not specifically regarding Federal lands, the terms of local franchises, pole attachments, and railroad crossings can also create substantial costs 

and concerns in deploying broadband infrastructure. Government at all levels—state 

and local, counties, tribal lands, and Federal—should work collaboratively to harmonize their process to expedite placement of facilities. 

These issues significantly affect broadband network operators and consumers. In 

Wyoming, the Bureau of Land Management (BLM) state office adopted a unique 

bonding policy and application process that appeared to equate deployment of 

telecom facilities with installation of pipelines transporting hazardous substances, 

dramatically increasing the application burdens and potential costs. In California, 

the U.S. Forest Service waited months to begin work on environmental reports for 

a small rural provider’s broadband deployment and then refused a temporary construction permit, costing the carrier most of the 2017 construction season and delaying the project into next year. In Utah, carriers have faced construction delays due 

to inter-agency permitting disagreements between the BLM and the U.S. Department of Transportation. From my experience at Totelcom, I can attest that when 

building new fixed wireless towers for deployment, the cost of the various permits 

and approvals normally runs higher than the actual construction of the tower. 

We have seen much agreement for some time now on solutions to simplifying the 

administrative barriers to deployment. The standardization of application, fee and 

approval policies and procedures across Federal land-managing and property-managing agencies to the extent possible should be a high priority. The Senate MOBILE 

NOW (S. 19) bill contains changes that should be considered for near-term implementation on Federal lands, such as improved ‘‘shot-clock’’ measures, while the 

FAST Act (P.L. 114–94) included sound reforms that should be extended to smaller 

projects as well. Such actions would enable smaller operators to remain focused on 

providing high-quality broadband service to their customers rather than dealing 

with onerous regulations. 

FCC Chairman Ajit Pai’s ‘‘Digital Empowerment Agenda’’ contains many thoughtful suggestions on how ‘‘to make it easier for [Internet Service Providers] to build, 

maintain, and upgrade their networks,’’ ranging from greater scrutiny of local franchising regulations to ensuring reasonableness in the costs for pole attachments. 

Chairman Pai’s formation of a Broadband Deployment Advisory Committee also represents a meaningful step in evaluating and taking real action on these issues. ConVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00049 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
46 

tinued progress in consideration and implementation of such ideas must be seen as 

an essential component of a holistic broadband infrastructure initiative. 

Finally, though rural telcos have long enjoyed productive working relationships 

with RUS, there is always room for improvement. Small carriers typically spend 

about 2 years and about $250,000 securing loan approval from RUS. Some providers 

would love to take advantage of RUS’s low rates, but the procedural barriers to borrowing from RUS send them to private lenders that offer higher rates. RUS could 

make its processes more user friendly and free up resources for broadband deployment with loan sequencing reforms that would allow borrowers to delay costly reviews until a loan is approved, but before funding is released. 

Conclusion 

Robust broadband infrastructure is crucial to the current and future success of 

rural America. But the characteristics that enable the unique beauty and enterprise 

of rural America make it very expensive to deploy advanced communications services there. Our nation’s small, rural telecom providers are deploying faster 

broadband throughout their service areas, but no carrier—regardless of size—can 

deliver high-speed, high-capacity broadband in rural America without the ability to 

justify and then recover the initial and ongoing costs of sustaining infrastructure 

investment in high-cost areas. 

A legislative infrastructure initiative offers a unique opportunity to provide the 

resources needed to make these investments, and mechanisms that ensure efficiency 

and accountability in the expenditure of funds are already in place. Our industry 

is excited to participate in this conversation regarding broadband infrastructure initiatives, and we look forward to working with policymakers and other stakeholders 

on a comprehensive infrastructure strategy to ensure that all Americans will experience the numerous agricultural, economic, health, and public safety benefits of 

broadband. 

Thank you for the opportunity to testify, and for the Committee’s commitment to 

creating an environment conducive to broadband infrastructure investment in rural 

America. 

The CHAIRMAN. Thank you, Ms. Otwell. 

Mr. Macmanus for 5 minutes. 

STATEMENT OF BRIAN E. MACMANUS, P.E., GENERAL 

MANAGER, EAST RIO HONDO WATER SUPPLY 

CORPORATION, RIO HONDO, TX; ON BEHALF OF TEXAS 

RURAL WATER ASSOCIATION; NATIONAL RURAL WATER 

ASSOCIATION 

Mr. MACMANUS. Good morning, Chairman Conaway, Ranking 

Member Peterson, and Members of the Committee. Vice Ranking 

Member Vela, thank you for your kind introduction. 

It is an honor to testify before you on the drinking water and 

wastewater infrastructure needs and concerns for rural America. I 

am Brian Macmanus, and I serve as the General Manager of the 

East Rio Hondo Water Supply Corporation in the Rio Grande valley of Texas. 

In 1979, East Rio Hondo began construction of its potable water 

system with our first USDA Farmers Home Administration loan of 

$1,100,800 to serve 975 customers. These customers were farmers, 

ranchers, rural, and colonia residents who were utilizing a mix of 

contaminated and non-potable water sources. 

The enormous cost to start a water system over such vast rural 

areas was not a possibility without the grants, low-interest loans, 

and 40 year terms that USDA funding made possible. 

The dollar value of the current infrastructure needs for water 

and wastewater in rural America can be tied directly to the current 

USDA rural water application backlog of $2.5 billion for almost 

1,000 pending applications. 

47 

East Rio Hondo currently has an application pending for approxi- mately $4.5 million for a new, 1 million gallon elevated water storage tank. This backlog truly represents my utility and rural and 

small community water infrastructure projects throughout the 

country. 

Why does rural America water and wastewater infrastructure 

matter to the average American? It is really simple. First, the people living in rural America produce the food, fuel, and fiber products for our entire country, and depend on safe and clean water to 

maintain their health and their community’s economy. Second, all 

American citizens depend on safe drinking water in rural America 

for the safety of their food supply as it takes clean, potable water 

to wash and process the fruits, vegetables, and meats at packaging 

facilities in rural America. Third, the wastewater treated and discharged by rural American communities is likely the drinking 

water source for the next community downstream. Although small 

drinking water systems outnumber large water systems ten to one, 

they still have a minority of the country’s population, often at a 

much higher cost per household. 

As a prime example, East Rio Hondo has constructed a UV light 

disinfection treatment process at our surface water treatment plant 

to inactivate cryptosporidium, which was detected in our raw water 

source. This project cost East Rio Hondo approximately $1.5 million 

in capital construction, or $191 for each and every connection in 

our system. 

Lack of economy of scale is also demonstrated by East Rio Hondo 

serving 7,850 connections with 466 miles of pipe, equivalent to 16.8 

connections per mile. Much larger urban utilities can have hundreds of equivalent connections per mile of pipe, and more easily 

spread infrastructure cost over their larger customer base. USDA 

funding is what continues to make growth and compliance projects 

truly affordable to rural America. 

In 2017, there are still rural communities in the country that do 

not have access to safe drinking water or sanitation due to the lack 

of population density or lack of funding. 

My associate, Finley Barnett, General Manager of S.U.N. Water 

Supply Corporation in Merkel, Texas, is seeking USDA funding for 

the expansion of his system to serve 300 rural residents whose 

wells have gone dry. 

My entire rural neighborhood hauled bottled drinking water to 

our homes due to private wells with salty ground water until 2009 

when East Rio Hondo laid a new pipeline on our rural road. 

My next-farm-over neighbors, Richard and Cheryl Johnson, were 

ecstatic to have safe potable water from East Rio Hondo as they 

had both been previously hospitalized due to fecal contamination of 

their private well from their septic system. 

A very crucial point to take home today is that rural America is 

being overlooked in the funding as currently proposed to partially 

occur through the U.S. EPA’s state revolving fund process. 

SRF dollars have historically been absorbed by large metropolitan water utilities. East Rio Hondo’s experience in applying for 

DWSRF funding is that our applications historically ranked too 

low, and have largely been unsuccessful. East Rio Hondo’s and 

NRWA’s preferred funding avenue for water and wastewater infraVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
48 

structure projects is the USDA Rural Development Direct Loan and 

Grant Program. 

NRWA urges Congress to consider the following rural water and 

wastewater infrastructure concepts: First, provide a minimum setaside for small and rural communities; second, provide grants not 

just loans; third, contract qualified private nonprofits to service the 

USDA water and wastewater loan and grant programs. The current checklist for a USDA loan and grant project requires an applicant and their consultants to complete 90 separate items before beginning construction. 

This checklist is included in Attachment C of my written testimony. 

NRWA would like to thank the Rebuild Rural Coalition for organizing this effort today. Thank you, Chairman Conaway, Ranking 

Member Peterson, Vice Ranking Member Vela, and Members of the 

Committee for allowing me to testify. 

I would be happy to answer any questions that you may have. 

[The prepared statement of Mr. Macmanus follows:] 

PREPARED STATEMENT OF BRIAN E. MACMANUS, P.E., GENERAL MANAGER, EAST RIO

HONDO WATER SUPPLY CORPORATION, RIO HONDO, TX; ON BEHALF OF TEXAS

RURAL WATER ASSOCIATION; NATIONAL RURAL WATER ASSOCIATION

Good morning Chairman Conaway, Ranking Member Peterson, and Members of 

the Committee. It is an honor to testify before you on the drinking water and wastewater infrastructure needs and concerns for rural America. I am proud to represent 

the many rural water and wastewater utility systems across America in sincerely 

thanking this Committee for your long support of the Department of Agriculture’s 

(USDA) Rural Development water programs that have lifted up the quality of life 

for so many of the residents in my home state of Texas and throughout this great 

nation. 

I am Brian Macmanus and I serve as the General Manager of the East Rio Hondo 

Water Supply Corporation (ERHWSC). I am a licensed engineer and water and 

wastewater treatment operator in the State of Texas. ERHWSC was incorporated 

in 1972 and began construction of our first pipelines in 1979 when ERHWSC closed 

our first Farmers Home Administration loan of $1,100,800 in order to serve 975 customers. Since our inception, we have expanded our water service and started wastewater service using additional funding assistance from the United States Department of Agriculture (USDA) (see Attachment B). ERHWSC now directly serves approximately 24,000 residents in Cameron and Willacy Counties, and wholesales potable water to an additional 1,816 people through the U.S. Immigration Customs 

Enforcement, Port Isabel Detention Center, the Town of Indian Lake, and to a portion of Military Highway Water Supply Corporation, all within a 4072 mile service 

area. 

I come before this Committee representing the Texas Rural Water Association 

which is a state affiliate of the National Rural Water Association. The National 

Rural Water Association (NRWA) is a water utility organization with over 31,000 

community members. Our member communities have the very important public responsibility of complying with all applicable regulations and for supplying the public 

with safe drinking water and sanitation every second of every day. Most all water 

supplies in the United States are small; 94% of the country’s 51,651 drinking water 

supplies serve communities with fewer than 10,000 persons, and 80% of the country’s 16,255 wastewater supplies serve fewer than 10,000 persons. In my home state 

of Texas, the national trend continues as there are presently 4,310 community water 

systems that have a population under 10,000 people, representing 93% of the water 

systems in the state. 

I am here today to testify on the water and wastewater infrastructure needs of 

rural America. I believe it is important in my testimony today that I identify to the 

average American who lives in an urban or suburban setting why it is important 

to invest our United States Federal budget dollars in the water and wastewater infrastructure of rural America. I know that the Members of this Committee are very 

familiar with the fact that our country’s food, fuel, and fiber come primarily from 

rural America. The people in communities producing the food, fuel, and fiber depend 

49 

on safe and clean water to maintain their health and their community’s economy, 

no differently that most Americans. Let’s take it a step further though on why the 

average American citizen should care about investing in safe drinking water in 

rural America. 

The United States currently enjoys the safest most affordable food supply of any 

industrialized country in the modern world. This is due, in a large part, to the efforts of past and present Members of this Committee and we wish to thank you for 

this tremendous achievement. A huge part of this achievement was past investment 

in the rural water infrastructure to produce safe drinking water and properly treated wastewater in rural America. Imagine consuming fruits and vegetables that were 

processed at packaging facilities in rural America, typically not far from where they 

are harvested, that were washed in water from an unsafe potable water supply. The 

potential resulting food borne outbreak could endanger the health and lives of many 

people in the more populated centers of our country. Fortunately, each of us can follow the USDA My Plate nutrition guidelines and make half of our plate fruit and 

vegetables, and do so in confidence because our fruits and vegetables were washed 

with clean potable water in rural American packaging facilities and again at our 

homes to prevent the spread of parasitic organisms such as E. coli. This clean potable water used to wash them did not show up on its own. In rural America, it was 

likely provided via USDA water and wastewater loans and grants. 

There is a saying in the water and wastewater industry, that a certain product 

rolls down hill. This stands true for any community in America, including rural 

communities, that discharge treated wastewater into our rivers and streams. Their 

wastewater is likely the drinking water source for the next community downstream, 

which could easily be an urban center. Sufficient wastewater treatment is critical 

to maintain the safety of the drinking water source. I hope I have your attention 

on the critical need to sustain the infrastructure for our water and wastewater systems in rural America. 

One other point which I will cover in more detail later in this testimony is that 

suburban America is now growing into what today is rural America. We have all 

seen the subdivisions occurring in areas that were previously farms, ranches, and 

forests. Growing rural America on the outskirts of population centers is a key component of the American economy growing again, and having water and wastewater 

infrastructure available to handle new growth is critical for the financial viability 

of these potential developments. 

When thinking about national water infrastructure proposals, I ask you to reflect 

on my previous statement of facts that most water utilities are small. These small 

systems have more difficulty affording public water service due to lack of population 

density and lack of economies of scale. My utility, ERHWSC, is a prime example 

of this lack of economy of scale with approximately 7,850 connections being served 

by 466 miles of pipe which equates to 16.8 connections per mile of pipe. This concentration is considered high for some rural systems, yet large urban centers can 

have hundreds of equivalent connections per mile of pipe, depending upon their density. 

The small community paradox in Federal water policy is that while we supply 

water to a minority of the country’s population, we have much more difficulty providing safe, affordable drinking water and sanitation due to limited resources and 

technical expertise. Also, while we have fewer resources, we are regulated in the 

exact same manner as a large community; we outnumber large communities by a 

magnitude of ten-fold, and Federal compliance and water service is often a much 

higher cost per household. As a prime example of this, ERHWSC has constructed 

an ultra-violet (UV) light disinfection treatment process at our surface water treatment plant, to maintain compliance with US EPA log removal requirements for the 

parasite cryptosporidium, which was detected in our raw water source. This project 

cost ERHWSC approximately $1.5 million in capital construction, or $191 for each 

and every member (connection) in our system. Much larger urban utilities would be 

able to more affordably spread this cost over a much larger customer base. USDA 

funding made this project affordable for the rate payers in ERHWSC. 

A great man named Billie Joe Simpson was the founder of ERHWSC and my 

predecessor until his passing in 2013. He told me shortly before his death that he 

could not believe what ERHWSC had grown into and what an impact it had created 

upon the local rural economy. ERHWSC was truly a rural community of farmers, 

ranchers, rural residents, and colonia residents when Billie Joe and his wife Martha 

Ann applied to USDA for our first project. The enormous cost to start a water system over such vast rural areas was not a possibility without the grants, low interest 

loans, and long loan terms of 40 years that USDA funding made possible. This story 

of small beginnings and huge results repeats itself, although with different demographics, over and over again throughout our great country. The continued developVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00053 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
50 

ment of growing rural America is a strong stimulus to our nation’s economy. The 

USDA rural water and wastewater loan and grant program is what continues to 

make growth and compliance projects like ERHWSC’s UV light disinfection system 

truly affordable to rural America. 

The dollar value of the current infrastructure needs for water and wastewater in 

rural America can be tied directly to the USDA rural water application backlog of 

$2.5 billion with 995 pending applications. I can tell you from first hand discussions with other water and wastewater utility managers in Texas, this number is 

artificially low because many utilities fall into noncompliance with regulatory requirements while waiting, sometimes for years, for closure on the funding process. 

As you can see in Attachment B, ERHWSC currently has an application pending for $4,454,238.00 for a new 1,000,000 gallon elevated water storage tank. The backlog 

of pending applications truly represents my utility and rural and small community 

water infrastructure projects throughout the country that can’t access alternative affordable sources of funding. 

In 2017, there are rural communities in the country that still do not have access 

to safe drinking water or sanitation due to the lack of population density or lack 

of funding—many in rural Texas. Just this past week, my colleague Finley Barnett, 

the General Manager of S.U.N. Water Supply Corporation in Merkel, Texas, told me 

how dependent he was on affordable USDA funding for the expansion of his system 

to serve 300 rural residents whose wells had recently gone dry. Each day, there are 

numerous rural families driving their pick-up trucks to central filling stations to fill 

up large plastic storage containers to ‘‘haul’’ the water back to their remote and isolated homes, farms, and ranches. Included with my written testimony are just a few 

of many recent news profiles of communities that lack basic drinking water access 

(Attachment A). My water utility and our rural water association’s mission has been 

to expand water service to these communities and rural areas—often for the first 

time. The delivery of drinking water and sanitation to rural America has been one 

of the great public health accomplishments of the second half of the twenty-first century. 

Over the last 73 years, through the combined financial assistance of the U.S. De- partment of Agriculture’s rural water grant and loan initiative (exceeding $50 billion), the country has made great advancements in the standard of living in rural 

America. Millions of rural Americans now have access to safe potable drinking 

water that their parents did not have. I personally hauled bottled drinking water 

to my home in 5 gallon bottles due to salty groundwater until 2009 when ERHWSC 

laid a new pipeline to me and my neighbors on our rural road. My next-farm-over 

neighbors, Richard and Cheryl Johnson, were ecstatic to have safe potable water 

from ERHWSC as they had both been previously hospitalized with gastrointestinal 

disease due to fecal contamination of their well from their septic tank. Thousands 

of rural communities now have public sanitary wastewater systems that have allowed for elimination of millions of questionable septic tanks, cess-pools, straight 

pipes, or worse. This rural water infrastructure development has been the engine 

of economic development in rural communities, and it has provided for dramatic improvements to the environment and public health. 

As an example of the key role that USDA rural water grant and loan initiative 

plays in the development of rural systems and the economy of communities they 

serve, please reference the loan and grant portfolio which ERHWSC has generated 

since its beginnings (see Attachment B). As noted above, without the total grant 

funds and affordable loans provided to ERHWSC via USDA funding, rural Cameron 

and Willacy Counties would never have seen the development of a potable water 

system. The farmers, ranchers, rural and colonia residents in ERHWSC’s service 

area were utilizing high iron and brackish, non-potable wells, shallow wells contaminated by fecal coliform (like Richard and Cheryl Johnson), or raw or partially 

treated Rio Grande River water contaminated with wastewater discharges from upstream in Mexico. These south Texans, with at times completely inadequate water 

infrastructure, would never have been able to afford a potable water system without 

the collective community efforts made possible via USDA funding. USDA funds for 

water and wastewater infrastructure are critical to the affordability of continuing 

this life-critical service. 

Rural America faces a significant dichotomy today. Some rural areas and particularly the Great Plains are depopulating because of changing factors in predominantly agriculture economies where farms are larger and farmers are fewer. A decreasing customer base makes financing projects mandated by continually growing 

regulations a difficult if not unaffordable task. In Texas, many towns and counties 

in far west Texas struggle to overcome depopulation. Other rural communities are 

challenged with areas of rapid growth where populations from nearby urban and 

suburban growth centers are moving to locales of what used to be farms, forests, 

51 

and ranches. It seems at times that everyone wants a little piece of the calmness 

of the country in rural America after the wear and tear of work in suburban/urban 

America. Rural system infrastructure that is prepared and capable of growing 

affordably with new arrivals from neighboring population centers is critical for this 

stimulus in our national economy to occur. In Texas this too is occurring in the area 

called the Texas Triangle between Houston, Dallas-Fort Worth, and San Antonio. 

My good friend Chris Boyd, General Manager of Mustang Special Utility District, 

struggles to keep up with capital infrastructure in Collin County, Texas, 50 miles 

north of Fort Worth, in an area that is quickly changing from farms to subdivisions. 

Maintaining affordable water and wastewater rates via USDA capital project funding is critical for both spectrums of our rural American economy. 

Just how much water and wastewater infrastructure demand is there today? 

Every 4 years, EPA works with states and community water systems to estimate 

the drinking water state revolving fund-eligible needs of community drinking water 

systems by state. In 2011, EPA published their fifth national assessment of public 

water system infrastructure needs and it showed a total twenty year capital improvement need of $384.2 billion. This estimate represents infrastructure projects 

necessary from January 1, 2011, through December 31, 2030, or an average of 

$19.21 billion per year, for water systems to continue to provide safe drinking 

water to the public. EPA’s Clean Watersheds Needs Survey (CWNS) is an assessment of capital investment needed nationwide for publicly-owned wastewater collection and treatment facilities to meet the water quality goals of the Clean Water Act. 

These capital investment needs are reported periodically to Congress. EPA’s 2012 

CWNS Report was the sixteenth survey since the enactment of the CWA in 1972 

which requires the Report. The total capital wastewater and collection needs for the 

nation are $245.8 billion over the next 5 years, or an average of $49.16 billion per 

year as of January 1, 2012. This includes capital needs for publicly-owned waste- water pipes and treatment facilities ($197.8 billion), and combined sewer overflow 

(CSO) corrections ($48.0 billion). 

President Trump has made improving the country’s infrastructure, including 

water and wastewater, a priority. NRWA is extremely grateful for this prioritization 

and excited about the potential for rural America. However, despite my testimony 

to the critical nature of this funding in rural America, my main point here today 

is to tell you that rural and small town America is being overlooked in the proposed 

process to develop the funds for new water and wastewater infrastructure initiatives. The funding as currently proposed to partially occur through the US EPA’s 

State Revolving Loan process will by-pass rural America and be absorbed by large 

metropolitan water developments. 

Most of the funding for rural American’s water and wastewater development has 

come from the U.S. Department of Agriculture’s (USDA) rural water grant and loan 

initiative because it targets communities who are most in need based on economics 

and water quality. Most of the EPA water infrastructure funding is dedicated to 

larger communities because EPA does not require a similar needs-based criteria. 

• Approximately 77 percent of Clean Water State Revolving Fund (CWSRF) funding for Fiscal Year 2015 were awarded to communities with a population over 

10,000 (EPA Clean Water State Revolving Fund Annual Review (https:// 

www.epa.gov/sites/production/files/2016-05/documents/2015_annual_report_ 3-14-16.pdf)). 

Approximately 72 percent of Drinking Water State Revolving Fund (DWSRF) 

funding for Fiscal Year 2016 were awarded to communities with a population 

over 10,000 (EPA Drinking Water State Revolving Fund National Information 

Management System Reports (https://www.epa.gov/drinkingwatersrf/drinkingwater-state-revolving-fund-national-information-management-system-reports)). 

My water system’s experience in applying for DWSRF funding is that ERHWSC’s 

applications have historically been ranked insufficiently to receive funding. The normal annual funding is usually consumed by the top projects ranked at the very top 

of a list of hundreds of applicants in Texas alone, and large municipal projects take 

very large percentages of the funding. Although ERHWSC has received DWSRF 

funding on one project recently, it was only due to ranking in the top ten in the 

state, due to potential emergency water outages brought on by drought conditions. 

All other ERHWSC applications for DWSRF funding have not scored high enough 

on the state ranking to receive funding. ERHWSC’s preferred funding avenue for 

water and wastewater infrastructure projects is the USDA-Rural Development Direct Loan and Grant Program. 

If forced to choose, NRWA would prefer the USDA water and wastewater loan and 

grant program over DWSRF, although both can provide significant benefit. The 

USDA water and wastewater loan and grant program has been the historical soluVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00055 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
52 

tion for small and rural water infrastructure needs and is largely responsible for 

the success of delivering water and sanitation to almost every corner of rural America. Since Fiscal Year 1940 USDA’s Water Program has made 96,724 loans and 

grants totaling $54.6 billion. This is perhaps the most discriminating assessment 

of need because it only measures rural and small community projects that meet 

USDA strict criterion for need-based high cost per household and local economic 

conditions. 

To make sure any water infrastructure initiative helps rural and small town 

America, NRWA urges Congress to consider the following global policy principles— 

and observations—based on their merit: 

1. A minimum portion of the infrastructure initiative funds should be specifically 

set-aside for small and rural communities, regardless of how the funding is 

established. This ensures that small and rural communities are not left out 

of the solution. 

2. Allow infrastructure funds some ability to provide grants—not just loans. 

Commonly, low income communities do not have the ability to pay back a 

loan, even with very low interest rates, and require some portion of grant or 

principal forgiveness funding to make a project affordable to the ratepayers. 

3. A small percentage of water funding programs should be set-aside for experienced nonprofit entities to provide specific technical assistance in completing 

the applications for water and wastewater infrastructure funding. Small communities often lack the technical and administrative resources to achieve 

compliance and complete the necessary applications to access the Federal 

funding programs. Providing these small communities and the funding agency 

with shared technical resources can expedite loan closing and construction of 

facilities. This assistance can save thousands of dollars for the community 

and help the systems maintain long-term compliance with EPA rules by expediting the loan process. 

4. Federal water funding programs should be used to ameliorate compliance with 

Federal unfunded mandates or standards. Currently, the Safe Drinking 

Water Act and Clean Water Act are creating a tremendous financial burden 

on small and rural communities. Federal compliance costs for the Federal 

drinking water rules, many for naturally occurring elements in groundwater, 

can be exorbitant. The U.S. Environmental Protection Agency’s (EPA) most 

recent noncompliance reporting data, via the Government Performance and 

Results Act, shows that for drinking water regulations 9,949 communities are 

in noncompliance; most all of these communities are simply struggling to 

achieve Federal compliance and avoid fines. 

• EPA lists 444 communities in violation of the arsenic standard; all have a 

population of fewer than 25,000 persons; 98% have a population of fewer 

than 10,000 persons; and 85% have populations under 1,000 persons. 

• EPA lists 1,374 communities in violation for the most recent disinfection 

byproducts rule; 1,310 have a population of fewer than 25,000 persons; and 

94% have a population of fewer than 10,000 persons. 

• EPA lists 76 communities in violation for naturally occurring fluoride in 

their drinking water; all but two of these communities have a population 

of fewer than 10,000 persons; and 80% of these communities have a population of fewer than 500 persons. 

5. Local communities have an obligation to pay for their water infrastructure 

and the Federal Government should only subsidize water infrastructure when 

the local community can’t afford it and there is a compelling Federal interest 

such as public health. The USDA water infrastructure program contains this 

needs-based criterion. USDA calls this the ‘‘credit elsewhere’’ criterion and it 

is unique to USDA’s funding. 

As you are aware, Texas is one of the four border states that serve colonias. 

ERHWSC is one of many rural water and wastewater systems that has benefitted 

from USDA infrastructure funds to remedy the deplorable conditions that exist in 

these low-income communities. Colonias are often in unincorporated areas, which 

unfortunately are similar to some Tribal areas, and lack some of the most basic necessities such as potable water and functional sewer systems, without municipal jurisdiction for development or zoning. ERHWSC and many rural water supply corporations along the border are prime examples of how a regional rural water utility 

can provide the capacity with USDA capital low interest loans and grants to relieve 

the squalid conditions that exist in these communities. NRWA encourages the availVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00056 Fmt 6633 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
53 

ability of affordable colonia specific funding sources as part of the infrastructure 

package. 

NRWA provides the following conceptual changes specifically to USDA water and 

wastewater loan and grant funding to the Committee for consideration: 

1. Provide the Secretary with the authority to use a small percentage of the 

funding made available for the Rural Development programs to contract with 

private nonprofits with demonstrated experience to conduct non-inherent government activities and functions necessary to deliver and service the Rural 

Utilities Service Water and Waste Water Disposal loan and grant programs. 

The application process to access USDA water and wastewater infrastructure 

funding can easily overwhelm the small and rural communities who often 

lack the capacity to administer and deliver the items required in the lengthy 

application process. The current application form (see Attachment C) requires 

an applicant or the applicants engineer or attorney to complete 90 separate 

checklist items before beginning construction on a project. The back and forth 

corrections between the applicant and USDA in completing this checklist can 

often take months and sometimes years. This impediment is compounded by 

the recent reduction of over 1,000 Rural Development program staff and office 

locations that can assist applications with the process. NRWA has identified 

over 40 loan processing and servicing functions and activities that can be performed by non-governmental third party entities. The inherent government 

activities would still be performed by Federal employees. Assistance could include but not limited to preparing the application with all required documentation (audits, environmental report, preliminary engineering report, etc.). 

Direct assistance could also be performed for preconstruction requirements, 

closing review, Buy America compliance, construction inspection, rate studies, 

budget preparation, warranty inspection, addressing letter of conditions, 

drafting emergency response plans and other activities as needed. Assistance 

to the applicants in all of the applicant checklist requirements would greatly 

expedite the process of capital delivery for construction purposes. My personal 

experience at ERHWSC regarding the loan processing timeframe from application to closing is that it can take years. The assistance of experienced private nonprofits to manage and expedite this process would be a welcome occurrence in rural America. 

2. Allow the Secretary the flexibility or waiver authority to exceed the current 

population ceiling of 10,000 for the Rural Development Water and Wastewater Direct Loan and Grant Programs will also help many rural communities. With the changing demographics in Rural America, we believe that 

providing the Secretary flexibility to assist these communities that are still 

experiencing economic hardship would be beneficial. The Committee could 

limit this authority to areas that are rural in character; provide a demonstrated need for financial assistance; demonstrate the ability to complete 

construction within a reasonable time frame; and demonstrate they cannot afford commercial credit at the prevailing rates and terms. 

3. Allow the Secretary the flexibility or waiver authority to increase the Water 

and Waste Water Guaranteed Loan Program to a much higher population 

ceiling, for example 50,000, would be a benefit to higher populated communities that don’t need the subsidized loan or grant funding. This program currently has a positive subsidy of only .48 percent. This program has been vastly under-utilized, for example, in FY 2016, only four guaranteed loans were 

obligated that totaled $7,118,000. This change would stimulate private capital 

at minimal cost to the Federal Government. 

4. Allow the interest on these federally guaranteed water, wastewater, and essential community facilities loans to be tax exempt. This modification would 

generate increased affordable financing options for rural communities including increasing the lending authority and activity of rural banks, allowing for 

longer loan terms, reduced interest rates as well as improving the marketability of the loans on the secondary market. The utilization of these guaranteed programs would increase while simultaneously reducing the current 

backlog. 

Thank you Chairman Conaway, Ranking Member Peterson, and Members of the 

Committee for allowing me to testify. I would be happy to answers any questions 

that you may have at this time. 

54 

ATTACHMENT A 

[1] 

A Toilet, but No Proper Plumbing: A Reality in 500,000 U.S. Homes 

The New York Times 

By Sabrina Tavernise (https://www.nytimes.com/by/sabrina-tavernise) 

Sept. 26, 2016 

Dorothy Rudolph in front of her home in Tyler, Ala., which does not have 

a septic tank. Credit Bryan Meltz for The New York Times. 

Tyler, Ala.—The hard clay soil in this rural Southern county has twice cursed 

Dorothy Rudolph. It is good for growing cotton and cucumbers, the crops she worked 

as a child and hated. And it is bad for burying things—in particular, septic tanks. 

So Ms. Rudolph, 64, did what many people around here do. She ran a plastic pipe 

from her toilet under her yard and into the woods behind her house. Paying to put 

in a septic tank would cost around $6,000—a little more than half of her family’s 

annual income. 

‘‘It was a whole lot of money,’’ she said. ‘‘It still is.’’ 

Here in Lowndes County, part of a strip of mostly poor, majority-black counties 

that cuts through the rural center of Alabama, less than half of the population is 

on a municipal sewer line. While that is not a hardship for more affluent communities—about one in five American homes are not on city sewer lines—the legacy 

of rural poverty has left its imprint here: Many people have failing septic tanks and 

are too poor to fix them. Others, like Ms. Rudolph, have nothing at all. 

That is not so uncommon. Nearly 1⁄2 million households in the United States lack 

the basic dignity of hot and cold running water, a bathtub or shower, or a working 

flush toilet, according to the Census Bureau. The absence has implications for public 

health in the very population that is the most vulnerable. 

Crumbling infrastructure has been a theme of this country’s reinvigorated public 

conversation about race—for instance, a botched fix for old pipes in Flint, Mich., 

that contaminated the city’s drinking water with lead. But in poor, rural places like 

Lowndes County, there has never been much infrastructure to begin with. 

‘‘We didn’t have anything—no running water, no inside bathrooms,’’ said John 

Jackson, a former mayor of White Hall, a town of about 800 in Lowndes that is 

more than 90 percent black and did not have running water until the early 1980s. 

‘‘Those were things we were struggling for.’’ 

There is no formal count of residents without proper plumbing in Lowndes, but 

Kevin White, an environmental engineering professor at the University of South 

Alabama, said that a survey that he did in a neighboring county years ago found 

that about 35 percent of homes had septic systems that were failing, with raw sewage on the ground. Another 15 percent had nothing. 


11510002.eps
55 

Cheryl Ball in her trailer home in Tyler, Ala. Ms. Ball can’t afford a septic tank, so she runs a plastic pipe that empties waste behind her property. 

Credit Bryan Meltz for The New York Times. 

‘‘The bottom line is, I can’t afford a septic system,’’ said Cheryl Ball, a former cook 

who had a heart attack several years ago and receives disability payments. She lives 

in a grassy field on which only three of seven homes have septic tanks. Most banks 

now require proof that a home has proper sewage disposal before lending, but Ms. 

Ball paid cash for her mobile home—$4,000. 

This area, known as the Black Belt (so called more for its soil, than its demographics), is haunted by its history of white violence toward African Americans and 

a deep, biting poverty. Lowndes is one of the poorest counties in the country, and 

its rural population, whose trailers and small houses dot the lush green landscape, 

often cannot afford the thousands of dollars it costs to put in a tank. Municipalities, 

with low tax bases, cannot afford extensive sewer lines. 

Ms. Rudolph, a retired seamstress, and her husband, a carpenter, live in a tiny, 

white clapboard house that he built after he, his parents and his siblings fled their 

home on land owned by a white man who forbade the family to vote. She remembers, as a young girl in the 1950s, not having electricity. They obtained running 

water in the early 1990s, she said, and used an outhouse until the mid-1990s. 

So their white toilet with a fuzzy green cover was a marker of progress. A plastic 

pipe carries its contents outside and empties into a wooded area not far from the 

house. There is no visible pooling of sewage, but there are other problems. 

‘‘The smell gets so bad,’’ said Ms. Rudolph, sitting on her porch guarding her 

chicken coop against a marauding fox. When it rains, she wages war with her toilet. 

One recent downpour brought its contents gurgling up to the rim. 

‘‘I was sitting there looking at it and got me a plunger,’’ she said. ‘‘It took me 

some plunging to get it clear. I was scared it was going to come back and go on 

the floor. Horrible.’’ 

She added, ‘‘There’s nothing we can do.’’ 

The problem is prickly for the state. Parrish Pugh, an official with the Alabama 

Department of Public Health, agrees that money plays a part. 

‘‘That’s where the rubber hits the road,’’ he said. 

‘‘But Alabama law forbids the use of ‘insanitary sewage collection,’ and the responsibility for that rests squarely with the homeowner,’’ Mr. Pugh said. Resisting 

is not only illegal, but could have health consequences: Raw sewage can taint drinking water and cause health problems. 

‘‘ ‘My parents had a pipe that ran into the woods, and that’s good enough for me,’ ’’ 

Mr. Pugh said, explaining a common argument. ‘‘But we didn’t know as much about 

disease back then. People are more educated nowadays. They are more concerned.’’ 


11510003.eps
56 

The state health department begs, cajoles, and eventually cites people who have 

problems and do not fix them. In the early 2000s, the authorities even tried arresting people. That prompted a public outcry and the practice soon stopped, but one 

person spent a weekend in jail and others were left with criminal records. 

The department cited about 700 people in the 12 months that ended in March, 

often because someone complained. 

The clay soil makes the problem worse. 

‘‘Rural wastewater is usually managed with a septic tank and a drain field, which 

slowly infiltrates the wastewater into the ground,’’ Professor White said. ‘‘Well, it 

won’t go into the ground here. Period.’’ 

John Jackson, former mayor of White Hall, Ala., said that until the early 

1980s, ‘‘we didn’t have anything—no running water, no inside bathrooms.’’ 

Credit Bryan Meltz for The New York Times. 

He added: ‘‘There are some options that may be available, but it’s going to cost 

thousands of dollars, and most people here can’t afford it. The answer, quite frankly, 

is not out there yet.’’ 

Experts and advocates have tried to find one. Grants from the state and Federal 

Governments to study the problem have come and gone, as have academics wielding 

surveys. There was even talk of self-composting toilets. 

‘‘It’s like we’re going in circles,’’ said Perman Hardy, a cook in Tyler who even 

did a urinalysis (http://health.nytimes.com/health/guides/test/urinalysis/overview.html?inline=nyt-classifier) for a study of health effects. For years, her sewage 

backed up every time it rained. In December, she spent all the money she had saved 

for Christmas presents on a new septic tank. 

Some change is happening. The town of White Hall recently received funding to 

connect about 50 homes to sewer lines, the first in its history. Town officials are 

thrilled: City sewer lines are critical to attract businesses that would bring jobs. But 

the pace is glacial. 

Eli Seaborn, 73, a White Hall councilman, said progress would be slow, like the 

pace of civil rights gains, where legal discrimination is gone but lingers in other 

forms. Similar patience is required for sewage, he added. 

‘‘Time is going to be the only thing that solves this problem,’’ he said. ‘‘It took 

more than 50 years for it to happen. But hopefully, it won’t take more than 50 years 

to fix it.’’ 


11510004.eps
57 

[2] 

What happens when a water utility becomes an orphan 

In tiny Coal Mountain, in West Virginia, residents are left to fend for 

themselves with a water system they can’t afford to test for lead. Government agencies have all but given up on forcing tests even though residents 

continue drinking the water. Jasper Colt. 

Editor’s note: the video clip What happens when a water utility becomes 

an orphan, is retained in Committee file, and is available at: https:// 

www.usatoday.com/videos/news/nation/2016/12/13/what-happens-whenwater-utility-becomes-orphan/95332502/. 

[3] 

The American Neighborhoods Without Water, Sewers, or Building Codes 

Low-income residents bought cheap land outside of border cities decades 

ago. But the promised infrastructure never came. 

The Atlantic 

Alana Semuels (https://www.theatlantic.com/author/alana-semuels/) 

Mar. 3, 2016 


11510005.eps
58 

A boy in Los Fresnos colonia in Texas Jessica Rindaldi/Reuters. 

Montana Vista, Tex.—No one objected when developers bought up dusty vacant 

land here in the 1950s and 1960s and turned it into unincorporated subdivisions— 

areas outside city limits where no one had authority to enforce building standards. 

Neither the state nor the county stepped in when the developers turned around 

and sold that land—making empty promises to later add running water and sewer 

systems—to low-income immigrants who wanted, more than anything, to own a 

home of their own. And no one batted an eyelash when low-income landowners in 

these unincorporated border subdivisions, called colonias, started building homes 

from scratch without building plans or codes, or when they started adding additions 

to those homes as their families grew, molding structures together with nails and 

extension cords and duct tape. 

That’s because, in Texas, all of these actions were perfectly legal. Texas prides 

itself on its low taxes and lack of regulation, but it’s possible that decades of turning 

a blind eye to unregulated building is starting to catch up with the state. Today, 

around 500,000 people live in 2,294 colonias, and many still lack access to basic 

services, such as running water or sewer systems. Lots of residents live in dilapidated homes with shoddy plumbing and electrical wiring that they’ve cobbled together themselves to save money on contractors. And now, they want the state to 

pay to extend basic services in their homes. Water, for instance, should be a human 

right in America, they say. 

‘‘You have families that live in third world conditions in the state of Texas with 

a modern city just miles away,’’ said Veronica Escobar, the County Judge of El Paso, 

who functions as a county chief executive. ‘‘But the state of Texas has essentially 

put counties in charge of health, safety and welfare, at the same time they give us 

very limited authority.’’ 

Alejandra Fierra lives with her husband in the Hueco Tanks colonia, where they 

bought land in 1987. They still don’t have access to running water or a sewer system. When her children were growing up, she would pour water from a well into 

a tub and wash them, one, two, three, in the same water. She does the same for 

her dishes. She gets a delivery of a 2,500 gallon water tank for bathing and washing, and buys bottled water from Walmart for drinking and cooking. 

In Montana Vista, a colonia some 22 miles east of El Paso, the septic tanks of 

the 2,400 families who live there frequently overflow, creating rivers of sewage in 

their backyards. In the summer, the smell can be horrific. Tina Silva, a resident and 

activist, lives here in a spacious one-story adobe house surrounded by a stone wall. 

She raises chickens and a giant pig in her backyard, where a rusted out car sits, 

half painted, in the sun. She loves her home and her neighborhood, but she doesn’t 

understand why it has taken so long to put in a sewer system. ‘‘We’re human 


11510006.eps
59 

beings. We pay taxes. Somebody needs to listen to us,’’ she says. Various politicians 

have promised her they’d help get the money to install services, but it’s never actually happened, Silva told me. 

Tina Silva feeds the chickens in her backyard at Montana Vista (Alana 

Semuels/The Atlantic). 

Part of the problem is that no one wants to take responsibility for paying to install these services. The developers who sold the land promising water and sewers 

are long gone. And for many the thinking—at least according to Escobar—is that 

if the homeowners wanted to buy land without access to running water, that’s their 

problem. 

It may seem obvious that the homeowners who bought cheap land without access 

to water and sewers should be responsible for installing access to services. But that 

isn’t realistic either. More than 40 percent of colonia residents live below the poverty line, according to a 2015 report (https://www.dallasfed.org/assets/documents/ 

cd/pubs/lascolonias.pdf) from the Federal Reserve Bank of Dallas. The median 

household income in colonias is less than $30,000 per year. And the conditions in 

the colonias are troubling. There are water and mosquito-borne illnesses, high rates 

of asthma, lice, and rashes. One doctor told the Texas Tribune (https:// 

www.texastribune.org/2011/07/10/conditions-health-risks-sicken-colonias-residents/) that rates of tuberculosis in the colonias are two times the state average 

and that there is a lingering presence of leprosy. 

In 2012, the Texas Department of State Health Services issued a nuisance determination in Montana Vista documenting the health problems the septic tanks were 

causing, which meant the El Paso Water Utility could receive a grant for more than 

half of the project costs. In December, the Texas Water Development Board agreed 

to provide a $2.8 million grant to El Paso Water Utilities so that the utility could 

start designing the sewer system. But it will cost an estimated $33 million to build 

the system, and that money has not yet been secured. 

‘‘It’s getting there, unfortunately, it’s taking a lot of time,’’ said Munzer Alsarraj, 

the infrastructure program manager for El Paso County. 

The state is stepping in to upgrade some of the colonias, too. Between 2006 and 

2014, 286 more colonias, were linked to drinking water, drainage, wastewater disposal, paved roads, and legal plats, according to the Federal Reserve report. In 2006, 

443 colonias had access to no basic infrastructure, by 2014, that number had 

dropped to 337. 

But it’s slow going. 

It’s not easy to install infrastructure in areas that are far from the main water 

and sewer lines and in places that have grown with no central plan. It was not until 

1989 that the Texas Legislature even asked state agencies to come up with rules 


11510007.eps
60 

(https://www.texasattorneygeneral.gov/cpd/historical-laws-colonias) that would ensure new residential developments had access to water and sewer services. Now, cities can regulate development in Texas, but in unincorporated areas, counties have 

little regulatory power. Zoning regulations that would limit the size of buildings or 

of lots in cities don’t exist for the colonias. 

In some instances, the county can’t install infrastructure to homes because they’re 

not up to code. Because people building on unincorporated land don’t have to follow 

many rules, there are odd constructions in the colonias, including units that combine two RVs, homes with rooms tacked onto the side standing on cinder blocks, 

homes with extension cords that run outside, wooden planks as sidewalks. This 

makeshift construction can lead to roof collapses and electrical fires, said Irene 

Valenzuela, the interim director of community services for El Paso County. 

A home in a Texas colonia consists of a trailer and a house (Eric Gay/ 

AP). 

The county is giving grants out to people interested in bringing their homes up 

to code, but people are often hesitant, she said. ‘‘I think the majority of them are 

afraid,’’ she said. ‘‘They say, ‘This is a takeover. What are you going to ask for next? 

If you assist me, are you going to take my property away when I pass away?’ ’’ 

Alsarraj, with the county, added. 

Then there’s the cost. The county is trying to install sewer lines in the Square 

Dance colonia. That colonia is located just a few blocks from established subdivisions that are part of the county’s water and sewer system. But the price of adding 

those services to the colonia’s 264 homes is $8.5 million. Installing water and sewers 

in another colonia, called Hillcrest, would cost about $120,000 per home, Alsarraj 

said. But the homes are worth just $20,000 to $30,000 each. 

It’s ironic, too, that the county is trying to extend water and sewers to far-off subdivisions as it also tries to execute a vision (https://www.theatlantic.com/business/ 

archive/2016/01/el-paso-urban-walkable-americans/431661/) that cuts down on 

sprawl. ‘‘For 30, 40 years, we’ve continued to sprawl out to the edges of the [E]arth 

and it was costing us more than we were making as a community,’’ Beto O’Rourke, 

a U.S. Congressman who led the charge to cut down on new subdivisions, told me. 

But El Paso has had little success regulating far flung subdivisions, even when 

they are incorporated. 

Perhaps most worrying to Escobar and others is that new colonias (http:// 

www.bloomberg.com/news/articles/2015-10-15/texas-towns-push-back-on-instantslums) are still being built across the state. This time around, they have basic water 

and sewer hookups, but don’t have paved roads or streetlights, according to the Federal Reserve. Plots cost as little as $25,000, and developers offer 20 year financing 

at a 12 percent interest rate and just $500 down, according to Bloomberg News 

(http://www.bloomberg.com/news/articles/2015-10-15/texas-towns-push-back-oninstant-slums). 

It’s proof to Escobar that developers will always be willing to sell substandard 

plots of land to people desperate to own a home. But she had hoped Texas would 

step in and regulate. 

Two sessions ago, the county tried to get permission for zoning authority over 602

miles near a border crossing south of El Paso. But the state legislature refused to 

grant it, in part because real-estate agents objected to the bill, said Escobar, the 

judge. Legislators also didn’t believe that government should trump property rights, 


11510008.eps
61 

she said. But perhaps that’s because they don’t have to deal directly with the aftereffects. 

‘‘We are having to fix the problems caused by unregulated government,’’ Escobar 

said. ‘‘There are innumerable examples and costs associated with fixing problems 

that could have been prevented. There’s just a fundamental belief in Texas—if you 

own property, you can do what you want with it.’’ 

[4] 

Like Flint, water in California’s Central Valley unsafe, causing health problems 

Fox News Latino (http://latino.foxnews.com/index.html) 

By Rebekah Sager (http://latino.foxnews.com/archive/rebekah-sager) 

Published March 8, 2016 

(Photo by Justin Sullivan/Getty Images) (2015 Getty Images). 

While the water crisis in Flint, Michigan (http://latino.foxnews.com/latino/news/ 

2016/01/22/flint-immigrants-last-to-know-about-contaminants-in-water/), made 

headlines around the country when the city’s leaders exposed residents to a tainted 

water supply for almost 2 years, families living in the Central Valley of California 

have been struggling without clean drinking water for decades. 

The population of the Central Valley, a basin surrounded by mountains that once 

offered hope to migrants like the fictional Joads in the ‘‘The Grapes of Wrath,’’ today 

is about 80 percent Latino, and 92 percent of the migrant farm workers in the Valley are Latino. 

There are vast dairy farms reeking of manure, highways lined with fast-food restaurants, liquor stores, prisons and numerous dialysis centers. 

Much of fruits and vegetables consumed in the U.S. are grown here, and the soil 

has been decimated by agricultural activity—overuse of fertilizers and pesticides, 

manure from livestock. One result is a toxic soup of nitrates in the area’s drinking 

water. 

Residents in towns along the San Joaquin Valley rely predominantly on pumps 

and ground water—which is not effectively regulated for contamination. 

When pumped up into people’s homes, the nitrates are so dangerous that people 

are known to get rashes when they shower. The presence of nitrates in the water 

supply also has been linked to ‘‘blue baby syndrome,’’ which is caused by the decreased ability of blood to carry oxygen—one of the most common causes is nitrate 

in drinking water. 

People turn to buying 5 gallon jugs to shower with and using 300 gallon tanks 

of non-potable water for basic needs. 

‘‘Generations of people who live here know not to drink the water,’’ Susana De 

Anda, a clean-water advocate and the co-executive director and co-founder of the 

Community Water Center NGO, told Fox News Latino. 

‘‘People pay more for this ‘toxic water’—sometimes as much as $100 a month for 

water just to shower with. On top of that they’re paying for drinking water,’’ De 

Anda said. 


11510009.eps
62 

According to the Environmental Justice Coalition for Clean Water, rural Central 

Valley communities pay the highest drinking water rates in the state, with some 

families shelling out as much as two to six percent of their income for water that 

they can’t drink. 

According to a Pacific Institute report (http://www.pacinst.org/wp-content/ 

uploads/sites/21/2013/02/nitrate_contamination3.pdf), nitrate exposure’s health 

impacts in the Central Valley fall disproportionately on poor Latino communities. 

Due to the state’s severe drought, new wells have to be dug more deeply, demand 

is high and the cost is between $1 million and $2 million. 

‘‘The drought actually causes the pollutants in the soil to be more concentrated 

and levels of contaminants such as nitrates to rise. Also, when deeper wells are dug, 

and that would be by maybe wealthier farmers, they actually end up syphoning 

water away from poor communities,’’ Genoveva Islas—program director at Cultiva 

la Salud (‘‘Cultivate Health’’), a nonprofit health advocacy organization in the Central Valley—told Fox News Latino. ‘‘And it creates a real inequity.’’ 

Most people in the area live a large distance from the closest big grocery store. 

Liquor and convenience stores become the default place to buy food and produce, 

and, all too often, sugary drinks are less expensive than drinking water. 

‘‘We’re in a food desert. People would buy water in bulk, but big stores are often 

very far outside of communities, and so families make a tough trade-off. Soda might 

be more affordable,’’ De Anda said. 

In addition to other factors, the consumption of soda vs. water is one of the leading reasons for the severe health problems in the Valley. The region has big problems with obesity and the highest rate of Type 2 diabetes in the state. 

An analysis of state’s death records by the Fresno Bee (http:// 

www.fresnobee.com/news/local/article19499391.html) and the Center for California 

Health Care Journalism at the University of Southern California paints a vivid picture of the disproportionate toll diabetes has taken in the Valley. 

At least 19 people die from diabetes-related complications in the eight San Joaquin Valley counties every day, the highest rate in the state. 

‘‘I’ve lived here all my life, and not until I was an adult was really aware of dialysis clinics. Now, I have an aunt and a close family friend who are both on dialysis. 

I’m seeing a number of these [places] pop up. More than ever before,’’ Islas says. 

The Central Valley may be the fruit and veggie center of the country, but for poor 

people healthy food is still significantly more costly than food sold in bulk, such as 

beans, rice, tortillas, white bread, ground beef and large bottles of soda. Many of 

the stores in the Valley offer free soda with groceries, and a small bottle of water 

runs about $1.69 versus a large soda at 99¢. 

In the last 3 years, the state has paid to retrofit water filters on drinking fountains in some pockets of schools and daycare centers, and provided filtered bottle 

stations, where people can fill-up containers. But Islas says it’s not universal. 

‘‘There’s still a lot of marketing of sugary drinks to kids, which in addition to diabetes and obesity, dental health problems. In Flint, the Governor has set aside 

money for the kids impacted by the lead, but in the Central Valley, we have the 

same issues of long term health problems for impoverished kids. We use education 

as a pathway out, but if you’re thirsty or you have health concerns, it’s pretty hard 

to learn,’’ Islas says. 

The drought in California may be shining a light on the region and its water supply, but the issues in the Valley have been left largely unaddressed. 

‘‘All these are interim solutions, but we also need to create water awareness. The 

water may look clean, but that doesn’t make it safe. It shouldn’t matter who you 

are or where you live, clean drinking water is a basic human right,’’ De Anda says. 

Rebekah Sager is a writer and editor for FoxNews.com. She can be 

reached at rebekah.sager@foxnews.com. Follow her on Twitter 

@rebekah_sager. 

ATTACHMENT B 

East Rio Hondo Water Supply Corporation USDA and DWSRF Debt 

Closed Loans 

With USDA 

Original Date 

Original 

Date 

Original 

Principal 

Amount 

Unpaid 

Principal 

Balance 

Interest 

Rate 

Monthly 

Payment 

Maturity Grant 

Amount Notes: 

USDA RD 91–14 2/8/1978 $163,000.00 $— 5 .00% $801.00 2/8/2018 AWSC Merger paid in full 

USDA RD 91–01, 

91–02 

9/17/1979 $1,100,800.00 $— 5 .00% $5,405.00 3/12/2020 $2,866,000.00 Original system note 

USDA RD 91–03 5/7/1981 $556,500.00 $— 5 .00% $2,683.00 5/7/2021 $1,669,500.00 Original plant & distribution 

USDA RD 91–06 3/14/1996 $909,500.00 $590,038.59 5 .00% $4,393.00 3/14/2036 $580,500.00 Plant expansion 

USDA RD 91–11 9/26/2003 $677,000.00 $568,195.04 4 .25% $2,969.00 1/26/2043 $— MASWT plant 

USDA RD 91–12 9/26/2003 $7,890,200.00 $6,561,632.81 4 .25% $34,560.00 9/23/2043 $1,946,200.00 MASWT plant 

USDA RD 91–15 5/2/2001 $593,800.00 $478,165.06 4 .50% $2,696.00 5/2/2041 $— Arroyo WSC 

63 

East Rio Hondo Water Supply Corporation USDA and DWSRF Debt—Continued 

Closed Loans 

With USDA 

Original Date 

Original 

Date 

Original 

Principal 

Amount 

Unpaid 

Principal 

Balance 

Interest 

Rate 

Monthly 

Payment 

Maturity Grant 

Amount Notes: 

USDA RD $— $— 0 .00% $— N/A $2,392,000.00 Wastewater, PH I 

USDA RD 91–18 11/9/2010 $650,000.00 $593,417.73 3 .759% $2,620.00 11/9/2050 $104,000.00 Nelson Rd. ground storage 

tank 

USDA RD 91–17 10/22/2014 $3,065,200.00 $2,994,878.07 4 .00% $12,813.00 10/22/2054 $— FM510 Transmission line 

USDA RD 91–22 $677,000.00 $677,000.00 2 .125% $2,133.00 4/10/2058 $379,400.00 UV Disinfection project 

USDA RD 91–26 $243,600.00 $243,600.00 1 .750% $719.00 4/10/2058 $— UV Disinfection project 

$16,526,600.00 $12,706,927.30 $9,937,600.00 

Loans Pending Closing With USDA 

USDA RD $1,109,000.00 2 .75% $3,812.00 $2,872,838.00 Colonia WW Phase II 

USDA RD $889,000.00 2 .50% $2,932.00 $484,700.00 Bean Road Transmission 

Pipeline 

Loan Applications 

USDA RD $4,454,238.00 Loan & Grant Determination Pending Unknown 1.0 MG Elevated Water 

Tower 

USEPA—Drinking Water State Revolving Fund 

Texas Water Development Board L10 

00198 

8/14/2014 $1,379,000.00 $1,264,300.00 * $8,364.83 9/1/2034 $591,000.00 HWWS Pump Station 

* Not Fixed. 

64 

ATTACHMENT C 


11510010.eps

Fonn RUS-TX 1780-Q 

Revised 2·2010 

USDA, RURAL UTILITIES SERVICE 

WATER AND WASTE 

PROCESSING CHECKLIST FOR NONPROFIT CORPORATION 

Applicant: Applicant Contact Person: Telephone: 

Engineering Firm: Project Engineer: Telephone: 

TYPE OF REQUEST: Applicant Address: Engineer Address: 

Water Sewer 

Water & Sewer 

Other: 

Jh .. bS4.'QUCHt Joan, the rollowmgshou,Jd bt• br ht forward: 

a) Aniclcsof lncorporal.ion; 

b) Bylaws with Suuc Orri4..-c aiJJJrcmd memo 

STEP 1 - Pre-Application 

Initial application and supporting material -Applicant will submit Items 1-9 to the Area Office (AO). 

Forms may be obtained at: http:/lwww.usda.gov/rustwaterlwwforms.htm and 

Texas forms at: http://www.rurdev.usda.gov/txlutilities.htm 

Item Folder Document Document or Prepared Request Date 

No. File Form Number By Date Rec'vd 

Position 

1 3 Notice of Intent to File Applicalion - Publication Applicant 

1780.19(a) 

Application for Federal Assistance SF 424.2. Applicant 

2 3 (include Tax ID & DUNS No.) SF 424C & 424D 

1780.33(a) 

3 3 Project Description to include service Applicant 

area map . 1780.11(a) 

Organizational Documents - Articles & Bylaws Applicant 

4 5 1780.7(3) & 1780.33(d) RB-TX 1780-20 & 

tf £!!!!!U1! borrower, provide RB-TX 1780-20A 

amendments since last approval & 

memo, if applicable. Amendments 

5 3 Council of Governments or State Letter Applicant 

lnter·Govemmental Review and 

Recommendations - 1780.33(b) 

6 1 Current Audit or Financial Report Applicant 

1780.33(0) 

7 3 Suppol1ing Documentation on Letters Applicant 

Existing Debt other than RD debt- Bank Statements 

1780.33(e) 

8 3 Verification of inability to obtain Credit Sl 1780-6 Applicant & 

at reasonable rates & terms - Attachment 2 and AO 

minimum 2 1enders - 1780.33(d) & lender contads 

N/0 unnumbered letter dated 6/30/04 

9 3 Certification for commercial credit and RB 1780-22 Applicant 

outstanding judgments -

1780.7(d). (g) and .33(d) 

TX PN No. 59 
65 


11510011.eps

Fonn RUS-TX 1780·6 

Revised 2-2010 

Item Folder Document 

No. File 

Position 

10 Has the Applicant applied with 

another Agency/Lender for this 

proposed pro·ect? If so whom 

11 3 Initial Processing Conference 

1780.39(a) 

12 3 Project Selection Criteria 

1780.17 

12a Attach to Evidence Regarding Median 

RB 1780·1 Household Income of the Service 

or AJea - 1780.1(b) & .17(c) 

12b Attach to Documentation for Income Survey -

RB 1780·1 1780.1(b) (if applicable) 

12c Attach to Population in Service Area • 

RB 1780·1 1780.17.(a) 

13 3 Review most recent Debarment 

Suspension List to insure Applicant's 

and their representative's names do 

not appear. RD 1940.M, 1940.606 (b) 

bttQ~ /twww ~Q!~ gQ:i/ 

14 3 CAIVRS 

hltRJ:·Ift;n1Q !h!~ ~f'IIVCilm!!l!!clhome !:!!ml 

15 3 Identify known Relationships/ 

Associations with Agency Employee • 

1780.1(f) 

16 3 Initial User Analysis 

17 Input data in CPAP 

18 4 Initial Application Eligibil~y 

Determination & Recommendation to 

State Office 

19 4 Submit File of Items 1·18 to State 

Office for Pre-Application Review 

20 4 Evidence of Initial Application Review 

(State Office Comments)· 1780.32(b) 

21 4 Notification to Applicant of Initial 

Appli<:ation Review Determination 

22 4 Application Conference 

Discuss target dates of Steps 2 & 3 

1780.39(a) · 

23 Update status in CPAP 

Document or Pr p~ red Request 

Form Number By Date 

Applicant/ 

Engineer 

Initial Processing AO/Appl/ 

Conference Guide Engineer 

Form 

RB 1780·1 AO/SO 

Copy of Census or AO 

other data used 

Approval Memo AO 

If applicable 

Copy of Census or AO 

other data used 

Printout AO 

Printout AO 

Memo Applicant/ 

AO 

Wcrtsheet Guide AO 

Form 

CPAP AO 

Memo AO 

Memo so 

Letter AO 

RCR AO 

CPAP AO 

The Area Office should submit the above nems for State Office (SO) review filed in an 8-position folder. 

All running case records (RCR) should be filed on top in position 3 in date order. 

AO = Area Office or Sub-Area Office 

SO = State Office 

TX PN No. 59 

Sl = RUS Staff Instructions 

RB = RUS Bulletin 

Page 2 

Date 

Rec1vd 
66 


11510012.eps

Fonn RUS-TX 1780·6 

Revised 2-2010 

Page 3 

Step 2 - Preliminary Engineering Report & Environmental Report 

APPLICANT AND ENGINEER WILL ASSEMBLE THE FOLLOWING MATERIALS AND SUBMIT AN 

ORIGINAL AND ONE COPY TO THE AREA OFFICE. FOR QUESTIONS OR CONCERNS ABOUT 

PREPARING THE PRELIMINARY ENGINEERING REPORT OR ENVIRONMENTAL REPORT, PLEASE 

CONTACT THE STATE OFFICE. 

Item Folder Document Document or Pr p~ red Request Date 

No. File Form Number By Date Rec'vd 

Position 

24 3 Site Visit - Sl1780·2(2.4)(a) RCR AO 

25 6 Agreement for Engineering Services • EJCDC. Applicanv 

1780.39(b) R8 1780..26. Engineer 

R8·TX 1780·26 

26 6 AD4 1048, "Certification Regarding AD-1048 Engineer 

Debarment. Suspension. lneligibil~y 

and Voluntary Exclusion" ·1780.33(h) 

27 6 Certifications for Contracts, Grants, RO 1940-Q, Engineer 

and Loans (Regarding Lobbying)- Exhibit A·1 

RD 1940-Q & 1780.33(h) or SF-lll. if 

applicable 

28 6 Forward to SO recommending Memo AO/SO 

approval of Agreemenl1780.39(b)(1) 

29 PER File Preliminary Engineering Report - TX Guide in Engineer 

1780.33(c)- 2 copies Preparing PER. 

TXRUS 

Instruction 1780-C 

30 6 Forward to one copy to SO Memo AO 

recommending approval of PER 

31 6 Preliminary Engineering Report Memo so 

Approval by State Engineer 

32 ENV File Environmental Report • 1780.33.(f) R8 1794A-602 ApplicanV 

2eopies Engineer 

33 ENV FILE Forward one copy to SO Memo AO 

recommending approval ER 

34 ENV File Environmental Report Memo SEC 

& Approval by State Environmental 

3 Coordinator (SEC) 

35 ENV File Environmental- Public Notice and R8 1794A-602 ApplicanV 

Publishe( s Affidavit (if applicable) Exhibit 8.1 to 8.4 Engineer 

36 ENV File Environmental - FONSI Sl1794·1 SEC 

Letters/Documents Exhibit D 

(if applicable) 

37 ENV File Environmental- FONSI Sl1794·1 ApplicanV 

& Newspaper clips and Publisher's Exh b~ E& F Engineer 

3 Affidavit (W applicable) 

38 Update Environmental Approval dates CPAP AO 

inCPAP 

TX PN No. 59 
67 


11510013.eps

Fonn RUS-TX 1780·6 

Revised 2-2010 

Page 4 

STEP 3- Application 

APPLICATION AND SUPPORTING MATERIAL SUBMITTAL - THE APPLICANT WILL SUBMIT ONE COPY 

OF ALL ITEMS LISTED IN STEP 3. THE AO AND SO WILL DETERMINE THE TYPE AND AMOUNT OF 

ASSISTANCE IT IS WILLING TO CONSIDER AND THE CONDITIONS THE APPLICANT MUST MEET TO 

RECEIVE ASSISTANCE. ALL SUBMITTALS WILL BE CONSIDERED FOR A GUARANTEED AND DIRECT 

LOAN OR COMBINATION, AND THEN GRANT ASSISTANCE WILL BE CONSIDERED. 

Item Folder Document Document or Prepared Request Date 

No. File Form Number By Date Rec'vd 

Position 

39 3 Notice of Public Information Publication and Applicant 

Meeting and Minutes - 1780.19(b) Minutes 

40 3 Certification Regarding Debarment or AD-1047 Applicant 

Suspension · 1780.33(h) 

41 3 Certification Regarding a Drug-Free AD·1049 Applicant 

Worl<place • 1780.33(h) 

42 3 Certifications for Contracts, Grants. RD 1940·0 . Applicant 

and Loans (Regarding Lobbying)- Exhibit A-1 

RD 1940·0 & 1780.33(h) and SF·LLL, if 

applicable 

43 5 Current list of Board of Directors. Memo Applicant 

Term and Expiration Date 

44 1 Audit Reports lor previously 3 years Aud~s Applicant 

45 3 Proposed Operating Budget • RD 442·7 Applicant 

1780.33(h) & 1780.41(2) 

46 RCR Inequities within Service Area RCR AO 

(pending disputes) . 1760.11 

47 3 Certification of Users by Rural RB· TX 1780-40 AO 

Development Manager 

48 3 Update Lender contacts from llem 8 Lender Letters AO 

(info cannot be 6 months old) 

Sl 1780·6 and Commentary 

49 3 Documentation relative to Health or Letter· applicable Applicant 

Sanitary problems • 1760.1 O(c)(1) and lor 75% grant or 

1780.13(b)(1) Poverty rate 

50 5 Water Purchase Contract or Sewage ApplicanV 

Treatment Contract wl approval Guide for Water Attomey 

~ if ;applicable (if new contract. Purchase 

must submit DRAFT prior to funding) RD 442·30 

1780.62 or 1780.63 

51 4 Submit Water Purchase Contract to Memo AO 

SO lor review prior to loan submittal 

If applicable. 

52 3 Evidence of Availability of Other Memo Applicant 

Funds- 1780.44(1) AO 

Leveraged Funds 

53 

TX PN No. 59 
68 


11510014.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Item Folder Document 

No. File 

Position 

54 3 Evidence of Overall Review of 

Applicant's Financial Status -

Sl1780-2(2.4)(c) 

55 5 Verify with Texas Comptroller of 

Public Account the certification of 

aocount status · 1780.33(e) 

htte:JJ~~a.92a.~tat~.tx y~ 

56 3 Cost Estimate of Proposed Project 

Attach to (info cannot be 6 months old prior to 

Project requesting funds) 

Summary 

57 3 Update Project Summary and 

Underwriting 

- 1780.41 

58 4 Transmittal Letter to SO with 

recommendations/comments/history 

59 Submit File to State Office for 

funding 

Document or 

Form Number 

RCR 

Computer printout 

Cost Estimate in 

PER 

Print Automated 

Forms 

lnCPAP 

Memo 

STEP 4 - State Office Review 

Page 5 

Pr ~ red Request Date 

By Date Ree'vd 

AO 

AO 

Engineer 

AO 

AO 

AO 

STATE OFFICE WILL PREPARE THE LETTER OF CONDITIONS FOR AREA OFFICE. THE AREA OFFICE 

WILL PREPARE THE NECESSARY FORMS STATED IN THE LETTER OF CONDITIONS AND DELIVER TO 

THE APPLICANT FOR CONSIDERATION. 

Item Folder Document Document or Prepared Date 

No, File Form Number By Completed 

Position 

60 3 Prepare Letter of Conditions • RB 1780·19 so 1780.41 (a)(5) 

61 3 Prepare Proposed Budget RD TX 1942-7 so 

62 3 Prepare briefing of proposed project Memo so for Project Announcement -

Sl1780·2(2.7)(e) 

63 4 National Office Approval Memo NO 

(If applicable) 

64 4 Evidence of Full Application Review Memo so (State Office Comments authorizing 

the issuance of the LOC and 194().1) 

• 1760.32(b) 

65 

TX PN No. 59 
69 


11510015.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Page 6 

STEP 5- Deliver Letter of Conditions 

THE AREA OFFICE WILL SCHEDULE AN APPOINTMENT TO DELIVER THE LETTER OF CONDITIONS 

ALONG WITH THE ATTACHMENTS. THE LOAN SPECIALIST MUST READ OVER THE CONTENTS OF THE 

LETTER AND ANSWER ANY QUESTIONS THE APPLICANT MAY HAVE. 

Item Folder Document Document or Prepared Request Date 

No. Fi le Form Number By Date Rec•vd 

Position 

66 3 Letter of Conditions (LOC) LOC AO 

Signed by the AD or authorized RD 

representative - 1780.41(a)(5) 

67 3 Letter of Intent to Meet Conditions - RD 1942-46 Applicant 

Discuss timeframe to meet Automated 

conditions- 1780.41(a)(6) 

68 2 Request for Obligation of Funds- RD 1940-1 Applicant& 

2 originals must be signed Automated Agency 

1780.41(a) 

Under item 44, Comments & 

Requirements- List Security 

requirements and add "Approval of 

financial assistance is subject to 

terms of the Letter of Conditions 

dated --- 69 3 Applicant Certification. Federal RD 1910-11 Applicant 

Collection Policies for COnsumer or 

Commercial Debt • 1760.33(h) 

70 3 Equal Opportunity Agreement- RD 400-1 Applicant 

RD lnst. 1901 -E 

71 3 Assurance Agreement - RD 400-4 Applicant 

RD lnst. 1901-E 

72 5 Loan Resolution Security Agreement RB 1780-28 Applicant 

- 1780.39(1) 

73 5 Water and w aste System Grant RB 1780-12 Applicant 

Agreement (if applicable) 

74 3 C redrt Alert Interactive Voice website AO 

Response System (CAIVRS) 

!ltiRi:li!!JtR-b!.!sl 92Yfa~ri!R!&licJhome bUD UpdateCPAP 

75 

76 

77 4 Submit 2 original signed Obligation RD 1940·1 AO 

forms to SO for approval, along with 

copy of budget, letter of intent, and 1" 

& last page of LOC (dated & signed) 

78 2 Evidence Applicant Notffied of Letter so Approval- 1780.41(b) 

TX PN No. 59 
70 


11510016.eps

Fonn RUS-TX 1780·6 

Revised 2-2010 

Page 7 

STEP 6- Pre-Loan Closing 

NOTE: IT IS VERY IMPORTANT THAT THE APPLICANT, ENGINEER, ATTORNEY, AND AREA OFFICE 

COORDINATE THEIR EFFORTS AT THIS TIME. EVERYONE WILL BE OBTAINING AND FINALIZING A 

VARIETY OF INFORMATION TO GET THIS PROJECT TO THE BIDDING STAGE. NOTE: BIDDING WILL 

NOT BE AUTHORIZED UNTIL CLOSING INSTRUCTIONS HAVE BEEN OBTAINED FROM THE OFFICE OF 

GENERAL COUNSEL (OGC). 

Item Folder Document Document or Prepared Request Date 

No. File Form Number By Date Rec'vd 

Position 

79 5 Legal Services Agreement • RB·TX 1780·7 ApplicanV 

1780.39(b) Attorney 

80 5 Certification Regarding Debarment. AD·1048 Attorney 

Suspension, Ineligibility and Voluntary 

Exclusion · 1780.33(h) 

81 5 Certifications Regarding Lobbying • RD 1940-0. Attorney 

1780.33(h) Exhibit A·1 

82 5 Check OebarmenVSuspension Printout AO 

(Attorney)- httgs:/lwww.egls.gov/ from 

Webs~e 

83 5 Legal Services Agreement • Approval letter so 1780.39(b)(2)- Concurrence from SO 

84 3 Agreement Between Applicant and Agreement Applicant 

Individual Users • 1780.9(g)(2) (if 

applicable) 

85 5 Copy of Membership Certificate Applicant 

86 3 Management Plan, Facility Applicant 

Maintenance Plan. proposal for the 

maintenance of accounts & records 

and auditor's agreement- See LOC 

1780.39(b)(4) & SI 178Q.4(1)(ii) 

87 3 Management Agreement/Agency RCRor LO 

Concurrence · 1780.39(b)(4) Letter 

88 5 Resolutions of any environmental Resolution Applicant 

mitigation measures - See letter of 

Conditions & Environmental Report 

4.0 Summary of M~igations 

89 5 Water Purchase Contract or RD442-30 or Applicant& 

Wastewater Treatment Contract - other format AO/SO 

Concurrence 1780.62 or 1780.63 

(if applicable) 

90 5 Water user AgreemenVSewer User RBTX 1780.9 Applicant 

Agreement - 1780.39(c) 

91 

TX PN No. 59 
71 


11510017.eps

Fonn RUS-TX 1780·6 

Revised 2-2010 

Item Folder Document 

No. File 

Position 

92 Easement Right-of-Way Easements • 

Folder 1780.44(g)(1) 

93 Easement Right-of-Way Map 

Folder (Approved by President, Attorney, & 

Engineer) 

94 5 Right-of-Way Certificate by 

Corporation 

95 5 Opinion of Counsel Relative to Right· 

of-Way - 1780.44(g)(1) 

96 5 Right-of-Way Certificate by Engineer 

97 Easement State and County Road permits (if 

Folder located in several counties. obtain 

permits from each county) 

98 Easement Railroad Permits (if appli<:able) (Must 

Fokter be assigned to USA) 

99 5 Certificate of Convenience and 

necessity (CCN) (amended CCN is 

required if lines are extended outside 

the current seNice area) 

100 5 Water and/or Wastewater Treatment 

Permhs from Regulatory Agency (for 

surface water/sewer trea tment 

projects if applicable) 

101 5 Water Rights (if applicable) · 

1780.44(g)(3) 

102 5 Option to Purchase Real Property 

(if applicable (prefer proposed 

Warranty Deed) · 1780.44(g) 

103 5 Warranty Deed, Leases and/or Site 

Easements (if applicable) (no reverter 

provisions -<>liginal or copy) -

1780.44(g) 

104 5 Preliminary Title Opinion or 

Commitment for Trtle Insurance (must 

cover land costs plus she 

improvements) 

1. Real Estate owned by appli<:ant 

2. Real Estate to be acquired 

3. Lease (if applicable) 

4. Ingress-Egress Easement (if 

appli<:able) 

5. Sanitary Control Easement (if 

appli<:able) - 1780.44(g) 

105 5 Certificate from Secretary of State of 

Lien Seareh (requested by UCC· 11) 

TX PN No. 59 

PageS 

Document or Pr p~ red Request Date 

Form Number By Date Rec1vd 

RD TX 442-8 or ApplicanV 

RD TX 442·9 Attorney 

Map Engineer 

RD 442·21 Applicant 

RD 442·22 Attorney 

Letter Engineer 

Engineer 

Engineer 

CCN Engineer 

Engineer 

Attorney 

RD 440·34or Attorney 

similar format 

Conveyance Attorney 

Instrument 

RD 1927-9 Attorney 

Attorney 
72 


11510018.eps

Fonn RUS-TX 1780·6 

Revised 2-2010 

Item Folder Document 

No. File 

Position 

106 6 Approval of Final Plans, Specs. 

Unexecuted contract document by SO 

· 1780.61 

107 6 Approval of Final Plans & Specs by 

State Regulatory Agency (TCEQ) 

· 1780.61 

108 6 Resume of Resident Inspector • 

1780.76(c) 

109 6 Approval of Resident Inspector from 

SO - 1780.76(c) 

110 2 Request for Pledge of Collateral (if 

applicable) 1780.45(e)(2)&(3) 

111 2 Evidence that Collateral is Pledged (if 

applicable) 1780.45(e) 

112 2 Electronic Funds Transfer/Automated 

Clearing House (EFT/ACH) and setup 

in ADPS • 1780.45(b)(2) 

113 3 Proposed updated operating budget 

114 3 Rate Study Analysis based on the 

proposed loan • Letter of Conditions 

Contact a Technical Assistance 

Provider 

115 3 Certification of Vulnerability 

Assessment (VA) · Letter of 

Conditions· Contact a Technical 

Assistance Provider 

116 3 Certification of Emergency Response 

Plan (ERP) - Letter of Cond~ion 

Contact a Technical Assistance 

Provider 

117 Update CPAP for VA & ERP plans. 

Certification must be every 3 years 

from date of certifiCation. 

118 5 Transmittal Letter to S/0 

recommending Closing Instruction 

(Follow applicable format in submitting 

docket) 

119 5 Request Office of General Counsel to 

issue Closing Instructions 

120 5 Ck>sing Instructions issued with 

special requirements to LO and 

authorization to advertise & receive 

bids 

121 4 Provide copies of Closing Instructions 

to Applicant. Attomey. and Engineer 

TX PN No. 59 

Page9 

Document or Pr p~ red Request Date 

Form Number By Date Rec1vd 

Memo Engineer 

so 

Memo Engineer 

Resume Applicant 

Engineer 

so 

LO 

LO 

SF-3881 ApplicanV 

Financial 

Institution 

RD 442·7 or Applicant 

similar form 

Applicant 

Applicant 

Applicant 

CPAP AO 

Memo AO 

Memo so 

Memo so 

Memo AO 
73 


11510019.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Page 10 

STEP 7 • BIDDING 

APPLICANT, ENGINEER, AND ATTORNEY SHOULD COMPLETE THE FOLLOWING ITEMS. REFER TO 

TEXAS RUS INSTRUCTION 1780, SUBPART C FOR ADDITIONAL GUIDANCE. 

Item Folder Document Document or Prepared Request Date 

No. File Form Number By Date Rec'vd 

Position 

122 6 Once all requirements can be met Memo AO 

Authorize Engineer to Advertise to Bid 

the Project 

123 3 Interim Financing Evidence of RB 1780-10 Applicant/ 

Commitment from Lender and Notice AO 

of Agency's Commitment (ff 

applicable) • 1780.39(d) 

124 5 Initial Compliance Review - pre-loan RD 400-8 AO 

review - RD 1901-E & 1780.44(c) 

125 3 Check Debarment/Suspension Printout AO 

(Applicant)- RD 1940-M. §1940.806(b) 

tt~s:/.1\vwv{. eg; .g ov/ 

126 3 CAIVRS (applicant) Printout AO 

bneJJLeotRlJYSI.SJ!lt!Brai!~l~! b~ml 

127 2 Authorization Agreement for RD 3550-28 Applicant/ 

PreAuthorized Payment (PAD)- on Financial 

all loans outstanding- update CPAP Institution 

128 3 VerifiCation of Applicant Contribution Memo Applicant 

or leveraged fund (if applicable) 

1780.44(b) 

129 6 Pre-Bid Opening Teleconference Guide Form AOI 

AO should notify Slate Office of Engineer 

teleconference • TX RUS 1780, 

SubpartC 

130 6 Bid Opening - Rural Development Engineer 

representative must attend -

1780.72(b)(2) 

131 Construct Submit Bib Tabulations to SO and Engineer 

File recommendation of award -

TX RUS 1780, Subpart C & 

1780.61(b) 

132 Construct Executed Contract Documents - AO Engineer 

File include assembly checklist 

TX RUS 1780, Subpart C 

. .. . . . . .. . . . . . .. ..... Contract equal or exceeds $25,000-

Certification Regarding Debarment, AD-1 048 wl each Contractor 

Suspension. Ineligibility and Voluntary Contract 

Exclusion 

TX PN No. 59 
74 


11510020.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Item Folder Document 

No. File 

Position 

133 Construct Check DebarmenUSuspension 

File (Applicant, Engineer., Contractor)-

tt~s:llwww.eR .g ov/ 

RD 1940-M, §1940.606(b) 

134 6 Legal Certification Regarding 

Adequacy or Contract Documents -

1780.61(b) 

135 6 Contract Review and Approval by SO 

136 Construct Construct Test Wells (il applicable) 

File prior to bidding of distribution lines 

TX RUS 1780 Subpart C 

137 Construct Approval or Water Source by State 

File Regulatory Agency (il applicable) 

TX RUS 1780 Subpart C 

138 Construct Revised Project Cost Estimate based 

File on award contracts 

140 2 Oe..obftgate excess funds prior to 

closing or provide RCR or justification. 

1780.44(e) 

141 7 Evidence or Insurance-Property 

Insurance. General liability, Flood, 

and Worl<er's Compensation -

1780.39(g) 

142 7 Fidelity or EmplOyee Dishonesty Bond 

• 1780.39(g)(3) 

143 

TX PN No. 59 

Page 11 

Document or Prepared Request Date 

Form Number By Date Ree'vd 

Printout AO 

I rom 

WebSite 

RB 1760-14 Applicanv 

Page7 Attorney 

Memo so 

Engineer 

Memo Engineer 

Engineer 

RCRor AO 

RD 1940-10 

list or Policies or Applicant 

Other Documents 

CopyoiBond Applicant 
75 


11510021.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Page 12 

STEP 8- LOAN CLOSING 

IF THE AWARDS OF THE CONTRACTS ARE WITHIN THE FUNDS AVAILABLE, THE AREA OFFICE MAY 

PROCEED WITH CLOSING. IN THE EVENT ADDITIONAL FUNDS ARE NEEDED, REFER TO THE "GUIDE 

FOR COST OVERRUNS." 

A. AREA OFFICE WILL REVIEW THE CHECKLIST, LETTER OF CONDITIONS, AND OGC'S CLOSING 

INSTRUCTIONS. IF IT IS DETERMINED THAT ALL CONDITIONS CAN BE MET, THEY SHOULD MAKE 

ARRANGEMENTS FOR THE CLOSING AND FOR A PRE-CONSTRUCTION CONFERENCE. 

B. CLOSING AND PRE-CONSTRUCTION CONFERENCES WILL BE HELD AND ALL APPLICABLE 

REQUIREMENTS, INCLUDING THE FOLLOWING WILL BE COMPLETED. 

C. AREA OFFICE WILL MONITOR USE OF FUNDS WITH A TRACKING SHEET BASED ON THE 

CONTRACT DOCUMENTS AND REVISED COST ESTIMATE. 

Item Folder Document Document or Execute Date 

No. File Form Number By Completed 

Position 

144 5 Closing Instructions from SO and Closing AO/ 

OGC. Appropriate parties must sign Instructions Attorney 

at closing 

145 2 Promissory Note RD 440-22 Applicant 

146 5 Deed of Trust - USI RD TX 1927-1 Applicant 

147 5 Certification of the Loan Resolution RB 1780-28 Applicant 

Secretary of the Board must sign at Certification 

closing 

148 5 Other Security Instruments as OGCCiosing Applicant 

prepared by OGC Instructions 

149 Construct Pre~Co struct on Conference (once RD 1924-16 or Engineer 

File closing is complete) similar format 

1780.76(a) 

150 Construct Notice to Proceed wilh Construction RB 1780-13 Engineer 

File Attachment S 

151 Construct Estimate of Funds Needed for 30 Day RD 440·11 Borrower 

File Period · 1780.45(b)(1 )(II) Engineer 

152 Check DebarmenUSuspension Printout AO 

(Applicant)· htt :ttwww e~l ov/ from 

RD 1940-M, §1 940.606(b) Website 

Prior to lo,oan closing 

153 2 Fax Loan Closing Information to Guide Form AO 

Deputy Chief Financial Officer Loan Closing 

(Finance) along wilh Promissory Note Information 

154 UpdateCPAP AO 

155 Construct Request Loan Funds - verify that AO 

File EFT/ACH is setup for loan and grant 

156 

TX PN No. 59 
76 


11510022.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Page 13 

STEP 9 - POST LOAN CLOSING 

THE LOAN DOCKET FOR FINAL OPINION SHOULD BE COMPLETED AS SOON AS THE LEGAL 

DOCUMENTS ARE FILED WITH THE SECRETARY OF STATE. FINAL PAYMENT TO ATTORNEY SHOULD 

NOT BE MADE UNTIL FINAL OPINION IS RECEIVED FROM THE OFFICE OF GENERAL COUNSEL. 

Item Folder Document Document or Prepared Request Date 

No. File Form Number By Date Rec•vd 

Position 

157 5 Final Title Opinion - 1780.44(g)(2) RO 1927-10 Attomey 

158 2 Promissory Note - 1780.45(a)(1) RO 440· 22 AO 

Submit copy of original with advance 

of funds listed to date 

159 5 Request for Final Opinion to SO Memo AO 

Submit all related material as stated in 

the Closing Instructions. 

160 4 Review and submit docket to OGC Memo so 

161 5 Post Review of Loan Closing - Memo OGC 

1780.45 (g) 

162 4 Notify Applicant of OGC post closing Memo AO 

opinion 

163 UpdateCPAP CPAP AO 

TX PN No. 59 
77 


11510023.eps

Form RUS-TX 1780-6 

Revised 2-2010 

STEP 10- CONSTRUCTION FILE 

CONSTRUCTION BEGINS. AREA OFFICE SHOULD SET UP CONSTRUCTION FOLDER. 

Item Folder Document Document or Prepared 

No. File Form Number By 

Position 

164 Construct Statement of Deposits and RD 402-2 or AO 

File Withdrawals (Monitor & Track Funds) similar form 

1780.45(e)(1 )&(4) 

165 Construct Estimate of Funds Needed for 30 Day RD 440-11 Borrower/ 

File Period- 1780.45(b)(1)(ii) Engineer 

166 Construct Partial Payment Estimate - Approval RD 1924-1 8 Borrower/ 

File of Invoices · 1780.45(e)(1) and Engineer/ 

1780.76(e) AO 

167 Construct Contract Change Order so EJCDCForm Borrower/ 

File Approval -1780.75(h) and 1780.76(h) or Engineer/ 

RD 1924-7 AO/SO 

168 Daily Evidence of Daily Diary and RB 1780-18 Resident 

Reports Inspection Reports • 1780. 76(d) Inspector 

File 

169 Construct Project Monitoring/Inspections- RD 1924-12 AO 

File 51 1780-2 (3)(3.1) 

170 6 Prefinal or Substantial Inspection - RD 1924-1 2 Borrower/ 

1780.76(1) · SO should be contacted Engineer/ 

to attend prefinal. AO/SO 

171 Update CPAP once prefinal is AO 

complete 

172 6 Final Inspections - 1780.76(g) RD 1924-1 2 Borrower/ 

Provide Copy of Final Inspection to Engineer/ 

State Office AO 

Update CPAP to 402 status once final AO 

173 is complete 

174 6 Update CPAP Warranty Inspections 

for each Contract (1 1"' month 

RD 1924-12 AO 

warranty) Sl1780·2.3.2(a)(i)(A) CPAP Servicing 

175 Construct Remaining Funds Notify Borrower AO 

File giving them appeal rights in 

aoeordance w/1780.45(1) & 178(}.2. 

2.14(e) once project is completed. 

SO must approve any remaining 

funds 

176 Construct Submittal for remaining funds Memo AO 

File (if applicable) 1780.45(f) & 

511780-2, 2.14(e) SO must approve 

any remaining funds 

177 6 District Director's Report (between 9'" RD 442-4 AO 

& 11 '" month of first year of operation) 

Sl1780-2(3)(3.2)(a)(i) 

Update CPAP Servicing 

TX PN No. 59 

Page 14 

Request Date 

Date Rec'vd 
78 


11510024.eps

Form RUS-TX 1780-6 

Revised 2-2010 

Page 15 

STEP 11-SERVICING 

UPDATE CPAP TO SHOW ALL SERVICING ACTIONS ONCE THE PROJECT IS IN A 402 STATUS. THESE 

ARE JUST A FEW THAT SHOULD BE UPDATED. REFER TO CPAP SERVICING FOR A LIST OF ALL 

INFORMATION REQUIRED OF THE BORROWER. THESE REPORTS ARE REQUIRED IN ACCORDANCE 

WITH THE LETTER OF CONDITIONS ANDRUS INSTRUCTIONS AS WELL AS THE STATE INTERNAL 

REVIEW (SIR) GUIDE. REPORTS SHOULD BE PULLED MONTHLY TO SCHEDULE VISITS, IF NEEDED. 

DUE DATE TYPE OF SERVICING REFERENCE 

Quarterly Quarter1y Management Reports 1780.47(f)(1) 

$ 1 1780-4(2)(ii)) 

Annual Audit/Annual Report 5 1 1780-4(2) 

Annual Budget $ 1 1780-4(2)(i) 

Annual Insurance 1780.39(g)(4) 

Annual Reserve Account 1780.39(e) 

3years Compliance Review - every 3 years for 2 1901E§1901.204(e) 

consecutive times. then every 6 years. 

3years Security Inspections 511780-2(3)(3.2) 

3years Vulnerability Assessment update Letter of Conditions 

certification even if no changes have occurred TX Unnumbered Letter 

3 years Emergency Response Plan- update Letter of Conditions 

certification even if no changes have occurred TX Unnumbered Letter 

Graduation Review 1951-F. § 1951.263 

UPDATE CPAP SERVICING 

TX PN No. 59 
79 

The CHAIRMAN. Well, thank you very much. 

The chair will remind Members that they will be recognized for 

questioning in order of seniority for Members who were here at the 

start of the hearing. After that, Members will be recognized in the 

order of arrival. And, again, I appreciate Members’ understanding, 

the strict adherence to the 5 minute clock. 

I now recognize myself for 5 minutes. 

Well, thank you very much for your testimony. It is clear the 

challenges facing the entire spectrum of infrastructure with respect 

to rural America. And the witnesses have laid that out really, really well this morning. I appreciate that. 

Ms. Otwell, one of the fundamental concepts behind Federal communications policy was this universal service. In other words, everyone should have a landline. 

Can you talk to us about why that was important in the past and 

why, looking forward, that we need to morph that concept across 

the entire spectrum of communications? 

Ms. OTWELL. Absolutely. Thank you, Mr. Chairman. 

The concept of universal service is that no matter where an 

American lives, if they are lucky enough to be in a rural area or 

if they live in an urban area, that they should have access to equal 

services at reasonably comparable rates. 

It started with voice services, and it was a huge success for rural 

America. We got everyone connected. Now we are connecting everyone with broadband, which is the connection of the present and of 

the future, and it is even easier to see the benefits of a broadband 

connection with the educational opportunities, telehealth, telework, 

some smart farming initiatives. Broadband makes everything more 

efficient. The concept of universal service is something that every 

single representative at this table can agree upon, the fact that 

whether you are connecting people with water, electricity, actual 

highways, or the information superhighway, that the continued 

connection to that, regardless of where you live, is what continues 

to make America the land of opportunity. 

The CHAIRMAN. I wish the rest of us were as cooperative as the 

Cities of Comanche and De Leon were. With respect to your hospital, it is about equidistance between the two communities, and it 

is a great example of a good partnership. 

Mr. Calhoun, I live in a relatively dry part of Texas. We call the 

Pecos River a river, but it would only be called that in Texas. 

Help us understand how do we go about communicating to those 

who don’t really have an appreciation or direct contact with locks 

and the waterways of our country to make sure they understand 

it is important? How can we do a better job of communicating that? 

Mr. CALHOUN. Well, thank you, Mr. Chairman. It is a tough 

thing to do, because the further that you are away from a navigable river, the less important it would seem to you. But I would 

contend that there are many different things, from airplane jet fuel 

to agricultural products to coal to steel to cement, everything that 

builds and rebuilds America and will make it great again. 

A lot of them move on the waterways. And we just need to continue to tell our story. And the real key is getting people within 

this body, within Congress, to understand the value of it and getting your colleagues that don’t understand the value of the rivers 

80 

and the navigable waters of the nation to understand them better. 

I think that is one of the things we can continue to do, as well as 

educate the general public. But education, as we all know, is a difficult task. 

The CHAIRMAN. Sure. I appreciate that. 

Dr. Halverson, I was pleased to see that CoBank was able to step 

up and meet the needs of Texans when they were facing drought 

conditions, by providing emergency capital and gap funding to communities in need. For reference, how quickly can communities access private capital for such projects? By comparison, how long 

would an USDA project take and does a partnership help expedite 

the project? 

Dr. HALVERSON. Well, thank you, Mr. Chairman. 

We, as a privately owned cooperative, have tried to be as extremely responsive in terms of time, terms and conditions to our 

customers as we can, whether the situation that they face is a wildfire or a flash flood, or what have you. We work with lots of partners to that end, be they partners in the Farm Credit System, the 

Department of Agriculture, state and local authorities, or whichever combination is most appropriate. 

We value, particularly, our relationship with USDA, and we look 

for ways to expedite those situations to the maximum degree possible when they arise. 

The CHAIRMAN. I appreciate that. Again, thank you, witnesses, 

for your being here today and being really clear about the needs 

of rural America. 

Mr. Peterson, 5 minutes. 

Mr. PETERSON. Thank you, Mr. Chairman. 

Ms. Otwell, I had the Minnesota telecom people into my office 

yesterday, and they were telling me that, for $200 million a year, 

we could get broadband everywhere. And in your testimony, it says 

$110 million. What is the number? Do you know? 

Ms. OTWELL. Absolutely. I can speak to that. 

The rural community-based carriers that NTCA represents, we 

currently have two paths for how we are going to go about regulations, these updated regulations. Both are significantly under-funded, though the first is a model-based path. And that one ties a certain number of locations to a certain amount of money. That one 

is under-funded currently by $110 million. And we know because 

it is tied to numbers and locations, how many consumers that affects. So that is going to affect 70,000 rural Americans that are 

going to get less broadband than they would under full funding. 

And 50,000 additional rural Americans probably will receive no 

broadband because of the underfunding. 

On the other side, the non-model side, is actually worse. They 

are under-funded for the next 12 months by $173 million. And that 

represents money that has already been invested, but the support 

mechanism is under-funded so much that they did not receive that 

recovery of $173 million. What that means is they plan their infrastructure projects for 2018, 2019 and forward. They have to make 

up that difference. That difference has to come from somewhere. So 

that means lesser deployment to the tune of that amount. That is 

where you get those different amounts. 

81 

Mr. PETERSON. This is money that is used to actually put the 

system in place. 

This is not necessarily the money to keep it running once it gets 

there. 

Ms. OTWELL. That is actually the money to keep it running. In 

rural America, because we have so few customers per square mile, 

we need that ongoing support to make the business case to be there 

in the first place. 

Mr. PETERSON. One of the reasons, from what I know, the Universal Service Fund worked for telephones is that we had a tax on 

the bill, and so you could collect it from everybody. But we don’t 

have a tax on the Internet. There is no way to collect anything 

from broadband service. What we are doing is we are collecting 

money on the telephone, and we are using some of that for 

broadband. And that is why, when I hooked up my hunting cabin, 

I had to put a landline in even though I didn’t want one, because 

that is what I had to do in order to get Internet, I guess. 

Ms. OTWELL. You are absolutely correct. 

Part of the changes to our regulations now, we no longer would 

necessarily need to require that landline. However, because it is so 

under-funded, the average company, in order to provide standalone 

broadband would cost $226 in our area to provide standalone 

broadband, and that is not a reasonable cost compared to urban 

America. 

But you are exactly right. That is part of the problem. 

Mr. PETERSON. Well, I have some co-ops that have really done a 

great job. They have taken money from RUS and other places, and 

they have gotten 1 gigabyte service to every community in their 

service territory. We have other places that don’t have anybody out 

there serving them because the big companies abandoned those 

folks, and there is no co-op in that area, and so forth. And so they 

have nothing. 

I have been trying to figure out how we can work this out. And 

it is very frustrating. We had one situation where the city in this 

county had service, and the state had a grant program that would 

have worked to extend it to the rest of the county. But the two big 

companies that I won’t mention that were in that city vetoed it. 

They not only abandoned these areas, they are actually standing 

in the way of us getting service out there. And I had the electric 

co-op come in and try to talk them into going into the business. 

Well, they looked at the situation. And because there is no ongoing 

funding to make up the shortfall, they decided they couldn’t do it. 

Somehow or another, we have to figure out how to get a funding 

stream, as I said in my statement, that is there on an ongoing 

basis so people can go out and extend this stuff out there and make 

it happen, like we did with telephones back in the 1930s. And 

whatever we can do to get that done, sign me up. 

Thank you very much. I yield back. 

The CHAIRMAN. The gentleman yields back. 

Mr. Austin Scott, 5 minutes. 

Mr. AUSTIN SCOTT of Georgia. Thank you, Mr. Chairman. I was 

just wondering if maybe the telecom companies can tell us where 

that hunting camp was. I am kidding. I am just picking on you, Mr. 

Peterson. 

82 

Ms. Otwell, I read your testimony. And the one issue, I take with 

it is that you say we are paying more for the same level of service. 

I would suggest we are paying levels and paying more not getting 

the same level of service in rural America. I live in a little town 

of Chula, Georgia, in between Tifton and Ashburn. And while, certainly, Ashburn has had its challenges with Internet services, 

Tifton being a little larger, has done better. But you get into those 

small towns that even are pretty close to larger areas, our service 

is subpar at best. 

And it was interesting that my neighbor decided to try a different route because they weren’t satisfied with what they currently had. And so when they tried that different route, the different route didn’t work. Then they had to go back into a waiting 

list to even get back on the Internet service that they had before, 

which, again, was a little slow. 

I appreciate you mentioning ComSouth in Hawkinsville in my 

district. They are a great company. I want to mention one of the 

things that has become a concern to us in Georgia with a different 

carrier up in the northern part of the state is that they take money 

to expand the networks, but it is the CAF funds, I believe—is that 

correct—where they are actually supposed to—well, maybe those 

funds are being taken and not being used for the proper purposes, 

and maybe being diverted to other projects. 

What type of accountability measures would you suggest so that 

we make sure that the money that we as Congress put into expanding access actually gets used for access, instead of supplanting 

funds that the companies would have put into those areas? 

Ms. OTWELL. That is a great question, Congressman. I appreciate 

that. 

Whenever we talk about the small company, the rural community-based carrier, Universal Service Fund, some of our forms have 

recently been updated for more accountability. For example, all 

companies, no matter which model or which regulation path you 

took, every year we have to report geocoded locations to all the locations we build broadband to. And if you are in that model-base 

path, we actually even have to report locations we previously have 

built to. At the end of that 10 year period, the FCC will have a 

geocoded map of every single place that we have broadband service. 

We also are not receiving support in certain Census blocks. Census 

blocks that are deemed either too low cost for the high-cost area 

or have a competitor already serving without support, those blocks 

are not eligible for support. Our system really has been built to 

only put the money where it is desperately needed and to enforce 

build-out requirements in those areas. 

Mr. AUSTIN SCOTT of Georgia. You mentioned one thing that we 

need to revisit, and that is competitors. It seems to me that one 

of the problems is that once someone receives a grant for an area, 

if they are not doing a good job in that area, nobody else is eligible 

for a grant in that area when maybe they would do a better job 

for the people. 

Ms. OTWELL. That is not untrue. And what you are mostly talking about there are areas that we call the—— 

Mr. AUSTIN SCOTT of Georgia. It is or is not true? It is true or 

it is not true? 

83 

Ms. OTWELL. That others may not be eligible? 

Mr. AUSTIN SCOTT of Georgia. That is right. 

Ms. OTWELL. You are correct about that. Those are what are in 

the price cap areas. So that is your larger providers usually. There 

are lots of rural areas that they cover that there is not as much 

accountability for. 

Mr. AUSTIN SCOTT of Georgia. In an area where, say, 

Windstream had taken a grant to expand access, but maybe did not 

do what we expected them to do with the grant, because of the way 

the current law is written, you can’t turn around and support 

somebody else that may come in and do what the funds were intended for. 

Ms. OTWELL. For example, a company like mine, we cannot come 

in and receive funding for that area. Most of these areas are your 

higher-cost areas with fewer consumers. And so without that ongoing support, there is really not a business case for one network 

much less two. We do try to not be inefficient in our building and 

using funds in the same area. 

Mr. AUSTIN SCOTT of Georgia. Sure. 

Ms. OTWELL. But that is an issue. 

Mr. AUSTIN SCOTT of Georgia. But my concern is where we have 

allocated Federal money to expand it. It is not being used by the 

company as we intended for it to. But then we can’t help somebody 

who actually would compete with them. 

Ms. OTWELL. Now, there is an option. In some of the latest reforms, some of those companies can turn in some of their areas 

that they are not serving, and there is—— 

Mr. AUSTIN SCOTT of Georgia. They are not going to do that. 

They are not going to voluntarily turn in those areas. 

Mr. Chairman, my time has expired, but I hope that we will continue to look at that area, because a lot of money is being taken 

and then not used for the purpose that it was intended for. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. David Scott. 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Chairman. 

As we approach this issue of rebuilding the crumbling infrastructure, there is another pressing need that we need to attach to that. 

I believe strongly that divine intervention and divine providence 

has played an extraordinary role in the movement forward of our 

nation. And nowhere is that more prevalent than in our having the 

right people at the right time in the right places, and we have had 

many great Presidents, two of which are FDR, Franklin Delano 

Roosevelt, who gave us the New Deal, and Dwight David Eisenhower, who gave us the building of the highway interstate system. 

Both men at the right time. 

But it wasn’t just that. It was the fact that they utilized these 

Public Works programs to address lifting up the employment, and 

the opportunities, and training that strengthen and broaden a new 

era, each time. And as we move to rebuild this crumbling infrastructure, we have another problem, and that is the crumbling 

family infrastructure. 

We have an extraordinarily high unemployment rate which is accompanied by the opiate crisis. And where is that happening? No 

greater place than where we are going to rebuild the crumbling inVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00087 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
84 

frastructure, in our inner cities, and in the rural areas, where, 

among our American young men, the employment rate in some of 

our rural and urban centers is a staggering 41 percent. 

And so I would like for us to take a look at a bill that we have 

introduced in a bipartisan way. Kevin Cramer and I, my Republican friend and I, have come up with a bill that would use this 

Public Works, Private Works Partnership as we move to rebuild 

the crumbling infrastructure, much as Dwight David Eisenhower 

used the Highway Bill, much as Franklin Delano Roosevelt, without which we never would have survived. 

We have a severe opiate crisis throughout our community. But 

nowhere is it more piercing than in the rural areas. Families 

breaking down, joblessness, hopelessness. We put House Resolution 

52 together that would direct our Secretary of Labor to connect onthe-job apprenticeship training programs that would help in these 

areas. 

Our American families right now are in a crisis, particularly as 

it appeals to our young men between the ages of 18 and 39. 

And so we hope that we can address that as we move forward. 

And our bill is H.R. 52, and my colleague, Kevin Cramer, and I, 

the gentleman from North Dakota, would appreciate it if you did. 

Let me ask you, Dr. Halverson, in your testimony, you described 

the Community Facilities Program as a successful model for publicprivate partnerships. Could you tell us, is there anything that we 

in Congress can do to help you improve this program? 

Dr. HALVERSON. Well, this is a program that we think has 

proved highly successful over time on its face. It also is successful, 

not just for the individual investments that have been made, but 

also because it mobilizes and catalyzes additional capital to communities that need it. So not just capital from CoBank and/or the 

Farm Credit System, but from community banks, local banks, and 

state and local authorities, and our request to the Committee to 

help us do this is to speak with our regulator. 

We have an approval process now that I would describe as administratively burdensome, one at a time approvals. We would like 

to see that become an institutionalized programmatic approval 

process so that the business can be executed in a more sustainable 

and viable manner, because we think there are ample opportunities 

for us to do this in rural America, and we would like to do it in 

a more skilled way than we currently can. 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. The gentleman yields back. 

Mr. Rick Crawford. 

Mr. CRAWFORD. Thank you, Mr. Chairman. 

Dr. Halverson, the President has indicated that private dollars 

can be leveraged with public funds to repair crumbling infrastructure. In your view, are the private financiers of CoBank prepared 

to meet that demand? 

Dr. HALVERSON. We absolutely are. As I said in my verbal testimony and written testimony, CoBank and the Farm Credit System 

cannot meet every demand for every project in every place in 

America. We have decades of experience, however, of leveraging 

private-sector capital, working closely with commercial banks, in 

particular, and USDA and others to do precisely that. What is hapVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00088 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
85 

pening and changing, particularly around communications infrastructure is technology is changing, the demand for capital that 

deal with these issues is growing. 

We have a great track record, we believe, of doing the right thing 

to meet the needs, and we would like to continue to do more of it 

and make a substantial contribution, along with all of the other 

sources of capital that include commercial banks, other private 

sources, as well as state and local governments where appropriate, 

and the Department of Agriculture. 

Mr. CRAWFORD. CoBank has a history of these kinds of partnerships, financing through partnerships with local banks, as you 

mentioned, and through utilities, the Rural Utilities Service. Why 

do you think others have been sort of shying away from that type 

of partnership? 

Dr. HALVERSON. Well, I want to give credit where it is due, right? 

There are thousands of community banks across the country who 

do a lot to provide for the needs of their local communities, and regional banks as well. But as you heard in Ms. Otwell’s testimony 

and other members of the panel here this morning, it is nothing 

new in the economies of scale problem. There aren’t that many people in rural America, so the revenue stream that is possible upon 

which to make investments and build businesses is much more 

challenging where population densities are as low as they are in 

rural America. 

And in its wisdom, the Congress established the Farm Credit 

System 101 years ago, and our mission is to meet that fundamental 

issue, and do as much as we possibly can to meet the needs of agriculture, and in the last several decades, infrastructure investment. 

And we intend to continue to do that, and broaden and deepen our 

partnerships with other capital providers to meet these very substantial needs that you are hearing about this morning. 

Mr. CRAWFORD. Ms. Otwell, in your testimony, you talked about 

the important distinction between raising capital for construction 

and assistance in funding the ongoing costs of servicing the system. 

It is kind of like buying the horse and feeding the horse. 

Ms. OTWELL. Exactly. 

Mr. CRAWFORD. The initial investment is one thing, but the upkeep is another. Can you talk about that? Why is it not enough to 

just simply provide cheaper financing to rural systems? 

Ms. OTWELL. Absolutely. Thank you for the question. It does. It 

takes both. The initial loan from either public sources or private 

sources is what helps us put the infrastructure in the ground. But 

as I talked about in my testimony, with only 3.4 customers per 

square mile, that is simply not enough customers to provide for the 

ongoing costs of operating that network, making the loan repayments, et cetera. We really do need that predictable, sustainable 

support to make the business case for the loans in the first place 

and the investment in the first place. 

Mr. CRAWFORD. I am going to stick with you on this one too. If 

you would kind of explain some of the effects of the shortfalls of 

the USF, how that is affecting you and other companies like you 

in rural communities that you serve. 

Ms. OTWELL. Sure. Just like when I was talking to Mr. Peterson, 

we have some actual numbers for the shortfalls. For the model 

86 

side, it is 70,000 rural Americans will get lesser service, 50,000 

may get none. For my company alone, it is 551 customers over the 

next 10 years. And if you are one of those customers, you are likely 

in some of the highest cost areas that we serve, which means you 

likely don’t have another option. So that is definitely a detriment 

to rural companies. 

Companies are having to slow down their investments. When we 

are making long-term investments like this, any sort of unpredictability definitely is hard to make those long-term investments on. 

Workforces are reducing in some cases, and so it is really bad for 

rural consumers. 

Mr. CRAWFORD. Thank you. 

Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman yields back. 

Ms. Adams for 5 minutes. 

Ms. ADAMS. Thank you, Mr. Chairman, Ranking Member Peterson. 

And thank you to all of the witnesses who have testified today. 

And particularly to you, Mr. Wynn. Thank you for coming in from 

North Carolina. 

Ensuring that we have sound and flourishing rural infrastructure is essential to addressing disparities in economic opportunity. 

The state of our rural infrastructure affects food security, education 

quality, access to necessities like broadband, clean water, and 

many other important issues that North Carolina and states across 

America face. Hopefully, the Committee won’t lose sight of what 

constitutes rural in terms of my district and many others across 

the country. 

Also looking forward, we must ensure that any potential infrastructure package addresses the concerns of our rural areas, landgrant universities, particularly 1890s, and our most vulnerable 

Americans. 

Mr. Wynn, let me begin with you and ask, in your testimony, you 

mentioned that in today’s world of video conferencing and online 

education, telemedicine connectivity is not a luxury, it is a necessity. I agree with you. Broadband Internet helps close educational 

divides. It provides access to quality healthcare and crucial work 

support. But unfortunately, many North Carolinians still don’t 

have access to reliable Internet service. 

Could you talk a little bit about what types of tools that you believe electric cooperatives should have access to in order to help 

bridge this digital divide between the haves and the have nots? 

Mr. WYNN. Yes. Thank you, Ms. Adams. And as some of the colleagues here at the table have been already saying, it is a challenge, and it is a necessity to have those things as rural citizens. 

And we hear it clearly from our members who know that rural 

electric cooperatives have brought electricity to rural areas where 

no one else would. And we are hearing that same theme as we realize that broadband and telecommunications is necessary. 

Some of the tools that are necessary, of course, obviously, funding is a major need. I think that we have an opportunity that we 

are seeing at our cooperative as we try to address this in the ability 

to leverage what we already have. And as I mentioned in my testimony, we have started building infrastructure for the purpose of 

87 

providing better service for being more cost effective from a utility 

standpoint. 

But as we build this infrastructure and start looking at the possibility of leveraging that infrastructure to bring broadband, doing it 

in a way that is closely connected and tied in with our current 

business structure is one that provides somewhat of a promising 

opportunity for us, because a lot of the investment is already being 

made on the utility side of the business, and to leverage that investment to bring broadband is in many ways making the numbers 

look a lot better. 

I think that the tools, some of them have already been mentioned, as far as looking at the Universal Service Fund, as far as 

looking at RUS financing, those tools are great, but many of my 

colleagues across the country are still finding it very hard to make 

the numbers work because of the sparseness of our populations. 

Ms. ADAMS. Thank you very much. 

Dr. Coon, it is good to have you here representing APLU. Last 

month, the Committee heard testimony from Dr. Walter Hill from 

Tuskegee who, in his testimony, talked about the devastating landgrants deferred maintenance. Tuskegee alone has about $43 million. My alma mater, North Carolina A&T, has as part of its 

course, $8 billion. 

What infrastructure priorities would you recommend to ensure 

that 1890s and all land-grant universities are prepared to take on 

the important agriculture research of the 21st century? 

Dr. COON. Well, one of the great opportunities here is for the 

Committee, through policy, but then also in the administration of 

that through the USDA, to identify those priorities. For example, 

our sister institution, Langston, has a very strong programming 

goat research and delivering that information to goat producers not 

only in Oklahoma but far beyond. I know the small farmer programs at North Carolina A&T are very strong programs. We talked 

about that. 

Dr. Hill was on the Committee that I was a part of, and we 

talked about having sort of several tiers to a grants program for 

infrastructure. So that you can set the priorities as they are needed 

to support those kinds of programs, but also that the level of funding is tiered as well. If there is a need for $1 million to help with 

the facility, that that is not in some way competing with another 

program that another university requires $30 million for. 

Ms. ADAMS. Okay. Great. Thank you very much. I am out of 

time. 

Mr. Chairman, I yield back. 

The CHAIRMAN. The gentlelady’s time has expired. 

Mr. Davis for 5 minutes. 

Mr. DAVIS. Mr. Chairman, I find it ironic that out of all the 

microphones that don’t work today, it happens to be mine. Is there 

some type of conspiracy from any of our colleagues? 

Completely on purpose, let the record show. But now what is 

wonderful is I have two microphones, so I am in stereo and even 

louder. 

First off, thank you to the witnesses. I want to start my questioning with Mr. Calhoun. I am about to go over to another hearing 

for another committee that I serve on, the Transportation and InVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00091 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
88 

frastructure Committee, to talk about the importance of our locks 

and dams in our inland waterway navigation system. And I would 

like to get your opinion on a few of the issues that you mentioned 

in your opening testimony in regards to that inland waterway system. 

As you know, Mr. Calhoun, there are a lot of my farmers that 

rely upon their grain being able to be shipped via barge on the Illinois and Mississippi Rivers in and around the areas that I serve 

in central Illinois. But we saw the Obama Administration zero out 

dollars for those projects in the line item that we call NESP. 

Can you give us a brief synopsis of why it is important for our 

agricultural sector, not just in the Midwest, but nationwide, to 

have access to that inland waterway system and why it is crucial 

to invest more dollars into it? 

Mr. CALHOUN. Thanks, Congressman. The two words that I always come back to are competition and capacity. And without the 

waterways, the nation is going to lack capacity to get your farm 

products to market. And when you don’t have enough capacity, do 

prices go up or down? They go up. And the price of transportation 

goes up. The price of grain then goes down. 

And likewise, when you want to have competition, you want to 

have different modes. You need the access to the waterways, and 

competition is a great thing when it comes to American business. 

Those are the two words that I focus on. 

The projects in your neck of the woods are very important. They 

are very important. I had a previous life. I worked for Cargill for 

41 years. They are very important to all the members of the National Grain and Feed Association. They are important to all farmers, because the river prices every bushel of grain that is produced 

in this country, not just the ones that are grown around the river. 

When the prices along the river decline, the prices all over the nation are going to decline. 

And so it is very, very critical, some of these locks and dams are 

older than I am, and I am old. And they need to be replaced and 

they need to be revitalized. Because if we have a catastrophic failure, it will cost this country billions of dollars if you shut down one 

of these segments for extended periods of time. And I don’t think 

this nation can afford to do that. 

I know you are on the T&I Committee, and I wish you great luck 

over there. We are very excited about what the President’s come 

out, and he is paying attention to infrastructure. But the trillion 

dollar question always is, who is going to pay for it and how is it 

equitably to be done. 

Mr. DAVIS. Right. Thank you very much for your response. 

Dr. Coon, I thank you for being here. As somebody who represents a land-grant institution in central Illinois, the University 

of Illinois, I am always thankful that anyone from Oklahoma State 

continues to support the U of I colors every time you come in. I notice that Chairman Lucas does the same on a regular basis. I am 

thankful for that. 

But in all seriousness, I want to talk to you a little bit about ag 

research. It has been dwindling. I mean, we haven’t grown it at the 

rate that other research dollars and other agencies have grown. 

Now, as we move forward, I only have a little bit of time left, so 

89 

if you could on behalf of all the land-grant institutions, and especially the one I represent, can you kind of talk about some of the 

regulatory hurdles that you face in accessing those ag research dollars right now and what we can do to relieve them in the future? 

Dr. COON. Thanks for the question, Congressman. And first of 

all, there is no blue. This is all black. 

Mr. DAVIS. It is that orange. 

Dr. COON. Yes. Well, that is 1⁄2 of the Illinois colors. Congressman Lucas just showed up. I had to cover that. 

Seriously, with respect to the regulatory hurdles, any kind of 

public investment is going to come with some level of accountability. And we understand and we appreciate that. We want to be 

accountable. 

But sometimes the accountability ends up consuming more of our 

time, perhaps, than the actual doing of the research. And if we can 

find a way to get to a point of simply saying, did we do what we 

said we would do? Did we spend money responsibly to accomplish 

it? And did what we accomplish make a difference, or do we have 

a reasonable expectation that it will make a difference? If we can 

get back to sort of those sorts of principles, it might help. 

Certainly, in animal handling and well-being, it is important 

that we are good stewards of the animals that we work with, pretty 

high levels of accountability there as well, sometimes puts us in 

kind of a quandary of, well, are we going to invest in that or are 

we going to, actually, going to get some research done with the facility? 

Mr. DAVIS. Thank you. My time has expired. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Ms. Plaskett for 5 minutes. 

Ms. PLASKETT. Thank you, Mr. Chairman. And thank you all for 

being here. 

This is, of course, one of the primary subject matters that we 

here in ag need to be discussing. 

I was very grateful that yesterday, I had a meeting with the Secretary of Agriculture and talked with him about the President’s infrastructure proposal and the need to really have concretely in 

there issues relevant to the rural area. 

Dr. Halverson, you mentioned in your testimony innovative public-private partnerships and the role that they play in helping to 

meet financial needs for infrastructure projects. That is a particular area that is very important to me. 

Before coming to Congress, when I had a real life, I was an attorney doing public finance law. Public-private partnerships are something that I think are very important and instrumental. 

One of the concerns I have with regard to public-private partnerships is how do we incentivize developers and others to come to 

rural areas to engage in those projects? And how do we incentivize 

developers to come into areas where there is not going to be the 

amount of local public funding to support that? 

For example, in the Virgin Islands, which I represent, we face 

enormous financial issues. And so what are the ways that you 

think that we can deploy funding into rural areas that have those 

90 

limited local resources? And have you seen that, and what are examples of that that you can cite for us? 

Dr. HALVERSON. Well, thank you, Representative Plaskett, for 

the question. The facts and circumstances in the local area are 

going to be very determinative in what is possible, right? Whether 

you are in a place with one person per square mile or 50 persons 

per square mile and so forth is going to make a big difference. The 

level of capital requirement and the type of business that we are 

talking about. 

That is a long way of saying, it depends on what the facts and 

circumstances are and the location that you are looking at. And 

there isn’t a one-size-fits-all answer. You can look at them on a 

continuum, and on one end of the continuum you need a higher 

amount of public funding, Universal Service Funds, and other 

forms to help drive down the costs. But you always look for the 

ability to attract institutions, like CoBank and our partners in the 

Farm Credit System, who are providers of reasonably priced capital 

in loan form. 

And there are, in fact, a great array of private companies already 

that are in the infrastructure business, whether it is communications or otherwise. And we bank a lot of those companies, and they 

are always looking for new places to go to continue to grow their 

businesses. We try to support them in whatever way is appropriate. 

If you have a particular situation you would like us to look at, we 

would be happy to do so. 

Ms. PLASKETT. Thanks. Thanks so much. 

Ms. Otwell, a question for you. In the agriculture appropriations 

bill, they recently reported out, the full committee report, language 

directing USDA, the FCC, and the Commerce Department to prepare a report that details each agency’s area of responsibility for 

addressing data speed. We talk about building infrastructure, we 

talk about the role of broadband in that infrastructure for rural 

areas. One of the things that we find very troublesome is the data 

speed and the lack thereof in rural areas, and this becoming a divide for our farmers and for these communities in rural areas. 

Do you believe that it is the Agriculture Department’s area of responsibility to address this? And if so, how? And how does the Department of Agriculture and this Committee work to create any 

broadband infrastructure investment plans in this area? 

Ms. OTWELL. Thank you, Congresswoman. That is a very good 

question. We do have issues with speeds in rural areas. Sometimes 

that is what we talk about when we are trying to build future proof 

networks. And when we are putting fiber in the ground, that is 

only limited by the electronics on either end. And so when we try 

to build networks, that is part of what we are trying to put in the 

best possible infrastructure to be ready for the future. Some of 

what the FCC still deems as broadband is really not fast enough 

to do all these applications that we talk about. 

One thing we do want to think about is with limited resources 

from whatever possible way, we don’t want to necessarily reinvent 

the wheel. The FCC oversees that Universal Service Fund that has 

been revamped. It is ready to go. It just doesn’t quite have enough 

funding in it right now. 

91 

We are always interested to hear other opportunities, things like 

that. But we want to be careful not to reinvent processes and not 

be efficient in that way. We also don’t want to overbuild networks 

where they do already exist and waste money that way either. 

Ms. PLASKETT. Okay. Thank you very much. 

I yield back. Thank you. 

The CHAIRMAN. Yes, ma’am. The gentlelady’s time has expired. 

Mr. Rick Allen, 5 minutes. 

Mr. ALLEN. Thank you, Mr. Chairman. 

And we are, I guess, going to talk about broadband here and the 

critical application of that service. Obviously, we know that agriculture, from a technology standpoint, has advanced very rapidly. 

And I will say that I planted some peanuts, and the first time I 

have ever done that, and I touched the wheel of the tractor, and 

I planted them like 17′′ over from the year before. And so it is pretty amazing what we are able to do in agriculture today. 

But the bottom line is, we have to do something about connecting 

our rural America, our farmers, and all those in agribusiness, not 

only through the various programs, but also education and things 

of that nature. And we have to have good service, because these 

folks are, obviously, very dependent on it. 

With that, as far as, if you could share your organization’s perspectives on the need to develop infrastructure that supports 

broadband in both wired and wireless formats and, in particular, 

where access to high-speed mobile services are currently lacking. 

Who in the panel would want to address, how can we get where 

we need to get here? 

Ms. OTWELL. I would love to speak to that. Thank you, Congressman. 

Mr. ALLEN. Yes. 

Ms. OTWELL. We do see a lot of working together with wireless 

networks. In our area, in some of our most remote areas, we do actually use a fixed wireless product to serve, especially some of 

those farms in those extremely remote areas. However, the thing 

to know about that is that even with a wireless network, those customers don’t know which one they are on. They don’t care. They 

are still generating huge amounts of data. 

You talked about some of the smart farming initiatives. People 

are using video streaming for some of the educational things, telehealth applications, that is generating huge amounts of data. And 

any wireless network cannot handle that amount of data except 

over a very short distance. You still have to have that wired network in place to the tower to be able to offload that data. 

In our area, we also have some national cellular carriers that 

have towers in our area, and we have built fiber to those towers, 

because they face the same problem. It is still a huge amount of 

data that has to meet the rest of the world somewhere. 

Mr. ALLEN. Is this like a density issue, in other words, costs per 

user situation to pay for this amount of data that is needed? 

Ms. OTWELL. It is. I mean, it doesn’t matter if you are in a rural 

area or not, we are still using massive amounts of data. And certain networks just can’t handle that yet. 

Mr. ALLEN. Okay. 

Yes, sir. 

92 

Mr. WYNN. Yes. Congressman, I think the same issues that the 

farmers and other people that you mentioned are having, so are 

utilities, electric co-op. 

Mr. ALLEN. Okay. 

Mr. WYNN. Because the way we operate as a business now has 

changed tremendously over time. We have to have smarter devices 

downstream on the lines, which really require broadband infrastructure. Anything we do now has to almost be connected some 

way and have some level of communication. 

One solution that we are looking at is as we build our infrastructure as the electric cooperative, the members who are being served 

by us are also reaping the benefits of that. So that leveraging is 

another possibility that we are toying around with. The utility, the 

cooperative that is having to do this is almost not an option as it 

once was in the past, so there may be some opportunities. 

Mr. ALLEN. All right. Well, we have private companies implementing broadband service or co-ops in private companies right 

now. We have had this tremendous lag from getting service to the 

user as we get more dispersed into the less populous areas of the 

country. And, of course, that is a financial matter. 

Of course, it sounds like it is also a data requirement matter. In 

other words, our farmers and folks like that need tremendous access to data, and I guess it is the same in the electric co-ops as 

well, it is pretty complex? 

Mr. WYNN. Absolutely. Data is becoming the thing that we really 

have to have to operate. And it is really driven by the demands of 

our members or consumers. What they expect today is totally different from before, and data is definitely in the mix of being necessary. 

Mr. ALLEN. Right. Well, of course, in my district, agriculture is 

the number one industry. And in my State of Georgia, agriculture 

is the number one industry. I don’t quite understand why we can’t 

serve that industry the way we need to serve that industry with 

these technical services. And, obviously, electric co-ops are a big 

part of my district as well. Thank you for your testimony. 

Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Panetta for 5 minutes. 

Mr. PANETTA. Thank you, Mr. Chairman. 

And thank you to all the witnesses who are here, your preparation, your time, as well as your testimony. I appreciate you coming 

in. And I apologize for having to step out, but I am back, and now 

you get to hear from me a little bit. 

I hail from the central coast of California, what many of my 

members here know as the salad bowl of the world. We have a 

number of specialty crops. Specialty crops take a lot of labor to 

produce. Unfortunately, we have a lack of labor right now, and that 

is an issue. And there is, obviously, two ways to deal with that. 

One is here in Congress with proper immigration reform, but two 

is mechanization in dealing with the lack of labor. 

One of the valleys I have is Salinas Valley. Right now, it is obviously big in specialty crops. There are a number of other valleys. 

But one of the other valleys that is paying particular interest to the 

Salinas Valley is Silicon Valley, because they are seeing that that 

93 

is kind of a way to go in regards to where their investment can go. 

And that is happening. We are seeing a lot of ag tech innovation. 

And they are very excited about it, let me tell you. They are very 

excited about coming up with ways to help the farmers out to fill 

that lack of labor. 

But my question to you is, and what I am seeing and what I am 

hearing, is that without proper broadband, the mechanization will 

not be implemented, and it will inhibit innovation when it comes 

to mechanization. And so I was wondering if any of the witnesses 

could testify to that fact as to how it does inhibit innovation, how 

it could prevent actual implementation of mechanization in our agriculture. 

Dr. HALVERSON. Well, I will take a stab at that, Congressman 

Panetta. I have had the opportunity to be out in your area, and we 

have some very important Farm Credit partners who lend to farmers and ranchers in your district and all over the State of California. But I hear that exact same thing all over the country. 

Right? I go out and I visit farmer producers all over the place. And 

modern technology, which generates exponential growth in data, as 

my colleagues just indicated, is a substantial contributor to the 

dramatic increases in productivity in American agriculture over our 

lifetime. 

And there is no end in sight to the upside to our ability to continue to produce. We do have some significant constraints, however, in our ability to realize the tremendous value that our agricultural productivity can generate in the long run. Right? One of 

them is the transportation infrastructure, the other is communications. 

If Congressman Allen were here, I would tell him the same 

thing. If you get into your combine or your tractor, sometimes you 

need a USB chip with a bunch of data in it and you need wireless 

communications; otherwise, you can’t actually operate your technology. To your point, it becomes a real impediment. 

Many of the pieces of high technology equipment these days that 

people use, whether in specialty crops in particular, they get 

downloads of new software overnight. Their difficulties get diagnosed remotely from the foreign country where the thing was produced or from somewhere else in the country, and they can’t take 

it to a shop, and there is not somebody for 500 miles to come and 

fix it. It gets diagnosed remotely. 

What we are seeing is a dramatic convergence between the communications industry and the agricultural industry, because they 

are so interdependent on each other. And our ability to continue to 

generate the kind of agricultural productivity that we have, whether in base row crops or specialty crops, increasingly depends on our 

ability to deploy high-quality, ubiquitous communications infrastructure. 

Mr. PANETTA. Exactly. Thank you. 

Any other witnesses? 

Dr. COON. Yes. Congressman, just a few other things. Information really is key to success in agriculture today. And the faster the 

better. And so in cooperative extension, we find ourselves with a 

tremendous opportunity to deliver information and programs to 

producers very effectively using technology, but it doesn’t get to 

94 

them if they don’t have the bandwidth. Right? So that is one of the 

challenges. 

And, likewise, we have a meteorological network within Oklahoma that we provide, along with the University of Oklahoma. 

And, again, it is extremely valuable information for producers in 

determining when it is best to spray or burn or whatever, but they 

have to be able to get that data, so it is really key. 

One of our ag econ faculty members is conducting a study currently. It is USDA funded. Dr. Brian Whitacre is looking at if you 

make it available, how do people use information when it becomes 

available in a rural setting? And so he is going out and basically, 

creating hot spots in rural communities and then studying the behavior of people as they use that to get information. What are they 

using it for? Where are they going, and so on. 

Finally, rural health is also tied in with this. And our dean for 

the Center of Health Sciences, Dr. Kayse Shrum, is developing a 

network to provide telemedicine, in effect, in rural communities. 

Again, we have to have that bandwidth. 

Mr. PANETTA. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Denham, 5 minutes. 

Mr. DENHAM. Thank you, Mr. Chairman, and thank you for holding a hearing on this important topic. 

This is an area I focus a lot on, on Natural Resources and Transportation and Infrastructure as well. I introduced the New Water 

Act, because in our area, agriculture does not survive without having, not only proper conveyance, but equally important, if not more 

important, proper storage. 

And I thought it was important to make sure that we had a program where we could borrow money where users would pay that 

up-front funding back, as a water user, I pay for my water, and 

that would go to paying back the infrastructure. 

Our challenge is, like WIFIA and TIFIA, we need another type 

of funding for the Bureau of Reclamation districts, so the New 

Water Act would deal with WIFIA. 

Mr. Macmanus, I wonder if you could tell us a little bit about 

some of the work that has been done with WIFIA and whether or 

not you see other benefits to storage across the country? 

Mr. MACMANUS. Congressman, thank you for your question. I 

was beginning to feel a little neglected up here. 

But our focus in the water industry is on potable water, predominantly. We do not focus on the irrigation and delivery and conveyance for crop production. But we deliver predominantly to people’s 

homes, businesses, and commercial facilities, processing facilities 

but not irrigation water. We are not familiar intimately with that 

program. 

Mr. DENHAM. But you have utilized WIFIA in the past? 

Mr. MACMANUS. Sir, I am not familiar with that program. 

Mr. DENHAM. Okay. Well, let me just ask it one step further. On 

the Clean Water Act, we end up with a lot of compliance issues. 

You had talked about this in your testimony. 

What I have heard from some water users is that the compliance 

issue oftentimes is a hindrance to putting new projects in place, beVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00098 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
95 

cause they are concerned about whether or not, as they have implemented new projects, they can actually achieve the compliance and 

end up facing penalties that they would not have faced previously. 

Mr. MACMANUS. Yes, sir. The example I gave in my testimony, 

the UV disinfection system, we sampled our raw water the first 

time in 2010. And when our samples came up positive for the 

cryptosporidium, we had to start a process of implementation to get 

this infrastructure built to have a treatment technique that would 

deal with these log removals that the EPA requires. 

My concern with the regulation itself is no matter how the results on our raw water turn out again in the future, if the 

cryptosporidium is no longer there, the EPA still mandates that I 

provide the treatment continuously whether or not the 

cryptosporidium is even present anymore. A lot of the regulations 

that we deal with don’t necessarily have a real-world practical application. 

The other side of this story is we have been treating the same 

raw water from the Rio Grande River in our treatment facility with 

conventional coagulation, sedimentation, and filtration for 30 years, 

have never had a water-borne disease illness outbreak. And now 

that we have started testing for cryptosporidium, I have to add an 

additional $11⁄2 million of infrastructure to treat an organism that 

we have haven’t really had an issue with. 

Do the regulations always make sense? No, sir, I can’t say that 

they do on the investment that we have to make in that regard. 

EPA is always going to err on the side of safety when it comes 

to public health, and their drive on this whole issue on the 

cryptosporidium goes back to Milwaukee when you had a massive 

release of manure into the receiving stream or the raw water 

source for the City of Milwaukee, and they had a massive waterborne disease outbreak. We are not looking at the same circumstances by any means, but we are still having to comply with 

those strict issues. 

And I will give you another example. 

Mr. DENHAM. Thank you. My time is short. I have one more 

question. But I do agree that we have seen a lot of projects that 

have been hindered just because of the compliance and the fees associated with it. 

My final question. Mr. Calhoun, on the Transportation and Infrastructure Committee, we talk a lot about the inland waterways and 

the conveyance of a lot of our products that move interstate commerce through our waterways. 

We have a 29¢ tax, fuel tax, that goes to the Inland Waterways 

Trust, which is also matched by public funds. It is a great way to 

make sure that those waterways stay open. But we always see new 

efforts to put new fees, toll ways, locks and dams, that could interfere with that interstate commerce. I wonder if you could briefly 

discuss that. 

Mr. CALHOUN. Certainly, thanks, Congressman. I commented in 

my testimony about our objection to tolls and fees. There is the difference between the waterways and a toll road. First of all, if you 

build a new toll road, you still have the state highway you could 

drive on and go around it. You have other alternatives than paying 

96 

these high-priced fees, and we don’t see that on the waterways. 

You have one way to go, and it is through the locks and dams. 

And we feel very strongly that you are going to penalize the 

users of the system, in this case the American farmer. Because if 

you have a 25¢, 50¢, 75¢ charge, that will have to be passed 

through to either the ultimate consumer or the person who produced the product. So that cost is going to go someplace. 

Mr. DENHAM. Thank you. I am out of time, but if I could ask you 

to respond in writing, if you could elaborate on the other beneficiaries that may also have a stake in the inland waterway system 

and making sure that it works properly. We are looking at those 

other beneficiaries that might also not be able to be helpful. 

Mr. CALHOUN. Absolutely. 

Mr. DENHAM. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Ms. Blunt Rochester. 

Ms. BLUNT ROCHESTER. Thank you, Mr. Chairman. 

Many people don’t realize that Delaware, they might drive to our 

beautiful beaches, but don’t recognize the diversity of our state. We 

have a very strong agricultural community, and so I want to, first, 

thank the Chairman and the Ranking Member for this panel. I 

mean, speaking of diversity, it is very diverse issues as well. 

Really, I want to address my first question to Dr. Coon. And I 

am on the Biotechnology, Horticulture, and Research Subcommittee, and so it kind of dovetails with Ms. Adams’ question 

and also Mr. Davis’ question. As we know, there are many benefits 

of research conducted at public universities, including the fact that 

the information gathered is publicly available and transferable. 

The academic setting allows for more long-term goals in research, 

and we can look forward, and it is not constrained by the profitability goals of private research. Also, as our country ramps up and 

tries to make sure that our investments are there, it helps us to 

be competitive. 

I am fortunate to have two land-grant institutions in my state, 

University of Delaware, which is my alma mater, and also Delaware State University, both doing really great research in the 

areas that are important to this Committee and supported by Federal funds. 

But you talked about the fact that, basically, you have to deal 

with faculty lines over facility lines. And my question is, how does 

deferring maintenance over time increase the likelihood of agricultural research being dominated by private research? And what 

kind of research may we lose out on because of this shifting dynamic? 

Dr. COON. Thank you, Congresswoman. I appreciate the question, your thoughtful considerations there. 

I think, in part, the risk of everything become being privatized, 

it is real. And at the same time, right now, we have a healthy balance in that a lot of the fundamental research that is important 

for agriculture still is being done primarily at the public universities. It has been that way, still is that way. And where the private-sector takes over is in the application of that, developing varieties, using technology that was originally developed at the universities. I think that is a good balance. 

97 

And the risk is if the support for the fundamental research goes 

away, what will happen to the private interests that have depended on that in the past? Will they pick that up? There is a lot 

of risk with it. A lot of things don’t turn out, and so the payoff isn’t 

quite the same. We run the risk of losing our overall capacity if it 

all becomes in the private-sector. 

And then at the same time, the private-sector tends to focus on 

the larger commodities, the more profitable areas and so on. Specialty crops tend to not get as much attention, and some of the 

other local issues don’t get the attention that they might otherwise. 

Ms. BLUNT ROCHESTER. Thank you. 

I have a quick question for Mr. Wynn. It might not be quick, but 

I have a quick question for you. You mentioned microgrids. Can 

you talk about why these are an important infrastructure investment, and also, if there is potential for them to help alleviate the 

maintenance cost of having to wire our most rural areas? 

Mr. WYNN. They are important because of the diversity of our 

system and how it is evolving and the demands of our consumers. 

Having a microgrid also provides more resiliency when there are 

outages. And electricity is becoming more and more critical, and 

the loss of it is becoming more and more of an issue when it is not 

there. Microgrids provide another opportunity to make sure that 

our systems are more resilient. 

We are kind of going back from where we come, because in the 

beginning, that is what we really had, was microgrids, and we got 

larger and became more centralized. I think that is important. 

The second part of your question was? 

Ms. BLUNT ROCHESTER. And do you think it would help alleviate 

the maintenance of having to wire? 

Mr. WYNN. There are situations even with our system where we 

are looking at the possibility of microgrids, especially in rural areas 

where you, in some cases, have miles and miles of line to get to 

a load that is centralized, that is very far away from the centralization. There are going to be opportunities, yes, that I think 

microgrids will make a lot of sense financially. 

Ms. BLUNT ROCHESTER. Great. 

And I only have like 10 more seconds, and I wanted to ask Ms. 

Otwell a really quick question. 

You mentioned about sending information to the FCC on the 

geocoded map. Is there a map of the country, I have heard yes and 

no, that shows how we look from a broadband perspective? 

Ms. OTWELL. I don’t think there is an accurate one right now. 

How about that? 

Ms. BLUNT ROCHESTER. Thank you. 

The CHAIRMAN. The gentlelady’s time has expired. 

Mr. Dunn, 5 minutes. 

Mr. DUNN. Thank you, Mr. Chairman. 

Dr. Coon, in recent months, a proposal to cap the indirect cost 

of certain Federal grants, research grants, has been floated. Today, 

fortunately, in the Appropriations Committee, they are marking up 

a bill that would prohibit those caps on NIH grants and USDA 

grants. 

Would you discuss the impact those caps have on your research? 

98 

Dr. COON. Thank you, Congressman. I appreciate the question. 

And thank you also for all who had a part in protecting us from 

that change. 

We call them facilities and administration costs. They are real. 

If we are doing research in a building that was built for classes, 

that is great, but the research that is going on in there wasn’t necessarily included in that original construction. We really have to 

recognize that the mission of the university going into research is 

beyond what it was created for, or what our state funding offers 

for. 

We really need to find a way to pay for the actual cost of the utilities that go into the research and so on. 

Mr. DUNN. I am going to suggest that you keep pounding on everybody that the cost of overhead is how you do business. I mean, 

your business is research. 

Dr. COON. Absolutely. 

Mr. DUNN. Your overhead is not going to go away. 

Dr. COON. It is real. 

Mr. DUNN. Yes, it is real. So thank you very much. I am going 

to keep you in mind. 

Dr. COON. Thank you. 

Mr. DUNN. Ms. Otwell, I so liked the last question on the mapping, because that is the complaint that I hear about, that the 

maps aren’t real. We hear that there is broadband and there isn’t, 

or there isn’t broadband and there is. And so I am just going to 

ask, submit to you that I think that we need some better maps. 

And I have an Internet page that looks like it reveals that information, can you comment. 

Ms. OTWELL. And that is why some of our reforms have changed, 

to give a better view of what is exactly out there to each and every 

location. I think that is definitely the reason why some of those 

have changed. 

Mr. DUNN. In general, it is a bad idea for the government to be 

competing against private enterprise in these spaces. However, Mr. 

Scott made a good point. Just because you have a provider and 

service in there doesn’t mean it is good service. 

In the 2 minutes or so left to us, I would like you and I to speculate on which technology or technologies are actually ultimately 

going to deliver the broadband to all the rural and remote areas 

in our country, whether the Virgin Islands or in the second district 

of Florida, which is very agrarian, and a lot of areas that are 

under-served. This is part cost-benefit analysis, and it is part sort 

of science techie analysis. I also sit on the Science, Space, and 

Technology Committee. We think we have some insights to share 

with you over there on that. Please speculate. 

Ms. OTWELL. You are right. There are definitely some varying options for different technologies. However, I would, once again, restate that a lot of those futuristic technologies, some of your satellite and wireless and whatnot, those cannot handle the amount 

of data currently that we are looking at. 

In my company alone, our average usage for our users at night 

has gone up more than 750 percent over the last 5 years. And that 

is not slowing down. It grows exponentially by the day. And so 

99 

right now, the only technology that can handle that much data is 

a fiber network. 

Some of these other options are great for that last little bit to 

reach the consumer. I had mentioned that we also use some fixed 

wireless in some of our higher cost areas. It is a better benefit 

ratio. But there comes a point where you have to have that wired 

network to complement all of those other options. They really are 

complementary networks. 

Mr. DUNN. I actually sat with some of the very, very large ISP 

providers. I don’t need to name them. You know who they are. And 

they are hesitant to build out that. It is the cost-benefit analysis. 

They just don’t see that they are ever going to get that investment 

back on fiber or wire or beamed broadband. But they do think that 

they have the solution in hand with satellites. There are new satellites, new cube sats, constellations of cube sats that they have already rented the launch times in Florida to put these things up. 

I think that that is what you are going to see, is going to be 

the—— 

Ms. OTWELL. The only thing I would say about satellite technology, especially in these rural areas, sometimes our network is 

the only voice network, and that is still extremely important for 

public safety purposes, things like that. And with satellite, you do 

have issues with weather. Sometimes they have latency issues, and 

so we do want to keep that in mind too, that there are other things 

that these networks are used for that maybe some of that technology is just not quite there and can provide just yet. 

Mr. DUNN. All right. Well, thank you very much. I thank all the 

panel. 

I yield back, Mr. Chairman. 

The CHAIRMAN. The gentleman yields back his time. Thank you. 

Mr. O’Halleran. Tom, I am going to figure out how to say your 

name one of these days. 

Mr. O’HALLERAN. We will talk about it. Thank you, Mr. Chairman. 

Getting back to cost-benefit analysis, I guess I wasn’t going to go 

in that direction initially, but it is the right direction to go in. 

We have these urban centers all around the world, but in America especially, and then we have rural areas. And they are interdependent on one another. There is just no doubt that the urban 

centers need that electrical grid, they need the water, they need 

the natural resources that come out of these rural areas, they need 

the food. And the rural areas need the telemedicine. They need the 

quality of life issues. The urban areas need the rural areas. On the 

weekend, this coming weekend, we will be flocking out of Washington to get to those rural areas to relax and enjoy and hopefully 

have decent broadband. 

But the core issue here is that there is a cost-benefit analysis on 

that side of the equation. The idea that this interdependency is 

only a one-way street that we have to look at these urban centers 

with large populations in order to make sure that we have benefit 

from the cost standpoint when it is a shared environment. And we 

must find a way to be able to identify that. 

What I am asking is does anybody up there know of any type of 

studies that have been done to clearly identify this cost-benefit of 

100 

the urban environment coming out to us and our environment coming into urban all the time, and that this is a crucial area for us 

to invest in as a country, and the urban people get as much out 

of it as we do in rural Arizona? Anybody. 

Ms. OTWELL. I would be happy to speak to that. I don’t have it 

in front of me. I would be more than happy to send it to you afterwards. Last year, the Hudson Institute did a study in combination 

with the Foundation for Rural Service that showed just rural 

broadband infrastructure contributed $24 billion to the nation’s 

economy as a whole, and that 2⁄3 of that actually benefited urban 

Americans with only 1⁄3 of it benefiting rural Americans. 

And so just like you said, they need us; we need them. And so 

anything we can do, like providing adequate broadband in rural 

areas, everything we do to make rural areas more efficient saves 

money for urban Americans too. The price of milk, different commodities that come out of rural America, those efficiencies in turn 

help urban Americans save too. 

Mr. O’HALLERAN. Ms. Otwell, I did read in your testimony, or 

somebody did. But the core issue to me is that we study the economic development potential and the potential of the cost to rural 

areas of serving that population that is coming out. The cost to the 

children that live in rural areas by not having the education necessary, the cost-benefit of rural areas being able to go out and compete for language teachers, doing it through telecommunications or 

broadband, telemedicine through broadband, instead of having to 

have that specialist at the hospital. 

There are these benefit analysis processes that must go on, I believe, in order for us to get a true picture and thereby be able to 

justify the investment in broadband throughout our country. Because my district, when you take a look at Navajo at 60 percent 

unemployment and White Mountain at 80 percent unemployment, 

these are critical issues. In rural America in general, the unemployment rate is so high, much higher than in urban settings. 

And so we have to find a way to balance this process in an appropriate way, and get others to recognize the need for more of a community approach to this than just, well, I have to run a line from 

point A to B, and here is how much it costs, and we just can’t do 

that. It costs us all, if the quality of life of people and our ability 

to get people to service the infrastructure of America is lost, and 

these towns and cities are lost. 

I open up that to anybody for discussion in 34 seconds. 

Dr. HALVERSON. Well, sorry. Go ahead. 

Mr. WYNN. I yield. 

Dr. HALVERSON. I mean, the logic of that is very compelling, Congressman. The challenge, of course, is it is really, really hard to 

measure. Right? We recently produced a piece of research to try to 

illuminate the differences between the service provision and various infrastructure segments in rural America versus urban America, and we found it challenging to get data to demonstrate the 

case and to measure some of these things. 

What you tend to get is organizations who are focused on a more 

micro level on their industry, their region, or what have you. I am 

unaware of anyone who has done this in the way that you are describing, which is kind of on a national basis, to try and come up 

101 

with some proxy for what is the value to urban America of everything they get in rural America and, therefore, that they ought to 

contribute in some way to paying for, which is, we would probably 

agree is worthy, but very, very hard to measure. 

Mr. O’HALLERAN. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. LaMalfa, 5 minutes. 

Mr. LAMALFA. Thank you, Mr. Chairman. 

Ms. Otwell, you mentioned that there are Federal proposals to 

accelerate the ability to do projects, and examples I have, like in 

the Siskiyou County in the far north part of my north Cal district, 

you have delays from U.S. Forest Service, for example, in starting 

environmental reports, because they are doing a lot of other things 

besides that. 

For one provider, their project has already cost them a full year, 

and now additional delays are taking into the next year. This happens a lot. You have BLM, where there is cross jurisdiction, perhaps. Again, Forest Service, California Department of Transportation. Then you have to deal with NEPA and historic preservation 

compliance. 

And we are not talking like we are building a dam here. We are 

not building a four-lane freeway. We are running some wire, maybe 

in a lot of cases already down in, perhaps, an existing right-of-way 

or something that will be buried and never seen again after we 

have made our initial footprint. 

Do you see that some of the proposals being talked about to accelerate projects is—do you really think it would provide any true 

regulatory relief? Do you have any recommendations that we could 

build off of those to take it a little farther and be able to accelerate 

what people need in these areas? 

Ms. OTWELL. Absolutely. Thank you, Congressman. That is a 

very timely question. Anything that can be done to streamline the 

many difference processes, especially involving areas that deal with 

Federal lands, would be helpful and free up resources to go back 

into deployment. 

For example, sometimes when you are dealing with those, you 

are going to have to file the same type of report and reviews across 

many different agencies. They all have their own timeline, they all 

have their own processes. Anything that can streamline that would 

definitely be a savings, and maybe having a certain agency be a 

lead on that and kind of oversee the whole process. 

Another thing that happens sometimes, we have duplicative reports between state and Federal levels. Sometimes, if there is a 

way that the Federal permit can use the state review as being useful, then that helps too. 

Mr. LAMALFA. Well, we are looking at some one-stop shopping 

proposals. Do you see anything on the horizon already I might not 

be aware of that is being done administratively or other legislation 

that we should be aware of to get behind? 

Ms. OTWELL. There are a few things. I know there was a 2015 

highway bill that involved some NEPA reviews, trying to consolidate those, but they were only for projects over $200 million, which 

is quite a bit larger than most of our companies are doing. SomeVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00105 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
102 

times, even just making sure those thresholds are low enough to 

benefit the small companies as well would be very helpful. 

Mr. LAMALFA. Yes. A tiny threshold maybe would be good here, 

because these seem like pretty low impact, low footprint projects 

we are talking about. 

Mr. Wynn, kind of a similar line with you here on this, is that 

you mentioned that reform priority, NEPA, ESA. And we are going 

to have a pretty good look at ESA this week as well. Would significant reform help stretch the dollars significantly further for infrastructure funding? With the limited funds we have available, do 

you see these hangups being actually very costly in getting them 

accomplished? 

Mr. WYNN. Yes. Congressman, they are costly in terms of lost opportunities that we otherwise would have if those were not there. 

So the short answer is yes. 

Mr. LAMALFA. Not necessarily the building of the infrastructure, 

but just blowing up the idea, people look at it and throw their 

hands up and say—— 

Mr. WYNN. In our world, yes, there are costs. And some of those 

regulations are really driving us towards private sources of funding 

because of the overhead burden that is there, the need for engineers to come in and do the inspections even after the fact. 

We think there are some real costs involved that—— 

Mr. LAMALFA. What would be one or two things you would like 

us to get done in that area, if we could? One NEPA, or what would 

it be? 

Mr. WYNN. Well, really, just recognizing the nature of our business. We are electric cooperatives that really don’t have a profit 

motive at all. We are governed by people we serve. Just the model 

itself really can alleviate some of the concerns that may be there 

that we are not going to intentionally do something that would 

hurt our neighbor if you would. I think we just really should be 

taking a new look at the motive behind some of the regulations in 

the beginning and realizing that the threat that might have been 

feared is not there any longer. 

Mr. LAMALFA. Bring them back to the original mission? 

Mr. WYNN. That is right. 

Mr. LAMALFA. Okay. Thank you, panelists. 

And thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Ms. Lujan Grisham, 5 minutes. 

Ms. LUJAN GRISHAM. Thank you, Mr. Chairman, and thank you 

for this hearing today. 

Ms. Otwell, the Federal Government has historically played a 

major role in the expansion of all major technology advances in 

communications. Whether it is electricity or radio, the telephone, 

the Federal Government has certainly made these technologies 

ubiquitous throughout the country. 

And, well, it feels a little bit awkward to say this, given that I 

have been talking about broadband since, it seems like, laying fiber 

was invented. Clearly, for rural America, it is the next frontier. 

And unless we get that done, we are not going to be able to support, not only our rural communities, but I would submit that even 

in ag, narrowing it completely, just the advances now in dairy 

103 

farming, where quite literally we have dairy cattle wearing pedometers and computer technology figuring out when these cows are 

ovulating, and they are having a huge increase in the success rates 

of fertilization for their herds by using technology. 

Interestingly enough, where we have some of the largest dairies 

in the country, we can’t access any of this technology in a routine 

and productive manner. And when we talk about innovations in ag 

communities, we know that most of these large ag enterprises are, 

thank goodness, are in rural America and providing incredible economic footprints as well as feeding the world. But they can’t take 

advantage of those innovations and the work that we invest in, in 

other titles in the farm bill unless we deal with broadband. 

And my colleague, Congressman Scott, he actually stole my question, because I spent 30 years working in state government on and 

off, and the big issue about any technology investments through 

government was that the accountability aspects, we would be promised a product, we would be promised that this would happen in 

this way, that would not occur. We would spend billions of dollars 

and folks would feel a bit as if we are not understanding technology in the way that makes it reasonable for a lot of stakeholders 

or folks who are doing that contract work or competitive review or 

accountability, perhaps we shouldn’t be investing anymore. And the 

problem is, of course, that is not right and, at least in my opinion, 

that gets you nowhere. 

You started to talk about accountability. What could we do in addition that makes it very clear that getting broadband everywhere 

it needs to be should be a priority and should be in the farm bill, 

making sure that states like mine, where you heard them refer to 

the Navajo Nation, 90 percent of the Navajo Nation has no access 

to the Internet, 90 percent. 

We have to get that addressed, and they are a huge ag producer. 

What else can we be doing? 

Ms. OTWELL. Thank you, Congresswoman. I appreciate the question. To be perfectly honest with you, for the community-based 

rural carriers that have served some of those most rural areas, we 

have just undergone the reform to address some of those sparsest 

areas. However, the funding is not there for the mechanism. 

We have actual numbers for how much it is unfunded. You can 

see the investment that rural broadband deployers want to put in 

but simply can’t because it is not there. 

Ms. LUJAN GRISHAM. But I want to make that case for you. I 

agree with you. 

Ms. OTWELL. Yes. 

Ms. LUJAN GRISHAM. What would I tell my colleagues about 

making sure that the investments that we could put into the farm 

bill would be carried out in the most effective, reasonable, and accountable manner, given that, I would guess, there is not a single 

Member who hasn’t felt like some stakeholder in a technology investment at government didn’t exactly get what we thought we 

were going to get and yet spent a ton of money? Any specific ideas 

that we could advocate for that, because I feel like the farm bill is 

one of the most accountable efforts in terms of a private-public 

partnership to advance the issues that we think are a priority, including rural economic development. 

104 

Is there anything specific for you, or anybody on the panel, that 

we could contemplate to create that balance, and then maybe provide an incentive for more funding as a result? 

Ms. OTWELL. I think just pushing those that have worked on 

these mechanisms to fund them, that accountability is there, the 

targeted funds to build those targeted locations is there. 

There was a letter that many of the Committee Members signed 

to the FCC earlier this year talking about that lack of funding, impressing upon them to put the funding there, to put these reforms 

into action, because it will build broadband. 

Ms. LUJAN GRISHAM. Thank you. I yield back. 

The CHAIRMAN. The gentlelady’s time has expired. 

Chairman Lucas for 5 minutes. 

Mr. LUCAS. Thank you, Mr. Chairman. 

Dr. Coon, in your comments, you noted that the land-grant universities, and I would be remiss if I don’t remind everyone the miracle and the wonder of the Morrill Act of 1862, and the 1862 landgrants, and the 1890 land-grants, and the 1994 facilities. That opportunity for the first time truly in the history of the world for anyone with enough effort, enough energy, and some smarts to be able 

to secure a college education. Just an amazing thing, the landgrant universities. 

But you mentioned the $29 billion replacement value of the infrastructure of these facilities and the $8 billion in deferred maintenance that we face now. Could you expand for a moment on what 

kind of things we are talking about that $8 billion would go to? 

And would you explain how that would help facilitate researchers, 

students, and the industries that utilize all this information that 

is developed? 

Dr. COON. Well, thank you, Congressman. I appreciate your loyalty to the land-grant system and share your respect for it. 

Where we find ourselves is we need to look at ways of solving 

the problem without simply going out and saying we are going to 

spend $8.4 billion. Because the kind of facilities—let me use it as 

an example from Oklahoma State. We have a dairy barn. It is a 

beautiful dairy barn built in the 1940s. And gorgeous design and 

so on. Our Holsteins don’t fit in it. It was built for Jerseys. Our 

Jerseys would probably fit in it, but they wouldn’t stay in it today 

if we tried to put them there. And it is this gorgeous wooden roof 

that has no protection or prevention for a fire. And so to go in and 

make that a useable facility, we would spend millions of dollars to 

put sprinklers in and so on and so forth, and end up with a substandard facility. 

In cases like that, we are better off to do what we are doing, 

which is to build a new free stall barn at a lot lower cost that is 

going to last for a long time. Some of it is simply replace it. But 

the rest of it is to, as I said, to be more diligent in ourselves in 

using our finances to make sure that we are taking care of the facilities. And no one wants to spend money on that, because it isn’t 

glitzy and it doesn’t get the attention of the public. But, the bottom 

line is it is good stewardship, and that is what we need to take on. 

Mr. LUCAS. And those facilities enable the scientists, who are 

also professors and teachers, working with the undergraduate and 

graduate students to do their work. 

105 

Expand on that for just a moment. Sometimes we forget that 

land-grants are a hands-on experience. 

Dr. COON. Absolutely. Well, one of the great risks that I fear is 

if we don’t address this adequately, we are going to continue to lose 

our most valuable faculty, our greatest expertise, either to the private-sector, or it may be we are stealing each other’s best, perhaps 

from one university to another. But what that means is that we no 

longer have that expert on our campus teaching students, either 

graduate students or undergraduates. In other words, we are not 

creating the next generation of scientists. 

And so it is important to have the research done. But in the process of conducting that research, we are also building in the sustainability of this whole approach to agriculture that we created beginning in 1862, where research is what is driving innovation in agriculture. 

Mr. LUCAS. I was late this morning, slightly, because a number 

of us from the Financial Services Committee had gone down to the 

Federal Reserve Board to visit with the Chair and the Vice Chair 

and one the Governors. And we got into a discussion about productivity and the decrease in the rate of productivity improvement in 

this country in the last 20 years. And the bottom line from their 

research department was, essentially, we weren’t investing with 

the intensity we had in the previous decades or century, and that 

this dramatic increase in productivity, which is how you increase 

people’s standards of living. They produce more. You don’t run faster. You work more efficient with more efficient processes, that we 

were entering a point where, through lack of investment, that rate 

of productivity was slowing in comparison to the rest of the world, 

and that, if we were going to increase the standard of living, we 

had to enhance that, which tees off quite well in what you are describing about continuing the mission. 

Because there will come a time, correct, as you just noted, where 

if we don’t invest enough, and that infrastructure, both physical 

and intellectual, will go away, and we will never catch up once we 

are behind the curve. 

Dr. COON. Well, as you know, we have a fantastic wheat breeder, 

Dr. Brett Carver, who heads up our wheat improvement team, and 

he puts up with some really ugly facilities. 

Mr. LUCAS. He could work on any of four continents if he wanted 

to go somewhere. 

Dr. COON. Yes, he could. He could go anywhere in the world and 

be paid a lot more than we are paying him. Don’t let him know 

that I said that. 

But, the point is he will probably stay with us. And I am going 

to do everything I can to make sure he has great facilities. He will 

probably stay with us. But who is going to follow him? How do we 

replace him if we don’t have any better facilities than we have 

today? 

Mr. LUCAS. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Ms. Kuster, 5 minutes. 

Ms. KUSTER. Thank you, Chairman Conaway. And thank you for 

this hearing on rural America. We appreciate it. 

106 

Most of you have spoken about conditions that are very familiar 

to me in New Hampshire and rural New England. And we have 

talked about all of these things in the 41⁄2 years that I have been 

in Congress, and made some good progress on red-listed roads and 

bridges, replacing aging municipal water systems, modernizing our 

electrical grid, and expanding broadband access to our rural communities. 

But I want to focus in on the broadband, because that has been 

of particular concern to regions of my district. According to the 

FCC 2016 Broadband Progress Report, there are over 99,000 Granite Staters who live without access to fixed advanced telecommunications capability. And a lack of broadband infrastructure has had 

significant consequences for those rural regions of the state. When 

the rural markets go unserved, companies are less likely to relocate 

and invest in new jobs. Housing prices are now depressed because 

of lack of access. Schools are burdened with costs and hospitals are 

less likely to use innovative telemedicine. 

My question is for Jennifer Otwell. In your testimony, you referred to the importance of the Universal Service Fund and how it 

relates to Federal loans and grants by small telecom providers. Can 

you explain why it is so important and what effects the current 

shortfalls in the budget are having on small telecom providers in 

rural communities? 

Ms. OTWELL. Absolutely. Thank you, Congresswoman. The Universal Service Fund is what allows our company to make the business case to have those networks in the high-cost rural areas in the 

first place. If we only have 3.4 customers per square mile, those 

customers themselves cannot pay enough, or should not have to 

pay enough to make those networks feasible. While we have programs like RUS and companies like CoBank and RTFC that provide the capital to make that initial investment, the loan programs 

that allow us to make those very finance-heavy investments, we 

really need that predictable sustainable USF support to make the 

business case for it to be there in the first place. 

Ms. KUSTER. My question is what can we do in a bipartisan way? 

And in particular, do we need to change how the USF collects fees? 

And I am concerned about what is going to happen to rural 

broadband deployment if the high-cost budget doesn’t change. 

Ms. OTWELL. You and me both. That is a very good question. 

There are proposals out there to start thinking about contributions 

and who is contributing to the fund. Those are very pressing questions that the FCC needs to work through, and we need Congress 

to continue to press them to work through those issues. 

Ms. KUSTER. Thank you. 

Now this is a question for Curtis Wynn. Can you share with us 

a bit what the increased adoption of distributed energy resources, 

like wind or solar, is doing in your system? I know you have community solar. And if you could talk about your investments for the 

future, are you considering distributed energy in future investments? 

Mr. WYNN. Yes, Congresswoman. We are, in North Carolina, 

really embracing this whole concept or movement, if you will, of 

distributed energy resources. We are investing, as you mentioned, 

in the community solar projects. There are several in the state 

107 

where, if you look at it from the standpoint of how it gets the availability of solar to every person who wants it, whether they are a 

renter or they live in an area that has trees that can’t get to the 

sun, it is available through a model that has been pretty creative 

and very effective. So that has been one area. 

But as in terms of the impact, it is another source of power, is 

the way we look at it. And how it fits into the grid is very important, and we are making the adjustments. Because the traditional 

way that the grid was built was basically not designed to have the 

fluctuation and power sources coming as they are. But that is not 

an excuse. That is just a reality of how things are going. And we 

are making adjustments. 

As a matter of fact, in my testimony I mentioned that we have 

a microgrid project that is an experimentation opportunity for us 

to see how it can be more fully deployed throughout the whole state 

with other systems, and across the nation, because it actually is a 

collaboration between our national association and our state G&T. 

Ms. KUSTER. Well, I just want to give a shout-out to a wonderful 

project in my district, the Town of Peterborough, New Hampshire, 

where they took a water treatment facility that had big ponds, and 

they used USDA funding for a much more efficient tertiary water 

treatment plant, and then they took the 7 acres where the ponds 

had been and filled it in and covered the whole thing with solar. 

And the whole town is using it. It is great. 

Thank you. I yield back. 

The CHAIRMAN. The gentlelady’s time has expired. 

Mr. Yoho. 

Mr. YOHO. Thank you, Mr. Chairman. Thank you all for enduring a long hearing, and we appreciate you being here. 

I would like to expound on what Chairman Lucas was talking 

about. But before that, I want to mention what Congressman 

Crawford said about the horse. Buying the horse is the cheap part. 

Being a veterinarian, I know that. And that is the easy part. 

I want to start with you, Dr. Coon. With the land-grant universities, and I hail from Florida, University of Florida, Double Gator. 

And they’re great facilities. I mean, it is a marvel. I went to vet 

school there. Their vet school would put a lot of human hospitals 

to shame. Great facility. And then we met with the director of 

IFAS, and he was talking about they need more facilities, and we 

have to build them. And yet they are complaining about the maintenance of maintaining them. And so I want to praise my university, and I am going to pick on them a little bit, because I know 

this applies to all universities in the land-grant situation. 

When we put these infrastructures in, sometimes they become a 

Taj Mahal. And they are looking at expanding a research facility. 

We were just down there on an ag tour. And they were talking 

about the new research facility that they are going to put in, state 

of the art. But I worry about the maintenance of this. 

And so when you put in a project, what do you do for long-term 

maintenance? And before you answer that, I want to add that I 

was talking to somebody that is in charge of a municipality, their 

infrastructure as far as their water, wastewater. And I asked them, 

I said, ‘‘What do you build into the project to take care of it, for 

108 

the maintenance and replacement 10, 15, 20 years down the road?’’ 

He shocked me because he says, ‘‘Oh, we don’t plan on that.’’ 

When you guys design something, as you are the association for 

public land-grants, when you sit down and you are into your think 

tanks and you are talking to people, yes, build this nice facility, but 

where is the funding for the maintenance? Because where we are 

at today, and Chairman Lucas brought this up, the competitiveness 

and the productivity of what we have today is based on what we 

invested in 150 years ago, and now we are at the point where we 

haven’t kept up with that. How do we get beyond that for the next 

generation so that your top researcher stays at your university and 

that it invites the new ones? 

What is your recommendations on that? 

Dr. COON. Well, thank you, Congressman. We talked about this 

in one of the reports that preceded this. And that was that, basically, if you are going to get Federal funds, you need to have a 

stewardship plan as part of the proposal. In other words, to answer 

your question, before you ever are granted the funds. It is a best 

practice that we have shirked, and just as the fellow you talked 

with perhaps may have in the water treatment system. We need 

to build it in at the beginning. 

And one of the ways that we are already doing that is, if someone comes to us and says they want to give us land, but they want 

us to keep it forever so that it doesn’t get developed, and so on and 

so forth, that is great. And what we say to them is, we will do that 

under one condition: Provide us an endowment that will cover 

those maintenance costs. We need to do the same with anything we 

build. 

Mr. YOHO. Let me ask you about that, because I know some of 

these universities are sitting on a billion or billions of dollars endowment. The question that I have here is what are some of the 

ways that the institutions are looking beyond Federal appropriations to modernize the facilities and equipment? Keep in mind 

where we are as a nation. We are at $20 trillion in debt. And we 

have to bend that cost curve or this is going to get worse next year 

and the next year. 

Go ahead. 

Dr. COON. For one thing, it is always going to be a mixed package. Federal funds are part of it. They are never going to be the 

whole package. State funds have to be part of it, university funds 

and others. If it involves teaching, student fees end up coming in 

and helping to cover it as well. Philanthropy is huge. It is big part 

of it, certainly for us and for a lot of universities. 

That is part of the mixed package, I guess, but the opportunity 

here at the Federal level is to use Federal funds to bring that other 

money. In other words, to make it contingent. You only get the 

Federal funds if you are able to match it with these other sources. 

Mr. YOHO. I am going to move on to another question. I am running out of time. 

Ms. Otwell, so many times we can bring the infrastructure, the 

rural broadband, so far. How do you go that last mile? What is the 

best way to go? Because, as you said, you might have one or two 

people per square mile. Who should be responsible for that? And 

109 

is there a smarter way to do it? And then keeping in mind 20 year 

replacement or maintenance of that. 

We have 20 seconds. 

Ms. OTWELL. Okay. Exactly. We are looking to put in futureproof networks as much as possible. If you are going to go through 

putting in a piece of fiber into the ground, you want it to be what 

will last for 20, 30 years. Some of those older networks, there is 

really not a midrange network. The older networks, they are already almost obsolete for what we are going to need them for in 

just a few years. There are different technologies. You almost always need that fiber—— 

Mr. YOHO. I am out of time, and I will reach out to you. Thank 

you, ma’am, because I want to follow up. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Soto, 5 minutes. 

Mr. SOTO. Thank you, Mr. Chairman. 

I have the honor of representing central Florida on citrus and 

cattle country. We, in the citrus areas, are facing a huge crisis with 

citrus greening. Over 70 percent of our production is down from 

peak production. And as we are developing resistant rootstocks 

that are currently about to be deployed, we are going to need an 

ability to be able to get these out into the field quite a bit. 

And I want to thank you, Dr. Halverson, you and CoBank, for 

your partnership with our citrus producers. 

If we were able to get out a lot of these resistant rootstocks, are 

you prepared, with your bank, to work with our growers and government to help really deploy these, even if they are semi-resistant 

in getting us closer to addressing this great crisis? 

Dr. HALVERSON. Absolutely, we are. I mean, that is really why 

the Farm Credit System is here, to support agriculture. There are 

risks, obviously, associated with that, and the industry is facing 

some really catastrophic difficulties. We will absolutely be able and 

willing to support the growers through other Farm Credit Association institutions that will lend directly to the growers but also to 

the co-ops as well. 

Mr. SOTO. Well, as we continue on our quest for the resistantproof, citrus greening rootstock, in the meantime, there are a lot 

of good strains that are being developed right now. 

The second thing I would like to talk about is organics. As we 

know, investments in infrastructure are key to spurring more production of organics, including organic grain. And since it has to be 

processed in a facility that is certified to handle organic products, 

it could require a lot of investment in infrastructure. 

How can CoBank and other of our ag lenders help with these organic hotspots to bring more opportunities to our rural economy? 

Dr. HALVERSON. Well, there is clearly a lot of dynamic change 

going on in agricultural production. Organic production is a part of 

that. And without getting into too much detail about the mechanisms and mechanics of becoming organically certified and otherwise, we, the Farm Credit System, we, CoBank, we finance everybody. We finance organic producers, and non-organic producers. 

What I would say, as you know, we are delighted to be focused 

and have the Committee’s attention as well focused on infrastructure, because whether you are an organic producer or not an orVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00113 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
110 

ganic producer, all of these producers are going to benefit from the 

type of quality of infrastructure that we are focused on providing 

for them. 

Mr. SOTO. Well, I would strongly encourage you all to consider 

pilot programs on the subject, being that the profit margins are 

pretty good, and they really bode well for the future of our American farmers. 

Turning next, this Committee is about new infrastructure, which 

is really an opportunity in rural America. And I know that our national rural electric cooperatives are really leading the way in renewable energy. 

And, Mr. Wynn, you may be familiar of the Town of Clewiston 

in Florida, which is run predominantly by bagasse, which is a byproduct of sugar. Where are we with renewables and going forward? How key is that going to be in delivering energy in our rural 

communities? 

Mr. WYNN. I think you said it in terms of its deployment. 

NRECA and its member systems have been very aggressive in 

many ways and very proactive in terms of deploying renewable energy. Many of our cooperatives are developing systems on their 

utility lines to help to modernize the system, help them become 

more resilient. We have really embraced that. It is conceived as a 

part of our future, and we are embracing that. 

Mr. SOTO. Well, I strongly encourage you to consider continuing 

doing that, whether it be biofuels through byproducts of commodities that aren’t used, whether it be hydroelectric or solar, these are 

all great opportunities for areas that may not have access to other 

sources. 

And I want to end with you, Ms. Otwell. We have certain fields 

in Florida where they have WiFi to be able to measure how tall a 

crop is, or sensors to develop when they need to have more water 

nutrients. Do we have that capability now in most of our farms, 

based upon our broadband access to really have those types of 

high-tech opportunities available? 

Ms. OTWELL. Absolutely. And we are trying to build to as many 

farms as we possibly can. And with the fully funded USF budget, 

we will have the ability to make those investments, knowing that 

there is a business case to build out to the most rural farms in 

those areas. 

Mr. SOTO. Thank you, and I yield back. 

The CHAIRMAN. The gentleman yields back. 

Mr. Thompson, 5 minutes. 

Mr. THOMPSON. Thank you, Mr. Chairman, and thanks for this 

important hearing as well, looking at the state of infrastructure in 

rural America. 

Mr. Macmanus, I have a close working relationship with the 

Pennsylvania Rural Water Association. I appreciate what you all 

do at the state level, and certainly our National Rural Water Association. When we talk, especially potable water, we kind of hear 

about some cities that have had some issues. But, I know when 

some of my townships and boroughs are replacing water lines, we 

are still finding some wooden water lines. 

And so my question for you is you recommended allowing not-forprofit organizations to take over some of the non-inherently governVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00114 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
111 

mental activities and functions of USDA. What activities are you 

talking about, and how would this suggestion improve the ability 

of systems like yours to build infrastructure and serve our rate 

payers? 

Mr. MACMANUS. I have been doing USDA rural development and 

loan and grant applications for 17 years at East Rio Hondo, and 

I can tell you the most difficult part is the bureaucracy of the waiting process of the back and forth between the funding agency and 

the entity. And what we are proposing is that nonprofits would be 

able to do the loan processing and servicing functions that is difficult, in particular for small communities, to follow the process. 

And I mentioned in my testimony Attachment C, the 90 points 

that the individual systems have to do on the checklist. I think it 

is greatly beneficial. If you had an individual whose sole function 

in life was to help the system and the USDA employees that are 

processing the loans to get a complete package from the applicant 

initially up front and then to push that through with the USDA 

employees, that is the exact type of assistance we are talking 

about. Hands-on, checking the list off with the customer, the applicant, and then helping the USDA employee verify their end of it 

as well. 

Mr. THOMPSON. Thank you. 

On the theme of bureaucracy, and how that impacts on infrastructure, I had the opportunity to go to the White House last week 

for a small luncheon, bipartisan, but it was on infrastructure. Really pleased to hear the White House. The President is committed to 

make sure that there is some type of rural title within that, which 

was outstanding. I know Secretary Perdue has done a lot of work 

with that. 

But it was interesting to me that the numbers, where the Federal Government owns, if you want to put it that way, about eight 

percent of infrastructure. We fund 12 to 14 percent of it. But we 

permit 100 percent of infrastructure. 

And the countries like Australia, which is pretty green actually, 

in their infrastructure, is my understanding, they have reduced 

their permitting time down to 18 months, a considerable economic 

activity that it has increased. Our average for this country is 10 

years, not 11⁄2 years. 

And so my question, just a broad question. When it comes to infrastructure in rural America, and Ms. Otwell already outlined 

some strategies on how to do this without really cutting any, without compromising the environment. How important is this in terms 

of the infrastructure in rural America? What would it mean for you 

or your members if we were able to get the permitting streamlined, 

get it closer to Australia versus our current 10 years? 

I will just throw that open to whoever would like to respond. 

Ms. OTWELL. I’m sorry. Go ahead. 

One thing for our companies, the less time and energy and resources we have to spend on permitting for multiple agencies and 

on individual basis, the more time we have to build broadband. 

Mr. THOMPSON. Mr. Macmanus? 

Mr. MACMANUS. And I would add, Congressman, when you have 

identified a need in your system, you need the infrastructure. The 

faster you can get that built, the less the inflation factor of your 

112 

identified cost is going to have on eating away at what you are applying for. If you are sitting, waiting, because of permitting and 

other issues, the money that you are trying to apply for is not going 

to be sufficient by the time you get to construction. You are going 

to have to turn around and apply for another loan or whatever it 

may be to find that additional financing to actually complete the 

project if there is a long delay in the permitting. It has a direct impact on the end-user on the cost that they will end up paying for 

the project itself. 

Mr. THOMPSON. Dr. Halverson, I appreciate CoBank and Farm 

Credit. I appreciate in your testimony you had about the role of 

both with our rural critical access hospitals. I mean, we have had 

80 rural hospitals close since 2010. Part of that is just dealing with 

the bureaucratic cost inefficiencies. And so I am out of time, but 

I just want to say I appreciate the role that both CoBank and Farm 

Credit has played. Because if we don’t have those facilities in our 

rural communities, I don’t care how you pay for healthcare, we 

don’t have access to healthcare. So thank you. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Costa, 5 minutes. 

Mr. COSTA. Thank you very much, Mr. Chairman. I think this is 

a very important conversation. I thank the Chairman and the 

Ranking Member for holding this hearing. 

A lot has been discussed about broadband. I am not going to go 

back over that area. Obviously, it is important. Transportation, access to our markets to move our farm products to where they need 

to go is clearly critical, not only for our population centers, but also 

for our export purposes. Water has been discussed earlier. It seems 

to me the focus of the discussion, though, on water has been more 

as it relates to local water quality issues and water access to rural 

communities. 

I don’t know that any of you have touched upon the notion possibly in this effort to develop a bipartisan, big infrastructure investment in America that we are considering water projects that have 

been so important to the West for generations. I am talking about 

major water projects to investing and using, not only investments 

in reservoirs, but the kinds of investments that we might see in 

groundwater recharge and using all the water management tools in 

our water toolbox to take advantage of the changes that are occurring. 

What I would like to ask the witnesses is—let’s say that we come 

together with—the President’s talked about $1+ trillion package, 

and we are still grappling on how we finance that. But it seems 

to me that the rural component is going to be some part of it, if 

we are successful. Now, is it going to be 20 percent of it, 25 percent 

of it? I know this Committee would like to, obviously, put our stake 

out there in terms of what we think is appropriate for rural America. That often gets overlooked. I would like you to respond to that. 

I would also like you to respond to the notion of leveraging. We 

have a number of localities, either counties, communities, service 

districts, that put together financing to help deal with their water 

needs, their infrastructure needs. Are there transportation needs? 

States that have put up significant money that have skin in the 

game. 

113 

One of the ways that we always finance projects here is Federal, 

state, and local funding. Are we going to acknowledge and reward 

those localities or those states that already are making investments so that we can further leverage the potential of this infrastructure package? 

Who would like to address those basic concepts? Because, I 

mean, we all have our wish list. And then finally, how do we 

prioritize? Because we all have our wish list, but how do we 

prioritize where the greatest needs are for rural America, knowing 

that transportation, water, and communications, i.e., broadband 

and others are critical needs. 

Dr. COON. So thank you, Congressman. There is a lot to cover 

there, and I promise I won’t try to do it all. 

But, in terms of the investment and attracting other money, 

leveraging money, part of it is thinking about what is it that attracts private capital, for example. And generally, it is the promise 

of a return on that investment. And so the public-private partnerships that work very well in other sectors, could they apply here? 

Are there applications, whether it is, perhaps, with irrigation 

projects, like you have suggested, or others where there is something to be earned over the long-term that would justify private investment in those projects. That is one example. 

And as I said earlier, one of the things is whatever Federal funds 

come, they really need to be tied to other sources of funding or the 

Federal money doesn’t come. 

Mr. COSTA. Should we reward states and localities that already 

have skin in the game as we construct the package? 

Dr. COON. Absolutely. 

Mr. COSTA. How do we prioritize? 

Mr. CALHOUN. If I could, I think that is a difficult question, because I guarantee you, if you went around to 20 people and said 

let’s prioritize where the project should go, you are going to get 20 

different answers. 

Mr. COSTA. I know it is difficult. 

And I don’t want to end up with just a political response in the 

legislation, hopefully, we come together with, because we know how 

the political responses usually get handled. 

Mr. CALHOUN. Well, I would look to get answers from your constituents and then try to get a group like this to come together and 

try to make that prioritization, because if we went around here 

today and you saw all the questions that were asked—— 

Mr. COSTA. No. And the needs are going to be far greater than 

what we are funding that with, or we will be able to come up with. 

Mr. CALHOUN. Absolutely. 

Mr. COSTA. And that is why it is important to prioritize based 

upon some sort of criteria that makes sense. 

Mr. CALHOUN. Yes. I am not sure I can tell you what that criteria is. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Bost for 5 minutes. 

Mr. BOST. Thank you, Mr. Chairman. 

Mr. Calhoun, in your opening testimony, you referred to the need 

to fund 25 different inland waterway modernization projects. Can 

you tell us, the Committee, where those are, where they are loVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00117 Fmt 6633 Sfmt 6601 P:\DOCS\115-10\26588.TXT BRIAN
114 

cated, what benefits they will have as the bottom line, and for the 

shippers, that use the waterways? 

Mr. CALHOUN. Certainly. The 25 projects are projects that have 

been authorized but not appropriated by Congress over the years. 

A number of years ago, the Inland Waterway Users Board came together with the Corps of Engineers and tried to prioritize these 

projects in the order of importance based on a criteria of risk of 

failure, where the greatest economic benefit was to the nation. A 

number of different criteria. And that list at the time was developed at a point in time, and, of course, as time changes, that list 

could change too. But that is where the list came from. And it is 

all over the system. It is in the Gulf regions. It is in the upper Midwest. It is in the Pittsburgh area. It is all over the navigable system. 

Mr. BOST. Could you elaborate a little bit on the importance of 

the Federal and non-Federal levee systems, and I will tell you 

where I am going with this, but as far as navigation and the importance of flood protection? 

Mr. CALHOUN. Well, navigation is just one of the values of the 

inland waterway system. Certainly, flood protection, irrigation, 

water use. We talked about water use, in California you pay for 

water. You don’t pay for water off the Mississippi River. 

Mr. BOST. Right. 

Mr. CALHOUN. There are a number of different beneficiaries. The 

problem we have had funding the river, historically, is only one of 

the beneficiaries pays anything into the trust fund, which is why 

the trust fund is low today. 

There are a lot of beneficiaries. And the trick has been, how do 

you charge someone on the other side of the levee for having that 

levee there? And when you talk about privatizing the locks, how do 

you charge recreational boaters for using it, for the improvement 

on the value of the real estate? Municipalities don’t pay for water. 

There is a lot of value being created, but nobody is being charged. 

And for the first 200 years in the nation, nobody was charged anything. 

It is a more recent trend that we want to try to have the users 

pay that back. But so far, we have only identified one user that we 

have been able to tax. 

Mr. BOST. Right. 

Dr. Halverson, as a follow-up to the question I just asked on the 

importance of levees. In Illinois, the Len Small levee in my district 

is a non-Federal levee that was breached, what they refer to as the 

holiday flood of 2015 and 2016. Let me tell you, it was no holiday. 

Dr. HALVERSON. I imagine. 

Mr. BOST. There is a mile-wide gap in this levee now. And this 

leaves about 38,000 acres of productive farmland in several rural 

communities without any flood protection. 

Would Farm Credit, or any other lender, for that matter, engage 

with a levee district to finance a reconstruction of the non-Federal 

levees in the absence of any involvement with the Army Corps of 

Engineers? 

Dr. HALVERSON. That is a very good question. I can’t tell you the 

answer, off the top of my head. I would give you a commitment 

that we will go and research that and come back to you in writing. 

115 

Mr. BOST. We are trying desperately to figure out the damage, 

as a matter of fact, one reason why I wasn’t here earlier is we were 

in Transportation dealing with the Army Corps specifically on this, 

because if we don’t get that one repaired, it is not only for the 

farmland, but also for navigational purposes. Because if you look 

at the State of Illinois and you go down to the bottom, there is a 

place where the river bends like this. It is actually called the 

Dogtooth Bend. It is about 17 miles around. Drops 12′ in that 17 

miles. If that levee is not replaced, it is already cut better than a 

mile of the 3 miles across, and navigation from New Orleans to the 

Great Lakes will be stopped. 

And so we are trying desperately to express how important it is 

to put the protection back in place. And it is amazing when dealing 

with bureaucracies how we can’t get things done. 

Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentleman yields back. 

Mr. Lawson, 5 minutes. 

Mr. LAWSON. Thank you, Mr. Chairman. And a welcome to the 

Committee. When I left the Committee, you all were talking about 

the tremendous amount of infrastructure research that the landgrant institution had such a backlog. I want to ask a question 

about that. 

But I was deeply concerned about the co-ops, because I can recall, when I was growing up in the rural areas, when we first got 

electricity, my brother and I stayed up all night trying to see what 

was going to happen with that light, but it never did go out. And 

so that was very interesting. 

But my question today centers around there are 1,000 people 

that are moving to Florida a day. And we are told that a lot of 

these people now, they wanted to be on the coastline, but now they 

are moving into rural areas where they are going to be served by 

co-ops. 

My question will be what kind of pressure does this put on electric co-ops, Mr. Wynn? Because if that many people come in, and 

Florida is now the third largest state in terms of population in 

America, but it is going to put a considerable amount of pressure 

on co-ops. How are they going to be able to handle it? 

Mr. WYNN. Well, we are welcoming growth from most co-ops. I 

know many of us don’t get an opportunity to see growth. I know 

the ones in Florida are experiencing that. But the good thing about 

it is that the good news is that we have access to capital, which 

is the biggest restraint that we would probably run into in terms 

of getting people to build the lines. That is something that we can 

always do. But, fortunately, we have three very good sources of 

capital. CoBank is one, RUS is the other, and CFC is another. And 

then there are syndications that can happen to bring other people 

to the table to do the financing. 

I don’t really see many barriers, barriers to the growth, but it is 

certainly something that can be managed and has been managed 

in other areas. 

Mr. LAWSON. Okay. And I guess the question would be with the 

President’s proposal to cut back on rural funding, serving in the 

Florida Legislature for a number of years, roundabout 28 years, 

House and Senate, one of the greatest things that, when the gavel 

116 

went down, that we carry back were water projects. Water projects 

from these local governments in those areas, which I had about 13 

rural counties that I was serving in. Water projects meant everything to him. 

And so when they are doing this farm bill, and I know the Chairman here, and they probably referred to it, it would be just devastating to cut back on water projects for rural areas. And if you 

have already talked about it, I don’t think there is enough talking 

that we can do about it. I would ask Dr. Halverson, will you comment on that. 

Dr. HALVERSON. Well, I would share your focus and your concern, 

Representative Lawson. I refer to my testimony, the fact that there 

is somewhere in the ZIP Code of $190 billion worth of investment 

required in refurbishing and reinvesting in the nation’s water infrastructure. That number gets bigger every day, not smaller. It is 

a deferred maintenance bill. 

We are making contributions as CoBank and the Farm Credit 

System. We would like to do more, but we can only make a small 

dent in what is a very large total requirement there. But we are 

very passionately committed to doing so, and that is why we are 

so encouraged by the Committee’s interest in moving this forward 

and expanding that activity. 

Mr. LAWSON. Okay. Thank you. 

And, Dr. Coon, I have limited time left. And you might have 

mentioned it. I caught the back end when I was going to the other 

committee. What are universities doing to try to make up for all 

of the infrastructure backlog that they have in terms of research? 

Dr. COON. We are looking for help everywhere we can get it. Basically, it ends up being pretty much crisis management. If we have 

freezers that go down, we have to go and address that right away. 

And so that takes our attention away from whatever else we might 

have been doing. We really need to step back and develop more 

complete plans that are more sustainable than the current reactionary mode that we are operating in. 

Mr. LAWSON. Okay. Thank you. 

Mr. Chairman, I yield back. 

I know one thing, in your closing argument if you could say, how 

does this relate with our competition with other countries. 

The CHAIRMAN. Thank you. The gentleman yields back. 

Mr. Arrington, do you have questions? 

Mr. ARRINGTON. Thank you, Mr. Chairman. I do. 

The CHAIRMAN. Five minutes. 

Mr. ARRINGTON. Thank you all for coming. And we have a budget 

markup today. I apologize for coming in late. 

But Ports-to-Plains is a transportation infrastructure initiative to 

enhance and expand transportation in middle America, essentially 

from Texas to Canada. Probably most of you are familiar with it. 

And, again, I apologize if I am making you repeat yourself. But 

talk about initiatives like Ports-to-Plains and the transportation infrastructure and how important that is, and how would you rank 

that, and what thoughts do you have, strategically, on that component of sustainable rural communities in getting our food, fuel, and 

fiber to market? 

117 

And anybody can take the question. Whoever wants to volunteer 

first. 

Mr. Calhoun, they seem to think you have the answer to this. 

Mr. CALHOUN. Well, that was a draft, by the way. I don’t know 

I volunteered. 

But I am not familiar with the initiative that you are speaking 

about, which is why I didn’t volunteer. But, one of the things when 

we talk about the inland waterways, one of the problems that we 

face is we are not actually under the jurisdiction of the Transportation Department. It comes under the Army Corps of Engineers. 

It is handled in a different fashion. 

When you talk about the things that I talked about today, that 

we have talked a lot about, broadband and everything else, but just 

physically the roads and bridges to get around this country, which 

are getting old and dilapidated and in need of fixing up. There is 

a large job to do, and it needs to be done in a coordinated fashion 

as much as we can. I don’t know that I answered your question. 

Mr. ARRINGTON. Yes. No. That is great. 

Dr. HALVERSON. I would just supplement that by saying the Administration is very focused on international trade and our trade 

balance and the like. And agriculture is one of the biggest single 

positive contributors to the trade balance and the current account 

balance of the United States for many, many years. That looks likely to be the case in the future, provided we can continue to innovate and continue to invest in our backlog of infrastructure weaknesses. 

We need to be able to get our agricultural production from the 

farm gate to a waterway. And ultimately, 1⁄4 to 1⁄3 of all of our agricultural production gets exported to foreign markets. It is vitally 

important. And it is why the Rebuild Rural Coalition is very, very 

focused on it, because our long-term trade, our long-term competitiveness for rural America and the quality of life is very dependent 

on our ability to get our products to the marketplace. 

Mr. CALHOUN. Yes. Last year, the U.S. ag exports, they contributed $21.5 billion to the balance of trade. And trade is very important to this country. And as I mentioned in my remarks, feeding 

a growing world is going to be very important to this country. And 

you cannot do it without the infrastructure. 

And the other thing that we haven’t talked about here much 

today is just the length of time it takes to build this infrastructure 

and get to where we need to be. Some of these projects, particularly 

on the inland waterway system, have taken 10, 15, 20 years to 

build. And then the permitting process before that. If you start 

today, you are not going to be done for a decade. And we just can’t 

afford to delay this process any longer. 

Mr. ARRINGTON. Thanks again for your time. 

And, Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman yields back his time. 

Thank you all. 

Dr. Halverson, given the role that the Rebuild Rural Coalition 

had in putting the panel together today, would you give us a couple 

of seconds or a couple of sentences on how you have been doing 

with that coalition? And are you worried that partisan politics 

118 

might creep into what you are trying to do and accomplish? And 

if that is the case, what are you doing to try to avoid that? 

Dr. HALVERSON. Thank you, Mr. Chairman. We have been serving in a, call it a convening capacity for that coalition. We are deeply excited and enthusiastic about the fact that we have been able 

to convene such a broad and deep group of institutions around 

what others have said should be and hopefully will be a relatively 

bipartisan agenda. There is seemingly, not a lot of things people 

can agree on these days, particularly here. We are hopeful and optimistic, based on the dialogue we are having within that coalition, 

that this is a bipartisan consensus. 

The devil is in the details, and there will be challenges ahead if 

we get legislation or an ability to mobilize some of the resources 

that everybody is interested in and addressing the question that 

Mr. Costa asked, which is how do you allocate that and so forth? 

But hopefully, that good old fashioned allocation mechanism that 

Congress has been familiar with for over 200 years can be digested 

in a relatively nonpartisan way. And we are hopeful and optimistic, 

and we will do everything within that coalition to support your efforts in that regard. 

The CHAIRMAN. Well, thank you very much. I appreciate that. 

Thank you for what the coalition is doing and the impact that you 

are going to have. 

We are at a great point with two opportunities to address within 

this broad spectrum of challenges. We will have the infrastructure 

bill probably before the farm bill, but we will have the infrastructure bill as well as the farm bill itself to take a look. 

The bad news about the farm bill is we are going to have a whole 

lot fewer resources this time than we did in 2014 to get that done, 

which will present terrific challenges. Mr. Costa asked about setting priorities. We are going to get an exercise in trying to do that, 

because we will have to get the farm bill done. 

I appreciate all of you coming to D.C. today and presenting a 

very clear statement as to why this is important to rural America, 

the impact across the entire spectrum. All your comments are very 

timely and much appreciated. And we hope there are other people 

listening and paying attention to this today, because this is a big 

deal to the folks like us who, like Jodey and I, live in rural America, and so we appreciate that. 

Under the Rules of the Committee, today’s hearing will remain 

open for 10 calendar days to receive additional material and supplemental written responses from the witnesses to any question 

posed by a Member. 

This hearing of Committee on Agriculture is adjourned. Thank 

you. 

[Whereupon, at 1:00 p.m., the Committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

119 

* Editor’s note: the hyperlink to the report, Still Living Without the Basics in the 21st Century: Analyzing the Availability of Water and Sanitation Services in the United States, is no 

longer valid. The correct link is http://rcap.org/wp-content/uploads/2017/05/Still-Living-Without-the-Basics-Water.pdf. 

SUBMITTED STATEMENT BY NATIONAL FAMILY FARM COALITION

The National Family Farm Coalition (NFFC) and their member organizations represent farmers, ranchers, community-based fishermen and their rural communities 

who strive daily to provide food and create jobs by adding value to sustainable agriculture and fisheries. In order to further these goals, our farmers and their communities rely on critical rural infrastructure such as affordable and reliable water and 

waste water systems. Rural Communities continue to lose population with the graduation of each senior high school class. What’s left behind are the elderly and the 

poor representing the under-served in communities who are sometimes susceptible 

to suffer from health issues or witness environmental degradation due to a lack of 

safe drinking water and waste water sewer systems. 

In an Environmental Protection Agency (EPA) report entitled Still Living Without the Basics in the 21st Century: Analyzing the Availability of Water and 

Sanitation Services in the United States, the U.S. EPA echoed this predicament. 

In the report, EPA highlights the fact that the people who lack these basic services 

live in some of the most productive farmland in the United States, along the U.S.- 

Canada and U.S.-Mexico borders, on Indian reservations, and in the states of the 

South and the Southeast. The EPA report further states that rural people are working and living in rural areas with dilapidated or nonexistent infrastructure. For example, rural places with populations of less than 1,000 and rural farm populations 

have the highest percentage of homes lacking services, well above the national average of 0.64 percent. See, http://opportunitylinkmt.org/wp-content/uploads/2015/ 

07/Still-Living-Without-the-Basics-Water.pdf.* 

NFFC members—like all rural residents—rely heavily on the USDA’s Water and 

Environmental Program (WEP) for funding to meet the needs safe drinking water 

and environmentally sound sewer systems. Other relevant water and waste water 

program includes EPA’s Clean Water State Revolving Fund (CWSRF), Drinking 

Water State Revolving Fund (DWSRF), and Environmental Justice Grants and Cooperative Agreements. In Fiscal Year 2016, USDA Rural Development through 

WEP, funded 945 projects with a total funding amount of $1,766,037,313. NFFC applauds USDA for its implementation of the WEP program. Nevertheless, we are 

compelled to point out that equity issues exist when local leaders of the funding 

projects place poor and minority communities on the back burner when deciding 

which area of the local municipality to first service. 

Under the USDA regulations that guide the implementation of the Water and Environmental Program, small towns and cities with populations of less than 10,000, 

have discretion, through the votes of local elected officials, as to which part of the 

city or town will be first serviced with new or improved water or sewer systems. 

Applicable case studies reveal that non-minority, affluent parts of a rural city are 

serviced first with USDA loans and grants. This environmental injustice typically 

occurs when USDA WEP funds are exhausted and the town’s project is cut back or 

down sized during the design phase. When downsizing occurs, the city council votes 

to fund the project in the rich part of town leaving the poor minority communities 

on a funding waiting list that may take decades to receive attention. Poor rural communities that must wait for basic services such as water and sewer will continue 

to see a swift decline in population. Young rural citizens are not likely to remain. 

Housing 

Rural residents—farmers and fishermen as well as small business entrepreneurs—also need access to high-quality, dependable broadband Internet services. 

As the USDA moves to become more efficient by requiring farmers to submit many 

of their reports online, the ability to upload and share data in a timely manner becomes even more necessary. ‘Last mile to the farm’ initiatives, such as Maine’s 

Three-Ring Binder project, have been supported by rural development funds 

through public-private partnerships that should be continued and expanded, especially as the proposed cuts to rural USDA offices go forward. We must think of this 

initiative as equivalent to the rural electrification projects in the 1940s and 1950s 

or, even more apropos, a universal service obligation like the post office or the phone 

companies. Broadband is indisputably necessary to the continued development of 

our farms and fisheries, rural economies and communities. 

The National Family Farm Coalition recommends that Congress mandate, 

through statutory language, that all rural communities, regardless of socioeconomic 

120 

1 81 Rural Hospital Closures: January 2010–Present. (n.d.). Retrieved July 21, 2017, from 

http://www.shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-closures/. 2Thomas, S.R., MPP, Kaufman, B.G., BA, Randolph, R.K., MRP, Thompson, K., MA, Perry, 

J.R., & Pink, G.H., Ph.D. (2015). A Comparison of Closed Rural Hospitals and Perceived Impact 

(Rep.). Chapel Hill, NC: NC Rural Health Research Program. 3http://www.shepscenter.unc.edu/wp-content/uploads/2015/04/AfterClosureApril2015.pdf. 

status, are treated equitably in the application of all water, waste water, housing, 

telecommunications and environmental programs, regardless of funding shortfalls. 

SUBMITTED STATEMENT BY NATIONAL RURAL HEALTH ASSOCIATION

The National Rural Health Association (NRHA) is pleased to provide the Committee on Agriculture a statement regarding the state of infrastructure in rural 

America and the role it plays in rural health care delivery. 

NRHA is a national nonprofit membership organization with a diverse collection 

of 21,000 individuals and organizations who share a common interest in rural 

health. The association’s mission is to improve the health of rural Americans and 

to provide leadership on rural health issues through advocacy, communications, education and research. 

Access to quality, affordable health care is essential for the 62 million Americans 

living in rural and remote communities. Rural Americans are more likely to be 

older, sicker and poorer then their urban counterparts. Access in rural America is 

impeded by not only geography, but also by decreasing reimbursements, physician 

shortages, and excessive regulatory burdens. 

Rural communities rely on rural infrastructure—from suitable roads and bridges, 

to clean water and broadband Internet access—to serve as necessary access points 

for a community, just as they rely on the rural health care delivery system as their 

access point for medical services. Investing in hospitals, broadband, and transportation will not only bolster local rural economies, but will also provide increased access to care. 

The Rural Hospital 

Investing in rural health infrastructure is more important than ever as rural 

America faces a hospital closure crisis. Eighty-one rural hospitals have closed since 

2010, resulting in 10,000 rural Americans losing their jobs and 1.2 million rural patients losing access to their nearest hospital. Even more concerning are the 673 

rural hospitals at risk of closure.1 Sustained Medicare cuts threaten the financial 

viability of one in three rural hospitals. The loss of these hospitals would result in 

11.7 million patients losing access to care in their communities. Continued cuts to 

rural providers have taken their toll, forcing far too many closures. Medical deserts 

are appearing across rural America, leaving many of our nation’s most vulnerable 

populations without timely access to care. 

Paired with the closure crisis, rural hospitals are also facing a brick and mortar 

crisis. Several rural hospitals standing today are original Hill Burton facilities. Built 

decades ago, these facilities need renovations or replacements, but unfortunately the 

rural hospital or community does not have the resources to replace their buildings. 

Local care is necessary to ensure patients’ ability to adhere to treatment plans, 

to help reduce the overall cost of care, and to improve patient outcomes and their 

quality of life. The crisis of rural hospital closures cannot be overstated: closures are 

devastating to the health of a community and to its local economy. When a rural 

hospital closes, rural residents lose access to their nearest emergency room. Rising 

Emergency Medical Services (EMS) costs, delays in obtaining results from diagnostic laboratory tests and scans, and difficulty in obtaining treatment for chronic 

conditions characterize communities that have experienced hospital closures. Additionally, the network of other providers that surround hospitals tend to become unstable or dissolve completely when a hospital is lost.2

The economic implications of rural hospital closures are staggering. When a rural 

hospital closes, the community it served experiences a per-capita income decrease 

of $703. Unemployment increases by 1.6 percentage points. Retirees and businesses 

are discouraged from relocating to the community. If all of the 673 vulnerable hospitals were to close, rural America would lose 99,000 direct health care jobs and 

137,000 additional community jobs. Over 10 years, rural communities will lose $277 

billion in GDP.3

Both the physical health of patients and the fiscal health of local economies are 

hurt when rural hospitals close. Therefore, it is imperative to fortify this key aspect 

of the health care infrastructure in rural communities. To help stabilize rural hospitals, Medicare bad debt cuts must end. Under the ACA, Medicare bad debt reimVerDate Aug 31 2005 12:09 Oct 24, 2017 Jkt 041481 PO 00000 Frm 00124 Fmt 6621 Sfmt 6621 P:\DOCS\115-10\26588.TXT BRIAN
121 

4 Rural Hospital Closures Decimating Rural Health Care Delivery (2016). National Rural 

Health Association; Washington, D.C. 5 Rural Transportation Facing a Rough Road. (2017, June 30). Retrieved July 26, 2017, from 

https://www.infrastructurereportcard.org/rural-transportation-facing-a-rough-road/. 6Transportation Fact Sheet (Rep.). (n.d.). Washington, D.C.: Rebuild Rural. 7 Rural Health. (n.d.). Retrieved July 24, 2017, from https://www.ruralhealthinfo.o/topics/ 

transportation#consequences 8Syed, S.T., Gerber, B.S., & Sharp, L.K. (2013). Traveling Towards Disease: Transportation 

Barriers to Health Care Access. JOURNAL OF COMMUNITY HEALTH, 38(5), 976–993. http://doi.org/ 

10.1007/s10900–013–9681–1. 9Written Testimony on The State of Infrastructure in Rural America, 115th Cong. (2017) (testimony of Richard R. Calhoun). 

bursement to rural hospitals was cut. Unfortunately, for those hospitals with a large 

pool of dual-eligible patients, bad debt cuts can spell financial disaster. 

Bad debt cuts hurt the rural health infrastructure in particular because rural 

areas have a higher proportion of dual-eligible patients than urban areas. Bad debt 

cuts have been partially responsible for the closure of one rural hospital per month 

since 2010. In order to stem this closure rate and avoid the serious economic and 

health-related implications of more rural hospital closures, cuts in bad debt reimbursement must be reversed. Enactment of such a policy would empower rural hospitals to not only treat the poorest, sickest patients in its community, but also to 

remain operational and provide access to care to rural Americans. 

Rural Transportation 

In rural America, transportation infrastructure is dilapidated. Traffic crashes and 

fatalities are 21⁄2 times more likely to occur on rural non-interstate roads.4 Over 1⁄3

of rural America’s roads are in poor or mediocre condition.5 Due to such poor conditions, farmers may have difficulty transporting crops to market. Small business 

owners may be unable to attract customers. Logistics can be more expensive. And 

in the health sector, patients face barriers to care that can range from inconvenient 

to insurmountable. 

Rural transportation infrastructure can encumber—or, with improvement, expedite—travel to medical care providers. Patients who must travel long distances to 

providers and those who lack readily-available methods of transportation are more 

likely to be late to or altogether miss appointments, face disruptions in care for 

chronic diseases, and forego preventive care because of transportation costs. The 

regularity with which patients use some medications, like insulin for diabetes patients, decreases the further the patient lives from his or her provider.6

The transportation infrastructure of rural America can be a key barrier for accessing health care. For those that cannot afford to miss work hours, do not own a car 

or another mode or transportation, or live considerable distances from the nearest 

clinic or hospital, poor transportation and inadequate roads cause unnecessary difficulty that discourages patients from seeking primary and preventive care. If patients utilize primary and preventive care, then health outcomes improve. Additionally, such utilization of primary and preventive care helps reduce health care costs.7

Therefore, improvements in transportation contribute directly to making health care 

more accessible. 

Increasing access to care via infrastructure improvements requires public funding 

and leadership. The public maintains roads and bridges; therefore, public funds are 

required to renovate them. Rural America faces a unique challenge in this regard: 

only 44% of rural road mileage is eligible for Federal grants. Expanding eligibility 

requirements for Federal funding will allow more rural roads to become eligible for 

Federal funds,8 thereby increasing opportunities for refurbishment. 

Other measures should also be taken to improve rural transportation infrastructure. Developing a system of block grants for investment has significant upside. 

Block grants would allow states and local communities to assign priority to certain 

infrastructure projects. If rural stakeholders are involved in setting priorities, Federal block grants can both fund rural infrastructure improvements, while limiting 

the cost to the Federal Government and incentivizing an efficient use of government 

resources. 

Finally, widespread adoption of the public-private partnership (PPP) concept could 

achieve results like those of block grants. As private companies vie for the government’s business, competitive economic forces drive the prices of their services down. 

Additionally, private corporations promise high quality in order to compete. Value 

engineering, emphasis on rapid project completion, innovation, and utilizing economies of scale are advantages of PPPs.9 Thirty states and the District of Columbia 

have drafted or passed legislation allowing PPPs to undertake infrastructure improvements. If the Federal Government can do the same to bring PPPs to more of 

122 

10Stitt, C. (2017, March 3). Infrastructure Spending and Public-Private Partnerships—by 

Charles. Retrieved July 26, 2017, from https://www.hudson.org/research/13407-infrastructurespending-and-public-private-partnerships. 11Daniel, H., BS, & Sulmasy, L.S., JD. (2015). Policy Recommendations to Guide the Use of 

Telemedicine in Primary Care Settings: An American College of Physicians Position Paper. ANNALS OF INTERNAL MEDICINE,787–789. doi:10.7326/M15–0498. 12Giger, J., & DeVany, M. (2013). Streamlining Telemedicine Licensure to Improve Rural 

America (Issue brief). Washington, D.C.: National Rural Health Association. 13 2016 Broadband Progress Report. (2016, January 29). Retrieved July 19, 2017, from 

https://www.fcc.gov/reports-research/reports/broadband-progress-reports/2016-broadbandprogress-report. 14Kaushal, M., Patel, K., McClellan, M.B., Darling, M., & Samuels, K. (2016, July 28). Closing 

the rural health connectivity gap: How broadband funding can improve care. Retrieved July 19, 

2017, from https://www.brookings.edu/blog/health360/2015/04/01/closing-the-rural-healthconnectivity-gap-how-broadband-funding-can-improve-care/. 

the country’s infrastructure improvement projects, the result could be infrastructure 

that helps facilitate, rather than deny, patients’ access to health care. 

Telemedicine to Bridge Infrastructure Gaps 

Telemedicine can serve as a method of circumventing the challenges of physical 

infrastructure. It has, for some time, experienced growth in popularity and capabilities. For the physician, telemedicine eases the consultation process. All physicians 

can benefit from consultation, but the practice is particularly relevant to younger, 

inexperienced doctors. Especially for young doctors working in rural and health professional shortage areas, ease of consultation may encourage them to remain in 

their respective communities. This would help reduce the ongoing physician shortages in rural America. 

Last, telemedicine can help diminish the need to see patients in person for preventive appointments or education sessions. Of course, in many cases physicians 

have no choice but to call a patient into the office or venture to a patient’s home, 

for example, to perform a physical examination. However, for those cases in which 

the physician does not need to see the patient in person, he or she can visit with 

the patient virtually, eliminating the need for travel on the part of the physician 

or the patient. 

To encourage the implementation and use of telemedicine, the Federal Government must lead on two fronts. First, geographic site restrictions in Medicare must 

be lifted to encourage the widespread realization of the benefits of telemedicine. Restrictions like these inhibit adequate reimbursement for rural providers that use 

telemedicine services to see patients.10 Second, the licensure process for telemedicine providers must be streamlined. Current licensure restrictions can be cumbersome and limiting to providers for whom telemedicine would be hugely beneficial. 

Encouraging uniformity among state regulatory bodies that handle licensure is imperative. These bodies should be encouraged to collaborate to allow rural telemedicine users to obtain licenses efficiently and effectively care for their patients.11

Rural Broadband 

Before expansions in telemedicine can become widespread, steps must be taken 

to shore up the rural broadband infrastructure. Internet access in rural America is 

poor compared to access in urban areas. Thirty-nine percent of rural Americans lack 

access to appropriate broadband Internet speeds (as defined by the FCC). In urban 

America, only 4% lack access to Internet of these standard speeds.12 Internet access 

for health care providers is worse in rural areas than in urban areas as well: 7% 

of providers in rural America lack access to appropriate Internet speeds. The national average is 1%.13 Last, even when the appropriate speed is available, it can 

be three times more expensive in rural areas than in urban areas.14 Before health 

outcomes can significantly improve in rural America, comprehensive broadband access is needed. 

The ramifications of lacking appropriate Internet are manifold. Without reliable 

Internet connections, modern telemedicine is impossible. Timely consultations are 

made more difficult. Patient education and access to provider information is limited. 

There would be significant benefits to the rural health care system from improving rural broadband access. Rural areas can be equipped with cutting-edge telemedicine services. Rural patients can be empowered to seek education regarding their 

medical care. Patients and providers can benefit through access to electronic health 

records. 

The Federal Government can support broadband Internet access for rural America 

through a few courses of action. First, it must continue funding for the Universal 

Service Fund (USF). Cuts have diminished the USF budget considerably. Sufficient 

funding is a prerequisite to adequate broadband access in rural areas. Additionally, 

123 

* There was no response from the witness by the time this hearing was published. 

continued support of the Rural Utilities Service’s (RUS) Broadband Loan Program 

can help to finance the high up-front cost of developing a broadband network in a 

rural area, thereby removing barriers to implementing broadband networks in rural 

areas. 

Finally, like the case of transportation infrastructure improvement, PPPs and 

public-private cooperation (PPC) can drive down the cost of network implementation 

and improve quality through competition and shared risk. A public entity, whether 

on the local, state, or Federal governmental level, can lower barriers like regulation 

and taxation of private companies to incentivize the extension of broadband Internet 

services to rural communities. 

Again, the permeation of broadband Internet access into rural communities can 

work to improve or encourage patient engagement in care, patient education, the 

convenience of provider consultations, and the adoption of telemedicine. Each of 

these areas can translate into enhanced health care access and improved health outcomes. 

Conclusion 

Rural infrastructure could be improved to better provide the health care services 

that rural Americans need. Rural hospital closures, poor transportation, lack of telemedicine services, and insufficient broadband coverage inhibit patients’ access to 

care, worsen health outcomes, and increase health care costs. Increased funding for 

infrastructure in rural health can improve access to health services and stimulate 

economic growth in rural America. 

The National Rural Health Association appreciates the opportunity to provide our 

input to the Committee. We greatly appreciate the support of the Committee and 

look forward to working with Members of the Committee to continue making these 

important investments in rural America. 

SUBMITTED QUESTIONS

Response from Curtis Wynn, President and Chief Executive Officer, Roanoke Electric Cooperative; Vice President, Board of Directors, National 

Rural Electric Cooperative Association* 

Questions Submitted by Hon. Vicky Hartzler, a Representative in Congress from Missouri 

Question 1. When traveling around my district and talking with everyone from 

school teachers to farmers, the need for access to high speed broadband is always 

on the top of my constituents’ minds. I joined my colleagues in a letter to President 

Trump earlier this year in asking for rural broadband to be included in the infrastructure package, and I have been working diligently with state and local partners 

to address the challenges facing the rural portions of my district. 

I have found there is inconsistency with the definition of rural broadband across 

the country and throughout various Federal programs. Currently, the FCC defines 

broadband speed at 25 megabits per second download and 3 megabits per second 

upload while various programs within the Rural Utilities Service at USDA have different minimum speed definitions for broadband. 

Would a unified definition of broadband across Federal agencies create a more equitable environment for rural Americans? How would a unified definition of 

broadband impact infrastructure investment decisions on companies? 

Question 2. Is the FCC the best suited Federal agency to set the Federal benchmark for high speed Internet? 

Response from Jennifer L. Otwell, CPA, Vice President and General Manager, Totelcom Communications, LLC; on behalf of NTCA—The Rural 

Broadband Association 

Questions Submitted by Hon. Vicky Hartzler, a Representative in Congress from Missouri 

Question 1. When traveling around my district and talking with everyone from 

school teachers to farmers, the need for access to high speed broadband is always 

on the top of my constituents’ minds. I joined my colleagues in a letter to President 

Trump earlier this year in asking for rural broadband to be included in the infrastructure package, and I have been working diligently with state and local partners 

to address the challenges facing the rural portions of my district. 

124 

I have found there is inconsistency with the definition of rural broadband across 

the country and throughout various Federal programs. Currently, the FCC defines 

broadband speed at 25 megabits per second download and 3 megabits per second 

upload while various programs within the Rural Utilities Service at USDA have different minimum speed definitions for broadband. 

Would a unified definition of broadband across Federal agencies create a more equitable environment for rural Americans? How would a unified definition of 

broadband impact infrastructure investment decisions on companies? 

Answer. A unified definition of broadband would only impact rural broadband investment to the extent it helped identify areas in need and then directed sufficient 

funding through the USF High Cost program to meet the Communications Act principle of reasonably comparable services and rates in urban and rural America. The 

High Cost program is what helps rural carriers make the business case to serve territory where the customers gained cannot begin to cover the enormous capital and 

operating expenses of rural network deployment. 

The FCC decided over 2 years ago that a 25/3 Mbps broadband connection represented ‘‘table stakes’’ for modern communications. Many reports on the state of 

the Internet today report average speeds that are relatively close to this figure as 

well. And yet the FCC’s High Cost program is not designed or funded to ensure 

rural Americans can receive at least such speeds. Instead, most components of the 

High Cost program only aim to promote the deployment of 10/1 Mbps service, apparently because the High Cost program lacks the resources to support more robust, 

efficient, and future-proof deployments. 

Thus, even if there were a ‘‘unified definition’’ of broadband across Federal agencies, in the absence of resources to back that definition up, a definition—assuming 

it were set at speeds comparable to what most urban Americans enjoy—would only 

serve to highlight the failure of our universal service policies to help rural America 

keep pace. In fact, the High Cost program has been under the same overall hard 

cap since 2011, and the underlying budget that helps enable investment and operations specifically by smaller operators based in rural America is predicated upon 

the same 2011 funding levels as well. 

As a result, an additional $110 million per year is needed to fully fund an alternative model that the FCC created to promote broadband deployment—this shortfall 

will leave 71,000 rural locations with lower-speed broadband and nearly 50,000 may 

see no broadband investment at all. And just as troubling if not more so, the outdated budget level dictates that small carrier recipients of High-Cost USF that could 

or did not elect model support will, from July 1, 2017 through June 30, 2018, be 

affirmatively denied recovery of $173 million in actual costs for private broadband 

network investments that these carriers have already made. 

A recent survey of non-model NTCA member companies revealed that the average 

respondent estimates charging $126 per month for standalone broadband under the 

budget control—far more than most rural consumers could afford. Further, the average response predicted charging only $70 per month for standalone broadband if the 

budget control were not in place and carriers received support for investments 

under program rules. These numbers reveal that the hard cap on the High Cost 

budget that has been in place since 2011 is preventing the High Cost program from 

helping rural providers offer reasonably comparable services and rates as called for 

in the Communications Act. 

Thus, to summarize, a Federal definition of broadband, if revisited regularly to 

keep pace with technology developments to ensure true reasonable comparability, 

could create a more equitable environment for rural Americans. But such a definition is only as good as the underlying programs designed to achieve it—and in the 

case of universal service policy, such a goal must be tied to sufficient resources in 

the form of USF support to support deployment of networks capable of delivering 

broadband at the ‘‘Federal speed.’’ 

Question 2. Is the FCC the best suited Federal agency to set the Federal benchmark for high speed Internet? 

Answer. The FCC—with the expertise and data the agency has at its disposal— 

is well situated among Federal agencies to set a Federal benchmark for broadband. 

But again, setting one Federal benchmark will only be helpful if matched with resources to finance and support broadband deployment in the highest-cost areas of 

the nation. It is also worth noting that RUS, which continues to help finance in the 

first instance construction of many of the networks in rural America just as it did 

in wiring rural America for electricity, can and should play a useful role in any such 

exercise, particularly as (in its financing role) it takes a unique and well-informed 

125 

long-term perspective on the sustainability of rural infrastructure, rather than 

merely thinking of short-term objectives that might quickly become outdated. 

Æ