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THE REAUTHORIZATION OF THE APPALACHIAN REGIONAL COMMISSION AND LEGISLATIVE PROPOSALS

TO CREATE ADDITIONAL REGIONAL

ECONOMIC DEVELOPMENT AUTHORITIES

(109–88)

HEARING

BEFORE THE

SUBCOMMITTEE ON

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND

EMERGENCY MANAGEMENT

OF THE

COMMITTEE ON

TRANSPORTATION AND

INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JULY 12, 2006

Printed for the use of the

Committee on Transportation and Infrastructure

(
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-Chair

SHERWOOD L. BOEHLERT, New York

HOWARD COBLE, North Carolina

JOHN J. DUNCAN, JR., Tennessee

WAYNE T. GILCHREST, Maryland

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

VERNON J. EHLERS, Michigan

SPENCER BACHUS, Alabama

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

FRANK A. LOBIONDO, New Jersey

JERRY MORAN, Kansas

GARY G. MILLER, California

ROBIN HAYES, North Carolina

ROB SIMMONS, Connecticut

HENRY E. BROWN, JR., South Carolina

TIMOTHY V. JOHNSON, Illinois

TODD RUSSELL PLATTS, Pennsylvania

SAM GRAVES, Missouri

MARK R. KENNEDY, Minnesota

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

MARIO DIAZ-BALART, Florida

JON C. PORTER, Nevada

TOM OSBORNE, Nebraska

KENNY MARCHANT, Texas

MICHAEL E. SODREL, Indiana

CHARLES W. DENT, Pennsylvania

TED POE, Texas

DAVID G. REICHERT, Washington

CONNIE MACK, Florida

JOHN R. ‘RANDY’ KUHL, JR., New York

LUIS G. FORTUN ̃ O, Puerto Rico

LYNN A. WESTMORELAND, Georgia

CHARLES W. BOUSTANY, JR., Louisiana

JEAN SCHMIDT, Ohio

JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL, II, West Virginia

PETER A. DEFAZIO, Oregon

JERRY F. COSTELLO, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JERROLD NADLER, New York

CORRINE BROWN, Florida

BOB FILNER, California

EDDIE BERNICE JOHNSON, Texas

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

ELIJAH E. CUMMINGS, Maryland

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

LEONARD L. BOSWELL, Iowa

TIM HOLDEN, Pennsylvania

BRIAN BAIRD, Washington

SHELLEY BERKLEY, Nevada

JIM MATHESON, Utah

MICHAEL M. HONDA, California

RICK LARSEN, Washington

MICHAEL E. CAPUANO, Massachusetts

ANTHONY D. WEINER, New York

JULIA CARSON, Indiana

TIMOTHY H. BISHOP, New York

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

BRIAN HIGGINS, New York

RUSS CARNAHAN, Missouri

ALLYSON Y. SCHWARTZ, Pennsylvania

JOHN T. SALAZAR, Colorado

JOHN BARROW, Georgia

(II)
SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMERGENCY

MANAGEMENT

BILL SHUSTER, Pennsylvania, Chairman

JIM GERLACH, Pennsylvania

KENNY MARCHANT, Texas, Vice-Chair

CHARLES W. DENT, Pennsylvania

JOHN R. ‘RANDY’ KUHL, JR., New York

DON YOUNG, Alaska

(Ex Officio)

ELEANOR HOLMES NORTON, District of

Columbia

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

JULIA CARSON, Indiana

JAMES L. OBERSTAR, Minnesota

(Ex Officio)

(III)

(V)

CONTENTS

TESTIMONY

Page

Bass, Hon. Charles F., a Representative in Congress from the State of New

Hampshire ............................................................................................................ 8

Brisbin, Jake, Jr., Executive Director, Rio Grande Council of Governments ..... 32

Daniels, Jonathan, President and CEO, Eastern Maine Development Corporation ........................................................................................................................ 32

Delia, Albert A., President and CEO of North Carolina Eastern Region, Director of Federal Relations, East Carolina University ........................................... 32

McHugh, Hon. John M., a Representative in Congress from the State of

New York .............................................................................................................. 8

McIntyre, Hon. Mike, a Representative in Congress from the State of North

Carolina ................................................................................................................ 8

Pope, Anne B., Federal Co-Chair, Appalachian Regional Commission ............... 17

Reyes, Hon. Silvestre, a Representative in Congress from the State of Texas .. 8

Robertson, Steve, Commissioner, Governor’s Office for Local Development,

State of Kentucky, Alternate to the States’ Co-Chair, Appalachian Regional

Commission ........................................................................................................... 17

Silvetti, Edward, Executive Director, Southern Alleghenies Planning and Development Commission, National Association of Development Organizations ....................................................................................................................... 17

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Bass, Hon. Charles F., of New Hampshire ............................................................ 47

Norton, Hon. Eleanor Holmes, of the District of Columbia ................................. 153

Oberstar, Hon. James L., of Minnesota ................................................................. 155

Reyes, Hon. Silvestre, of Texas .............................................................................. 190

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Brisbin, Jake, Jr ...................................................................................................... 81

Daniels, Jonathan .................................................................................................... 94

Delia, Albert A. ........................................................................................................ 138

Pope, Anne B ............................................................................................................ 157

Robertson, Steve ...................................................................................................... 192

Silvetti, Edward ....................................................................................................... 207

SUBMISSIONS FOR THE RECORD

Bass, Hon. Charles F., of New Hampshire, articles, statements and charts ...... 47

Brisbin, Jake, Jr., Executive Director, Rio Grande Council of Governments,

responses to questions ......................................................................................... 88

Daniels, Jonathan, President and CEO, Eastern Maine Development Corporation, responses to questions and attachments ................................................... 103

Pope, Anne B., Federal Co-Chair, Appalachian Regional Commission, responses to questions ............................................................................................. 170

Robertson, Steve, Commissioner, Governor’s Office for Local Development,

State of Kentucky, Alternate to the States’ Co-Chair, Appalachian Regional

Commission, responses to questions ................................................................... 199

Silvetti, Edward, Executive Director, Southern Alleghenies Planning and Development Commission, National Association of Development Organizations, responses to questions ............................................................................... 217

(1)

THE REAUTHORIZATION OF THE APPALACHIAN REGIONAL COMMISSION AND LEGISLATIVE PROPOSALS TO CREATE ADDITIONAL

REGIONAL ECONOMIC DEVELOPMENT AUTHORITIES

Wednesday, July 12, 2006,

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPOR- TATION AND INFRASTRUCTURE, SUBCOMMITTEE ON ECO- NOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMER- GENCY MANAGEMENT, WASHINGTON, D.C.

The subcommittee met, pursuant to call, at 1:00 p.m., in room

2253, Rayburn House Office Building, Hon. Bill Shuster [chairman

of the subcommittee] presiding.

Mr. SHUSTER. The Committee will come to order.

We are here today to discuss the reauthorization of the Appalachian Regional Commission and other proposed regional economic

development authorities.

The Appalachian Regional Commission was established by Congress in 1965 to address the profound economic and social problems

in the Appalachian region that made it a region apart from the rest

of the Nation. Since its inception, the ARC has helped cut the region’s poverty rate in half, more than doubled the percentage of

adults over the age of 25 with a high school diploma, and provided

water and sewer services to over 800,000 households. The region’s

infant mortality rate has been reduced by two-thirds.

Currently, there are 77 counties in the region recognized as economically distressed. This is quite an improvement over the 223

distressed counties recognized in 1960.

As with other members of this Subcommittee, I am grateful for

the assistance ARC has brought to our communities. The ARC has

done a great job encouraging local economic development by making use of local resources for the benefit of the community. While

ARC funds are rarely the largest source of project funds, they have

proven integral to the success of the projects. These projects and

new initiatives go a long way in attracting new industry, new companies and, of course, the jobs that accompany the investment to

the area.

As with all parts of the region, the ARC has been a significant

resource to the distressed counties in Southwest Pennsylvania. I

have had the personal opportunity to see its success through numerous ARC investments in Pennsylvania. To give you an example

of the benefits of ARC, a project in Huntington County received an

ARC grant of $250,000 in 2005 to extend water and sewer piping
2

to commercial development. The project is expected to help retain

and attract industry to the area, private investment of roughly $25

million, and over 400 jobs. This is a significant investment for Huntington County and a boom to the community and region.

ARC has previously authorized, in 2002 through 2006 fiscal year,

new initiatives, including an increased focus on telecommunications

and technology were instituted and have shown early success.

While ARC is considered by most to be a strong, effective, and

efficient model of intergovernmental economic development commission, there is still room for improvement. One of the proposed

changes to ARC is the creation of an additional designation to assist counties that are at risk, yet don’t fully qualify as distressed.

By law, these counties may only be funded up to 50 percent of

project costs. The new proposed at-risk designation will permit

ARC to fund projects in these counties up to 70 percent of the

project costs.

Over the past few years, ARC has only been funded at approximately two-thirds of the amount authorized and recommended by

Congress. I urge the appropriators to fund the Appalachian Regional Commission according to the authorized levels we have set

and will set in the future, allowing the region to reach its full potential.

Other regions not supported by regional economic development

commissions are also at risk. Certain parts of the Southeast,

Southwest, and Northeast have high unemployment, low per capita

income, and lack the necessary healthcare, education, and water

and wastewater facilities. Numerous proposals have been introduced to create economic development commissions using an ARC

model for success. We will hear from proponents of these new regional authorities today.

I look forward to hearing from all of our witnesses.

Mr. SHUSTER. And, with that, I would like to recognize the Ranking Member, Ms. Norton, from the District of Columbia for an

opening statement.

Ms. NORTON. Thank you very much, Mr. Chairman. And I particularly thank you for holding this hearing.

We have periodically had hearings on the Appalachian Regional

Commission work, and every time I sit at one of these hearings I

want to amplify what I learn, because, if anything refutes the bad

rap that Government programs are given, it is the success of the

work of ARC in the Appalachian regions.

I am also wonderfully gratified by the way in which ARC has leveraged much more in private sector funds simply because the Federal Government has stepped forward. I mean, I have seen how

that can work in the District as well. But here Congress began in

the 1960’s to deal with the proverbial poor region of the United

States, a part of the upper South that didn’t have the same resources as other parts and had been in a cycle of perpetual poverty.

I am going to let the Ranking Member of the Full Committee,

who is more responsible for making sure this program survived

decade after decade, regale you with what he knows about what

Congress has done with this program. I am a youngster not in age,

but certainly compared to him when it comes to this program.
3

Here is a program that works with 13 governors, their Federal

co-chairs, and look what they have done with Appalachia, which

has essentially been written off as a poor region. You know, they

didn’t grow cotton, so they weren’t like other parts of the South.

They are not quite Sunbelt. They have got this very difficult industry: coal mining. Sure, their people want to work, but they haven’t

got much to work with, we were told.

Here, before you get to the high tech area, to changes in the

economy, what ARC did was to work with the economy they had.

And it is amazing what a little bit of Federal money has done to

transform the proverbial poor region of the United States of America, and the Chairman recounted some of it: poverty rates cut in

half; infant mortality—and this is close to all of our hearts—reduced by two-thirds; the percent of adults with high school diplomas doubled. Here is an example of what very wise deployment of

Federal funds can do to parts of the economy that would otherwise

be written off.

Appalachia simply could not have picked itself up by its own

bootstraps. It needed somebody to help it get a hold of those straps.

And look what they have shown. For me, this is the quintessential

program. Not to say, Federal Government, why don’t you just fund

everything. But to say you can get funded if you do what ARC did,

and get the confidence of the private sector with the funds we give,

and then you will be on a roller coaster of your own making.

Now, I am an extraordinary fan of this program. Ladies and gentlemen, I come from a big city. I can’t get a dime of this program

no matter what happens.

[Laughter.]

Ms. NORTON. This is not a self interested advertisement for more

Federal money. It is an opportunity to sit back and say, because

this has been such a bipartisan effort, Mr. Chairman, let us shout

it to the hilltops, not of what we have done, but of what you can

do in order to make sure you have the success Appalachia has had.

That is what my good friends at the table are trying to do. They

are simply trying to take this model and put it to good use in their

region, because while their regions had not been written off, their

regions suffer from the very same problems: huge pockets of poverty, the absence of natural born resources, but hardworking people

that just need the kind of help we were willing to give Appalachia.

Now, don’t mess with Appalachia. We are the rich Federal Government, and we do believe in investment. If this isn’t the kind of

investment we should make, I don’t know what it is. What it

means in Appalachia is we don’t have to invest nearly as much in

food stamps. We don’t need to invest nearly as much in HUD and

public housing. If you want to save the taxpayers money, that is

the way to do it; take people off the Federal dole they must have

just to live and give them what it takes for them to make themselves live.

So I welcome my good friends, Congressman Bass, Congressman

McHugh, Congressman McIntyre, Congressman Reyes, who want

to address the same problems in their region. Along with the

Chairman, I stand ready not simply to get them some money, but

to use the Appalachia example to try to say, to the rest of our col-
4

leagues in the House and the Senate, this is what we should be

doing with our Federal money. Thank you for coming.

Mr. SHUSTER. Thank you very much.

Now I would like to recognize the esteemed Ranking Member

who probably authored much of the ARC a couple of years ago, Mr.

Oberstar.

Mr. OBERSTAR. Thank you, Mr. Chairman. Yes, indeed, I had the

great privilege of being on the staff of this Committee at the time

that the Appalachian Regional Commission legislation was crafted

and the Economic Development Administration legislation was and,

in fact, wrote the Committee report on the EDA legislation and

worked very closely with our colleagues in the Senate, with Jennings Randolph and his staff on the ARC legislation.

The Appalachian Regional Commission was really started by

President John F. Kennedy, who directed Franklin D. Roosevelt,

Jr. to head up a commission to travel through Appalachia, as Kennedy did, in the course of the presidential campaign to see for himself first-hand the problems, the needs, and talk to the people

about potential solutions and a structure within which those solutions could be carried out. The recommendation of the Roosevelt

commission was the Appalachian Regional Commission.

In those days, in the early 1960’s, Appalachia could be described

as 80 acres and a mule. The way up for most people in Appalachia

was a bus ticket north to Cleveland, Detroit, or Chicago. A hundred

years of decline and deterioration, as the Roosevelt group noted,

cannot be turned around in five years or ten years, it is going to

be a long-term effort.

And, wisely and rightly, they recommended dealing with the infrastructure throughout the 13 States or the portions of 13 States,

rebuild the roads, the water, the sewer, airports, the health facilities, vocational training. There were no vocational training facilities in those communities.

Even much later, 20 years after establishment, your predecessor,

Mr. Chairman, Bill Klinger, from Pennsylvania, and I traveled Appalachia holding hearings, we found the people literally were

drinking their own sewage. The hard pan areas of West Virginia

and Eastern Kentucky, where there was no drainage in the septic

systems, were mingled with the groundwater and people had generations of intestinal disease, and it affects that. Appalachian Regional Commission created the means to do that.

I went into a small town in West Virginia and our Committee

was greeted by the mayor and the council, and after the public

hearing he took us around to tour the town, went into a small shop

and it was one of those cash registers, the old kind where you

punch the buttons and the numbers pop up on the screen, and behind that cash register on the wall was a little sign that said ‘‘God

never put nobody in a place too small to grow.’’ He said, before Appalachia, we were so far down we had to look up to see bottom.

And, indeed, in 1965, per capita income in the counties of Appalachia was 45 percent of the national average. But 20 years later

it was up to 75 percent. Jobs were being created; health care was

instituted; vocational training centers were installed; the backbone

Appalachian highway system was underway. Where you had to

drive 40 miles to connect one town to another, now you could go
5

just 10 or 15. Those are the successes. But more importantly,

1,600,000 jobs were created throughout Appalachia over its 35

years, 40 years.

But you don’t turn around a century decline in two or three decades. That is why, a few years ago, when the Commission submitted its report to Congress, the title was ‘‘Halfway Home and a Long

Way to Go.’’ We still have a long way to go. We are making the

right investments, making the right choices and decisions, and now

there are proposals for other commissions similar.

There were regional development commissions established in the

1960’s, late 1960’s, 1970’s. We had the Upper Great Lakes Regional

Commission, but it wasn’t carefully monitored, it wasn’t carefully

evaluated, its investments weren’t carefully targeted, the programming wasn’t properly done, it didn’t follow the Appalachia model as

it should have done. And in establishing new commissions we need

to take the lessons learned and apply them to the future.

This hearing will give us an opportunity to take stock and chart

a course for continuing the success of the Appalachian Regional

Commission.

Mr. SHUSTER. Thank you.

Mr. Michaud, do you have an opening statement?

Mr. MICHAUD. Thank you very much, Mr. Chairman. I want to

thank the Ranking Member, as well, for holding this hearing. I am

very glad that we are having this hearing in a way that includes

both the reauthorization of the ARC and the consideration of possible new commissions, including the tripartisan bill that I introduced, along with five co-sponsors, to create the Northeast Regional

Economic Development Commission.

I want to thank the panel for coming here today. I especially

want to recognize my colleagues, Mr. McHugh and Mr. Bass, who

are here today to give testimony. Their work and the work of their

staffs have been invaluable in developing the Northeast Regional

Commission bill. They are both truly dedicated to help improving

the economy in our region. I admire their work and I wan to thank

them both personally for their efforts.

For 40 years the ARC has shown us an effective way to address

regional economic distress. Now we must ask some basic questions:

Should we be extending this approach to other areas? And, if so,

how and where does it make sense to do so? One of the first points,

there is no question that the ARC has been effective, as you heard

from the previous speakers.

The Federal investment in ARC has also been a good investment

for the American taxpayers. In fiscal year 2005, each dollar of ARC

funding leveraged $2.57 in other public funding and $8.46 in private funding. Clearly, a small Federal investment is going a long

way towards creating jobs, infrastructure, business opportunity,

and hope for the future.

This track record of success leads us to other questions for today’s hearing: Where and how else do we apply this approach? Mr.

Chairman and Ranking Member, I would suggest a set of five principles or guidelines that we should use to decide whether we should

add new regional commissions:

First, any proposed region should have clear economic distress

that has persisted over a long period of time. The Federal Govern-
6

ment cannot react to every local downturn, but it should be focused

on fighting long-term structural economic problems in a region.

Second, the region should either be spread over multiple States

or the economic problems that are addressed should be so severe

that no State acting alone would be able to deal with them. In

other words, there should be a clear Federal interest and a Federal

role.

Third,—and this is extremely important—the proposed regions

should have a common character. It should be geographically

linked together, and it should cover an area that has common economic challenges and assets. In other words, it should be an area

where a region commission can address a clear set of regional problems and can use regional assets to help build new economic opportunities in those regions.

Fourth, any new commission must have a clear, consistent structure with an appropriate balance of Federal, State, and local roles.

The Federal Government should not be imposing solutions on the

States, but it must maintain oversight. Local economic development professionals and stakeholders must have a strong role to

play.

And, finally, we should have a rational process with setting up

new commissions. It should be done by this Committee, where the

oversight has always been, and with clear understanding of that

they would be administered in a similar efficient, common-sense

model like the ARC.

Mr. Chairman, of course, I have a small bias in this matter. I do

believe that the Northeast Regional Economic Development Commission would meet all of these guidelines. While I am not an expert on the Southeast or the Southwest proposal, I believe that

they do as well.

Speaking for the Northeast, our region has a clear persistent pattern of longstanding economic distress. It spreads across several

States and it has a common character: the loss of natural resourcebased industry; an aging, crumbling infrastructure. A lack of transportation infrastructure has left it geographically isolated, just like

the ARC region has historically.

The bill would create a Northeast Regional Economic Development Commission. It is written to be consistent with the proven

management structure of the ARC and with existing commissions,

and it has a strong role for State and localities. And now it is being

examined today in this Committee, which I believe will establish

the history and oversight needed to take the next step forward.

In closing, Mr. Chairman, I can say from personal experience

that this commission is sorely needed. Like my father and my

grandfather before me, when I left school, I went to work in the

mill for 28 years before I got elected to Congress. And two days

after I got sworn in to Congress, the mill I worked at went bankrupt and my hometown was devastated. The story of my town is

not unusual in the State of Maine; the mill where I worked that

has closed has been repeated throughout the Northeast. That is

why this bill has a strong tripartisan group of co-sponsors. It also

has the united support of economic development district directors,

local NGOs, and major conservation groups.
7

And I would like to recognize the representatives from Maine

local economic development directors who are here today, as well

as the Northern Forest Alliance, who are all here today to support

this legislation. I look forward to hearing the testimony of the witnesses, especially Mr. Bass and Mr. McHugh and Mr. Daniels, and

hopefully we will be able to move this legislation forward so we can

improve the lives of people living in the most economically distressed region of our Country. So thank you very much, Mr. Chairman.

Mr. SHUSTER. Thank you, Mr. Michaud.

First, I would like to welcome all of our witnesses here today.

Oh, Mr. Davis, I am sorry. Do you have an opening statement?

Mr. DAVIS. If I could read it, it probably would be.

[Laughter.]

Mr. DAVIS. It will be very brief.

Obviously, each of those of us who live in an area the ARC provides funding for, and options and opportunities for, has been a

God-send and a blessing certainly to much of Appalachia. The district I represent is the fourth most rural residential district in

America today. We have the third highest number of blue collar

workers, meaning the lower wage earners.

When you look at a district of that nature, you realize that

ARC—perhaps those who would choose to be or would love have a

commission similar to this a part of their area—has played such a

diverse and important role in health care, in education, in economic

development, in infrastructure. Our entire lifestyle has been

changed by the options available to us through grants that otherwise would not have been available. There is an Appalachian highway called Highway 111 that goes all the way from Chattanooga

through the center of my Congressional district that would not be

there today had it not been for the Appalachian highway.

So there is no one in this Committee or in this Congress that understands more the goodness that has come from the ARC and the

goodness that could also be a part of the rest of America for those

who are seeking a similar commission. So I applaud the work of

the leaders of ARC.

I see some here from my home State, one, Ms. Anne Pope, and

others that are leaders of the ARC on the national level, but also

those leaders that are city mayors and county mayors and industrial development boards, and those who are looking to sources that

are able that they can leverage to use local funds, as well with Federal funding, to make a tremendous difference in the lives in all

the areas that I mentioned.

I yield back the rest of my time.

Mr. SHUSTER. Thank you, Mr. Davis.

Mr. OBERSTAR. I ask unanimous consent that the prepared statements be made part of the record.

Mr. SHUSTER. Without objection, so ordered.

I will start over. I want to welcome all of our witnesses. We appreciate your being here today. And I also want to ask unanimous

consent that our witnesses’ full statements be included in the

record. Without objection, so ordered.

Since your written testimony is going to be made part of the

record, we would ask you to summarize in five minutes. And some-
8

times, for members of Congress, that can be difficult, so I will use

the gavel liberally if I have to.

Now, feel free to expound on your statements.

We have three panels of witnesses today, and our first panel is

comprised of our colleagues: Mr. Reyes from Texas, Mr. Bass from

New Hampshire, Mr. McHugh from New York, and Mr. McIntyre

from North Carolina.

Thank you for being here with us today to discuss regional economic development authorities, and we will start with Mr. Reyes.

Please proceed.

TESTIMONY OF THE HONORABLE SILVESTRE REYES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS;

THE HONORABLE CHARLES F. BASS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW HAMPSHIRE; THE

HONORABLE JOHN M. MCHUGH, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW YORK; THE HONORABLE MIKE MCINTYRE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF NORTH CAROLINA

Mr. REYES. Thank you, Mr. Chairman. Thank you and Ranking

Member Norton and, of course, my good friend Ranking Member

Oberstar for your comments on this particular issue that is so vital

to, I think, all of us in our regions.

Members of the Subcommittee, I am here today to talk about the

conditions that exist in many places along the U.S.-Mexico border

to give you a better understanding of the great need for the creation of a regional economic development authority for the Southwest border region of the United States. It was because of this

great need and the places like my congressional district of El Paso,

Texas, that I introduced H.R. 5742.

The Southwest border region as defined in H.R. 5742 includes all

counties within 150 miles of the U.S.-Mexico border. This region

contains 11 counties in New Mexico, 65 counties in Texas, 10 counties in Arizona, and 7 counties in California, for a combined total

population of approximately 29 million people.

According to research compiled by the Interagency Task Force on

the Economic Development of the Southwest Border, 20 percent of

the residents in my region of the Nation live below the poverty

level. Unemployment rates often reach as high as five times the national unemployment rate, and the lack of adequate access to capital has created economic disparities that make it difficult for businesses to start up in this whole region.

Border communities have long endured a depressed economy and

low-paying jobs. We have some of the highest levels of unemployment and the lowest levels of income in the Country, and our economic challenges partly stem from our position as a border community.

Economic development in border communities is difficult to stimulate without assistance from the government, private sector, and

community nonprofits. H.R. 5742 would help foster planning in

order to encourage infrastructure development, technology development, and deployment education and workforce development, and

community development through entrepreneurship.
9

Modeled in part after the Appalachian Regional Commission,

which we heard from so eloquently from all your members, the

Southwest Border Regional Authority would be successful because

of four guiding principles.

One, the Authority would fund proposals designed at the local

level, followed by approval at the State level in order to meet regional economic development goals.

Two, projects leading to the creation of a diversified regional

economy would be prioritized. Currently, States and counties often

are forced to compete against each other for limited funding.

Third, the Authority would be an independent agency. Having

the Authority set up in this manner would keep it from having to

attempt to satisfy another Federal agency’s mission requirements

when determining which projects to fund.

And, fourth, the Authority would be comprised of one Senate-confirmed Federal representative and the Governors of Texas, New

Mexico, Arizona, and California. The proposed structure would

allow equal representation by each State and a liaison back to the

Federal agencies.

For too long now, Mr. Chairman, the needs of the Southwest border region have been largely ignored, overlooked, and underfunded.

It is time for Congress to recognize all of the challenges that are

facing the border and to help the region make the most of its many

assets. One important part of that effort would be to establish new

economic development opportunities in the Southwest through an

authority like the one in H.R. 5742, the Southwest Border Regional

Authority Act.

In closing, Mr. Chairman, I want to welcome a good friend and

fellow Vietnam veteran, Judge Jake Brisbin, who you will hear

from in the next panel. And I want to thank you and all the members of the Committee for giving me an opportunity to share with

you some of my thoughts on this very important and vital legislation. Thank you very much.

Mr. SHUSTER. Thank you very much, Mr. Reyes.

Now, Mr. Bass.

Mr. BASS. Thank you very much, Mr. Chairman and Ms. Norton.

Bon jour.

Mr. SHUSTER. To start, I don’t speak French,

[Laughter.]

Mr. MICHAUD. I don’t either. Well, Jim does.

Mr. BASS. Reset the clock.

Mr. Chairman, I ask unanimous consent to submit my statement, as well as some statements in support of this bill, 1695, and

a couple of newspaper articles.

Mr. SHUSTER. Without objection, so ordered.

Mr. BASS. Thank you. And I will be very brief.

I think that the opening statements said it very well, especially

Eleanor Norton’s statement and Jim Oberstar’s statements, about

why we need these kinds of commissions. I would point out—I have

a little map here which my friend from Maine is familiar with. If

you look at this map, you can see the dark areas are areas of significant economic distress, and it happens to be, really, the exact

area that would be covered by this new commission that we are

talking about.
10

The exception is northern Vermont, but that is because the biggest city in Vermont—Vermont is reversed from the rest of New

England in that Burlington is up near the Canadian border. But

it is different. There is a mountain range, as you know, that cuts

through the middle here, and it really does more than just provide

a barrier and beautiful scenery; it also cuts the two economies

apart.

Now the average household income in New Hampshire is well over $46,000 a year. Individual income, and I am mixing apples

and oranges here a little bit, in northern New Hampshire is less

than $17,000 a year. We have small, what used to be big businesses which are smaller businesses now, that are struggling. Our

last paper mill, or next to last paper mill in the north country, shut

down recently.

And we see a concept here that could really change things

around if we change the focus of economic development from a

north-south effort—and we do have good transportation systems,

but it still is a long way from Boston, Massachusetts up to Coos

County, New Hampshire—and work on improving east-west communication, be it through transportation routes, roads and so forth,

or be it through telecommunications and other forms of economic

development, that we can make a real difference over a relatively

short period of time in improving the livelihoods and the futures

of these families that live in these areas.

The scenery is beautiful up here, these are great communities,

but these people live a hard life. And for relatively small investment we can take the model that was developed in the Appalachian

region, have a regional commission in our area and really make a

difference. So I urge you to favorably consider this legislation. I

want to thank my friend from Maine for being the prime sponsor,

and I yield back.

Oh, Mr. Chairman?

Mr. SHUSTER. Yes.

Mr. BASS. I have a markup in my committee, if you wouldn’t

mind excusing me.

Mr. SHUSTER. No, absolutely.

Mr. BASS. Thank you.

Mr. SHUSTER. Thanks a lot for coming. Appreciate your comments.

Next, recognize Mr. McHugh.

Mr. MCHUGH. Thank you very much, Mr. Chairman. And I

should say, based on my brash remark about the fluency of some

members here, that the distinguished Ranking Member of the Full

Committee has been to my district. I have heard him speak French,

and he would put to shame Louis XIV and all that came after. I

was referring to my dear friend, Mr. Bass, whom I am questionable

about his fluency.

[Laughter.]

Mr. MCHUGH. Having said that, thank you, Mr. Chairman, for

having our full statements written in the record, and I take that

opportunity just to make a few personal comments.

First of all, let me also add my words of thanks to the distinguished member of the Committee, the gentleman from Maine, for

his leadership in this. Obviously, his position both on this Commit-
11

tee and as a concerned member and a thoughtful legislator on

these kinds of issues has been helpful, along with Mr. Bass and

others. But I particularly want to extend my compliments to you,

Mr. Chairman, to the Ranking Member, Ms. Norton, and, of course,

to the distinguished Ranking Member of the Full Committee, as

well as all the Subcommittee members for their understanding.

I am not trying to, as we say in my part of the world, blow smoke

up your skirts, but the opening statements were as eloquent as

anything I have heard in nearly 14 years in Congress, and to have

folks who may not be directly involved in the regions that are

under discussion today and yet have such an appreciation and sensitivity and understanding is a warming fact, and I thank you so

much for that.

Let me just say a little bit about my district. And my dear friend,

Charlie Bass, showed the larger swath of the proposed region that

is embodied in the Northeast Regional Economic Development

Commission, but like so many here today, Mr. McIntyre and others, I represent an amazing chunk of earth, over 14,700 square

miles—that is about 30 percent of the land mass of the great State

of New York—great diversity, the Adirondack Mountains, 1,000 islands, lakes, rivers, streams, unbelievable farmlands. As I said,

such diversity. But the thing that they all share are economic challenges.

Like all of my colleagues that have spoken here today, the indices of challenge unemployment, higher levels of out-migration, generally lower levels of household income and such are far below national averages, far below State averages, and, in fact, are below

those areas where commissions like this already exist.

I have been a very frustrated person for the past 22 years in

elective office and more than 35 years in public service, as we have

tried to develop in good faith ways to address those challenges of

poverty and economic decline. It is always a source of amazement

to me how we are amazed when we put together a model of response, whether it be job creation, economic development, or a social program based on an urban model, apply it to rural areas, and

then scratch our heads as to why it doesn’t work.

It seems to me one of the several genius aspects of the ARC is

that it eschewed that kind of cookie-cutter approach. It understood

that it has to have responses tailored to local challenges. It embodies, I think, everybody’s idea of good government, melding together the local, the State, the Federal agencies, all overseen by a

regional commission that used the resources provided to it on a

needs basis and in a way in which the evaluation was made that

this is going to produce results. And Ms. Norton was very eloquent

in her statement about the return on investments that have attended the ARC, and I think that doesn’t just happen by chance.

We are here today, or at least I will speak for myself, some

would say with a glint of envy. I would say, rather, with the effect

of flattering through imitation the ARC. It is the model by which

we all wish to—at least I do proceed in trying to bring that same

kind of relief to equally deserving areas. And, as I said, I am just

so warmed by the fact that you are holding this hearing and by the

absolute great understanding that you bring to it.
12

This is Hamilton County, and I will leave you with this thought.

This is 7,200 square miles of that more than 14,700 that I represent. It is one of the largest land masses in the State of New

York as a county, and yet it has just over 5,000 people. Those wonderful shades of green are not a celebration of my ancestors’ homeland, Ireland, it is, instead, tax-exempt properties, properties that

are locked up in what is known as the Adirondack Park. The Adirondack Park is, under the constitution of the State of New York,

larger than Grand Canyon, Glacier, Yellowstone, and Yosemite

Parks put together. That is great news, it is wonderful. However,

as you see by that green area, it means you don’t have a lot to

work with in terms of economic development.

The pink, those are housing, mostly residential areas from outof-state folks or out-of-region folks who are seasonal residents. You

can’t see it, probably, the little yellow dots are the opportunity

areas where economic development projects can legally and constitutionally be effected. That is the kind of challenge we face county after county. I have ten more of those in my district, and they

are represented and replicated right up through Vermont, New

Hampshire, and, of course, into the great State of Maine. That is

why we are here asking for your help. You have already done a

great job.

Thank you, Mr. Chairman. I yield back.

Mr. SHUSTER. Thank you very much, Mr. McHugh.

And now recognize Mr. McIntyre for your statement.

Mr. MCINTYRE. Thank you, Mr. Chairman. Many thanks to you

to agree to hold this very important hearing today on legislation

that I have introduced, H.R. 20, which is a bill to create the Southeast Crescent Authority.

We currently have a broad range of support for this bill that includes bipartisan co-sponsors from States throughout the southeastern United States. A Chapel Hill, North Carolina think tank

that has studied changes in the South over the last 40 years included in its recent report information and statistics that examined

the jobs, the population growth, the educational systems, the racial

gaps, and the economy of all southern States.

And the report states that even as the South’s economy surged

over the past two decades, structural shifts undermine the farm

and factory base of the region’s rural communities and transform

metropolitan communities. The rising economic tide, it said, lifted

so many boats that it was easy to ignore the structural changes at

work. But when the tide ebbed at the close of the 1990’s, it revealed serious weaknesses in the South’s economy.

In fact, in the last three years, the South lost 465,000 manufacturing jobs, a 7.7 percent drop. Factory jobs declined by more than

10 percent in Alabama, Mississippi, North Carolina, and South

Carolina more than the national average. And after 2001, the hemorrhaging continued, especially in the textile-dependent States of

Georgia, North Carolina, and South Carolina. The forces of

globalization and technology have fundamentally restructured the

southern economy, creating and destroying both high-skilled and

low-skilled jobs.

Mr. Chairman, the time is now to work to change this pattern

and ensure that those individuals, whether they are working in
13

textiles, tobacco, or manufacturing—the traditional industries in

the South—and those communities that have been effected are not

left behind. And I an confident that the Southeast Crescent Authority will be a critical factor in doing just that, and, indeed, it

will meet that five criteria that Congressman Michaud mentioned

earlier in opening remarks.

The southeastern portion of the United States, encompassing the

States of Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, and Florida, is an area which has seen poverty

rates well above the national average, coupled with record unemployment. In fact, in 2004, the South had a poverty rate of 14.1

percent, the highest rate—the highest rate—of all regions of the

United States. In addition, over 10 percent of the counties throughout this area had unemployment rates at least double the national

average unemployment. In other words, the Southeast has led the

way, unfortunately, both in having the highest level of poverty and

the highest level of unemployment.

The seven States of the Southeast Crescent Authority region also

have experienced, as you well know, natural disasters. What you

may not realize is at a rate of two to three times greater than any

other region of the U.S. And this vulnerability to natural disasters

only further exacerbates the ability to recover from economic distress.

Now, SECA, the Southeast Crescent Authority, is modeled primarily after, as we have heard today put so eloquently, the successful Appalachian Regional Commission. Southeast Crescent Authority hopes to enjoin a local, State, and Federal partnership to lift

our citizens out of poverty and to create jobs, the two areas where

we are suffering so much. With this Federal allocation of funding,

we have very specific programs that would help with community

betterment: infrastructure, education and job training, health care,

entrepreneurship, and leadership development. And the communities with the greatest need, those with the highest economic distress, would be the ones that are targeted, and help would be given

according to the degree of distress so that we make sure that we

are trying to help those areas that need the help most in the fastest possible way.

Mr. Chairman, the Southeastern United States is one of the last

areas of the Country not to have a Federal authority totally dedicated to ending poverty and strengthening communities. As you

know, there have been very many commissions put in place and,

of course, the Appalachian Regional Commission is the one that

leads the way. We would like to see the Southeast Crescent Authority be that valuable tool to assist State and local officials, county development organizations, and many others in providing the resources and leveraging additional funds to allow our citizens to

reach their economic potential.

Now, on another panel today you are going to hear from Al Delia,

who is sitting here in the front row, at the very end there, the Director for Federal Relations for East Carolina University, who has

done extensive study, has done the background, has done the demographics, has done the charts, the population studies and the

economic studies that would help underscore and lay the foundation for what could go ahead and be done with the Southeast Cres-
14

cent Authority. He and I share the same excitement over the opportunities this bill has to offer in the southern region of the Country. I am confident we can use the ARC’s successful partnership

model, being that a good part of that Commission is in North Carolina and other States that are affected.

And as a matter of economies, we know it costs a lot less to leverage local and State dollars and allow access to available Federal

grants than to go behind and clean up the distress in the wake of

unemployment, poverty, dropouts, and poor health care delivery.

Again, I want to thank you, Mr. Chairman, and all the members

of the Subcommittee and the Committee at large for your willingness to hold this hearing and to work with us, and we look forward

to working with you. Indeed, the time is now, as you have heard

from my colleagues and as you have heard from me, regarding the

needs in our areas. The time is now. The need is great.

The Southeast Crescent Authority is the answer to help us confront these problems head-on. Together I know we can do it, and

with your help I know we will succeed. Thank you very much.

Mr. SHUSTER. Thank you, Mr. McIntyre.

Thank both of you for being here today. I have no questions. My

questions will wait for the local economic folks.

Ms. NORTON. Mr. Chairman, I have just one question.

Mr. SHUSTER. Go ahead, Ms. Norton.

Ms. NORTON. Because you have been preaching to the choir, and

the Chairman wants to get on, to lay the record out, I do want to

ask a question. In light of the fact that the Congress is having

trouble funding things—and we would love to see this funded, or

at least begun to be funded. In fact, we are trying to keep things

from being de-funded, and here we are talking about an investment

that we think is very much worth it.

But the question I have really is a strategic question, because it

does seem to me one is going to have to make fairly unique arguments to get any attention. So part of what I want to know is

whether or not at least some funding, some pilot funding might be

useful. That is the first thing.

The second thing, frankly, is our colleagues want to help. And

when we go to our colleagues, they really do want to help one another and want to help people who have a harder time than another time. But everybody has a stereotype of where people come

from.

Mr. McHugh, you come from New York State. I spent 12 of the

best years of my life in New York City. Both my children were born

in Mt. Sinai Hospital and, you know, I am a native Washingtonian

who still loves New York. But I remember the back and forth between New York City, which felt it was funding the State, and the

rigamarole on that.

So when people hear New York State, they think about New

York City. Too bad. Some of us know that New York is blessed

with this one great big city, but, hey, there is a great big State

there. We would have to somehow deal with some of the issues you

are talking about fairly uniquely because, remember, some of these

conditions exist in fairly large pockets around the Country.
15

Mr. McIntyre, you come from North Carolina. If ever there is any

symbol of the New South, it is North Carolina. My mother, by the

way, was raised in North Carolina, and it wasn’t so new then.

Mr. MCINTYRE. Right.

Ms. NORTON. And it is the very essence of what we mean by the

New South. But you are talking about something that most people—so what do we think about? We think about that research triangle and all of those well educated people and what they contribute to the State.

Mr. MCINTYRE. That is Mr. Price’s district.

Ms. NORTON. Yes.

[Laughter.]

Ms. NORTON. And so, strategically, if we are going in, in this climate, talking about some way to get started on other regions, I

would appreciate your strategic advice as much as what you have

had to say, which it seems to me does arm us substantively.

Mr. MCHUGH. Well, as always, the distinguished Ranking Member strikes at the heart of every challenge. Our good intentions in

this Congress are never measured up to by our available resources,

and I think particularly in this environment we all understand

that. I hate to negotiate down from the starting line, particularly

when Mr. Michaud is there, who has worked so hard on this, but

I think it is an obvious statement to lay out the fact that when you

are dealing with a regional commission—as all of these are of considerable size, there is a lot of first steps that have to be taken.

The bill which we have proposed calls for $40 million, which, in

the context of the Federal budget, it is not even lost in the couch,

I mean, it won’t even fall out of the pockets, really. But, nevertheless, I don’t want to diminish the challenge that is there, and I

think the adoption of the authorization is the first critical step. As

an authorizer myself, I think that is where you have to start with

any program, and then the battle is, traditionally, do you find a

way to match the appropriation with the authorization. And we

deal with that on Armed Services, as the Chairman knows, each

and every day.

So we would certainly have to, and willingly, work with you and

defer to your judgment on that, but there are certain causes that

I think merit a full authorization to help the next step in the battle.

And as for New York, most New York City residents think the

State ends at the Tappan Zee Bridge. I am heartened to hear that

you were the exception to that. It is a big, beautiful State, but with

a lot of challenges.

Ms. NORTON. Forty million dollars is so little, you would think

that we wouldn’t have, especially since we are talking about an authorization bill, then you would have the uphill battle.

Mr. McIntyre?

Mr. MCINTYRE. Right. And I would agree with my friend, Representative McHugh’s comments. North Carolina in particular, for

instance, my home State, we have exactly 100 counties. Fifteen of

those fall into the category of places like the Research Triangle

Park and down toward Charlotte and the Triad area, which is

where Winston-Salem is.
16

That means 85 percent of the State, which mathematically exactly equals 85 counties, are classified as rural, some of which

qualify and are part of the Appalachian Regional Commission,

which means that all those other counties that are not in the 15

that are the high-growth area, like around Raleigh-Durham, Charlotte, and Winston-Salem, are mainly in the middle part and the

eastern part of the State, which is where I live. In fact, I fly into

Raleigh-Durham every week, but then have another 100 miles to

go home to the extremely rural area that I represent and the extremely rural area

Ms. NORTON. How much have you asked for, $40 million?

Mr. MCINTYRE. At minimum, $40 million, to get started. And I

think that is very reasonable help for that region

Ms. NORTON. What are your Senators doing? You know, for that

little bit of money, you know, they tuck things into every, that is

why the District suffers from not having any Senators. For that little bit of money, they could, you know, we are talking about pocket

change. They put more in bills than any of us ever find out every

time there is an appropriation period. Are they working

Mr. MCHUGH. Well, we are the House with a heart.

Ms. NORTON. But are they working on this at all?

Mr. MCINTYRE. Yes, they are supportive, our Senators are.

Mr. MCHUGH. Ours are

Mr. MCINTYRE. In fact—I am sorry—Senator Dole, who I was

just with this morning on another issue, she has a companion bill

that mirrors this exactly. So we are working this in both houses.

Ms. NORTON. Just let me suggest this. You know, you are right,

that is shamefully little—that is a pilot, for goodness sakes, starting at that amount of money. Let me tell you what I fear. We did

one region, that was Appalachia. The reason that pilot even crosses

my mind is that I see some region, maybe with Senators who give

this priority, among the $4 billion plucked out because some senator, for a lousy $40 million, is going to be able, maybe even in an

appropriation without authorization, because you can get pilots

that way.

So, look, the last thing I want to do is bargain down, and I asked

about the Senate because of the experience I and you have had

with the Senate. What we have before us is four different regions

all seeking money. I ask you, how do you think the Congress would

parse this? Either they would give a small amount of money or

somebody would decide what kind of an amount would allow this

to get started. And we have been talking about these regions for

some time, so I just ask you, as you leave this hearing, to help us

think strategically, in this climate, how do we get started on additional regions.

Mr. MCHUGH. Point well taken.

Mr. MCINTYRE. We will be glad to. We will be happy to work

with your staff.

Mr. SHUSTER. Thank you very much. And I think it obviously is

a difficult thing to do. Mr. Oberstar, four years ago, or eight years

ago, authorized the Great Plains Economic Development Region,

and it is yet to be funded. So that is going to be a tough one, but

look forward to working with you. Thank you very much for being

here.
17

And as our first panel leaves and our second panel, I just want

to inform you, second panel and third panel, we are going to be

called for votes probably sometime between 2:30 and 3:00, so one

thing I have learned as a Subcommittee chairman is how to manage the clock. So I might have job opportunities in the NFL managing some of those teams’ clocks in the game. So, second panel,

please approach.

And our second panel is here to discuss the reauthorization of

the Appalachian Regional Authority. Our second panel has three

witnesses: Ms. Anne Pope, the Federal Co-Chair of ARC; Mr. Steven Robertson, who is Commissioner of the Governor’s Office for

Local Development for the State of Kentucky and Alternate to the

States’ Co-Chair for the ARC; and Mr. Ed Silvetti, who is a fantastic economic development person, also a good friend of mine who

hails from my home county.

I think you live in Blair County, don’t you? OK.

He is the Executive Director of the Southern Alleghenies Planning and Development Commission who is speaking on behalf of

the National Association of Development Organizations this afternoon.

I would like to welcome all of you and thank you for traveling

to Washington, D.C. And, Ms. Pope, if you are ready.

TESTIMONY OF ANNE B. POPE, FEDERAL CO-CHAIR, APPALACHIAN REGIONAL COMMISSION; STEVE ROBERTSON,

COMMISSIONER, GOVERNOR’S OFFICE FOR LOCAL DEVELOPMENT, STATE OF KENTUCKY, ALTERNATE TO THE

STATES’ CO-CHAIR, APPALACHIAN REGIONAL COMMISSION;

EDWARD SILVETTI, EXECUTIVE DIRECTOR, SOUTHERN ALLEGHENIES PLANNING AND DEVELOPMENT COMMISSION,

NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS

Ms. POPE. Yes. Thank you, Mr. Chairman, for holding this hearing and giving me an opportunity to testify on behalf of the Bush

Administration.

President Bush is strongly committed to Appalachia. He recognizes that this region has not fully participated in the growth of

the American economy. He will not be content until every person

who wants to work has a job, and the President believes the ARC

can play an important role in this.

I appreciate your strong support, Mr. Chairman, for the work of

ARC. Pennsylvania is an important ARC State, and most of the

Ninth District is in our region.

I am also pleased to be joined by Steve Robertson, Kentucky Governor Fletcher’s ARC Alternate. Governor Fletcher is a strong advocate of ARC. Together we represent the Federal-State partnership that governs ARC.

You will also hear from one of the leaders of economic development in Appalachia, Ed Silvetti, of Southern Alleghenies Planning

and Development Commission. Of our 72 local development districts, they are all critical partners for ARC. Ed is a creative leader

who understands the benefits of regionalism and knows how to get

people to work together.
18

Mr. Chairman, the economic landscape in Appalachia is shifting.

Appalachia’s traditional reliance on low-skill jobs and what we call

the big four—manufacturing, mining, tobacco, and steel—is rapidly

shifting to a more knowledge-based economy. We know that 80 percent of the high-growth jobs of tomorrow will be knowledge-based.

Appalachia must adjust to these new realities if our people are

going to compete. Our communities must create jobs in a new way,

enhancing the skills of its workers and home-growing our own. We

have to have innovative regional strategies that position our communities to compete in this global economy.

ARC must adjust as well. We are becoming more performancebased, increasing our leveraging, expanding our partnerships, and

focusing on innovative regional strategies to help communities help

themselves.

I believe that, to be effective, an organization must have a plan,

work that plan, and then measure what it has accomplished. For

ARC, that plan is our strategic plan which we developed in 2004

by holding a series of meetings across the region. That plan basically says four things, four goals: increasing jobs; strengthening the

capacity of our people; developing and improving regional physical

infrastructure; and, four, building the Appalachian Development

Highway System.

So, over the next 10 years, our goals are to: create 200,000 jobs;

enhance the employability of 200,000 workers; three, provide basic

infrastructure to 200,000 households; and open 250 miles of the

Appalachian Development Highway System. Our plan declares our

overall objective of Appalachia reaching socioeconomic parity with

the rest of the Nation.

To help us measure our progress, we have devised an economic

index that compares Appalachia with the rest of the Nation. The

index shows that we have more of the worst counties and fewer of

the best than the rest of the Country.

We know, at ARC, that to have the most impact, we need to

work in three ways:

Leveraging. There has been a lot of discussion about that today.

We are working to increase our leveraging. And, last year, for

every ARC dollar spent, $11 was leveraged from other sources, including $8 from the private sector.

We know we have to increase our partnerships, both at the Federal Government level and in the private sector, which has been a

primary goal of mine. A good example has been Microsoft. Microsoft is a key partner who, two years ago, put in $1 million of software investment in the region. And when they saw the need and

demand, they quickly doubled that to $2 million.

And the third thing we know we have to do is find innovative

regional partnerships that our States and communities can work

together, regionally, and look for examples of innovation and try to

replicate those innovative approaches across the region. A great example of that is our Appalachian Higher Education Network. This

is a highly successful effort to increase the college-going rate in Appalachia, something in which we lag behind the rest of the Nation.

ARC discovered a model in Ohio, and we have replicated that in

eight other Appalachian States. Since 1998, the Network programs
19

have reached nearly 11,000 high school seniors and boosted the college-going rate by 20 percent.

Responding to the lack of equity capital in Appalachia, five our

or States came together and created the Southern Appalachian

Fund. ARC’s million dollar investment attracted almost $12 million

in funds, invested in eight companies, creating over 100 jobs.

Telecommunications and technology has been a major priority of

ARC. Over the past four years, ARC has invested $32 million,

leveraging another $120 million in innovative projects such as

SEDA-COGs, e-commerce initiative to promote the use of Internet

small businesses in Pennsylvania; MEGAPOP, which is connecting

all of Northeast Mississippi, and Connect Kentucky, which Steve

Robertson is going to talk a little bit more about.

Mr. Chairman, as we look to the future, ARC is adapting its programs to accommodate the economic changes that are sweeping

across Appalachia. To help us better define Appalachia’s economically weak counties, the Commission has adopted a new designation of ‘‘at-risk’’ to identify those counties that are just on the cusp

of becoming distressed and need special attention. We will examine

our programs to see how we can best assist these at-risk counties.

We have a new program called Asset-Based Development, which

basically is helping communities look for new ways to maximize the

assets that are in their communities to help diversify their economic base. For example, Appalachia has vast natural resources

that offer economic opportunities in areas such as wood products,

value-added ag and energy. When one thinks of Appalachia, one obviously thinks of coal. But the region also is rich in other energy

resources, such as oil and gas, wind, and biomass.

In February, the Appalachian governors and myself agreed to develop an energy policy blueprint for the region, which is a roadmap

using these energy resources to help spur economic growth and create jobs. We plan to unveil this blueprint later this fall.

ARC has historically been about providing basic infrastructure.

Let me assure you that the commitment will continue. Appalachia’s

water and wastewater services, particularly in our distressed counties, lag behind the U.S., while our per capita costs are higher. We

will encourage regional approaches and innovative solutions to

meet these basic infrastructure needs.

Mr. Chairman, Appalachia is on the move. We have made

progress: major reductions in poverty, infant mortality in distressed counties, and increases in educational attainment and

small business investment. But we have not reached parity with

the Nation, which is our goal. But I believe that ARC has positioned itself to respond effectively and help the region make significant strides in moving to parity with the Nation. We appreciate

your help in this effort.

Mr. SHUSTER. Thank you very much, Ms. Pope, for your testimony.

Now, Mr. Robertson, you may proceed.

Mr. ROBERTSON. Thank you. Mr. Chairman and members of the

Subcommittee, I want to thank you for inviting Ernie Fletcher,

Governor of Kentucky, to testify today. He regrets that his schedule

made it impossible for him to attend, but as the Appalachian Re-
20

gional Commission’s 2006 States’ Co-Chairman, Governor Fletcher

is proud to represent the 13 Governors from the region.

Again, my name is Steve Robertson, and I am Governor

Fletcher’s alternate to the Committee, and I am the Commissioner

of the Governor’s Office for Local Development, and I am honored

to be here to testify on behalf of Governor Fletcher and the other

12 governors in the ARC partnership.

And certainly Kentucky Governor Fletcher understands the importance of leveraging a variety of funding sources, and he especially values the collaboration between my office in Kentucky and

one of your colleagues, Congressman Hal Rogers and his staff, as

we work together to utilize Federal dollars to identify the most viable projects in Appalachia Kentucky. We have a strong relationship

there and certainly look forward to continuing that.

The ARC has been a strategic partner and advocate for sustainable community and economic development in the Appalachian Region since its formation, and we are grateful for the organization’s

guidance and support. We want to commend the President and

Congress for continuing to commit to the work of the Commission

and want to thank you, Mr. Chairman, for holding this hearing

today to consider a five-year reauthorization of ARC’s non-highway

program.

ARC investments, combined with strong State and local government and private sector commitment and investments, have been

instrumental in reducing the number of distressed counties in the

region from 223 to 77 in fiscal year 2006. I believe this demonstrates significant results. Kentucky has 51 counties in the region. This year we have 32 distressed counties, 12 at-risk, and 7

transitional.

In 2005, ARC invested more than $8 million in program funds in Kentucky, which leveraged more than $33 million in other

funds. We anticipate that these investments will lead to the creation or retention of more than 1100 jobs. Between 2001 and 2005, ARC invested more than $47 million in

program funds in my State. This is expected to create or retain

nearly 3500 jobs and serve more than 65,000 families with infrastructure improvements.

ARC’s mission is broader than other economic development programs, focusing not only on cyclical economic downturns, but on

long-term systemic regional distress. ARC is often the lever that

has brought other Federal funding sources to projects and localities

suffering severe distress. ARC targets distressed counties and over

the past five years has provided them annually with more than 65

percent of our congressionally allocated funds.

The Commission has been about solving problems by building

partnerships, leveraging our grant dollars, and being an advocate

for the region. For every ARC dollar invested in infrastructure, Appalachia has gained about $33 in long-term benefits.

I think it is important to note here that ARC’s success in

leveraging additional Federal, State, and local government funds,

as well as private sector investments, is based on its bottom-up approach to identifying local needs and developing local plans to address them. ARC works in cooperation with local communities and

the 72 local development districts across the region that provide
21

guidance, technical assistance, strategic planning expertise, and

oversight to ensure the ARC projects address the identified need

and accomplish anticipated results.

The Appalachian Region continues to face a unique and complex

set of social and economic challenges. One of every five jobs lost in

manufacturing has been in Appalachia. Income in Appalachia continues to lag the Nation; our counties still have a need for modern

infrastructure.

From our perspective, ARC’s mission has not been completed.

Seventy-seven counties are currently classified as severely distressed, and an additional 65 counties are on the brink of slipping

back into the distressed classification.

Mr. Chairman, you represent a district mostly within the Appalachian Region, so I know you see first-hand the benefits of the

Pennsylvania ARC partnership and recognize that there is still

work to be done, so reauthorization of ARC is essential.

On behalf of Governor Fletcher and the other Appalachian governors, I want to express our commitment to working with you and

the Appalachian Regional Commission to achieve our shared regional goals of socioeconomic parity with the Nation. We urge the

Congress to reauthorize ARC for five years so we can work toward

accomplishing these goals for the 23 million residents of the region.

Thank you.

Mr. SHUSTER. Thank you very much, Mr. Robertson.

And now, Mr. Silvetti, you may proceed.

Mr. SILVETTI. Thank you. Mr. Chairman, members of the Subcommittee, thank you for the opportunity to testify for reauthorization of the Appalachian Regional Development Act and to offer just

a few recommendation for its improvement.

My name is Ed Silvetti, and I am Executive Director for Southern Alleghenies Planning and Development Commission,

headquartered in Altoona, Pennsylvania. I am here also on behalf

of the Development District Association of Appalachia and the National Association of Development Organizations. My gratitude for

this invitation to comment on behalf of efforts to improve local

economies and the quality of life for our fellow citizens within 72

local development districts throughout Appalachia. And on behalf

of the Appalachian Regional Commission, an innovative, intergovernmental model that has successfully fostered community and economic development for over 40 years.

Presently, I am Chair of the State Association in Pennsylvania

of LDDs and I serve on the Board of the Development District Association of 72 LDDs throughout Appalachia. My experience provides a unique perspective, and I will try to convey this experience

this afternoon to members of the Subcommittee.

In 1975, I was a graduate student in the Institute of Public Administration at Penn State. I had a course entitled Intergovernmental Relations. The ARC was actually used as a case study for

Federal-State-local partnership and cited as innovative and unique

in targeting Federal resources in a multi-State region that sorely

needed it by any standard.

ARC has proved highly effective in planning, programming, and

budgeting for projects and for organizing local leadership that has

enhanced the lives of Appalachian citizens. ARC’s model is a true
22

intergovernmental model that preserves a direct Federal role with

investment and policy decisions, but respects State priorities and

the active participation of local governments through local development districts.

This work remains a challenge today. But were it not for ARC,

most investments in support of technical training, primary health

care, and job creation would not have occurred as they did. Policy

leaders at all levels have closely monitored ARC and consistently

cite the Commission as the premier example for a successful regional approach to economic development. This has inspired leaders from other impoverished regions to seek replication of this

model.

LDDs serve 410 counties and 23 million people, promoting sustainable development, the environment, emergency preparedness,

human services, public administration, and workforce development.

This network has yielded impressive results, as further described

in my written statement.

In my local experience, ARC has participated in virtually every

economic development related project of any consequence in my six

county local development district. ARC investments have been critical on the cusp of emerging issues like telecommunications, civic

leadership, and asset-based development. ARC has provided foresight and innovation.

I testify today with certainty that the ARC process as a true

intergovernmental partnership works exactly as it was planned,

and as I was taught it should work more than 30 years ago in

graduate school. The LDD planning process is comprehensive and

includes investment strategies that guide our work. The Appalachian States and ARC staff can rest assured that due diligence has

been performed and projects recommended meet the ARC guide

and are consistent with ARC’s goals and performance metrics.

In partnership with the Commonwealth of Pennsylvania, ARC

has funded numerous infrastructure projects, but also a program of

direct technical assistance promoting the growth of small and medium sized businesses. This enterprise development program was

innovative when first established and has since become a national

standard for smart economic development.

Earlier this year, one of our enterprise development clients received an exporting award from the U.S. Commercial Service. Our

LDD received an award as well for its work with this company,

Household Lumber near Bloom. Congressman Shuster, you helped

present those awards. LDDs reflect the ARC’s insistence that efforts be performance-based.

Southern Alleghenies Commission has goals and objectives and

measurable outputs and outcomes. We understand performance

measurement, and we support our ARC partners here in Washington and in Harrisburg that ARC dollars be used to leverage other

investments.

The proposed five year reauthorization bill would allow ARC to

annually designate those counties with fragile economies that are

at risk of becoming economically distressed and codifies the ARC’s

existing practice in this area. We support permitting ARC to fund

projects in at-risk counties at up to 70 percent of project costs.
23

Lastly, provisions allowing ARC to provide LDDs with a hardship waiver that increases their Federal share for administrative

grants up to 75 percent from the current 50 is also strongly encouraged.

Chairman Shuster and members of the Subcommittee, I believe

the ARC has been unique and highly successful. It fulfills its intergovernmental mission and has demonstrated that Federal-Statelocal partnerships result in significant long-term benefits. It is not

lost upon those of us working in the field that proposals are being

made to emulate ARC. Allow this good work to continue.

Thank you, Mr. Chairman and members of the Subcommittee. I

would love to answer any questions you might have.

Mr. SHUSTER. Thank you very much.

I have a couple questions for the panel.

First, Ms. Pope, you had mentioned that you focused on increasing the number of young people that get a college education. I have

two questions, or I guess one question, two concerns. It seems, from

where I live in rural Pennsylvania, we at times have put too much

emphasis on college and not on higher education, going on to technical school, and it seems a lot of kids are going to college when

we would be better served if some of them would go to technical

training and in technical fields.

So can you comment on that a little bit, as well as it seems my

experience has been kids go away to college, a lot of times they

don’t come back to rural Pennsylvania, they go to the city and take

some years or they never come back. So can you talk about what

your experience has been on those two fronts?

Ms. POPE. Yes, Mr. Chairman. Let me address your first point

about kids going to college. We sort of have a general umbrella of

focusing on—we do have a college-going program where—Appalachia, you know, really lags the Nation in kids going on to college,

so we have a specific program to do that.

But one of our four primary goals is to increase the employability

of our people. One way is increasing education; another way absolutely is increase their employability by enhanced training. We

have a number of programs that get at encouraging our citizens to

get their GED, workforce development programs. So I think that

we have a program that is multi-layered to increase the employability that does get at the college-going rate and technical type

schools.

I will add that was a major push in, say, the 1960’s and 1970’s,

to get our citizens to have a high school diploma. We know today

that is not enough to be competitive. They have to have college,

some sort of post-secondary education or enhanced training to be

competitive.

Your second point we hear a lot, which is if we educate our

young, they will leave. And when we had our strategic planning

process, the number one concern of people across Appalachia was

the brain drain, that our children, if we educate them, they will

leave. That is a concern, but how we feel is that today they have

to have that education and that enhanced employability to be competitive. The low-skilled training in Appalachia that would provide—earn a livable wage is no longer, so we feel that we have to

educate our folks within Appalachia.
24

But I think it is a bird in the hand, too. We have to do other

things to help create jobs, and I think that is the primary difference. If there are no jobs, then they will have to leave. But we

are working to try to create and retain jobs within the region as

well.

Mr. SHUSTER. Do you have any kind of numbers that indicate

what percentage might be staying, college educated?

Ms. POPE. Well, I mean, it varies vastly across the region. We

can certainly get that to you, but it does vary greatly across our

region.

Mr. SHUSTER. And I certainly don’t want to downplay the

positives of a college education, but, again, we have seen in our

schools—and I think, Ed, you know first-hand, and I will let you

respond—that so many kids are going to college when we need, we

have jobs and skilled profession, working in the electrical field,

electricians and computers and things like that that don’t require

a college degree, but they make a significant living if they have

that kind of training.

Mr. SILVETTI. I just wanted to mention that, you know, part of

the effort that we undertake is looking at the growth industries in

our region, looking where the good jobs are being created and try

to foster kids coming up through school to get an education in

those fields so they can stay in the area and earn a sustainable

wage. That is an important part of the process, linking economic

development efforts with education.

Mr. SHUSTER. The second question I have is on the increase in

the affordable access to advanced telecommunications and those

types of things. How has that been going, can you sort of give us

a report card? It was reauthorized, that was a new part in the reauthorization, I believe.

Ms. POPE. Yes. And that reauthorization has been having us

focus on and putting emphasis on telecommunications has been

very helpful to us. It has been a focus of the Commission; it is a

special initiative. We take money and focus it on that. Of the $34

million that we spent over the last four years, we have leveraged

over $120 million. And the example that I gave of Microsoft, but

for our special telecommunications initiative, I think that would

have been difficult.

So it has been very helpful to us. I would say it has been very

successful. Our goal is to get high-speed broadband access to all

410 counties in our region, and we are certainly well on the way.

We know the private sector is key in this, and we are working with

Microsoft, Verizon, and others to try to encourage speeding up

bringing broadband to certain markets, particularly in our distressed counties.

Mr. SHUSTER. Mr. Robertson, you want to give a State’s perspective on that? Do you see that?

Mr. ROBERTSON. I do. Thank you, Mr. Chairman. In Kentucky,

Governor Fletcher has placed a high importance on having

broadband availability across the entire State by the end of 2007.

ARC has played a critical role in the funding component of

leveraging private investment and other State dollars to enter communities, particularly our 51 ARC counties, to analyze their

broadband needs and help these communities figure out what their
25

next steps are to create the environment where a private provider

will want to enter and provide the service.

And certainly, over the last two years, in Kentucky, I believe we

have gone from 60 percent to 77 percent availability, and I think

those numbers are a bit dated. I spoke with someone in the State

this morning, and they are hopeful that by the middle part of next

year we will be at 90 percent availability across the State.

And when you start to reach that point, especially when you get

into Appalachia, you know, that is when these communities who

now have plans partially funded by ARC monies, I mean, they are

able to go out and leverage satellite companies to provide the last

mile to make sure their residents have access. But certainly the

focus on telecommunications has been critical in Kentucky and

ARC has been a critical part of that.

Mr. SHUSTER. Mr. Silvetti, you want to respond locally?

Mr. SILVETTI. I wanted to mention what the LDDs in Pennsylvania just finished doing. We finished a huge process of mapping

advanced telecommunications deployment in Pennsylvania by cable

companies, by the telecom. What we are going to do now, under

Pennsylvania Act 30, we positioned ourselves to prepare bona fide

requests for services which will go into the telecommunications providers in Pennsylvania. And there is a time line within that State

Act that require them to provide that broadband and other telecommunications services. I think we are doing a lot of good work

in this area.

Mr. SHUSTER. Thank you very much.

I think we are going to take a recess here. It is going to probably

be about 45 minutes, is my guess, two 15-minute votes and a 5-

minute vote.

Ms. NORTON. Just so I can ask my questions on the record.

Mr. SHUSTER. OK. Exactly. We will let you go ahead. I don’t

know if you are going to grill them for 45 minutes?

[Laughter.]

Mr. SHUSTER. No, OK. And we would probably like to come back

and I think there might be some questions. Mr. Davis or Mr.

Michaud, do you have any questions for the panel? OK, go ahead.

Mr. DAVIS. And I praise you for what you all have done. I look

at my district and I see transitional, several of those. I have probably almost a third or probably 40 percent of the counties in the

district that I represent in the eastern part of that area. It is unbelievable the impact that has been made. Thanks for what you do

and thanks for being here. I apologize for not being able to come

back after the hearing today.

Ms. POPE. Thank you, Congressman.

Mr. SHUSTER. That is it, Mr. Davis? That was short. That is not

typical for a member of Congress.

Mr. DAVIS. That is all you need to say.

Mr. SHUSTER. OK. And what we are going to do is Ms. Norton

has, I am sure, several questions. We will let you go ahead and answer, and when she is done, we will excuse you. I have asked a

couple of questions, the main questions I wanted to. We won’t hold

you up. Then we will be back for the third panel. My guess is we

are going to get back here quarter after 3 to 3:30, and more than
26

likely it will be closer to 3:30. So thank you all for coming, and I

will leave you in the good hands of Ms. Norton.

Ms. POPE. Thank you, Mr. Chairman.

Mr. SHUSTER. Recognize Ms. Norton for questions.

Ms. NORTON. Mr. Davis said to be easy on you all. That is easy.

It is easy to be easy on you all.

I do have a follow-up to the Chairman’s question about education, because I was really intrigued since we know that education

is the key to everything, more so than ever, because there are

going to be jobs for nobody without education, because the whole

rest of the world has education. They are beating the socks off of

us now, even among our highly educated areas.

There is no question in my mind that a kid who gets exposed in

Appalachia to the world has a real temptation to go seek her fortune in the world. I mean, I grew up in a big city, the District of

Columbia. It was a small, segregated southern town. First thing I

wanted to do was go away to school. The next thing I wanted to

do was not come home until they grew up. And, in fact, I am a native Washingtonian, third generation Washingtonian. I came back

when they grew up. Actually, I came back because I was appointed

to a Federal position. And I am not sure I would have come back.

I was in New York.

I think we have got to put ourselves in the heads of these youngsters, who have grandfathers and fathers, generations of poverty,

and I am sure many of the people you are talking about are the

first people in their family ever to go to college. So anything—and

I wasn’t the first in my family to go to college. But, if anything,

for these kids it has to be a shock and a real awakening to the

world.

I note that State university tuition have risen at a faster rate

than the tuition even of private universities. That is nothing to

brag about because their tuition were so high, places like Georgetown and Yale and Harvard. The rate couldn’t get much faster. But

I have been astounded, for example, in neighboring jurisdictions, to

see rates that—I don’t know what is wrong with folks, but rates

that go up 10 percent a year. That is keeping millions and millions

of kids simply out of college once they see that, particularly since

the Congress has kept Pell grants flat for a very long time.

My question is who pays for these children to go to college, State

college, for example? Do they pay for it? I realize these are small

tuitions, but I want to know who pays for them to go to college.

Ms. POPE. You want me to take a stab?

Ms. NORTON. That is a factual question. Do these children, who,

of course, get activated by jobs and other opportunities, are they

going to State colleges? Are they paying their tuition to go to State

colleges?

Mr. SILVETTI. I can answer that with a very recent example. I

have a niece. My youngest sister’s daughter just graduated from

Penn State. She has accepted a teaching position, chemistry and biology, in the Hershey, Pennsylvania school district. She is $18,000

in debt. My sister and my brother-in-law are $18,000 in debt after

four years at Penn State and she was on a partial academic scholarship.
27

Ms. NORTON. Well, who pays for these poor children to go to college?

Ms. POPE. Our Appalachian Higher Education Network, which

really has been highly successful in States where they are, in the

high schools where they are, we are seeing double digit increases.

Ms. NORTON. I am asking a question.

Ms. POPE. Well

Ms. NORTON. Who pays for these children to go to college? Mine

is a factual question. Do they go on scholarships? Do they go on—

do the States—I don’t know, I am just asking. I am really searching for information.

Mr. SILVETTI. I will say one thing also. One of the things our

local development district does is administer Federal Workforce Investment Act dollars, and we see a lot of people coming back into

the workforce who couldn’t afford to go to school when they got out

of high school, they don’t have marketable skills, now they are coming back and we are helping to pay for their education with funds

such as under the Workforce Investment Act. But that is only a

portion of it as well.

Ms. NORTON. Also, people have lost jobs because of

Mr. SILVETTI. Lost jobs or even people who have well, basically

have lost their jobs or have no marketable skills and end up back

in another system.

Ms. NORTON. That we ought to fund much more fully, because

those are the people who are already planted in the district and are

not likely to, you know, run off to New York or someplace.

Ms. POPE. Well, and I would like to add, Delegate Norton, that

it is no one answer, it is cobbled together. I mean, some of it is Pell

grants, some of it is the kids work through college, their families

struggle. You are exactly

Ms. NORTON. Let me—I have a suggestion, that is all. I know

who is not going to college. The Pell grant is a very declining value.

I know all these students qualify for Pell grants, and I know State

college and universities are very tend to be, especially if you are

talking about the associate degrees, tend to be very reasonable.

The poorer you are, the greater that amount of money that you

have to spend on tuition, books, et cetera.

By the way, Mr. Silvetti, even young people tend to work and go

to college now. You know, your full-time student is fairly rare, kind

of still a middle-class phenomenon. Except the reason it is a middle-class phenomenon is the parents really aren’t paying for it. You

say the parents had the $18,000 debt. I really wonder. The fact is

that most of the time, if you think about what is happening in our

Country today, the baby-boomers aren’t willing to make the sacrifices, so the youngsters are postponing buying a house or whatever you are supposed to do with money.

Let me just suggest this to you. I would hesitate—I would hate

to even ask you to gather statistics. I am not worried that we don’t

benefit even if they move, because they are unlikely to move to

Paris or to even South America. They are probably moving to somewhere in the United States, where they are contributing to the

overall economy, so we benefit no matter what. You and we want

the benefit to flow as directly as possible to where the investment
28

was made. We have freedom of movement in this Country, and the

last thing we want to say is you can’t move any place.

I just want to cite, and ask you to consider, one of the most successful programs of the Federal Government, along with this program, and that is our tuition forgiveness programs for doctors, now

social workers, nurses. If you think anybody was going to go, who

had an M.D. or a nursing degree, where you are talking about, I

don’t need to tell you what they would say to you. When people get

out even of college—yes, sir, Mr. Silvetti, even of college—and even

out of State college, they have debts today, almost all of them, that

they would prefer not to have.

And, by the way, youngsters today don’t just go to college and

just do poor, the peer culture says you have got to at least look like

you are not a pauper. So they go to college and they do have some

consumer goods that they buy, and they come out and, you know,

they just have all this debt and they have these credit cards and

the rest of it, and we are trying to teach them how to deal with

all of that.

But I don’t see that there is a lot of incentive, even with the

enormous success you have, for not taking your little associate degree and your little college degree and going and you are talking

about leveraging it? I am not sure they do the inflationary effect

or the cost of living effect. But I do think that the grass looks

greener on the other side, and that in some other State it may look

like, with your little degree, even if it is teaching or some other extraordinarily important but low-pay occupation, the pay is going to

look better someplace else.

I just would like to see your ARC, or whoever in ARC might be

inclined to look at the Federal model. I ask you to look at the

model. I ask you to look at the model because this is what we have

discovered, that the physicians—and if ever there are people that

are fairly sophisticated and on their own who are not going to rural

areas and to poor areas where they don’t have movies, it is physicians.

And, yet, we find that once they go for the minimum of I think

it is three years, and if you stay longer you get a greater percentage of your—they tend to remain. There is enormous satisfaction,

apparently. It comes from seeing that you were needed. You know,

you went. You were motivated by the fact of this huge debt.

I don’t have any idea whether this would work, but I do not believe that in an era where you are doing so well, that it would not

be beneficial to show the rest of the Country what can be done if

you give an incentive for people to remain here. You might want

to do it in certain occupations. I don’t know how to do it, all I know

is that without any information whatsoever, it is hard for me to believe that a young person exposed to the internet, exposed to movies, exposed to books that you are required to read in college, would

not have an enormous incentive to take her education and run.

And I am pleased that she is not going to run out of our Country,

for the most part. Ninety-nine percent of them, unless we are running them to Iraq, are probably going to be right here contributing

to our economy.

But I would like you—and this I don’t ask for for the record, because I am not trying to show that people leave the area, but I
29

would like to ask you to look at some slice of the students who

have been educated and see what happened to them. And if corrective action is needed to consider what kind of corrective—I say corrective—what kind of action might be taken. Because even if you

kept them for three years, if you kept them for two years, in America, if you stay in one place for two years, that is considered, wow,

because we all are so mobile.

So even if you kept them for a short period of time, you will aid

your economy. That is why I asked that question, not because I

was trying to ask why haven’t you already done that. You have

done the right thing by simply getting these young people educated.

I would like to know what the Ohio model is that you say has

been replicated. I was intrigued that you say you found a model,

you used that, and that has encouraged people to go to college.

Ms. POPE. Yes. It is really an attitude adjustment model, and

what it is designed—the man, Wayne White, who was the inspiration for this model, found that the kids in Appalachia for some reason didn’t believe they were college material. They didn’t think,

just as you said, Delegate Norton, their family didn’t go, their

mother and father, their grandparents didn’t go. They were able to

find work, so they didn’t need to go. Historically in Appalachia education has not been emphasized. So this is a program that merely

opens the world up to them.

Ms. NORTON. So what did you do, go into high schools and try

to

Ms. POPE. We go into high, it is primarily, what we do is there

is a network that is in nine States now, Ohio plus eight other

States. And a community college, usually, or university is where

the center is housed, but the primary focus is in the high schools.

And what it does is it goes into the high schools, it talks about the

importance of going to college. They take the kids to technical colleges, to community colleges; they go on visits. And just that exposure to college has had a tremendous success. As I say, 20 percent

or more in most every place that it is. So it has been extremely successful.

But I also would like to add we are doing other things also. I

mean, we know the importance of math and science, and we are

partnering with NASA and with the Oak Ridge National Lab to try

to encourage the study of math and science and how important it

is. So we are doing things sort of in a multi-tiered way to try to

change, you know, an emphasis toward education.

Ms. NORTON. I congratulate you on this very, very important

turnaround, the notion of who can go to college.

Let me ask you to tell me something about places within Appalachia, within the ARC counties where the model hasn’t seemed to

work and why do you think it hasn’t.

Ms. POPE. This particular model?

Ms. NORTON. No. The model that is being used as the core model

for the program. There must have been some places where there

has greater success than others. I am asking for places where there

seems to have been less success. What do you believe has been the

reason for that?
30

Ms. POPE. Well, I think our greatest challenge, quite frankly,

when you look at that map right there and see the red, which are

our most severely economically distressed counties, those are counties that have severe, widespread, and generational poverty. They

are so economically distressed. There is a lack of infrastructure,

there is a lack of investments, in many cases over many generations.

Ms. NORTON. Have you targeted those areas first?

Ms. POPE. Yes, ma’am.

Ms. NORTON. Or primarily?

Ms. POPE. Yes, ma’am. We target the red sort of the greatest

need first. We take money, we carve money off the top, and that

Ms. NORTON. So they are the hardest to deal with, then, despite

being targeted.

Ms. POPE. Yes. And we take money off the top that can only be

spent in those communities. We have what we call an enhanced

distressed program which really goes into the communities and

works on the lack of civic infrastructure.

Ms. NORTON. Yes, well, I am asking why haven’t things worked.

Is it just, you know, the overall question of poverty? Because obviously it has worked some places.

Ms. POPE. Well, I think it has. I mean, I think we have made

a great deal of success. We have cut the number of distressed counties in half. But we have a ways to go.

Ms. NORTON. Were those counties on the cusp, and they just

needed a little less help?

Ms. POPE. Well, yes and no. Some are on the cusp, but some were

in severe economic distress. And I would like to say that I hope

that ARC has been a part. They have worked and worked their

way out of distress.

Ms. NORTON. Just one more question. Could you just give us an

example of how you leverage private money when you are talking

about an area where you haven’t had an educated workforce? I

know you said Microsoft, for example. Of course, Microsoft is one

of these good corporations.

But how do you get someone to want to come—you have got some

Federal money, yes, but they can come virtually anywhere; they

can come to D.C. or Northern Virginia or Maryland and find a

workforce that is already ready to go. Is it your low wage rate?

What is it that would make a company want to make substantial

investment in a part of the Country where the workforce is still

getting educated and where there is no tradition of higher education and, indeed, where there has been generational poverty?

Ms. POPE. Well, let me take a stab at it, Delegate Norton. I think

what we have seen is there is not any one answer that we know.

We know that there has to be investment in infrastructure. We

know there has to be roads. We know there has to be high-speed

band access with this new global world. We know that our people

have to be trained. And so we have to make a multi-tiered investment, and that is what our program is based on.

Ms. NORTON. And even though the workforce is not what it is in

suburban areas, with infrastructure investment they have shown

an interest in these areas?
31

Ms. POPE. I will give you an example. There is a high-tech company that is going into one of our most severely distressed areas

of Southwest Virginia. They just made an announcement a few

months ago. ARC is making an investment where they are going

to create 300 high-tech jobs with a salary ranging from $40,000 to

$70,000. And that is just a start. They are investing $7 million in

a facility

Ms. NORTON. Why are they doing that?

Ms. POPE. I think it is several reasons. I think the company,

there are roads that are going into that area. The workforce has

a good work ethic; they want to train, they want to learn, they

want to train.

Ms. NORTON. And what is it that this company makes did you

say? I am sorry.

Ms. POPE. It is a high technology company.

Ms. NORTON. What are you doing? What will the workforce be

doing?

Ms. POPE. Software. Developing software.

Ms. NORTON. Wearing those white coats?

Ms. POPE. Yes.

Ms. NORTON. Good work if you can get it.

Ms. POPE. And one is Northrop Grumman that is making—this

is in Lebanon, Virginia. So we are working to help. We are

partnering with them to help train the workforce.

Ms. NORTON. Actually, when I mentioned low wage rate, although parts of the Country like this part, which have higher wage

rates, you know, fuss and fume, you have got to take advantage of

it. You have got to take advantage of the fact that, yes, this is a

market economy, and people will look to where they can get reasonable products for less labor costs. And if you have got that, then

the investment in higher education and keeping them there is

going to be very important.

We could not be more impressed by what you are doing, and we

just ask for you to help your friends and neighbors who were here

earlier to try to get what you got.

So I will ask that the hearing be recessed until the Chairman returns.

Ms. POPE. Thank you, Delegate Norton.

[Recess.]

Mr. SHUSTER. The Committee will come to order. Thank you all

for waiting. I was only five minutes off. I was in the rush hour to

get back here or I would have got back here on time. Those elevators in the Capitol building aren’t that efficient; they all go to the

same floor at the same time, it seems like.

I want to welcome the third panel. Thank you for being here. The

third panel we are hearing from today will discuss other proposed

regional economic development authorities. We are joined today by

Mr. Jonathan Daniels, President and CEO of Eastern Maine Development Corporation, who will discuss the proposed Northeast Regional Development Commission; Mr. Al Delia, President and CEO

of North Carolina Eastern Region, who is here today to discuss the

proposed Southeast Crescent Authority; and Mr. Jake Brisbin, Executive Director of the Rio Grande Council of Governments, who

will discuss the proposed Southwestern Regional Border Authority.
32

I hope our third panel will continue to provide us with insight

into these issues.

With that, I recognize Mr. Daniels. You may proceed.

TESTIMONY OF JONATHAN DANIELS, PRESIDENT AND CEO,

EASTERN MAINE DEVELOPMENT CORPORATION; ALBERT A.

DELIA, PRESIDENT AND CEO OF NORTH CAROLINA EASTERN REGION, DIRECTOR OF FEDERAL RELATIONS, EAST

CAROLINA UNIVERSITY; JAKE BRISBIN, JR., EXECUTIVE DIRECTOR, RIO GRANDE COUNCIL OF GOVERNMENTS

Mr. DANIELS. Thank you, Mr. Chairman and the honorable members of the Subcommittee, for the opportunity to testify this afternoon on behalf of the legislation to establish the Northeast Regional Economic Development Commission. I would also like to

thank Congressman Michaud for his leadership, as well as the cosponsors in the development of this legislation.

As was mentioned, my name is Jonathan Daniels, and I am here

today as President and CEO of an economic development district

in Maine, and it is in that capacity that I will offer my testimony.

My organization is one of six economic development districts in

the State, a State that was recently cited by the Federal Reserve

Bank of Boston for an economy that is virtually stagnant, and one

of only two States—joining Louisiana—for its negative growth over

the last year. A look at the map of Maine shows just how significant job losses have been over the past 12 years just due to traderelated impacts.

Of the 145 businesses that are certified under the Trade Adjustment Act in Maine, there have been more than 18,000 job losses.

While a few of these operations have reopened, available employment opportunities continue to wane. Additionally, this map does

not note the recent decision by BRAC to close the Brunswick Naval

Air Station, which will not only impact the nearly 3,000 employee

workforce on the base, but the State of Maine as a whole. And

while I am speaking primarily of conditions in Maine, the problems

we face are emblematic of the entire proposed commission region.

This afternoon, Mr. Chairman, I would like to succinctly discuss

the need for the authorization and funding of the multi-State

Northeast Regional Development Commission as part of an overarching package that will further our efforts to create a sustainable, diverse economic region at the time when our traditional industries are closing in favor of more service-oriented economy.

As someone who typically stands against the creation of additional entities as a cure for the ills of economic distress, in this

case I see a new federally sanctioned development zone as an opportunity to put forth the infrastructure that will support the activities of the existing development districts, while eliminating the

redundancies that plague the current system. While the ultimate

number of counties designated within this zone has not yet been

determined, we evaluated 23 rim counties that represent a rural

distressed cross-section of Maine, New Hampshire, Vermont, and

Upper State New York, as well as the six reservations supporting

the five Native American nations represented within these counties.
33

Why should this region be considered for the creation of such a

commission? We evaluated five separate criteria in our analysis

which serves as a basis for determining the general economic and

social health of the region. And you are also going to be able to see

some charts which are going to show graphically where our region

stands against some of the other regions that are being considered.

Change of population migration or, in the case of the proposed

commission region, out-migration. The region as a whole saw a .3

percent reduction in population from 1990 to 2000. In comparison,

the ARC region saw a 9 percent increase, while the United States

as a whole saw an increase of 13.2 percent. The most significant

display of out-migration occurred in Aroostook County, the northern section of the State of Maine, which saw a 15 percent reduction

in population over a 10-year time period from 1990 to 2000.

Poverty. Thirteen point 6 percent of the population within the

prescribed region live in poverty according to 2000 census data,

which matches both the national average and the poverty rate in

the ARC region, with the highest level of poverty in the northeast

region within Washington County, Maine at 20.3 percent.

Median household income. The average median household income in the region is more than $8,000 less than the national average. And at the extreme, Washington County, Maine is twice that,

or in excess of $16,000 below the national average of $41,000.

Unemployment. According to 2005 Bureau of Labor Statistics

data, the unemployment rate sits at 5.6 percent, or half a point

above the national average. Again, Washington County, a recurring

theme, has the distinction of having the highest rate, at 8.4 percent.

And per capita income as a percentage of national average. This

is often the best indicator of economic health of a region. The region as a whole stands at only 76 percent of the national average

of per capita income. There is not a single county within the proposed commission region that meets the national average, with

Franklin County, New York falling 35 percent below the national

average.

Now, as you can see from the map that is going to be put up

showing the initial data collection region, there is an obvious distress pattern that runs from Maine into New York. And you can

see from the dark green and lighter green sections—we actually

tabbed this as gangrene because of the amount of economic distress

in the region, and it is also tabbed as the ‘‘Ice Belt,’’ as the economic conditions in the region that sit below just the Canadian border are extremely cold.

How do we begin to address the distress that exists within the

Northeast region?

One, we need to create an entity that emphasizes and assists in

the development of infrastructure through public investment that

supports private sector business development, enhances educational attainment that spurs job skills training and stimulates

entrepreneurship.

We must put forth a bottoms-up approach that allows the development strategies that are created at a local level to be integrated

into an overall regional plan that fosters an efficient model of col-
34

laboration that can help leverage additional public and private sector investment.

We must provide a critical mass of funding for the commission.

This funding will be carefully administered and invested in the

projects that strengthen our traditional industries, while helping us

invest in projects that will create a more diverse, sustainable economy.

Ultimately, we need to authorize the creation of a Northeast Regional Economic Development Commission that will ensure proper

capacity to deal with the chronic distress that besets the region.

Mr. Chairman and members of the Committee, I would like to

thank you for the opportunity to address this issue this afternoon

and to provide evidence that I hope will prove significant in making a decision for approval for this commission. I would be happy

to answer any questions. Thank you.

Mr. SHUSTER. Thank you very much, Mr. Daniels. Can you just

point out where was Mr. McHugh’s—the county that Mr. McHugh

pointed out, the big green one in the corner there?

Mr. DANIELS. Right up in this section. This would be his.

Mr. SHUSTER. Was it Hamilton County?

Mr. DANIELS. Hamilton County, yes.

Mr. SHUSTER. Is that one of those dark green ones there?

Mr. DANIELS. Yes, sir.

Mr. SHUSTER. All right.

I now recognize Mr. Delia for your statement.

Mr. DELIA. Chairman Shuster, Mr. Michaud, ladies and gentlemen, I am pleased to be here today to once again testify in support

of House Resolution 20, a bill to create the Southeast Crescent Authority.

My name is Al Delia, and I am currently the Director of Federal

Relations for East Carolina University in Greenville, North Carolina, and soon—in fact, within about three weeks—I will assume a

new position, as President and Chief Executive Officer of North

Carolina’s Eastern Region, one of seven regional economic development organizations in North Carolina.

I last had the privilege of testifying before this Subcommittee on

September 12th, 2002, shortly after legislation to create the Southeast Crescent Authority was first introduced by Representative

Mike McIntyre and co-sponsored by a number of his colleagues

from both sides of the aisle throughout the Southeast United States

and, indeed, from other parts of the Country.

In the interval of time between my first appearance before this

Subcommittee, nearly four years ago today, and today, I am sorry

to report that the deep and persistent poverty found throughout

the rural parts of the 429-county region known as the Southeast

Crescent has not improved. In fact, evidence points to an increase

in poverty in many of the areas of the region.

Over the last 40 years, an amazing transformation has occurred

in and around the larger metropolitan areas of the Southeastern

United States. Modern economically successful cities like Richmond, Raleigh, Charlotte, Atlanta, Birmingham, and Orlando represent islands of wealth surrounded by a vast sea of rural poverty.

Everyone across the Country and, indeed, around the globe

knows the story of these new South enclaves of wealth and success,
35

but today I want to focus my remarks on those parts of the South

to which few bear witness. It is the South that I have dedicated

two decades of my life to try to change to improve to help restore

the promise of America to those who often live with little hope and

empty promises.

It is a place that brings up the rear when measuring educational

attainment. It is a place that brings up the rear in economic opportunity. It is a place that brings up the rear in the health of its people. It is a place that brings up the rear in per capita wages. It is

a place that often lacks basic infrastructures other places of the

Country take for granted. In essence, it is a place that simply lags

behind the rest of the Country.

This place is the rural South. Those of us that have the opportunity to travel through the picturesque landscapes of small towns,

rich farmland, and expansive coastal plains often on our way to

luxurious mountaintop or oceanfront homes—do not absorb the reality that 20 percent, 30 percent, and sometimes over 40 percent

of the people we pass along the way live below the poverty line.

These figures represent double, triple, and quadruple the national

average poverty rates. The rural South is a place with an abundance of rich soil and poor people.

The seven-State region of the proposed Southeast Crescent Authority has the highest rates of unemployment, the highest number

of people trapped in deep and persistent poverty, and the most occurrences of economically devastating natural disasters, as Congressman McIntyre mentioned, two to three times the national average. We have borne the highest and disproportionate share of

America’s price for leading the global economic changes that resulted from NAFTA and CAFTA. Economic restructuring that have

all but eliminated textile jobs, caused by commodity prices to plummet, and cut manufacturing employment by more than half in

many areas.

However, I do not appear before you today to paint a dark picture of the region. Nor do I sit before you today with hat in hand

asking for charity. Four years ago I told this Subcommittee that

the future of the rural South, like our well known sunshine, was

bright and warm. I said that our opportunities in the economy of

tomorrow were too numerous to count.

Well, today is yesterday’s tomorrow and my convictions and my

predictions have proven to be solid and true. In those parts of the

rural South where resources and opportunities converge we have

seen economic success emerge. However, in too many places we

continue to lack the resources to take full advantage of the opportunities.

It is appropriate that today I testify on the heels of this Subcommittee’s consideration to reauthorize the Appalachian Regional

Commission. The Southeast Crescent Authority is closely modeled

after the ARC, and like those leaders of a generation ago in the Appalachian Region, the leaders and the people of the Southeast Crescent are ready and willing to do their part. SECA is designed to

assist areas of the region that are mired in poverty, just as other

government-sponsored economic initiatives have in the past in

other parts of the Country.
36

One former ARC national co-chair told me that the ARC rarely

puts in the most money to a project, but it often puts in the first

or the last money into a project. In effect, the ARC money is the

glue that holds projects together. No such glue is available in Eastern Norther Carolina or in the rest of the Southeast Crescent region.

As proof of the power of that glue, one need only look at the

change the ARC region has undergone in just over four decades.

These numbers have been spoken about a lot today. But in 1960,

as we have heard, before the creation of ARC, 223 counties were

classified as distressed, and today that number is down to 77. What

other federally-funded program can claim that level of success?

This statistic alone is testament to the excellent work and outstanding success of the Appalachian Regional Commission. We in

the Southeast Crescent region want an opportunity to replicate

ARC’s success, and perhaps even improve upon its record.

Thanks to the lessons we have learned from the good work of the

ARC, I am more convinced today than ever before that the Southeast Crescent is uniquely positioned to take swift and full advantage of the creation of the Southeast Crescent Authority.

We know that the creation of SECA, the Southeast Crescent Authority, will not solve the economic woes of an entire region by

itself, but it is one tool, an effective and affordable tool, that will

begin to create economic opportunity and hope. While other parts

of the United States with economic challenges have the advantage

of federally-funded economic development commissions or authorities, such as the Appalachian Regional Commission, the Delta Regional Authority, the Denali Commission, Northern Great Plains,

to help deal with the deep and persistent poverty of their regions,

the Southeast Crescent region continues to struggle without a Federal partnership.

In creating SECA, Congress must insist that four things occur:

that, one, funding be adequate to the task and all monies dedicated

to this purpose be used wisely and quickly; two, that planning at

the local, State, and multi-State level must be integrated and comprehensive; three, that the organizational structures, policies, regulations, and guidelines with the Authority must become operational

quickly and reflect the best of the policies, regulations, structures

and guidelines, and experiences of each of the other four currently

authorized regional commissions; and, four, projects must benefit

the most distressed areas, that these projects are truly targeted to

improve economic or community needs and that the goals established are attainable, that projects have long-term benefits, and

that potentially eligible projects are placed in a project pipeline

prior to SECA becoming operational so that, once resources are

available, projects may be funded and make a difference on the

ground quickly.

In my written testimony I expand on each of these requirements

on which I believe Congress must insist.

I had the honor and privilege of working with fine people from

each of the seven States of the Southeast Crescent region for a

cause I believe in. During the past several years, we have learned

much about the successes and structures of the ARC, and that is
37

why we want to follow the model of the ARC. Support for the

Southeast Crescent region is broad and deep.

I have had the opportunity to travel to each of the seven States

to meet with the local development district in each State, and I am

happy to report that in each of the seven States there has been

unanimous support among the councils of governments and local

development districts for creation of the ARC. And, indeed, two and

a half years ago, the Southern Governors Association also unanimously endorsed the creation of the Southeast Crescent Authority.

As I have said, we have learned much from the challenges and

the obstacles faced by some of the other commissions, and we believe that the lessons we have learned from other regional authorities and commissions, and experiences from those will allow SECA

to become the model of success for future Congresses.

In closing, Mr. Chairman, I want to express my thanks to you

and to your Subcommittee for your willingness to hold this hearing

and to listen to testimony on the need to expand the successful 40-

year experiment of the Appalachian Regional Commission by creating new regional authorities and commissions in other parts of the

Country.

At the risk of singling out only one member among many that

have played important and tenacious roles in keeping the needs of

the Southeast Crescent region and its people before this body, I

want to take this opportunity to particularly thank Representative

Mike McIntyre. I look forward to working with you and all the

members of this Subcommittee, and to work with your fine majority and minority staffs to help to enact this important legislation.

Thank you.

Mr. SHUSTER. Thank you, Mr. Delia.

Now I recognize Mr. Brisbin for your opening statement.

Mr. BRISBIN. Thank you. Thank you, Mr. Chairman and members of the Committee, for the opportunity to testify today about

the concept of Federal-State regional commissions and, more specifically, the pending legislation proposal, H.R. 5742, for the Southwest Regional Border Authority. I also want to extend my appreciation to Representatives Henry Bonilla and Silvestre Reyes for the

dedication and hard work along the border. Congressman Reyes is

not just my Congressman, on the border, as we say, he es mi

hermano.

My oral testimony will be comprised of three main parts: my

background and experience, why we need the legislation, and how

I envision it to be the answer to many of the most pressing problems of the Southwest border. I will try to keep statistics and recitation of numbers you have already heard to an absolute minimum.

I have been a commissioner, a mayor, and a county judge for border entities. The county I served as county judge shares over 100

miles of border with Mexico. Public policy has always been my first

love, but I did own and operate a successful telecommunications

firm on the border for 16 years. I currently serve as the Executive

Director of the Rio Grande Council of Governments, a regional organization that covers over 22,000 square miles and parts of two

States.

I am also a member of the Board of Directors of the National Association of Development Organizations and Chairman of the
38

NATO Task Force on Homeland Security. My reason for telling you

this is this experience has led me to the conclusion that regionalism employed in an area of commonality can be highly effective

both in terms of cost and goal attainment.

This Country has a chronic problem along its southwestern border: employment, economic development, infrastructure construction, and financing are all in short supply. One might say that the

same could be said of many places, and that might be true, but

where else have national policies such as trade, immigration, and

homeland security contributed in such a way as to inhibit a region’s ability to keep pace with the rest of this great Nation?

The Southwest has regionally undergone a transformation in the

public eye from the unknown part of the United States to the entry

point for many of our most pressing problems. If you think that is

scary to the rest of the Country, consider our dilemma: we are

overwhelmed with needs, and most of those needs are growing exponentially. Trying to address those needs by shaping our remedies

to Federal programs already in existence is often just a temporary

fix and a poor fit. More often than not, the guidelines simply don’t

work on the border.

Federal programs such as the EDA and the Small Business Administration have proved to be useful tools in our past efforts. We

have no desire to supplant those agencies. Their usefulness has

been proven over time. I envision the Southwest Regional Border

Authority to be the primary tool to address the current needs of

our border communities. The joint Federal and State makeup with

its bottom-up approach and with the guidelines adjusted to fit border realities is the right way.

This, of course, is nothing new. The other regional commissions

currently in place and those proposed are proof that there is merit

in the idea. The new Federal funds would be coherently managed

from a regional approach and the return on those funds to the Federal coffers would be significant. All those involved in the business

of economic development have seen this model work many times.

In short, we ask that you give us, the residents and governments

of the Nation’s southwestern border region decision-making power

in regards to the use of Federal and State funds for water, sewer,

telecommunications, technology, and transportation infrastructure

to generate a healthier economy.

The success of councils of governments and regional organizations in Texas, New Mexico, Arizona, and California is a documented fact. The regionalism concept is working now. The one glaring shortcoming is the difficulty in matching the needs with the

programs. The Southwest Region Border Authority would be the

tool to make it all come together, the final buy-in by the Federal

and State governments to the realization that regions are unique

and the best answers to local problems are found at the local and

regional level.

End result, we get locally determined needs addressed through

a regional approach, coordinated at ever level and reviewed for economic impact, benefit, and priority. Unfortunately, this can’t be

done from Washington, D.C., all respect due being given. The reality of living on the border is filled with events unfamiliar to most

Americans. It is a great challenge to make the region a contributor
39

to the Nation’s wealth, not a statistical anomaly in a Nation of

prosperity. We welcome the challenge, hope for your support, and

totally embrace the concept of the Southwest Regional Border Authority.

I am happy to respond to any questions the Committee might

have, and thank you for this opportunity, Mr. Chairman.

Mr. SHUSTER. Thank you, Mr. Brisbin.

I am going to open the questions up.

Mr. Michaud, why don’t you go ahead and start off?

Mr. MICHAUD. Thank you very much, Mr. Chairman.

Mr. Daniels, as I stated in my opening remarks that the Northern Forest Alliance was here to support the Northeast region’s bill,

and it also gained support of conservation groups. Some might

wonder why would those organizations support an economic development bill. When the co-sponsors and I carefully drafted the scope

of this Commission, we included focus on land use, conservation,

and sustainable development. In your view, why are these issues

important when it comes to economic development in the Northeast?

Mr. DANIELS. Thank you. Briefly, having a partner such as

Northern Forest Alliance, Northern Forest Center work hand-inhand with economic development agencies I think it is unique, and

it has changed, it is evolving, as I think all of us have taken a look

at the economy over the last few years. It is changing our natural

resource. Base economy is shifting. In 1970, when we had 25,000

people working in the paper industry, we now have 10,000 people

working in the paper industry, and a lot of those jobs have really

shifted out. So we need to find new ways to create sustainable economic development.

If you look at now, a great example is the advance in engineered

wood composites facilities at the University of Maine, utilizing

underappreciated, underutilized species, injecting it with composite

resins and creating value-added products. Many of those are being

tested right now by the U.S. Army and by the Department of Defense, and recently that facility in the University of Maine was

chartered as a center of excellence for the U.S. Army. So taking a

traditional natural resource base within our area and being able to

provide new technology—in this case composites—we are really utilizing the existing resources and creating that sustainability that

we need.

And that is not only in Maine, but it needs to be done throughout. That can be done simultaneously with looking at the tourism

industry, $1.5 billion a year in the State of Maine. But we need to

do a better job of packaging that.

So bringing in partners such as Northern Forest Alliance, looking

at opportunities, looking at sustainable options that are occurring

within composites and utilizing natural resource base economy,

this in itself—we need to have a commission in order to solidify

that development strategy. Right now we are doing it as a component here and a component there. We need that overarching commission in place to be able to bring all of those parties together,

take the local development strategies and create an overarching

package which we can implement on a regional basis. That is what

this commission needs to be put forth to do.
40

Mr. MICHAUD. My second question is, what kind of investment

could you see this commission focusing on that would have a significant impact on the economy for the region, the Northeast region?

Mr. DANIELS. And I think we have heard this in a couple different instances today, certainly within the Appalachian Regional

Commission region, talking about transportation development,

talking about broadband access. Transportation as a whole, the

transportation reauthorization bill last year came forth and established the high-priority corridor from Calais, Maine to Watertown,

New York and really set the stage for transportation investment.

We need to go beyond that and be able to not only take a look at

the major routes within that east-west corridor, but take a look at

the arterial system and be able to connect that arterial system to

an enhanced transportation corridor.

Broadband access, I have got a great example right now. I am

working with a business that has been in town for about 100 years.

They have evolved, and it is a high-tech 150-person shop just north

of Bangor. Because of the lack of broadband access, they have given

us exactly two years, and the clock is ticking, or else they are going

to pack up their business and move it down to Atlanta, Georgia.

We do not have the broadband capabilities.

There is another one, Jackson Laboratory, well known within the

world of applied science and biotech. Right now, because of the

technology they have, in order for them to ship information off the

island, they have to shut their entire operation down for three

hours each night to download information to get it out of Jackson

Laboratory throughout the world, because there is not enough

broadband capacity.

And it is not only those large operations, but it is the two-person,

three-person shop that is doing design work somewhere in Maine

that needs to be able to ship their design plans down to New York

or throughout the world, and they are not able to do that right

now. Basically, those businesses are not able to develop or they are

shutting down.

Mr. MICHAUD. Thank you, Mr. Daniels. And I want to thank the

other two members of the panel.

Thank you very much, Mr. Chairman, once again for having this

hearing.

Mr. SHUSTER. Thank you.

My first question is, when you came up with the Northeast region, why did you cut out those southern New York counties there?

Because, if I am not mistaken, most of them are across the border

from they are all across the border from Pennsylvania. But those

are regions in Pennsylvania that aren’t that don’t have that much

economic growth and activity going on.

So how did you get that? And the second part of the question is,

besides the obvious, why did you include Connecticut? And the obvious being you get two more senators and a couple more members

of Congress to support this. But you have got Connecticut and

Rhode Island, and even a chunk of Massachusetts over there don’t

seem to be—I mean, they seem to be doing pretty well. How did

you come up with the region?
41

Mr. DANIELS. Actually, the 23—and this expands a little bit on

the 23 initial counties that we did evaluate. I think we certainly,

as we take a look at the legislation, need to come to a final total.

I have heard anywhere from 34 to 40, anywhere in there, as long

as they meet those distress factors. I think what it does do, it certainly strengthens, as we bring more counties in, the needs.

And I happen to be a resident of Upstate New York, happened

to live in Hamilton County at one point, certainly was part of that

distress. I don’t think we have come up with a full total as of yet,

so to cut that off at that level I couldn’t give you an answer right

now.

Mr. SHUSTER. I answered my own question. That is part of the

ARC. But Connecticut and Massachusetts, those areas, why did

you include them, is it the obvious?

Mr. DANIELS. Those are shown purely as those are successful regions right now, just not as distressed as the northern part of the

area. So when we developed the map as a whole, we just wanted

to show that as you go north, the areas of distress get much worse.

Mr. SHUSTER. Oh, so you are not saying that is not the region

you are proposing?

Mr. DANIELS. No, no.

Mr. SHUSTER. OK.

Mr. DANIELS. There is actually another map that we do have

that basically takes from Washington County, Maine, just on the

right-hand side of the map, the dark green, and runs all the way

to about Watertown, New York. Those are the 23 counties that

originally were evaluated, the rim counties that are just south of

the Canadian border.

Mr. SHUSTER. OK.

And a question for Mr. Daniels and Mr. Brisbin. You are both

on State’s borders with Canada and Mexico. Do you see cooperation, international cooperation on these types of economic development commissions?

Mr. DANIELS. Certainly. I happen to sit as part of the Board of

Directors of the Atlantic Provinces Chambers of Commerce, which

represents 14,500 businesses in Atlantic Canada. They were the

ones that made the overture towards us to make sure that there

is cooperation. Issues that impact the economy in Northern Maine,

Northern Vermont, Northern New York, Northern New Hampshire,

impact those in Quebec, Ontario, and New Brunswick.

So we need to be able—we are such a small region as a whole.

We just don’t have the critical mass to tackle any type of economic

issue by ourselves, so we need to be able to have the Federal Governments of both the United States and of Canada working to address the economic distress.

Mr. SHUSTER. I don’t know if they have counties in Canada. But

are the regions similar, economically, as they are in New York,

Vermont, and Maine?

Mr. DANIELS. If we expanded this map all the way to Halifax,

Nova Scotia, you would see the same level of distress pattern running all the way from Western New York all the way through Nova

Scotia, and even into Newfoundland and Labrador. And it is probably even more so than we are suffering right now. But, yes, you

do have that same pattern.
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Mr. SHUSTER. And how much cooperation is going on in that part

of the world with Canada on, for instance, sewage treatment facility or water waste treatment facilities and things like that? Is that

happening, cooperation?

Mr. DANIELS. I can’t speak to that. What I can speak is that we

are looking at joint energy policy. The Province of Quebec is far

ahead of us in their hydropower, their renewable energy resources,

so what we are doing is we are looking at ways and there is a joint

committee that is made up of the eastern Canadian premiers and

the New England governors, and they are getting together and

they are going to be working on environment and energy and how

those can work together so that we can deal with some of the energy problems and the high energy costs associated in the region.

Mr. SHUSTER. So if I travel up there into Maine today, would I

see Canadian power coming across to one of those counties, supplying utilities for them?

Mr. DANIELS. Bangor Hydroelectric is owned by Emera, which is

Nova Scotia Power, which is Nova Scotian. And there is an $85

million investment that is being made now running from eastern

Maine down into the greater Bangor central Maine region that is

called the 345 kV Line Northeast Reliability Interconnect, and it

will allow power to flow in both directions, and it really ties into

the Point Lepreau Nuclear Power Plant in Canada.

Mr. SHUSTER. Mr. Brisbin?

Mr. BRISBIN. Chairman Shuster, to address your question, yes,

currently there is a border counties coalition group that is made up

of representatives from northern Mexico and all of the counties

along the U.S.-Mexico border. They are doing work together. There

is a mayors conference that does work together. There is currently

wheeling of energy back and forth across the Mexican border.

And other than AND Bank and Border Economic Cooperation

Commission, there are no other specific projects going on. It is a

very difficult process for us in that we are dealing with a country

that is not nearly as developed as we are, and we are dealing with

the northern end of it, which is their least developed portion of that

country.

But, frankly, along the border, we don’t breathe without talking

to each other, because it is a river for the most part. I mean, it is

not—there is so much interchange and interplay. I mean, El Paso

is home to a joint area, when you include the City of Juarez, of 2.5

million people.

So there is so much interchange going on on a daily basis that

when we look at policy, whether it be water planning or anything

of that nature, we bring them to the table too. We can’t always cooperate to the degree that we can because they lack the resources

we do. That is a frank statement. But is there the will to do it and

are there mechanisms to do it? Yes. And I would assume that this

would improve that.

Mr. SHUSTER. Back to sewage and water. Do we supply any of

those utilities, that infrastructure, to Juarez?

Mr. BRISBIN. I think that we have done joint projects with sewage treatment and we are doing—I guess our usage of the water

is based on their usage and then a common policy is adapted, as

well as the discharge into the Rio Grande, et cetera. I do not know
43

if there is a case where they are actually receiving water from us,

although I know that there are contingency plans to do that on an

emergency basis.

Mr. SHUSTER. And, Mr. Delia, you are in the eastern United

States, the Carolinas. It is a hurricane-prone region. Can you comment on past recoveries, the programs, and their role in economic

development?

Mr. DELIA. I would be happy to. A couple of words about the rate

of natural disasters that occur in the Southeast region. Between

1980 and 2000, those two census periods, we had 2.5 times the

number of billion—that is with a B—billion dollars disasters come

through the region than anywhere else in the Country. Now, if

you—and that was during a time when the prevalence of hurricanes, predominantly, was lower than it is right now in this new

two or three decade period that geologically and climatologically we

are going through.

The disasters that occur in the Southeast region, because of the

depth of poverty of most of the region—and let me frame that

depth of poverty. We have a 429-county region. When you take out

the metropolitan areas of Raleigh, Charlotte, Miami, et cetera, everything else is in poverty. Seventy-three percent of the counties in

that 429-county region have poverty rates above the national average. Almost 43 percent of the counties have poverty rates double,

triple, and quadruple the national average.

So when it comes to recovery, the Federal Government has done

a good job in terms of economic recovery and, unfortunately, we

have all too much good experience in how to begin to recover from

economic disasters. You can take a look at the recovery effort in

the Carolinas, particularly North Carolina, from Hurricane Floyd

and the flooding that ensued.

So we had very good immediate recovery, economic recovery, but

the real problem is the long-term recovery. The real problem is creating the infrastructure and the economic opportunity that will

allow businesses and individuals to ride out those storms and build

wealth, and that has not happened, one statistic which goes

counterintuitive to what people envision for North Carolina. Delegate Norton mentioned North Carolina is kind of the poster child

for the new South. When we think about the highest number of per

capita PhDs in the Country being in Chapel Hill and Raleigh Research Triangle Park. If you move 80 miles east of there, you have

the lowest number of high school graduates in the Country.

In 1999, North Carolina had the highest number—and clearly

also the highest per capita number—of outhouses in the United

States, on the cusp of the 21st century. We now no longer have

that statistic because they were wiped out in three days during

Hurricane Floyd. Now, what that means is that suddenly not everybody got indoor toilets. What it means is

Mr. SHUSTER. A lot of troubled people.

Mr. DELIA. There are a lot of troubled people, but there is a lot

of straight piping that is occurring in terms of water and sewer and

so forth. So the problems may have begun to look different, but

they are still there.

Mr. SHUSTER. And I said to Representative McIntyre, when we

were talking about it before the hearing, North Carolina—he said
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80 miles from the Triangle, and I said, isn’t that the beach? No,

it is not that far. So my understanding of North Carolina is what

Ms. Norton said, that it is the new South and you don’t think of

this type of areas that have poverty and lack of education.

Mr. DELIA. Mr. Chairman, if you take a look at the Research Triangle Park and you look at the beaches, the Outer Banks, you have

got about a 220 mile stretch that you have got to go through.

Twenty miles outside of the Research Triangle Park you are in poverty; 20 miles west of the beach you are in poverty. So you are

looking at 180-mile east-west stretch where you have got incredibly

deep and persistent poverty, persistent to the point that it has been

the same, 20 percent, 30 percent, 40 percent unemployment poverty rates, ever since the statistic has been kept by the Census Bureau, so we are talking 40-plus years.

Mr. SHUSTER. And you mentioned 423 counties?

Mr. DELIA. Four hundred twenty-nine.

Mr. SHUSTER. How many of those would be distressed counties?

Mr. DELIA. Ultimately, it depends on your definition of distressed.

Mr. SHUSTER. Well, using the ARC’s definition.

Mr. DELIA. Using the ARC, you are looking at probably about 43

percent of those counties would be labeled distressed.

Mr. SHUSTER. Two hundred, roughly, or close to it.

Mr. DELIA. Right.

Mr. SHUSTER. What about in the Southwest?

Mr. BRISBIN. I think it is roughly 75 percent. I think it is roughly

75 percent.

Mr. SHUSTER. And how many counties?

Mr. BRISBIN. I think there are about 130, Mr. Chairman, I think.

And I think probably 85 or 90 of them would be distressed counties.

Mr. SHUSTER. And what about in the Northeast region?

Mr. DANIELS. We looked at 23 initial counties, and I think that

count is going to expand, but I think as you take a look at the size

of the county, as you get into Aroostook County, Aroostook County

is the size of Massachusetts and Connecticut combined, so you are

looking at a fairly large stretch. But the scope of the county certainly is much larger than the southern model.

Mr. SHUSTER. And what percentage of the counties would you

say are going to be distressed? I guess that would be the three dark

green counties?

Mr. DANIELS. I think you are looking at about 90 percent of what

is currently being evaluated would be fully distressed.

Mr. SHUSTER. OK. And my final question is if you had a magic

wand, or if Congress said, OK, we are going to create all three of

these, what would you take from ARC that you think that they do

really well? Not all of it, but just one or two. And what did they

do that you think we don’t want to do that because we don’t think

that has worked well, if there is anything?

Mr. DANIELS. I think the basic management model and the development model.

Mr. SHUSTER. That is where they have done well?

Mr. DANIELS. They have certainly done well. We are right now

in the development phase. We are certainly where they were back
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in—not 1960, but certainly in the 1970’s, when they had a little bit

of history under their belt. There are significant differences in that

a lot of the distress and how they have come upon their distress

is very different, and how they go about meeting those distress factors is going to be very different. I think certainly what we need

to do is have the flexibility

Mr. SHUSTER. Why would they be different? I mean, because they

are basically measurements of unemployment and education level.

There are four measurements? Income, poverty, unemployment.

Mr. DANIELS. Those basic distress factors, I think some of the

programs and how we—we have been—I think we would take the

model of transportation and broadband access, a lot of the core development components, health care I think as well, put those foundations in place and be able to address the real core to those distress factors.

Mr. SHUSTER. So flexibility is what you

Mr. DANIELS. We need to be able to have the flexibility.

Mr. SHUSTER. Mr. Delia, the same question.

Mr. DELIA. I agree with Mr. Daniels’ assessment in terms of

flexibility and the management structure, but I would add one

which, in my view, is really the overarching reason to create these

commissions, and it is not the money. The money is certainly very

helpful and required, but it is the ability to coordinate response to

needs at the local level.

What the ARC has done exceedingly well, and the Delta Regional

Authority has begun to do exceedingly well, is bring together Federal resources from diverse Federal departments and agencies in

concert with State resources, local government resources, and even,

to a larger extent than even those, private resources to attack a

problem in a holistic way. That I think is the secret to the success

of the ARC, that coordinating role, and that, Mr. Chairman, I think

is the single most important thing that these commissions would

bring to our region, is that overarching coordinating and planning

role.

Mr. SHUSTER. I agree with you that on that. I think that these

Federal programs need to have coordination. I know you look at

fire companies around America, and I am sure a lot of volunteer

fire—I have got a volunteer fire company one mile down the street

from it, and they both want money and somebody has got to say

to them, whether it is the State, the Feds, or local saying, look,

let’s consolidate; we don’t need 2 firehouses or we don’t need 2

waste treatment facilities or 60 different water supplies in a region,

consolidate the water too.

Mr. Brisbin?

Mr. BRISBIN. I too agree, Mr. Chairman. The combination of the

State and Federal resources being coordinated, that is the critical

thing and that is the thing that is lacking from other programs

that are currently in place. And also I think one of the things that

we really like about the ARC is the idea of the State and Federal

voting equity on the chairmanship of the board, and having some

you have got Federal accountability, but you also have the ability

for the States to present their case, and I think in that structure

that is a key part of it.
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Mr. SHUSTER. Right. Well, just that panel we had here today

with Federal, the State, and the local, that is what it is all about.

Mr. Michaud, do you have any other questions?

Mr. MICHAUD. No. Just want to note that was a good question

that Matt probably—your question about is that the region. No, the

Massachusetts, Connecticut, and Rhode Island were just put there

so you can see the comparison of Maine and New York and upstate

New Hampshire and Vermont.

Mr. SHUSTER. Well, again, besides the obvious to me, picking up

two senators in Connecticut is not a bad strategy.

Mr. MICHAUD. But I do know we have finite resources, and when

we put the region together, as you can see, pretty much all of

Maine, the top tier of the other States definitely have problems.

Mr. SHUSTER. Right.

Mr. MICHAUD. And I might also add there have been some areas

I know in Maine, labor market areas, where the unemployment

rate has been as high as 35 percent, so it is devastating.

Mr. SHUSTER. OK, well, again, we want to thank the three of you

for coming here today. We appreciate your taking the time and

shining some light on this. As I said, I showed my ignorance to Mr.

McIntyre when I thought he was talking about the beach, and I

couldn’t understand how you couldn’t have economic prosperity in

that part of the Carolinas. So, again, thank you all for being here

today.

I need to ask unanimous consent that the record of today’s hearing remain open until such time as our witnesses have provided

answers to any questions that may be submitted to them in writing

and unanimous consent that during such time the record remains

open, additional comments offered by individuals or groups may be

included the record of today’s hearing. Without objection, so ordered.

Again, thank you very much for being here today. And if no other

members have anything else to add, then we stand adjourned.

[Whereupon, at 4:20 p.m., the subcommittee was adjourned.]
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