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93–028 PDF 2015

S. HRG. 113–557 

THE IMPORTANCE OF REGIONAL STRATEGIES 

IN RURAL ECONOMIC DEVELOPMENT 

JOINT HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

AND THE

SUBCOMMITTEE ON JOBS, 

RURAL ECONOMIC GROWTH 

AND ENERGY INNOVATION 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 1, 2014 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

Available via the World Wide Web: http://www.agriculture.senate.gov 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

DEBBIE STABENOW, Michigan, Chairwoman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

SHERROD BROWN, OHIO 

AMY KLOBUCHAR, MINNESOTA 

MICHAEL BENNET, COLORADO 

KIRSTEN GILLIBRAND, NEW YORK 

JOE DONNELLY, INDIANA 

HEIDI HEITKAMP, NORTH DAKOTA 

ROBERT P. CASEY, Jr., PENNSYLVANIA 

JOHN WALSH, MONTANA 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

SAXBY CHAMBLISS, Georgia 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

MIKE JOHANNS, Nebraska 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

SUBCOMMITTEE ON JOBS, RURAL ECONOMIC GROWTH AND ENERGY 

INNOVATION 

SHERROD BROWN, Ohio, Chairman 

TOM HARKIN, Iowa 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

E. BENJAMIN NELSON, Nebraska 

ROBERT CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

JOHN THUNE, South Dakota 

RICHARD G. LUGAR, Indiana 

SAXBY CHAMBLISS, Georgia 

CHARLES GRASSLEY, Iowa 

JOHN HOEVEN, North Dakota 

CHRISTOPHER J. ADAMO, Majority Staff Director 

JONATHAN J. CORDONE, Majority Chief Counsel 

JESSICA L. WILLIAMS, Chief Clerk 

THOMAS ALLEN HAWKS, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel and Senior Advisor 

(II) 

(III) 

C O N T E N T S 

Page 

JOINT HEARING(S): 

The Importance of Regional Strategies in Rural Economic Development .......... 1 

Thursday, May 1, 2014 

STATEMENTS PRESENTED BY SENATORS 

Heitkamp, Hon. Heidi, U.S. Senator from the State of North Dakota ............... 1 

Johanns, Hon. Mike, U.S. Senator from the State of Nebraska .......................... 3 

Panel I 

O’Brien, Doug, Deputy Under Secretary for Rural Development, United States 

Department of Agriculture, Washington, DC .................................................... 6 

Panel II 

Keeley, Dawn, Executive Director, Red River Regional Council, Grafton, 

North Dakota ........................................................................................................ 17 

Person, Gary, City Manager, City of Sidney, Sidney, Nebraska ......................... 19 

Tilsen, Mark, Chief Executive Officer, Native American Natural Foods, Kyle, 

South Dakota ........................................................................................................ 21 

Fluharty, Chuck, President and Chief Executive Officer, Rural Policy Research Institute, University of Missouri, Columbia, Missouri ......................... 24 

APPENDIX 

PREPARED STATEMENTS: 

Fluharty, Chuck ................................................................................................ 38 

Keeley, Dawn .................................................................................................... 44 

O’Brien, Doug .................................................................................................... 57 

Person, Gary ..................................................................................................... 62 

Tilsen, Mark ...................................................................................................... 70 

QUESTION AND ANSWER: 

Fluharty, Chuck: 

Written response to questions from Hon. Debbie Stabenow ......................... 84 

Keeley, Dawn: 

Written response to questions from Hon. Debbie Stabenow ......................... 90 

O’Brien, Doug: 

Written response to questions from Hon. Debbie Stabenow ......................... 92 

Person, Gary: 

Written response to questions from Hon. Debbie Stabenow ......................... 94 

Tilsen, Mark: 

Written response to questions from Hon. Debbie Stabenow ......................... 97 

(1) 

THE IMPORTANCE OF REGIONAL STRATEGIES 

IN RURAL ECONOMIC DEVELOPMENT 

Thursday, May 1, 2014 

UNITED STATES SENATE, SUBCOMMITTEE ON JOBS, RURAL

ECONOMIC GROWTH AND ENERGY INNOVATION, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, Washington, DC 

The Subcommittee met, pursuant to notice, at 10:01 a.m., in 

room 328A, Russell Senate Office Building, Hon. Heidi Heitkamp, 

Chairwoman of the Subcommittee, presiding. Present: Senators Heitkamp, Brown, Donnelly, Casey, Johanns, and Thune. 

STATEMENT OF HON. HEIDI HEITKAMP, U.S. SENATOR FROM 

THE STATE OF NORTH DAKOTA 

Senator HEITKAMP. Good morning, and welcome to the first hearing of the Subcommittee on Jobs, Rural Economic Growth and Energy Innovation in the 113th Congress. 

I would like to just take a quick moment to give my best wishes 

and prayers and the support of our Committee members and, really, I am sure the entire Senate to Senator John Boozman, who is 

recovering from emergency open heart surgery. I look forward to 

seeing him very soon across the table in the Ag Committee. 

We are here to talk about the importance of regional strategies 

in rural economic development—what has worked to boost economic development in rural communities and what can be done in 

rural areas to achieve long-term, sustainable economic growth. It 

is a topic that presents great opportunity for North Dakota and 

many other States represented here on the panel. 

‘‘Regional strategies’’ may sound vague, but the main point is 

that they target resources to where they have the most impact locally. 

That could mean using resources to modernize a hospital as part 

of a population retention strategy so it can support more people in 

a community and state-of-the-art services. 

It could mean working with multiple counties and State officials 

to install high-speed Internet services to support a plan aimed at 

attracting new businesses. 

Or it could mean supporting local nonprofits and businesses by 

encouraging them to promote job training initiatives that meet the 

needs of prominent industries in a particular region. 

You know, I am a product of a small town in North Dakota. In 

fact, I love to tell the story that I grew up in a town of 90 people, 

and my family was one-tenth of the population. 

2 

[Laughter.] 

Senator HEITKAMP. We certainly understood that the role of 

those small towns is to support the dominant industry, which is agriculture. But we also know that if we are going to continue to 

grow and really use every available land resource in our country, 

we need to diversify rural America. 

I think because of my upbringing, I am acutely aware of the economic and growth challenges many rural communities face, low 

populations, low tax bases, long distances between communities, 

and rural towns tend to rely more on agricultural production as a 

main driver of their economic activity, subjecting them to price 

swings of global markets and exposure to the weather risks inherent in farming. 

In order for small communities, like my home town, to continue 

to survive, it is important that they become connected to the global 

marketplace and that we continue to build and support our towns. 

This requires investments in infrastructure such as high-speed 

Internet and transportation. Equally important, growing small 

town economies requires careful planning that capitalizes on regional strengths. 

The United States Senate Agriculture Committee recognized the 

importance of these regional strategies by including in the 2014 

farm bill new, targeted Federal investments for USDA projects that 

support long-term regional strategies. Senator Brown, who told me 

he was coming, in particular, I think, deserves recognition for his 

leadership in championing the regional language in the farm bill. 

Through this new approach, the Committee—he was not even here 

to hear me brag about him. 

[Laughter.] 

Senator HEITKAMP. Through this new approach, the Committee 

hopes rural communities target investment to boost economic development by harnessing their strengths. 

We need to reinforce the importance of recent economic strides 

in rural communities and encourage others to do the same. Even 

though North Dakota has been and continues to be an agriculture 

State, many of our farmers—in fact, most of the farmers that I 

know—still get much of their income from off-farm sources. Making 

investments based on regions’ strengths helps everyone. 

In North Dakota, we have great examples of regional economic 

success, whether it is the Jamestown Hospital buildout or whether 

it is the Dakota College at Bottineau getting help to help mid-sized 

producers sell locally grown vegetables. There is so much that communities can do working together. 

I have to tell you I am particularly excited to hear from Dawn 

Keeley from Grafton, North Dakota, one of our witnesses today. 

She has more than 24 years of experience—she does not even look 

24, but she has more than 24 years of experience in economic development in our State and was recently named the Executive Director of the Red River Regional Council. 

All of us today support our rural communities and want them to 

grow responsibly. Today we have a chance to hear of excellent examples of how we can do that, learn from the examples across our 

State, and continue to support rural America. 

3 

I now will turn it over to Senator Johanns, our Ranking Member 

on this Committee, for his opening comments. 

STATEMENT OF HON. MIKE JOHANNS, U.S. SENATOR FROM 

THE STATE OF NEBRASKA 

Senator JOHANNS. Well, thank you, Madam Chair, for calling this 

hearing. We are talking about a very important topic today not 

only to our two States but really across the country. 

In Nebraska, all but a handful of our counties are rural, with the 

nearest metro area oftentimes far away. When I was Governor of 

our State, I visited all of those counties. I have done that again as 

a United States Senator. I have witnessed firsthand some real 

trials, and I have witnessed firsthand some triumphs. 

Today we are going to get a chance to hear about Sidney, Nebraska. It is in Cheyenne County, and it is a real rural development success story. Gary Person and his community have made 

tremendous strides in the Nebraska Panhandle, and I could not be 

more excited that Gary is here with us today to talk about his community. 

As Secretary of Agriculture, I administered USDA Rural Development programs and saw firsthand the challenge of rural development on a national level. It is just simply a very difficult task. Despite decades of work on rural development, we have still seen 

steady population decline in rural communities across the country. 

There is no one factor that explains this trend, but most would 

agree that thriving rural areas are in the best interest of this country, especially in States like ours. 

That is why I have made rural development a priority throughout my years of public service. Our communities in Nebraska have 

so much to offer, small to large, and they contribute greatly to the 

vibrancy of our great State. It is hard work attracting or growing 

businesses and jobs anywhere, but that is especially true in our 

small towns. 

It is especially difficult when investors look at you differently because you are from a small community. All too often these communities are written off because the conventional wisdom says that 

small towns inevitably are losing population as people migrate to 

the city and, therefore, there is only one path forward for them. I 

could not disagree more. 

The roots of successful development are there in rural communities in Nebraska and across this country. Hard work and determination are a part of it. Rural America is known for these values 

for a reason, and they are needed to create successful entrepreneurs. 

Many rural areas also have an abundance of natural resources. 

We cannot forget that most rural areas do and will always depend 

on agriculture as their economic foundation, appropriately so. Livestock production especially is often forgotten in rural development, 

and sometimes it is even discouraged, even by the rural communities. 

In Nebraska, our rural economy has grown as we have increased 

the number of cattle on feed and ethanol plants. Strong prices 

across Ag products have helped drive new investments in rural 

4 

communities. But we all agree that alone has not stopped the outmigration from rural areas. 

So it is clear we need some new approaches. We are here today 

to talk about one such approach. Regional strategies are efforts by 

groups of communities to promote their region and its relative 

strengths. Working together, it is a common value we share. 

Too often small towns think that they have to work individually 

all alone to attract investment and growth. By acting regionally, 

though, there are opportunities that may do more to promote 

growth in flourishing communities than limiting investments to the 

borders of one single town. 

We are doing this in Nebraska. Regional economic development 

groups are working with one another and the State of Nebraska to 

maximize opportunities. As Governor, I had the pleasure of working with these groups. Now the farm bill we passed earlier this 

year recognizes this shift by setting aside 10 percent of funds from 

rural community facilities, utilities, and businesses, and cooperative development categories. These funds are targeted specifically 

toward multi-jurisdictional projects. It is an effort to offer incentives to communities to work together to find solutions, infrastructure needs, and other economic issues. 

In some areas, towns and counties work better than others. That 

is reality. But maybe this targeted funding will give some fence sitters the push they need to get past those old rivalries and work together within the region. 

Still, some rural communities are not content to wait for USDA 

funds to face the challenges. They have recognized that while funding is a part of the solution, there are issues that also impact their 

future. While it is generally not in the jurisdiction of this Committee, it would help these towns if the Federal Government would 

lighten the regulatory burden. Instead, we have seen an onslaught 

of regulations over the last 5 years that add expense to creating 

jobs and doing more with our infrastructure dollars. Rural towns 

and regions often lack the resources to comply. 

I think all members of this Committee would agree that agencies 

should give special attention to impacts on rural areas when considering new regulations. They just oftentimes do not have the resources to deal with that. 

So once again, I thank you, Chair Heitkamp, for this hearing, 

and I thank the panelists for being here. I look forward to the testimonies. 

Senator HEITKAMP. I think it is clear that this Committee has 

been so blessed to not only have a great Senator from a State that 

we swap back and forth on who is going to be top in wheat and 

top in a number of our commodities, but he has brought the wisdom of someone who has sat in the chair of the Secretary of Agriculture. I know that I have learned a great deal and always appreciate your comments. Thank you, Senator. 

Before we introduce our next panel, I believe Senator Thune, 

who has joined us, would love to introduce his guest and constituent, Mark Tilsen, CEO of Native American Natural Foods. He 

is on the second panel, but we wanted to make sure that you had 

a chance to introduce him. 

5 

Senator THUNE. Well, thank you, Madam Chair, and thank you, 

Ranking Member Johanns. I appreciate very much your holding 

this hearing today and providing this Subcommittee with an opportunity to hear from leaders in rural America who have established 

excellent examples of how rural development really should 

progress. I am pleased that we have with us here today Mr. Mark 

Tilsen, who is an accomplished businessman and respected member 

of the South Dakota business community and an enrolled member 

of the Oglala Sioux Tribe. He is the current president of Native 

American Natural Foods, which has developed and markets the 

Tanka Bar, a line of buffalo-and cranberry-based, high-protein, lowcarb snacks sold on more than 375 Indian reservations and carried 

in over 6,000 retail locations in all 50 States. 

Mr. Tilsen is a partner at Lakota Express, Inc., which is a direct 

marketing and customer care management company. In addition to 

his current work with these organizations, Mr. Tilsen has co-founded a number of community organizations and businesses throughout the region and has led several tribal economic development efforts. 

I look forward to Mr. Tilsen offering his firsthand knowledge and 

experience to the Ag Committee as we consider how to advance economic development strategies in small communities and work with 

USDA to successfully implement farm bill rural development programs. 

Mr. Tilsen is a valued member of the South Dakota business 

community, and his demonstrated leadership in the economic development world can help the Committee identify areas where we 

can better provide support to stimulate economic growth in rural 

areas and Indian reservations. I want to thank Mark for being here 

today and very much helping inform our thinking and help shape 

an agenda that would be good for rural America and good for our 

tribes. 

So thanks for taking time from your busy schedule, and thank 

you, Madam Chairwoman, for inviting Mr. Tilsen and you, Senator 

Johanns, as well for holding this hearing and what I hope will be 

a very productive meeting. 

I want to point out, this is just for those of you—a little marketing here. This is what Tanka looks like, and very high protein 

and low fat and healthy. So be sure you look for this when you get 

out there. 

Thank you. 

Senator HEITKAMP. Senator Thune, if you could guarantee that 

everyone would be as fit as you if they ate Tanka Bars—— 

[Laughter.] 

Senator HEITKAMP. You could not keep up with the demand, I 

am pretty sure. 

We have excellent panelists, and in the interest of time, I am 

going to ask that members’ opening statements be submitted for 

the record. We will recognize Senators based on the order of appearance, and I am going to go ahead and introduce our first panel. 

I am pleased to introduce Deputy Under Secretary Doug O’Brien. 

Mr. O’Brien serves as Deputy Under Secretary for Rural Development at USDA where he is responsible for overseeing policy implementation for the rural development mission area. Prior to his apVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
6 

pointment, Mr. O’Brien served as senior adviser to Secretary Tom 

Vilsack and Chief of Staff to Deputy Secretary Kathleen Merrigan. 

Before joining USDA, Mr. O’Brien served as assistant director of 

the Ohio Department of Agriculture and also served as senior adviser to Iowa Governor Chet Culver; as interim director for the National Agricultural Law Center in Fayetteville, Arkansas; and as a 

senior staff attorney at Drake Agricultural Law Center in Des 

Moines, Iowa. He is a former counsel for the U.S. Senate Agriculture Committee where he worked on the 2002 farm bill, and he 

was raised on a diversified farm in Iowa, so he knows of where he 

comes. 

Welcome Mr. O’Brien. If you could keep your comments to 5 minutes, and then we will go into questions. 

STATEMENT OF DOUG O’BRIEN, DEPUTY UNDER SECRETARY 

FOR RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr O’BRIEN. Absolutely. Thank you. Chairwoman Heitkamp, 

Ranking Member Johanns, Senator Thune, it is a pleasure to join 

you today to discuss rural development’s use of regional strategies 

in economic development. 

Strong rural communities are the key to a stronger America. To 

build stronger economies, it is vital that rural places create regional strategies to remain competitive. 

Rural America sees historic opportunities because of its unique 

assets, but it also faces historic challenges. The potential in rural 

America is vast. The bioeconomy, renewable energy, rural manufacturing, local and regional food systems, and, of course, production 

agriculture provide new markets and expand the potential for economic growth to spur the Nation’s economy. Yet USDA data indicates that the recent economic recession has resulted in the highest 

rural poverty rates in rural America since the mid-1980s. The 

USDA’s report, ‘‘Rural America at a Glance,’’ points to stalled job 

growth in non-metro counties, an increase in poverty—particularly 

among children—and a declining population. This combination of 

challenges and opportunities demands innovative approaches from 

the Federal Government such as support for regional strategies. 

While USDA has worked to support regional rural strategies in 

recent years, we are excited that Congress provided for a regional 

authority in the 2014 farm bill. This authority establishes a priority to fund projects that are part of long-term community and 

economic growth strategies in rural places. Implementation of this 

new authority will help us continue to better leverage resources 

and coordinate programs so that USDA can more effectively support rural places that work collaboratively. 

This is the right approach. Extensive studies from entities such 

as the Organization for Economic Cooperation and Development 

show investments aligned to regional strategies can yield better results. Their recommendations to policymakers include: investment 

in less economically developed regions; a use of pro-growth strategies based on regional assets; the implementation of education and 

training for low-skilled workers; coordination of infrastructure investment with other development strategies; and a focus on institutions that facilitate collaboration and communication. 

7 

One key way that rural development has been able to better support regional strategies is with its involvement with the White 

House Rural Council. This collaboration helped develop things such 

as the Rural Jobs and Innovation Accelerator Challenge, which 

leverages existing financial resources and technical assistance from 

various Federal agencies to strengthen regional industry and accelerate economic growth. 

For example, in Louisiana, the I–20 Corridor Regional Accelerator will integrate the community capacity building of Winrock’s 

Capacity Assistance for the Regional Economy program with business and economic development led by Louisiana Tech University. 

In another example, Rural Development’s Stronger Economies 

Together program, launched with land grant university partners 

and the regional rural development centers, enables rural communities and counties to work together to implement multi-county economic blueprints to build on a region’s current and emerging 

strengths. 

North Carolina’s Sandhills Stronger Economies Together planning effort will support agriculture business in the region through 

training and marketing, business planning, alternative business 

structures, succession planning, and the creation of a food hub. 

Rural Development’s history of funding infrastructure has also 

produced an array of benefits for rural regions. Since 1938, Douglas 

Electric Cooperative has delivered electricity to customers in southwest Oregon. Concerns over lost economic development led the utility to establish Douglas Fast Net and provide broadband to the region. The result is better education and training, a stronger economy, and a 21st century business environment. 

Leveraging Federal resources to strengthen regional economic development efforts is an agency best practice, and in a recent effort, 

the Federal Government’s Promise Zones Initiative coordinated 

partnerships for investments in high-poverty urban and rural and 

tribal communities to create jobs and increase economic activity. 

For instance, Kentucky’s Promise Zone road map will reduce contamination in major watersheds, help portions of the region maintain access to quality health care, and expand a food program to 

low-income residents and multifamily housing complexes to boost 

economies in this eight-county region. 

Initiatives such as these are integral to developing an array of 

innovative tools to help all regions grow. USDA and Rural Development will continue to build on these successes and help rural communities grow sustainable economies. 

I appreciate the opportunity to testify today before members of 

the Subcommittee. Thank you for your support of Rural Development programs, and I am happy to answer your questions at this 

time. 

[The prepared statement of Mr. O’Brien can be found on page 57 

in the appendix.] 

Senator HEITKAMP. Thank you so much, Mr. O’Brien. 

I am going to start out just kind of with a broad question, which 

is: How developed is the capacity for regional strategic planning in 

rural America today? 

Mr O’BRIEN. Well, that is a great question, Madam Chair, and 

I think that the answer has to be it really does vary over geogVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
8 

raphy. In my experience, there is not one particular thing that suggests that a place will have more capacity to do regional development. We see regional development in areas of greater need. For 

instance, in the Promise Zone and the region of southeastern Kentucky that Mr. Fluharty will talk about later, as well as advanced 

regional economic development efforts in North Dakota or Nebraska, some places with greater resources, some without. 

There are, I think, people in nearly every place across the United 

States who now know about this best economic development practice. Part of the reason we are so excited about the regional provision in the new farm bill, as Senator Johanns talked about is—I 

think it really will make a difference in terms of some of those community leaders, county commissioners, mayors, even the private 

business sector, who have thought about going through some of 

this extra effort. 

It is not easy work, regional economic development. It means collaboration. It means time away from some of the other priorities 

that these different entities have. But we know the results are real. 

The extra motivation provided by the priority and the set-aside, I 

really do think, will make a big difference in the long run. 

Senator HEITKAMP. Because I have to tell you, I have seen that 

culture change in North Dakota, even where you see the largest 

cities doing outreach, realizing that if we can get a biodiesel plant 

in Velva, that benefits Minot, and so Minot is supporting that kind 

of effort. 

I wanted to turn to the farm bill just quickly. In the farm bill, 

obviously, we included the first of its kind set-aside for projects like 

this. Can you explain how USDA plans to implement our regional 

language, whether applications in the current fiscal year will benefit? Are you going to have to do rulemaking? If so, where are you 

at with that? 

Mr O’BRIEN. Yes, thank you for that question. You know, Secretary Vilsack—— 

Senator HEITKAMP. I should ask you a question you do not want 

me to thank you for. 

[Laughter.] 

Mr O’BRIEN. Oh, okay. I always thank you. I thank you just for 

being—— 

Senator HEITKAMP. I always feel like I am not doing my job if 

people like my questions. That is the prosecutor in me. 

[Laughter.] 

Mr O’BRIEN. It is okay. I appreciate the opportunity to talk about 

the implementation of the regional provision in the 2014 farm bill. 

Secretary Vilsack, when he came in the department understood the 

value of regional approaches as a former small town mayor, State 

Senator, and, of course, Governor. So he is very much supportive 

of implementing the section as quickly as possible. 

We have spent a good bit of time in the last 2 months across the 

Department on all of our farm bill implementation. We have seen 

good success through disaster assistance and in rural development. 

We have already been able to obligate the dollars for the water programs. 

We will need to promulgate a rule to fully implement Section 

6025. We have begun that process already. We will not be able to 

9 

fully implement until the 2015 fiscal year. But during 2014, because you and Congress were so clear in the intent, we are examining our programs, particularly those identified in the farm bill, 

and looking at our current authority and our current discretion, 

whether it is points with the State director or the administrator, 

and implementing the intent to the greatest degree possible with 

the authority we currently have under regulation. 

Senator HEITKAMP. Well, I have additional questions, but I am 

going to turn to Ranking Member Johanns for additional questions 

he has. Then if Senator Thune still has some time, we will go to 

him. And, Senator Brown, welcome. 

Senator JOHANNS. Madam Chair, thank you. 

If I might just offer a thought to follow up on the Chair’s questions, because I believe this is really, really important to keep in 

mind as this is being implemented, it would be terribly unfortunate 

if 5 years from now, when we are looking at the next farm bill, if 

we looked back and saw that this regional concept resulted in the 

region developing a situation where 90 percent of the economic 

benefits from this program went to the biggest town in the region, 

if you know what I am saying, and the other 10 percent was sprinkled around in the other small towns, say to us. We do not see that 

we got a benefit out of this, and we do not think it did much regionally. I think that is what we are trying to get at, is this notion 

that truly everybody has got to be in this together in the region. 

That is what we are driving at. The key issue will be how you implement this. 

How are you going to deal with that phenomenon? How are you 

going to make sure that the small town, maybe the town of 900 or 

90 or whatever, is actually paid attention to when there is maybe 

an area in that region where you have a larger community that is 

doing a lot of right things right now today? How do you deal with 

that? 

Mr O’BRIEN. Well, that is an excellent question, and certainly a 

concern of ours and many of the stakeholders. I think one thing to 

note is that even with the 10-percent set-aside, even when we 

apply the new preference, the other requirements and preferences 

within law still apply. 

So for instance, in our water and wastewater program, there are 

particularly preferences for towns of under 2,500, under 5,000, 

then, of course, under 10,000. Those will still apply in the metric. 

We also have in many of our programs, including at least most 

of the four programs delineated in the regional provision, preference for areas of greater need. Those will still apply. 

So in terms of a watershed movement of dollars into the bigger 

places, into the places of maybe greater resources, I think current 

law already protects that, and we will certainly implement. 

To your point, I have seen both in this country and I have had 

the opportunity to work with OECD on regional rural strategies. I 

have seen a number of approaches where smaller places, I certainly 

do have a voice. I think more and more, whether you are talking 

about small towns of 7,000 being the county seat that is sort of the 

powerhouse, or a micropolitan of 70,000 that is kind of the powerhouse, I think a lot of the economic development practitioners realize that it is not in the interest of that bigger town to kind of domiVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
10 

nate that regional conversation. There are assets, there are people 

in those smaller towns where that workforce will be needed for the 

region. There are natural assets whether it is based on agriculture 

or forestry or otherwise. 

So, I think that we will certainly encourage that in terms of just 

our community economic development practitioner, but it is a concern that we will continue to keep in mind, and I appreciate that 

comment. 

Senator JOHANNS. I mentioned in my opening comments the 

whole issue of regulation and the challenges that presents to communities. Mr. Person is here today. We have worked on these 

issues together when I was Governor and since I have been in the 

United States Senate. Sometimes the regulatory requirements to 

build that road or to do whatever are just so incredibly onerous for 

a small town. They see their very precious resources being burned 

up. 

How do we deal with that? How can USDA in your judgment, 

maybe with a boost from a regional standpoint, help our small communities deal with that issue and get on top of that issue? 

Mr O’BRIEN. I think actually the encouragement and the proliferation of regional approaches will help address that real concern 

of the need to have the capacity to address application requirements and regulatory requirements. 

As a member of an agency that has application requirements, we 

have a responsibility--and, in fact, we appreciated the encouragement and the direction in the farm bill—to streamline our regulations and our application systems, and we are working through 

that and appreciate it, because we had planned to do that anyway. 

On the other side of the table, the applicants, the communities, 

by encouraging them to work together, they can get to a scale so 

that they can make sure that they have the right type of engineer 

or architect or planner that can really make the difference to make 

sure that the project, whether it is a hospital in Jamestown or a 

four-county regional water system in Arkansas, to make sure that 

it is truly done right and that it can sustain and serve the people 

of those communities. 

Senator JOHANNS. Thank you, Madam Chair. 

Senator HEITKAMP. Senator Brown. 

Senator BROWN. Thank you, Madam Chair, and I appreciate your 

work on this issue, the work that—some of this work started from 

a Committee hearing we held a couple of years ago here—Mr. 

Fluharty was there, another Ohioan was there, and Mr. O’Brien is 

kind of an honorary Ohioan with the work he has done there, 

thank you for that—and developed into an amendment that helped 

us do more forward thinking regional strategies, and I am grateful 

to Chairwoman Heitkamp for helping to move that forward. We 

have seen that have an impact in my State, in Athens, in Wilmington, and in Somerset and in Chester Hill, and thank you for 

that. 

My questions are on a couple of issues I want to pursue, Mr. 

O’Brien. Most of rural Ohio, and especially rural Appalachian Ohio, 

are people not engaged in agriculture, obviously. How does rural 

development reach them to sort of figure out how to do these sort 

of regional programs? How do you find them? How do you commuVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
11 

nicate with them? How do you reach them? One of the most challenging places in America, I remember at a veterans hearing sometime ago, we were talking about the challenge that veterans, when 

they come back to Appalachia, are the sort of least likely to want 

to check into a local veterans service organization or office or the 

VSOs to even look at what benefits they might be eligible for. So 

how do you reach especially in Appalachian Ohio, or Appalachia— 

any one of these States in that kind of rural America? 

Mr O’BRIEN. Well, thank you for that question, Senator. As you 

know, I am familiar with that footprint, both in my former job with 

the Ohio Department of Agriculture and now in my work at Rural 

Development. I think Appalachian Ohio is an excellent example of 

how Rural Development needs to tailor its approach to the reality 

of the place. Athens, at University Town, actually has quite a bit 

of capacity and is really leading a rural angel investor type of effort 

as well as small business incubation group. 

Our job in a place like Athens and the surrounding 20, 30, 40 

miles is to plug in support, because there are some folks there, who 

know how to get to us. They know how to get to the small business 

development centers outside of their region, and it is maybe like a 

lot of other more remote or lower-resource areas rural areas across 

the country. I think we have more of a responsibility to help lead 

and provide capacity to those places to make sure that they can access Rural Development as well as Farm Service Agency, Natural 

Resource Conservation, and other USDA programs. 

The way that we have done it in Ohio and other places is to identify key local partners. In Ohio, it is the Appalachian Regional 

Foundation we have worked with, providing more than one grant 

to make sure that they are helping small communities build wealth 

in those places. Rural Development is also in the process of looking 

at other strategies to help build community economic development. 

In the 2015 budget, in the President’s budget for rural development, we propose to create a very small group, perhaps 50 people, 

to look at building a pilot of a mobile 21st century workforce that 

can help areas, particularly areas of greater need to have the capacity to build sustainable plans and to access resources, not Federal or State, but private resources. 

Senator BROWN. You have noticed from your time in our State 

and you have seen this all over the country, when an industrial 

plant closes in a small town, and there are many of them I think 

throughout Indiana, Ohio, all over, that may pay $12 to $15 an 

hour—they are not the $20 or $25 an hour union jobs, but they are 

decent wages. So often a husband and wife work at the same place, 

a small plant. If a plant like that closes, as we have seen throughout my State and much of the Midwest and other places, the whole 

family income—the whole family is turned upside down because 

the whole family income is lost. We had some provisions in the 

farm bill on bio-based manufacturing. What do we do there? How 

do we plug that in, what that does for rural America, obviously, 

with bio-based manufacturing and what it can do to build a manufacturing base in small town Midwest? 

Mr O’BRIEN. In particularly, the opportunity around bio-based 

manufacturing puts rural places at a competitive advantage in this 

new and emerging subsector in the industrial sector. The stuff that 

12 

we grow, that our farmers grow, or that is grown in our forests in 

the United States, could be made into high-value products, whether 

it be plastics or resins or asphalt. 

What we can do at Rural Development is leverage the expertise 

and the knowledge that we have about rural America. We have 

over 400 offices throughout the United States. We have over 3,800 

people that work in the field that know more than any other member of the Federal family about the opportunities and the needs of 

those rural places. These days a lot of those opportunities, are biobased. 

We think our responsibility is to support those local businesses 

and those local regional strategies that are created from the grass 

roots and support them through our financing. 

Also, I think USDA Rural Development has the opportunity to 

bring in other Federal partners, such as the Small Business Administration, or the Economic Development Administration, who, 

while have all intention to work in rural, simply do not have the 

footprint that we do. We do that through the White House Rural 

Council. We do that through our connections through our State offices. 

Senator BROWN. Thank you, Madam Chair. 

Senator HEITKAMP. Thank you. 

Senator Donnelly? 

Senator DONNELLY. Thank you, Madam Chair. 

Mr. O’Brien, thank you for being here. In regards to the USDA’s 

outreach and assistance, I was wondering if you could talk a little 

bit about the resources you have available to help rural communities close the skills gap so that businesses can find enough 

trained people to locate their facilities in these communities. 

Mr O’BRIEN. Senator, thank you for that question. The workforce 

development issues are some of the most critical in rural places. A 

report that I cited in my testimony actually cites workforce development investments many times in rural places are those that will 

get the greatest return as long as that investment is tied to a larger, more comprehensive regional economic development strategy. 

Within our programs at USDA Rural Development, one particular program, the business grant program, known before the 

2014 farm bills the rural business entrepreneur grant program, as 

well as two other grant programs that we have, can provide resources to intermediaries that have as part of their strategy to do 

workforce development. 

Within the Federal family, I have learned over time that certainly the Department of Labor really has the real resources for 

workforce development. Also, part of what we have done at Rural 

Development in the last 4 or 5 years is work much more closely 

with community colleges. I have found that in many places community colleges, may be the only anchor institution in a rural region 

that have the capacity to plan and to work with all the different 

types of entities that are key for a successful strategy. Obviously, 

their bread and butter is workforce development. 

I was in western Tennessee about 3 weeks ago, in Dyersburg 

Tennessee, and saw a fantastic partnership between the community college there and ten small manufacturers with very tailored 

classes in workforce development to support the jobs to keep the 

13 

people who want to stay in that rural place. We do have some resources and we draw on other Federal resources to support that 

kind of effort. 

Senator DONNELLY. The follow-up, the other key to a lot of this 

economic development then becomes, okay, we need to have the 

skills, we need to have the skilled people. Then you look and you 

go, Do we have the infrastructure to be competitive? 

Mr O’BRIEN. Right. 

Senator DONNELLY. I was wondering, in regards to the USDA, 

what are you doing in terms of some of our rural communities to 

help them put together a comprehensive infrastructure plan so 

that, okay, a business is willing to take a look, we may have 

enough skilled people here, but access to market and other infrastructure for the community? 

Mr O’BRIEN. That infrastructure plan is key to a small town such 

as Boley, Oklahoma, where I was last week. It’s a small town of 

1,100, a very low resource place with deep infrastructure needs. We 

have been able to help them invest in their water and wastewater 

infrastructure, but they had not updated their plans I think for at 

least a decade, if not decades for infrastructure. They had the exact 

same question you posed. 

We have some resources at USDA Rural Development, but I do 

need to be candid that over the last 4 or 5 years, our grant dollars 

have diminished, as have a lot of grant dollars across the Federal 

Government. 

I certainly have seen small towns and regions that have been 

able to put together and leverage dollars, whether that is with 

their regional planning organization, a COG or an ADD, or whatever it is in that place, with the county and with others to craft 

those strategies. 

I think the new farm bill provision provides that incentive to 

make sure that towns make those plans so the taxpayer dollars 

that you provide USDA can go farther and make the biggest impact 

in rural places. 

Senator DONNELLY. One of the things I worry about is losing our 

young people in a lot of our rural communities, and it is jobs, it 

is quality of life, it is the chance to have them trained with appropriate skills, to have the infrastructure in the town or community 

to encourage good jobs to come. But losing the young people, it almost creates a spiral that starts. After skills and after infrastructure, what are the other things that you look at and say here are 

the kind of elements that are critical to keeping people at home 

and having them build their future right here? 

Mr O’BRIEN. Well, I think the most important element these 

days is making sure that high-speed broadband is available in 

rural places. The National Telecom Association has a great report 

on how the majority of people who grew up in a rural place and 

this is not going to be a surprise to any of you, but they want to 

stay in that rural place if they can. They asked about different 

types of amenities, and right at the top of the list was they simply 

need to have access to high-speed broadband. 

USDA has important programs that have enabled us to push 

broadband out in areas, particularly with some of the Recovery Act 

14 

funding, but there is still work to do, and we work closely with our 

sister agencies to do that. 

I think another thing that people do not talk about as much— 

and a lot of this can be highlighted in some of the regional strategies—is realizing the cultural and the recreation assets in rural 

places. Young people more and more actually value the opportunity 

to ski or snowmobile or hike or fish or hunt. More and more people 

in urban areas with discretionary income are spending dollars on 

activities like that. 

One of the basic tenets of a lot of the regional strategies is look 

at the assets you have, focusing on those recreational and natural 

assets, lifting them up with some relatively low investments—it 

might be in a bike trail, it might be in a music festival. But it is 

that extra little bit that will make that mid-level manager for a 

manufacturer consider living there. I hear a lot about that can be 

the hardest part for a small manufacturer with 20 or 30 jobs, and 

they are trying to find that person who is kind of that mid-manager to run the place. They have a hard time getting that family 

to come to that rural place and stay in that rural place. 

There are great things happening in rural America. We know 

there is a great quality of life and it is lifting it up, and there may 

be a few key investments to make it an even better place. 

Senator DONNELLY. Thank you so much. 

Thank you, Madam Chair. 

Senator HEITKAMP. Thank you. 

Senator Casey, any questions? 

Senator CASEY. Madam Chair, thank you very much. 

I was telling the Chairwoman recently I have been wanting to 

actually be at a hearing where she was chairing, and this is wonderful to see you in that position. I do not have a camera—— 

Senator HEITKAMP. It is a long story, everyone. 

[Laughter.] 

Senator CASEY. I do have a phone that has a camera, but I will 

not take a picture. But this is a great—— 

Senator DONNELLY. I would also like to add how impressed we 

are by your nameplate, Madam Chairwoman. 

Senator CASEY. That is right. 

Senator HEITKAMP. See what I have to put up with? I just want 

to point that out. 

Senator CASEY. But thanks for having this hearing. I know I was 

late and missed a lot of the hearing, so I will be respectful of both 

time and substance. 

But I wanted to ask one question with regard to—and I know 

that these are kind of fundamental questions for dealing with constituents and their questions that they have, but kind of the terms 

of art here, the multi-jurisdictional strategic community plan, how 

do you—when a constituent says to me, ‘‘What does that mean? 

How does USDA determine what constitutes that?’’ How do you answer that? Maybe the same question as it relates to the economic 

development plan. 

Mr O’BRIEN. First, I should state something I had an opportunity 

to state earlier, that in implementing this section, Section 6025, we 

have determined that we will need to promulgate a rule, so the two 

15 

questions—the way we answer those will be in the regulation. I 

think I can provide some initial reaction. 

On the multi-jurisdictional strategy the choice is there. I think 

the basic choices will be whether we look at that as a number of 

towns that perhaps are within a county of course, as in Pennsylvania, towns, townships—or is it multi-county. 

At least two of our initiatives at USDA are focusing on regional 

where we have looked for multi-county to try and make sure that 

we get that type of footprint. But, actually one of the good questions is, does it necessarily need to be multi-county? As you move 

west, counties get really big, and we certainly have heard from people that sometimes that is not appropriate, and we have made 

some exceptions. 

So we will make that determination. It is an important question, 

and we will certainly look forward to working with this Committee 

to make sure that we get it right. 

As to the second question on economic development strategy, I 

think that and, we again will have to do that in regulation, there 

is a spectrum of the sophistication of these strategies, everything 

from a very well done community economic development strategy 

that EDA puts out as a framework to a smaller group of folks that 

collaborate together to look around a particular opportunity. 

My first take is that we go towards the less formal. Also in the 

statute, it does indicate that there are a couple other really important points—that there be broad-based collaboration. I think that 

is a real key. You need to have the public sector, the private sector, 

and in a best-case scenario, the nonprofit sector at the table. You 

need to have the leaders, whether it is the different towns or the 

different communities at the table as it is created. 

I think if you have that, if the people are honestly looking at the 

assets there, which is also in the statute, and they have metrics for 

success, then I think you have a recipe for a good economic development strategy that is based on the vision of the people in that 

place. 

Senator CASEY. Well, I will tell you—and I will wrap up, but, 

first of all, I want to thank you for your public service and your 

work on these particular matters. But when I consider what we 

face in Pennsylvania—the Chairwoman knows something about our 

State—we are not usually considered a big rural State. But because we have such a big population, we have got literally millions 

of people that live in rural areas and a lot of counties that are full 

of a lot of small towns, and a lot of them in rural America. It is 

interesting. When I look at the economic trauma that people have 

lived through, some of the highest unemployment numbers in the 

last couple of years have been some of my home area of northeastern Pennsylvania, where we have fairly big cities; Philadelphia 

has been high; but other than those metropolitan areas, the highest 

unemployment has been in small towns and a lot of rural areas, 

whole counties devastated, some rescued in a sense by natural gas, 

but some one or two counties away that have not seen that. 

So all of these strategies that lead to better results by way of 

rural development, economic development, regional approaches are 

going to be vitally important to help people dig out of that difficult 

circumstance. 

16 

Because I want to make sure the Chairwoman does not get mad 

at me, I have 13 second left, and I am going to cede that time to 

someone else. 

[Laughter.] 

Senator CASEY. Thank you, Madam Chair. 

Senator HEITKAMP. Thank you, Senator Casey. 

Senator Brown was not here earlier to hear my praise for setting 

this in motion. I think you can see from the questions this is just 

the beginning of our discussion with USDA on regional development. There is a lot of concern and a lot of interest in how this program gets implemented, and I want to thank you, Mr. O’Brien, for 

being a national leader, and I want to thank you for your service. 

You have a lot on your shoulders when you look at the challenges 

ahead for rural America. 

Mr O’BRIEN. Thank you for having me. 

Senator HEITKAMP. Thank you. 

We are going to go ahead and call up the next panel. I want to 

warn everyone. I understand that we are going to receive a—we 

are going to have to vote at 11:15, and so we are kind of working 

through those issues. We are hoping we can get through opening 

statements before we run off and vote, and then come back and 

probably do some questions and answers. So we will go ahead and 

call up the next panel. 

[Pause.] 

Senator HEITKAMP. Welcome, everyone, and thanks for joining us 

today. I think we are all looking forward to your testimony. 

Again, just as a reminder, your testimony should not be any 

longer than 5 minutes so that we have more time for questions and 

answers. 

I am going to start with one of my introductions, and then we 

will be switching back and forth, Ranking Member Johanns and 

myself. 

I want to tell you how pleased I am to see Dawn Keeley, executive director of the Red River Regional Council in Grafton, North 

Dakota, which is a town north of Grand Forks. Dawn has over 23 

years of community and economic development experience, serving 

as the executive director of the Red River Regional Council, a 

multi-county regional council located in northeastern North Dakota, assisting local government in economic and community development, disaster recovery, housing development, and rehabilitation 

and strategic planning. 

She has been heavily involved in all aspects of rural development 

in her community and in her region. She and her husband, John, 

and their beautiful children have a farm north of Grafton that I 

have been fortunate enough to be a guest at. You certainly are 

among the best of rural development leaders all across the country, 

and I thank you so much for attending. 

Secretary—why do I always call you ‘‘Secretary’’? 

Senator Johanns will introduce Mr. Person. 

Senator JOHANNS. Gary Person is from Sidney, Nebraska, is city 

manager, has been in that capacity for years. He grew up on a 

small farm and a ranch on the Wyoming-Nebraska border, graduated from the University of Nebraska at Kearney, in western Nebraska. Gary manages a $31 million annual budget, 81 full-time 

17 

and 30 part-time employees, and oversees and manages 13 city departments. 

I could tell you from personal experience Gary has provided inspired leadership and energetic ideas to transform a community— 

a community that is a real success story really throughout the Midwest. His unwavering belief in the goodness and strength of rural 

America, specifically rural Nebraska, helped lay the groundwork 

for what has become a booming economy in that part of the State. 

Gary, I look forward to hearing your thoughts. I thank you for 

being here today, and to all of our other panelists, let me say also 

welcome. 

Senator HEITKAMP. Our third panelist, Mr. Tilsen, has been very 

ably introduced by our Senator from South Dakota, but I want to 

welcome him personally. He is the president of Native American 

Natural Foods. He has more than 25 years of experience in nonprofit fundraising, marketing, community development, and 18 

years in special event marketing and production, obviously received 

a tremendous number of awards, but I want to personally tell you 

I took your bars on a long hike in Peru and shared them with a 

lot of people who thought they were pretty darn good. I think that 

your efforts and your products are well known all across—within 

that outdoors community, and congratulations on the many awards 

your products have received. 

Our final panelist is Chuck Fluharty. He is the founder and 

president of Rural Policy Research Institute. He is widely recognized as an expert on regional strategies in rural economic development and has been involved in numerous regional planning efforts 

throughout our country. It is the only national policy institute in 

the United States of America solely dedicated to assisting rural impacts and looking at public policy and rural communities. This 

comprehensive approach to rural policy analysis involves faculty 

from founding member institutes at Iowa State, the University of 

Missouri, the University of Nebraska as well as researchers, policy 

analysts, practitioners from other universities, research institutions, governments, and non-governmental organizations. 

Dawn, we will begin with you. Do you want to begin your testimony now? 

STATEMENT OF DAWN KEELEY, EXECUTIVE DIRECTOR, RED 

RIVER REGIONAL COUNCIL, GRAFTON, NORTH DAKOTA 

Ms. KEELEY. Thank you very much. 

Senator HEITKAMP. Press the button. 

Ms. KEELEY. Chairwoman Heidi Heitkamp, Ranking Member 

Johanns, and members of the Subcommittee, I very much appreciate the opportunity to be here today and discuss the importance 

of regional development strategies. As Senator Heitkamp said, I am 

the executive director of the Red River Regional Council. I have 

been part of this organization since about 1993. I took a 5-year hiatus and went to work for a private engineering firm, and in that 

experience I was highly involved in the oil patch in North Dakota 

and dealing with regional strategies in western North Dakota to 

address rapid growth issues, which is the flip side of much of what 

we have historically dealt with. 

18 

We serve to unite and collaborate with all of the cities in our region, and I am currently under the development of our Regional 

Economic Development Strategy, so I have been holding those 

meetings locally in the last few weeks and months and to try to figure out what our regional strategy is and updating that. I have gotten very impressive engagement and involvement in those discussions. 

The things I really want to talk about today, I want to bring up 

three key points that I think are very important as it relates to regional strategies and what will make that happen well in our—as 

a practitioner and amongst my colleagues here. 

The first one is leverage. I like to say that ‘‘leverage’’ is our middle name in rural America. We have to leverage on every front on 

all days—leverage in our volunteer base, leverage with our communities and our partners. I jest that our private and public sector 

partners are our Capital SWAT Team, capital with an ‘‘A.’’ 

When I have a really great project that I need to bring forward, 

I call in the SWAT Team, and they show up, and we get the job 

done. I have been very impressed by that. I think we have a very 

can-do spirit amongst our economic development personnel and 

leaders in North Dakota, our State and Federal leaders. 

So our tagline is ‘‘Moving Ideas to Actions,’’ so I am all about action. I want to get things done. That requires leveraging and having strong partnerships with all the parties involved. 

The regional council is one of those local partners that the Under 

Secretary referenced as well. We manage multiple Federal grants. 

We currently have at least seven contracts in place with different 

Federal agencies, either directly or indirectly. 

Maintaining the program funding for some of these Federal relationships is very important to our agency. Without that funding— 

we have a small staff of six people, and without these key funding 

elements, we would not even be able to maintain our staff. 

The second key foundation is really the ability to integrate programs. We talk about leverage. We need to also be able to integrate 

programs. Amongst our staff, we have staff that have to have expertise in multiple areas and are funded in multiple ways. So we 

are always integrating our programs and trying to be innovative in 

our approaches on how we can even explain to our State and Federal partners how we can make this all work better together. 

One of the difficult parts of some of the leverage and program integration that we do is the requirement of the Federal approved indirect cost plan, and for a small agency such as ours to develop the 

cost plan and regularly update it on an annual basis, it does become an issue. So there are occasions where many of the Federal 

programs require one-to-one match, which can be a struggle to 

meet the match requirements. But we also then—if we do not have 

that federally approved in direct rate, then we are further subsidizing those programs with about another 20 to 25 percent of our 

humble office setting requirements. 

So the SBA does have a policy where they have an indirect rate 

that they have provided through the agency, so we can recommend 

that be considered for most of the Federal programs on the smaller 

award. 

19 

The last piece is really about strong, vibrant rural communities, 

and I see I am running low on time, so I will try to hit some hot 

spots here. But the agriculture is very important in rural North 

Dakota. It is 25 percent of our employment base as well as 25 percent of our economic base. 

Since 1940, 30 of our 53 rural communities have had 70 years 

of declined population. So I would like to say I really have given 

this a lot of thought, and I really think that the efficiencies gained 

in the farm economy have also led to the demise of our small rural 

communities. So while the farm has grown, the communities have 

shrunk. I am looking at my children and wondering how I am 

going to be able to keep my children interested in staying in this 

rural community. 

Also, the ability of tech—farms have become very high tech. 

These high-tech farms cannot be supported by low-tech, low-amenity communities. In our regional planning efforts today, we are losing 30 percent of that age group. We have lost—-between the ages 

of 0 to 44, we have lost 30 percent in the last decade alone. So we 

have some real struggles and challenges. 

I would like to put a plug real quick that today we are inspiring 

youth entrepreneurship, and as I speak, there are 600 kids gathered in the school district in Grafton talking about youth entrepreneurship all day long. So this is hopefully one of our first building 

blocks to move forward and inspiring our youth to use their technology skills to build these communities. 

Thank you. 

[The prepared statement of Ms. Keeley can be found on page 44 

in the appendix.] 

Senator HEITKAMP. Thanks, Dawn. 

Mr. Person? 

STATEMENT OF GARY PERSON, CITY MANAGER, CITY OF 

SIDNEY, NEBRASKA, CHEYENNE COUNTY 

Mr. PERSON. Thank you, Chairwoman Heitkamp, Ranking Member and our favorite son from Nebraska, Senator Johanns, and 

other members of the Committee. It is an honor to be here. 

Though I come before you with the title of city manager, I am 

still about as grassroots country boy as it gets. I have spent my 

adult life trying to find the keys to sustainability and meeting the 

challenges a rural community faces in America’s heartland. 

I am the first generation on both sides of my family that no 

longer is involved in farming or ranching. The farming and ranching way of life we grew up with has practically disappeared from 

today’s landscape, but the preservation of rural lifestyles and values is still critically important for America’s future well-being. 

In Nebraska, 80 of our 93 counties are considered non-metro. It 

amazes me in those 80 rural counties there was more population 

in the 1890 census than in the 2010 census, and only six have 

shown population growth since 1950. 

Rural communities all across America have struggled to survive 

as their way of life has changed just as dramatically. Drive down 

any of their main streets. Your eyes will tell you everything. Take 

a leisurely drive on a country road, and abandoned farmsteads far 

outnumber those inhabited. The average age of the population has 

20 

nearly reached senior citizen status. Most rural communities will 

not and simply cannot survive if they have not diversified the agriculture revenue stream that is their primary economy. 

Today I share a story about one community that found new ways 

of sustainability, economic diversification, and completely reinvented itself over the past 40 years. It is not a suburb that pretends it is a small community, as it is 100 miles from any population base and 350 miles from the State capital. 

Our community was thriving in the 1940s and 1950s, but its primary payrolls were dominated by the Federal Government and 

Mother Nature. You simply cannot control either one as a small 

rural community. 

By 1970, most of those jobs disappeared, and farming and ranching was about to head into the 1980s crisis mode. The population 

declined 45 consecutive years, the economy tanked, and the public 

infrastructure started to erode away. 

In the most recent 25 years, four times we have taken economic 

development initiatives to a vote of the people, and each time the 

citizens overwhelmingly voted to rebuild their own future, not depend on someone else to do it for them. 

We educated ourselves on Federal and State revitalization programs that would give us a hand up, not a handout. We did it with 

homegrown entrepreneurs like the Cabela’s family with its national 

outfitter reputation and our own knack for recruiting other employers across the country looking to expand into a rural lifestyle. 

Even into the 1990s, agriculture has always been the largest industry earner in our local economy. Today it ranks as our 7th leading industry earner. 

We have tripled that local economy and valuation base over the 

last 20 years. We have more jobs per capita than almost any community in America. Every one of our employers needs more workers. We have another $300 million of new projects on the ground 

and moving forward this spring. Our most significant challenge is 

building affordable workforce housing. 

Today’s new generation is not pulled by the rural emotional 

heartstrings like those of us who grew up in rural America. They 

will, however, come back for good jobs, quality of life, and a safe 

place to raise their families. Our employers have proven it. 

I am sharing several statistics provided by the Public Affairs Research Center from the University of Nebraska, Omaha, illustrating the rural outmigration of our State where 75 percent of our 

93 counties lost population again just this past decade. I have also 

provided key excerpts from our 2012 city comprehensive plan on 

how we have bucked that trend and diversified our economy. 

Some of the suggestions I mention in the written testimony I realize you have no control over in this Subcommittee, but I sense 

what you are all about is the general awareness and future wellbeing of rural America. There are ways you can influence those 

outcomes in arenas beyond this Committee with a shift in policy 

and elimination of bureaucracy. 

One of the key advantages rural America had a generation ago 

was its low cost of utilities and housing. The same is not true 

today. Our small community has had to endure $20 million of mandated public infrastructure projects primarily brought on by the inVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
21 

creased environmental regulations dealing with water, wastewater, 

landfill, electrical generation sources, emission standards, and others. Combined with new banking regulations, it will put many 

small communities out of business and lock the door for any hope 

of a future rural renaissance. 

Regional emphasis is critically important, but it is going to take 

incentivizing communities and counties to work together to have 

the impact we must have to achieve consolidation, break down 

longstanding barriers, and begin to work on regional strategies. 

USDA programs are critically important to help us balance this 

ever growing regulatory world with low-interest, long-term financing and guaranteed loans for projects in the public and private sectors. We also need more flexibility within those programs on income standards. 

I believe, like you do, that rural America still matters. We just 

need to have Americans rediscover this opportunity and way of life 

once again. 

Thank you for your dedicated service to our country. 

[The prepared statement of Mr. Person can be found on page 62 

in the appendix.] 

Senator HEITKAMP. Thank you, Mr. Person. 

Mr. Tilsen? 

STATEMENT OF MARK TILSEN, PRESIDENT AND CO-FOUNDER, 

NATIVE AMERICAN NATURAL FOODS, KYLE, SOUTH DAKOTA 

Mr. TILSEN. I would like to thank Senator Thune for that rather 

gracious introduction. I only want to make one correction. I am not 

a tribal member. I am a new guy there. All my kids and grandchildren are tribal members, but I have only been there for 40 

years. 

I would also like to thank Chairwoman Heitkamp and other distinguished members of the Committee. 

I am here today as the co-founder and president of Native American Natural Foods. I have worked on and around the Pine Ridge 

Reservation for about 30 years. Pine Ridge is well known as one 

of the poorest places in America where the unemployment rate has 

never been lower than 65 percent. 

This 30-plus years of work has given me a firsthand knowledge 

of the impact of our Federal Government’s economic development 

programs in Indian country that I will try to share with you today. 

As the father of three children who are members of the tribe and 

six grandchildren, it is their future that motivates me and whose 

interests I represent here today. 

I am also a social entrepreneur who believes that at this critical 

time in history, we must and can build sustainable, just economies 

that preserve our air, water, and land. I know that each and every 

business decision we make has to focus on what is best for the 

greater good, for your grandchildren, yours and mine alike. As social entrepreneurs, we look at business as a tool to address social 

needs. We operate on more than just the financial bottom line, and 

we listen to the market for opportunity to create change. 

This is why my business partner, Karlene Hunter, and I 

launched Native American Natural Foods. We created a national 

brand in the middle of a food desert in one of the most geographiVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
22 

cally, economically isolated places in America—on the Pine Ridge 

Indian Reservation. We did this with purpose and intention. We 

understood the social problems, the poverty, and the barriers to 

business success. We live with them every day. 

So we choose to focus on the positive assets in our community. 

We wanted to see if we could build a brand that could one day become strong enough to break the isolation of the reservation and 

to have a positive impact on the health of the people, the land, and 

the buffalo. 

This led us to an idea: Could we take the Lakota people’s ancestral knowledge of the perfect portable energy food and create a new 

brand that shared the positive history of healthy food, stewardship 

of the land, air, water, and respect for the buffalo as the givers of 

life and turn it into a high-value natural brand? 

Then we took the entrepreneurial step of putting everything at 

risk and created the Tanka Bar. Today I am proud to share with 

you that the Tanka Bar is sold on over 375 Indian reservations, 

over 6,000 retailers, including Whole Foods, Costco, Natural Grocers, national parks, and many, many more. 

We have created a learning company that is focused on quality 

natural products, best-in-class customer service, empowering our 

employees to become owners. 

We are an innovator of a new category in this emerging category 

of meat bar snacks. We created the category over 7 years ago. The 

Tanka Bar is the first protein bar with real meat in it, the first 

meat snack with real fruit, and the only 100 percent buffalo and 

fruit bar. We are also the only certified Native American natural 

product that is distributed nationally. As you said, we have won 

many national awards. 

We are mission-driven company. We have created nine full-time 

jobs on the reservation. When we started, none of our employees 

had ever worked in the natural food industry. But given the opportunity, tied with the training and tools to succeed, our employees 

are now on track to become managers and soon owners of the company. 

We have created a profitable business model, but we have only 

begun to have our desired impact on the community. Our next step 

is we need to refinance for growth, expand our product offering, increase our investments in marketing, invest in management-level 

training, and grow the number of Native American buffalo. We 

need to recruit more young people into raising buffalo, as it is a 

fast-growing opportunity. 

In order to address this, we have joined forces with the American 

Indian Land Tenure Foundation to launch the Tanka Fund. It is 

a new national campaign to return buffalo to the lives, lands, and 

economy of Indian people. It is critical that we find a way for 

USDA to play an important role in bringing the buffalo back into 

the economy. 

The challenges of lack of basic infrastructure, shortfalls of capital, lack of training resources, inadequate, undependable Internet, 

and access to lands and markets for Native American Natural 

Foods are many. But we are a microcosm of the bigger challenges 

facing Native American communities. 

23 

I want to jump ahead to point out that the Oglala Sioux Tribe 

with the Thunder Valley Community Development Corporation has 

completed a regional plan, and they have created—a Regional Plan 

for Sustainability, and they have created a road map to do this. We 

are one of the few companies that was able to participate fully in 

the creation of this regional plan. But then the regional plan is not 

funded, so it is another example of what happens when you have 

a lot of young people—over 23 organizations participated in this, 

but we are not even close to recognizing the needs. 

The plan shows every single community on the Pine Ridge Indian Reservation is at capacity, and I want to point out that we 

have 11 of the poorest counties in the United States in South Dakota, and these are all Native American communities. The thing 

that is different and the challenges we have is the population of 

the Native communities is growing faster than anywhere else. It is 

only the rural communities in our State that are growing. But we 

lack—it is estimated that the Oglala Sioux Tribe lacks over 5,000 

houses. The current HUD funding for houses is not even enough 

to keep up with the current growth of the population. Whether it 

is current infrastructure, housing, expanding infrastructure, there 

is a severe shortfall that this new regional planning initiative is 

really critical for the next step for our business but the bigger community. We are not just an isolated business. We cannot succeed 

and grow without the necessary infrastructure. 

Did I just go over my time? 

Senator HEITKAMP. But it was going so well, we did not see 

any—— 

[Laughter.] 

Mr. TILSEN. I will just keep going then. 

I guess that is my biggest point, is that the average age in Indian country is about 25. People are returning to the reservation, 

but we are not investing in the future, the hopes, the dreams of 

these young people. The opportunity is tremendous, but the gap between what is available to them and what is needed is just enormous. 

As an interested observer of Federal programs, I have seen many 

of these types of projects where you get the community excited, 

there is a lot of research and a lot of planning, but then on the 

Federal level the follow-through is not there, and we are hopeful 

that this new change in the farm bill is going to open up the opportunity to help meet that need. 

I also want to point out that one of the biggest changes that I 

think could add to success of entrepreneurial development in Indian country is start to back away from grants and figure out a 

way to provide—allow people to earn equity. That is what we are 

doing with our company. If we are going to talk about wealth creation, we have to get beyond job creation. We have to figure out 

a way to provide equity. I think equity will have a bigger multiplier 

effect on the local economy. In the long term, it will have a better 

impact on the national debt. It is really necessary for the next step, 

which means we are going to have to take more risk. We might 

have to balance that with the accountability, but we do have to figure out a way to take more risk. 

24 

I guess my last thing I just want to say is that climate change 

is no longer a debate. The only decision left will be: Will you, our 

elected leaders, have the courage to lead us to a new sustainable 

economy? We realize that the economic forces to maintain the status quo may seem stronger than gravity itself, but change can happen. The majority of people support it. Native communities across 

South Dakota are unified in their opposition to uranium mining in 

the Black Hills and the XL energy fight. But we often ignore Native communities when they stand with the water and land. And, 

in fact, we have punished them both economically and politically 

for their position to protect air, water, and land, and I think we 

now need to take a step back and learn from them. That is what 

we are doing with our company, and I would like to urge you as 

our leaders to do the same. 

Thank you. 

[The prepared statement of Mr. Tilsen can be found on page 70 

in the appendix.] 

Senator HEITKAMP. Thank you, Mr. Tilsen. 

Mr. Fluharty? 

STATEMENT OF CHARLES W. FLUHARTY, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, RURAL POLICY RESEARCH INSTITUTE, TRUMAN SCHOOL OF PUBLIC AFFAIRS, UNIVERSITY OF MO, COLUMBIA, MISSOURI 

Mr. FLUHARTY. Thank you, Madam Chairman—and congratulations to you—Ranking Member Johanns, and members of the Subcommittee, Senator Casey, I will try to be quick. I know you have 

the vote coming. 

It is an honor to be here today, particularly with three worldclass practitioners. If you just listened to these three individuals, 

I think the road map is fairly clear. I would ask that my comments 

be in the record. 

I want to say I am very pleased to be here today to not talk 

about my request that you create a regional strategy in a farm bill. 

Today I want to commend this Committee for your vision, for your 

acknowledgment of the practical realities in the countryside, and 

for creating legislation that I think is potentially the most significant entrepreneurial development since the RD Title was put in 

the farm bill. I want to thank you for that opportunity you created 

for our rural young people to stay where they live. 

But I also want to urge your vigilance, I want to urge your commitment, and I want to urge your oversight. I would like to make 

three points in that regard. 

You have to assure your legislative intent reaches its full potential. 

Secondly, the goals that you have created this program for have 

to be followed closely, and we need an evidence base to assure, 

when we come back to the next bill, you have a rationale to continue it, deepen it, fund it more deeply. As my colleague just said, 

the need is very, very great, and the follow-through federally is a 

challenge still. 

Finally, we need to make certain this is exploited by the Department, and that is critical. 

25 

This will require some things. It is going to demand your patience, it is going to demand flexibility, and it is going to demand 

collaboration. This is hard work. Soft infrastructure takes time and 

great people. 

You are going to have to have collaboration with other Federal 

agencies. This administration has done that very well. We need to 

deepen it with State agencies, with cities, with counties, with regional governments and organizations, and with the private sector, 

the NGO community, and particularly the philanthropic community. 

But I would just ask this opportunity to not be squandered by 

small development, small thinking, small politics, or approaches 

and mythologies that say USDA cannot do this work. It may not 

have done so until now, but I would argue it is up to the task. 

The innovations that have been achieved by this Committee and 

the Department across the broader farm bill will all be implemented. You intend for that to occur. The spirit should also drive 

this new innovation in rural development. I have no doubt at all 

that it is possible. I would argue the risk management tools you 

have given entrepreneurs in moving from a commodity payment to 

an insurance payment is the exact same thing you are doing in regional strategies for the counties, regions, and entrepreneurs where 

these farmers live and work. 

Now, this regional approach is so necessary for three reasons. 

There are longstanding structural deficits. I have talked about 

them to this Committee many times. I want to re-mention them. 

They are critical as a rationale for doing this. 

The first is the consistent per capita disadvantage in economic 

and community development in Federal funding, it is $300 to $500 

per person per year less in rural areas. That is tens of billions of 

dollars. That is largely because we do not have a place entitlement 

in CDBG for rural non-metropolitan areas. That means multi-year 

funding and planning cannot occur. 

Finally—and I need to raise the issue—philanthropy today is investing only 1 to 3 percent of its total outlay in rural areas. That 

creates, those three things, the soft infrastructure to build an innovation economy in our urban areas. These practitioners lack all of 

that in their work every day. 

As you know, I have testified many times about this, and I just 

would like to end with one example of how it does work. In my testimony, I chatted about the SOAR Initiative in Kentucky. House 

Appropriations Chair Hal Rogers and Kentucky Governor Steve 

Beshear came to RPRI last fall and said, ‘‘We have to do something. We have lost 7,000 mining jobs in eastern Kentucky in 3 

months. Those are $80,000-a-year jobs. What can we do?’’ 

We are now 5 months in with an amazing regional development 

plan, 50 counties, cities, development organizations, private firms, 

the faith community, our universities, and just good Appalachian 

folk working on 15 different committees, doing what these folks do 

every day. That is simply possible. It is simply going to take, however, a little flexibility in seeking USDA to take a greater lead. In 

different places, it will look differently. 

We started the journey to ask this Committee to do this 10 years 

ago. We hosted an international conference with the Federal ReVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
26 

serve Bank of Kansas City and the OECD. There is clear international evidence that this is the way rural development is going. 

I would just urge you to look at the SOAR example. It is a similar 

example of these three great public servants, and it is occurring 

right now with zero Federal help. The only way they were able to 

do that was RPRI is funded by your Committee, and they simply 

said, ‘‘Ask RPRI to come in and start.’’ 

I believe the potential is significant for where you are headed, 

and I commend the Committee at the deepest level for moving forward with this. I think it will be a change agent. 

[The prepared statement of Mr. Fluharty can be found on page 

38 in the appendix.] 

Senator HEITKAMP. I want to thank you all for your excellent testimony. 

I am going to turn the Committee over to our Ranking Member, 

Senator Johanns. I am going to go vote, and then I will be back. 

Senator JOHANNS. [Presiding.] Thank you, Madam Chair. 

Let me ask a question, and I think this actually is probably appropriate for any of the panel members, but I will start with Gary, 

if I could. 

As I would travel our State over the years, there would be some 

communities that just would seem like they had it figured out. 

They would build one success on another success, and all of a sudden, a lot of energy was happening there. There would be other 

communities where they just could not get to that first success, just 

for whatever reason. 

I would like to hear your collective opinions on what do you think 

is a difference maker. What is driving that community that is successful? What is holding back that community that cannot seem to 

land that first business to create jobs or whatever it is? Gary, get 

us started here. 

Mr. PERSON. Okay. Well, I think most important it starts with 

the grassroots attitude of a community. You have got to believe in 

yourself. You have got to sell what you are, not what you are not. 

You have to get people working together. We did that through some 

initiatives that we took to the ballot to allow people to decide how 

they wanted to spend the revenue we had as a community to try 

to make economic development work. 

One thing I have learned is do not ever sell the people short. 

They get it. Give them an opportunity. You cannot let the 

naysayers get you down all the time. 

Then there are some even smaller tier communities that they 

have to get over the fact that they might be envious of what goes 

on a few miles down the road, but if that other community can provide the jobs and they can still take their paychecks back to those 

communities and keep their houses full and their schools viable, 

then everybody wins. That is the best regional approach there is: 

You have to rally around, and being an old farm boy, I call it the 

‘‘mother hen theory.’’ You know, if the mother hen is healthy and 

vibrant and doing good things, all the baby chicks are going to continue to grow up and be good as well. 

So I think some of those communities have had to realize that 

maybe their niche is being a bedroom community, but being part 

of that regional coalition, because those communities like Sidney 

27 

need those job holders, too. In our case, 40 percent of our workforce 

commutes from other communities and to our economy from as far 

a distance away as 100 miles in every direction. 

Senator JOHANNS. Dawn, do you have thoughts on that? 

Ms. KEELEY. Senator Johanns, I truly believe that the core of 

what makes the difference is just having strong leadership, and 

strong leadership that has an eye towards the future. I think just 

having a positive outlook and encouraging folks and supporting 

folks as they are trying to put ideas forward and kind of creating 

that can-do spirit, I think it can be contagious. It just needs to be 

instilled, and it really takes collective encouragement of that spirit. 

Senator JOHANNS. Mr. Tilsen? 

Mr. TILSEN. I have to concur that we have to invest in the collective creativity, especially in Indian country, of the young people. I 

think when we were looking at trying to find a distance-neutral 

economic development opportunity, we studied several communities 

around the country. We looked at how did Ben & Jerry’s start in 

Vermont and how did Patagonia start in Portland and how did 

Cabela’s start in Sidney, Nebraska. That is where we came up with 

the idea of why couldn’t we create a national brand even where we 

were at. We have proven that the model works, but we have not 

got it to scale yet, and that is where we really need the help. 

But even just that has really energized a lot of young people. I 

mean, the folks that we have working for us, they have never had 

a job where they get to use their own creativity to succeed. We 

have never run an ad. We have run this whole company off of social media; 125,000 people a month communicate with our team 

just through the Internet. We are in a town of 2,500 people. 

Senator JOHANNS. Chuck. 

Mr. FLUHARTY. Just two quick things, Senator. I think we need 

to think about the young men and women that are 15 to 30 right 

now. They are very, very different people than we are. We think 

place-making is critical for them. It was mentioned several times. 

They want to stay. They are going to need some assets. 

I will just tell a very, very quick story that reinforces this. When 

the Chairman and the Governor came to me, I said, ‘‘Let us just 

try to have a regional dialogue.’’ As you all know, Appalachian 

Kentucky has been beaten down for a century. So we agreed to rent 

a school gym and just bring people together and say what could we 

do together to collaborate. 

We had 4 weeks. We had to rent the gym at the regional university. We had over 2,000 people show up on an icy, rainy day in 

eastern Kentucky. Two thousand people. We should not speak 

down to rural folk. They get this. They want to do it. But we have 

got to focus on that next generation of young people who want to 

stay at home. That is the key. 

Senator JOHANNS. That is the key. As you know, in this farm bill 

we have adopted this regional approach. What we are trying to do 

and what we are trying to signal is that we believe the future for 

rural America, in part at least, is going to be a regional approach, 

everybody kind of working together within a region. 

If you were to sit down with Tom Vilsack or the Secretary for 

Rural Development and say, okay, here are the three things that 

you need to focus on in implementing this program, or two things, 

28 

what would you tell them those are? What should we be looking 

for to make sure that they get it right as they roll out this program? And, Dawn, why don’t I start at your end of the table. 

Ms. KEELEY. So I am clear on the question, what do we need to 

do to support rolling out this program? 

Senator JOHANNS. Yes, yes. 

Ms. KEELEY. Okay. I think I need to give it a little more thought. 

I am sorry. 

Senator JOHANNS. Okay. I will come back around. 

Ms. KEELEY. Yes, I would appreciate that. 

Senator JOHANNS. Gary, you were taking some notes there. 

Mr. PERSON. Sure, I will jump in. I think there has to be some 

skin in the game, the local communities and counties, that these 

programs have to be designed that unless you are a regional player, unless you are part of the team, your community and your companies are not eligible to participate. 

I have been part of a regional development group for three decades, been a board member, and it is frustration to get—a lot of 

times you will see counties or communities leave the fold because 

they do not think regionalism is important or they do not think 

communication is important. 

You are very familiar with the Panhandle, and you know that 

the base of the population is in Scotts Bluff County. Well, Scotts 

Bluff County pulls out of the regional group. What kind of a message does that send to all the other counties in the communities 

in the region? 

Until there is the incentive where the people demand it, why 

aren’t you part of this group? Why aren’t you part of trying to find 

the solutions and that you have an obligation to help all those 

around you? 

We need to break down those old barriers. I look back to the 

1890s, the late 1880s, when we probably were at our peak population out in that area of the State. We had one county. Look at 

the challenges we had with transportation and communication. 

Today we have got everything you could ask for when it comes to 

both, and we have 11 counties. I mean, we have just—it seems like 

we have to get beyond some of these imaginary lines and we have 

to start thinking about the people who have to support that, and 

that is the taxpayers. We have to find ways to consolidate but do 

it through incentivization rather than penalty. 

Senator JOHANNS. Mr. Tilsen, any thoughts how best to roll out 

this program? 

Mr. TILSEN. Well, in addition to the three things that I brought 

up in terms of infrastructure, housing, water/sewer, and climate 

change mitigation, I think particularly to Indian country and to 

disenfranchised communities our reservation probably exports 

about $300 million into the region, exports, because the dollar 

turns over less than once. The model that was created by awarding 

Thunder Valley Community Development Corporation on Pine 

Ridge as the coordinating company, as the coordinating group for 

the regional plan, for the first time in history you had tribal officials, county officials, State officials, Federal officials, people from 

colleges, universities, the Oglala Lakota College, small businesses 

29 

like ours, all at the table planning the future of the region. Normally the tribe would be left out of that process. 

So I would encourage you to keep empowering the reservationbased groups and using leverage to try to create these regional 

plans. This plan that they created has huge potential, and so the 

follow-up funding is important. But on the tribal level, I would 

urge you to continue to empower the tribal planners and the tribal 

community development corporations to break that isolation, because in the past it has sort of been an exploiter-exploited relationship, and that interferes with economic development, and it interferes with progress. 

Senator JOHANNS. Chuck? 

Mr. FLUHARTY. Senator, this is the most critical question, I 

think, for rural development, and I want to spend a minute answering it because we have done this all over the world. 

The first challenge we have is cultural. It is always cultural. 

Every rural region is very different. In almost all of those where 

success occurs, you have an inclusive model of buy-in at the start. 

That could be the council churches, it could be a Governor, it could 

be a mayor, it could be a tribe, it could be a development organization. But the reality is that you have a challenge in your USDA 

structure right now given the history of the grant and loan programs. 

I think it is going to be an uphill slog, but I urge this Committee 

to stay engaged. Everyone is working really hard to move this, but 

we need every Federal agency engaged in some way. It is more 

than scoring. Thunder Valley was a great example, frankly, HUDfunded—HUD-funded, Housing and Urban Development—to do 

that. 

The second thing is I think we need Governors and mayors and 

county commissioners much more involved. 

The last thing I would say is I think any quick answer is wrong, 

but let me share a quick answer, and that is, scale is so critical. 

Once you have solved the cultural issue, I think you have to look 

at convincing that woman who is a mayor of that micropolitan region that her future is not to become an MSA mayor but to become 

the center of a regional growth hub with 15 or 20 contiguous counties that aligns with that growth hub. We have 700 micropolitan 

regions, and in the West we have smaller growth regions of four 

to five thousand. Figuring out a way, to your question, to assure 

every one of those contiguous rural counties does not suffer from 

that great sucking sound when that money goes to their regional 

area, but they begin to build a compact around distributed food, energy, entrepreneurship, workforce education, and health and 

human services, finding some scale to start I think does advantage 

your opportunity. 

Ms. KEELEY. Thank you. I have a couple of thoughts. I think that 

we are currently in the development of our SETs, and the approach 

that I took was to develop four individual county plans first as the 

foundation for our regional planning. 

EDA private sector funding through our planning grant program, 

which is funding much of the time that I am investing in doing this 

work, and I supplemented the EDA funding by each of these parVerDate Nov 24 2008 17:30 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93028.TXT MICAH
30 

ticipating counties contributing additional funds so that we could 

do these individual plans. 

But I think there is not—we are still carrying on our day-to-day 

business while we are in the middle of this extraordinary planning 

effort, and there are not adequate resources to fund enough time 

to really do the job really well. 

I think that somebody may have mentioned it already, too, but 

I think that on the flip side of that is making sure there are resources available, and I think there are a lot of project-driven resources that can be made available. I think the most difficult struggle that I have is trying to figure out how I can pay for our staff 

time, it is just being the champion, being the leader, being the cando spirit guy on the team, and if I have to figure out nickels and 

dimes to be that guy, it gets really to be a challenge to just maintain our workforce within my group and then to—I mean, building 

a can-do spirit means a lot of boots on the ground and a lot of time 

investment in building that spirit. 

So I would love to be that champion. I just struggle a bit sometimes to make sure that we have adequate funding in place so that 

our staff has the confidence that we are going to be able to keep 

their job around. It is not just an annual grant-based job. 

Senator JOHANNS. You know, you raise a valid point. It occurred 

to me years and years ago, as I would work with communities 

across the State as Governor, that resources were always tough to 

come by. 

Number two, most of the local government was volunteer. You 

know, your city council person might be getting some insignificant 

stipend. Gary, I do not know what you pay your city council people 

there. 

Mr. PERSON. It is insignificant. 

[Laughter.] 

Senator JOHANNS. I do not mean to embarrass anybody, but typically it was—it just was something to recognize that they had attended the meeting. But, by and large, whether it was the school 

board, the local city council, or whatever, they were operating as 

volunteers in setting aside significant amounts of time in that volunteer activity. So your point is extremely well taken. 

We have been talking about the relationship at the Federal level 

with the State and more specifically the local communities. I would 

like to have you explain what are the challenges in attracting capital or somebody making a loan into a small community so when 

a business comes to you and says, ‘‘I have got this great idea,’’ how 

difficult for them is it to get their business up and going, attract 

the capital, the loan support that they need to open that business 

and maybe start with two employees or whatever and maybe build 

Cabela’s someday. And, Gary, I will go to you. What challenges do 

you face in that? 

Mr. PERSON. They are enormous. When we went through that 

transformation back in 2008 with the banking community and the 

regulations that come down, the projects, I look back 10 years ago, 

that would have been a no-brainer to take to the local banking 

community. Today they are so overregulated now, and it is like 

there is this scare factor. If you dare make a wrong decision by 

funding something there is a huge penalty to pay in the end. 

31 

I will just give you one critical example in our community. We 

have grown our economy. We now have 8,000 jobs in a town of 

6,700 people. We need market rate housing in the worst sort of 

way. Developers have wanted to build a tax credit project, and I 

get that. I understand it. We have a need for it. But we have several now that have openings. We have 100 people every day looking 

for a place to live, but yet they cannot live there because of the income restrictions. 

We have not built a market rate apartment complex in our community for 60 years. We just went through a 10-year cycle trying 

to build an apartment complex. They see this economy, and they 

see all these jobs, but it is always the what-if factor when they look 

at Sidney, Nebraska, because we have got a lot of great employers, 

but obviously Cabela’s is our flagship, and it is the what-if. What 

if they are not here in 20 years at the end of my mortgage? How 

are we going to survive? And, consequently, they have to have all 

these guarantees from the private employers in order to build it. 

To make a long story short, we eventually gave up after we 

worked through three different development groups trying to get 

an apartment complex built. Cabela’s had to wind up building it. 

Now, it will open in July, and then maybe at that point when it 

is filed, it is operational, it is successful, we will have an example 

for the banking community to say—but it just—it was so frustrating, and all the funding agencies even, though they said the 

right things when you were talking to them, behind the scenes they 

must not have been, because the projects did not happen. That is 

a really, really frustrating thing in rural America. We all get categorized into this one little lump sum instead of looking at those 

of us that are an anomaly out there and that we still need people 

to take that—I would call it a ‘‘minimal risk.’’ It is an investment 

in rural America’s future, but it is extraordinarily frustrating. 

Senator JOHANNS. I want to hear from everyone on this. Mr. 

Tilsen, I will go to you next, because I am especially interested how 

you got your business up and going. But, Gary, it occurs to me that 

in some respects there is less risk in Sidney, Nebraska, than there 

would be on some projects whether they are in Omaha, Lincoln, 

Des Moines, or whatever, just because the employment base is so 

strong and there is such a tremendous need. I do not know if you 

have ever analyzed it, but I will bet there is a need for how many 

apartments, how many houses, in Sidney? 

Mr. PERSON. If we build 1,000 tomorrow, they would be all filled. 

I know when I say that people look at you like you are crazy, but 

I honest to God believe it. We have people coming in to city hall 

every single day just begging for a place to live. They know we run 

the utilities, so they want to know if somebody shut off their utilities today that they are moving out of town. 

The other frustrating thing is because the local banks have been 

so regulated down, they have a cap where they can lend to. So they 

have to partner with a larger bank. Well, when they look at rural 

western Nebraska, the percentage rate on financing just went up 

as a result of just solely from the fact of where you are located, because in Omaha and Lincoln, it would have a lower rate. Then the 

cash flow starts becoming even more challenging. 

Senator JOHANNS. Mr Tilsen? 

32 

Mr. TILSEN. This is a really, really big problem. Three years ago, 

I went to 11 banks in South Dakota when we were growing so fast, 

and we could not find anybody to lend us any money. We recently 

started—our first investor was the local Lakota Fund, which is a 

CDFI, and using a PRI from a private foundation, we were able to 

get our first investment of $61,000. But because we are on an Indian reservation, banks, like most of the banks in Rapid City, 

which is 100 miles away, consider the reservation to be outside of 

their service area, so they provide no commercial lending on the 

reservation without a Federal guarantee. 

Now, here is an interesting problem. To have a Federal guaranteed loan, you need to have 20 percent equity. We are in the natural food industry where the key principal driver of the business 

is your brand value. But the Federal Government loan program 

does not recognize brand value as an asset. They consider it an intangible when it is considered the only tangible asset in my industry. 

So most of what I am building is not recognized, and so I cannot 

access USDA-guaranteed money, BIA-guaranteed money, or SBAguaranteed money. So that is a particular problem. 

The reason that we are still in business is that the CDFI clearinghouse out of Los Angeles, California, and us put together a complicated transaction that involves investors of a tribe, two foundations, a bank, the Federal Reserve, and the clearinghouse CDFI, 

and that is just to get us where we are at now. Now we are faced 

with having—having just done that in the last year, we have to do 

it again. Like I said earlier, we are experiencing 125 percent 

growth. We want to add more jobs. 

Then the last thing is about 48 percent of the people who work 

on Pine Ridge cannot find housing, so we have this low-income 

housing problem, but now we have a workforce housing problem. 

Just as my colleague from Sidney just outlined, there is a need 

right now, a market for these houses, and the financial structure 

to build them and get them on the market is a huge gap. 

So we have some real serious challenges being rural. You mentioned that about 3 percent of the foundations in the country give 

to rural America, and about 3 percent of them give to Native Americans. So that is about one-third of 1 percent of the philanthropy 

that is going out there. 

From a step back, you would think there is a lot of money, but 

when you actually try to bring a business to scale, it is a huge challenge for us. 

Senator JOHANNS. Chuck? 

Mr. FLUHARTY. Just very quickly, every region is going to be different, but the CDFI example, if Gary cannot do it, we have got a 

huge problem. Let me just say that is an example of what I would 

urge the Committee to think about in a more integrated scoring or 

public-private alignment. I would urge you to look at what CDFI 

in Kentucky—Kentucky Highlands, one of the really good ones— 

did recently with the houseboat industry that completely crashed 

down around Somerset. They have started building high-energy-efficiency homes using that facility in the winter when they are not 

doing houseboats. It is a wonderful model. It is market scalable. 

The price point is right, and they cannot even get funding to start 

33 

because they do not believe they will be sustaining commitment for 

developers. 

That is an issue where some combination of the alignment between HUD and the housing program at USDA and our CDFIs, our 

philanthropic communities, there must be a way to think about 

this if you are in a sustaining regional strategy that has been in 

some way vetted, you can begin to get at these issues that are an 

impediment to growth that are structural. I think the Committee 

should think seriously about looking at that issue. 

The reverse is the issue in the shale area, is you can get all the 

housing you want in the shale areas right now, and no one is 

thinking about the end of that entity, and the history of shale extraction is rather amazing when it ends. Gary’s community is much 

safer, and he cannot get it done. So it is something we could work 

on. 

Senator JOHANNS. Dawn, have you faced the same challenges? 

Ms. KEELEY. I think I have a good example to talk about just a 

little bit. I think some of our key—many of our communities, even 

though we are small and have had population decline, are facing 

housing demand issues that they cannot meet, so there is that need 

for market rate housing development. The key piece of all that 

really is in the infrastructure and extending the infrastructure as 

well as the development. 

But I am currently involved in a project right now where we are 

attempting to reuse an existing building that happens to be owned 

by the State of North Dakota in our town of Grafton. This project 

received a 30-percent housing award grant through the State of 

North Dakota. The lending institutions would like us to have the 

USDA guarantee on the bank note, even with a 30-percent downpayment on the project. 

So I went back to the drawing board, and I said, well, we manage the CDBG program in our region, and I would like to put some 

CDBG money into it. And, by the way, I think I would like to own 

the building and I want to build this nonprofit developer capacity 

right within our office so that we can do more projects. 

The CDBG feedback was that you have conflict of interest. You 

manage the CDBG program; therefore, you cannot invest in your 

own project. I found this to be a barrier, and I said rather frankly—this was a Monday conversation—that there are only a few of 

us that are going to be able to step up to the plate, and if we just 

continue to put barriers before us, we are not going to be able to 

continue to support these communities in the ways that they need 

to be supported. 

Senator HEITKAMP. [Presiding.] Thanks, Dawn. 

Senator Johanns has to go vote, and I have fulfilled my commitment, at least for these two votes, so I have a little more time to 

spend with you. Thank you all for your patience and the adjustment to schedules. 

You know, I have a number of questions that I would love to ask 

all of you, but we would be here all afternoon, which I do not think 

would suit anyone’s purposes. But one of the things that concerns 

me—and I hear this among Federal programs that typically get 

siloed. You know, you have got this program for water development; you have got this program for infrastructure, other kinds of 

34 

infrastructure; you have got this program for workforce development, on and on and on. As we divvy out those programs and look 

at indirect costs of all those Federal programs nonprofits and folks 

who do work like you do all across the board, not just in rural development, throw up their hands and say, ‘‘What are we doing? We 

are not going to apply for a $50,000 grant that will cost us $10,000 

to audit. That is just not realistic.’’ 

One of the concerns that I have going forward is that we still 

keep a level of accountability on Federal dollars, but that we do 

things, we maximize the collaboration and we increase the flexibility. 

I want to ask you, Mr. Fluharty, in your experience working 

across the board, do you think it has gotten better or worse? What 

recommendations would you have to me as somebody who serves 

not only on this Committee but also on Government Operations on 

the kinds of discussions that we should have to maximize Federal 

dollars? 

Mr. FLUHARTY. Madam Chairwoman, I will bet if you stayed the 

afternoon, these three fine people could fill you with horror stories 

for 5 hours. 

Senator HEITKAMP. Yes. 

Mr. FLUHARTY. While you were gone, I raised for your colleague 

the very real need you have to stay very actively engaged in this. 

Unless we can address that, this program will definitely not 

achieve the intent. I would say two or three things. 

This administration has really tried to build cross-administration 

alignments. I commend them for that. They have worked very, very 

hard. Part of the challenge USDA has is fully statutory. I am in 

that building a lot. There is a lot of interest. It is statutory. I would 

say two or three things. 

It is absolutely essential that you build a sufficient evaluation 

and evidence base to provide risk management for yourself as a 

Committee, the Under Secretary as Under Secretary, and the public entrepreneurs that are going to do it. But we are going to have 

to solve that one, and I would say that structural thing is more 

critical than anything you do to work with USDA as they start to 

think about this rule. I would urge that you stay actively engaged 

as rulemaking comes. 

We have worked across the Federal departments for 20 years, 

working with development organizations, cities, counties, and Governors. There is a lot that could be done incrementally to alleviate 

some of that challenge if we would have had a framework to do it, 

if you would have had some platform upon which to say in this 

case, with this rule, we will do this. It is not just scoring on a grant 

because you are going to be precluded, you are going to have to 

have waivers if you want to go in it, et cetera, et cetera. It is your 

largest challenge to make this work, frankly; otherwise, you are 

nibbling at the corners. 

The last thing I would say in that regard—and every sector we 

work in, there would be differences. I think there are three things 

we can do: really ask philanthropy nationally to step up in the first 

six or eight regions and say the soft infrastructure necessary, the 

glue to begin this. If USDA cannot do that, I do not know how 

these folks are going to free up staff. I will tell you what we did 

35 

in Kentucky. I am doing two jobs full-time. My entire staff is in the 

SOAR region, because everybody else is full-time. It takes that to 

build this. That could come through Federal regs. I doubt it can legally, so it has to come somewhere. Beyond that, once you have the 

walk-around potential, I really do think you need to think about 

very, very serious commitment to some kind of public-private intermediary trust that allows in regions you certify that have strong 

SETs plans, strong government plans, some variation. I would say 

housing stock and capital stock are your two most critical questions. I would really think about bold thinking in this. If you do 

not, this is going to be nibbling at the edges, in my opinion. I think 

it will be good, but to me that is the most critical question. What 

could we do in this rule to just take the last five horror stories we 

had and start to get after them a bit in Federal regulation. 

Senator HEITKAMP. Well, I know from my perspective, I serve on 

the Housing and Banking Committee, I serve on the Small Business Committee, and every Committee that I serve on, when it 

comes time, I ask questions about what is the impact in rural areas 

and what is the impact in Indian country. I serve on the Indian Affairs Committee. I think many times I have met with blank stares, 

like, ‘‘We do not know how to do housing.’’ When I ask the affordable housing groups, ‘‘What have you done to encourage housing on 

the reservations in Indian country?’’ they will tell me what they 

have done to provide anti-poverty programs in urban areas that do 

serve Native Americans who live in urban areas, but they have no 

idea how to build capacity for housing. I share Mr. Tilsen’s concern 

about housing all across Indian country. 

I share everyone’s concerns that you have here, but I feel like we 

may be creating, if we do not watch it, a system that we hope will 

reward people for doing things regionally, doing things strategically, but the reward will not be big enough to really overcome turf 

discussions, to really overcome the kind of natural competition that 

you see that grows out of Class B schools sitting across the gym 

from each other, right? 

I mean, we all know, if you grow up in rural communities, you 

know Hankinson and Ledgerwood are going to fight over who gets 

the ethanol plant, and they are going to brag for years it was 

Hankinson—which it was. Never mind. 

[Laughter.] 

Senator HEITKAMP. Ledgerwood now is going to be mad at me. 

But these are really, really important questions, because we have 

an underutilized resource in America. It is called ‘‘rural America.’’ 

We have people—and, Mr. Person and Mr. Tilsen, it is a microcosm, as you talk about aging of your counties and you talk about 

an average age of 25. It is not one size fits all. But the results and 

the process has to be regional. 

But we need the people who are doing the entrepreneurship, as 

you point out, Mr. Fluharty, to stay involved, to tell us what lessons you are learning from this process, how this can work better. 

I think Mr. O’Brien is an excellent person, and I think Secretary 

Vilsack is very committed to this process, but they cannot do it in 

a vacuum, and they cannot do it alone. I loved your example of now 

we are transitioning to crop insurance. We really are transitioning 

to regional strategies. 

36 

You all have been very, very patient with us. I want you to 

know—I think sometimes people who come to these hearings feel 

like we came and we testified and that was the end of it. This is 

a key component for us and certainly for me and Secretary Johanns 

and a lot of the members here who have seen those rural communities in decline, in what was always a pretty vibrant economic 

condition now look for alternatives. You are on the cutting edge. 

You are modeling that opportunity for everyone. You are proving 

out best practices. We want everyone to learn from those best practices. We want you to teach Congress about what the impediments 

are for exercising those best practices. 

I want to thank you all for coming. We are going to leave the 

record open for—I have to check out my date here—until Thursday, 

May 8th. I know that you will be receiving questions from other 

members on the Committee. The Committee stands adjourned. 

[Whereupon, at 12:02 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

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