U.S. GOVERNMENT PUBLISHING OFFICE

23–590 PDF WASHINGTON : 2018

S. HRG. 114–642 

USDA RURAL DEVELOPMENT PROGRAMS AND 

THEIR ECONOMIC IMPACT ACROSS AMERICA 

HEARING 

BEFORE THE

SUBCOMMITTEE ON RURAL DEVELOPMENT 

AND ENERGY 

OF THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

APRIL 6, 2016 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

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

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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

PAT ROBERTS, Kansas, Chairman 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

DAVID PERDUE, Georgia 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

BEN SASSE, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

DEBBIE STABENOW, Michigan 

PATRICK J. LEAHY, Vermont 

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 

JOEL T. LEFTWICH, MAJORITY STAFF DIRECTOR

ANNE C. HAZLETT, MAJORITY CHIEF COUNSEL

JESSICA L. WILLIAMS, CHIEF CLERK

JOSEPH A. SHULTZ, MINORITY STAFF DIRECTOR

SUBCOMMITTEE ON RURAL DEVELOPMENT AND ENERGY 

JONI ERNST, Iowa, Chairman 

THAD COCHRAN, Mississippi 

JOHN HOEVEN, North Dakota 

DAVID PERDUE, Georgia 

THOM TILLIS, North Carolina 

JOHN THUNE, South Dakota 

HEIDI HEITKAMP, North Dakota 

SHERROD BROWN, Ohio 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

JOE DONNELLY, Indiana 

(II) 

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(III) 

C O N T E N T S 

Page 

HEARING(S): 

USDA Rural Development Programs and Their Economic Impact Across 

America ................................................................................................................. 1 

Wednesday, April 6, 2016 

STATEMENTS PRESENTED BY SENATORS 

Ernst, Hon. Joni, U.S. Senator from the State of Iowa ........................................ 1 

Heitkamp, Hon. Heidi, U.S. Senator from the State of North Dakota ............... 2 

WITNESSES 

Panel I 

Mensah, Hon. Lisa, Under Secretary, Rural Development, United States Department of Agriculture, Washington, DC ......................................................... 4 

Panel II 

Hill, Craig, President, Iowa Farm Bureau Federation, West Des Moines, 

IA ........................................................................................................................... 18 

Shaw, Monte, Executive Director, Iowa Renewable Fuels Association, Johnston, IA .................................................................................................................. 20 

Sommerville, Cris, President, Dakota Turbines, Cooperstown, ND .................... 22 

APPENDIX 

PREPARED STATEMENTS: 

Tillis, Hon. Thom .............................................................................................. 34 

Mensah, Hon. Lisa ........................................................................................... 45 

Hill, Craig ......................................................................................................... 41 

Shaw, Monte ..................................................................................................... 54 

Sommerville, Cris ............................................................................................. 35 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Sommerville, Cris: 

DWEA Distributed Wind Vision-2015-2030, Strategies to reach 30 GW 

of ‘‘behind-the-meter’’ wind generation by 2030, March 2015 .................... 78 

Griggs-Steele Empowerment Zone, Inc. .......................................................... 104 

QUESTION AND ANSWER: 

Hill, Craig: 

Written response to questions from Hon. Amy Klobuchar ........................... 108 

Mensah, Hon. Lisa: 

Written response to questions from Hon. Debbie Stabenow ......................... 118 

Written response to questions from Hon. Michael Bennet ........................... 121 

Written response to questions from Hon. Joni Ernst .................................... 109 

Written response to questions from Hon. Amy Klobuchar ........................... 115 

Shaw, Monte: 

Written response to questions from Hon. Amy Klobuchar ........................... 126 

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IV 

Sommerville, Cris: 

Written response to questions from Hon. Amy Klobuchar ........................... 132 

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(1) 

USDA RURAL DEVELOPMENT PROGRAMS AND 

THEIR ECONOMIC IMPACT ACROSS AMERICA 

Wednesday, April 6, 2016 

UNITED STATES SENATE, SUBCOMMITTEE ON RURAL

DEVELOPMENT AND ENERGY, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC 

The committee met, pursuant to notice, at 10:02 a.m., in room 

328A, Russell Senate Office Building, Hon. Joni Ernst, Chairman 

of the subcommittee, presiding. 

Present or submitting a statement: Senators Ernst, Hoeven, 

Tillis, Heitkamp, Brown, Klobuchar, Bennet, and Donnelly. 

STATEMENT OF HON. JONI ERNST, U.S. SENATOR FROM THE 

STATE OF IOWA 

Senator ERNST. Good morning. Thank you, Ranking Member 

Heitkamp, for being here today. We do expect that we will have 

other members of the subcommittee coming in and out this morning, as well, So I apologize for that. But, I call this hearing of the 

Senate Committee on Agriculture, Nutrition, and Forestry’s Subcommittee on Rural Development and Energy to order. 

I feel fortunate to be chairing this committee, considering my upbringing in rural America and the critical role that Iowa plays in 

producing energy for the nation. Today, over half of Iowa’s three 

million residents live in rural communities. Each year, I do a tour 

of our state’s 99 counties, and 75 of those counties have a population of 25,000 or less. 

As I am committed to do when I came to the Senate last year, 

I really do want to focus on the things that make sense while working to streamline or even eliminate federal programs that foster 

bad behavior by both the government and the people. I believe it 

is imperative that we focus on the causes of rural poverty and work 

to provide opportunities for folks to overcome obstacles that have 

created many of the problems we see throughout rural America. 

Lack of jobs and poor rural housing are just two examples I hear 

about while traveling throughout Iowa. 

Since the early 1900s, the Federal Government has administered 

various programs aiding communities in rural America. Today, the 

major agency tasked with carrying out the bulk of these programs 

is USDA’s Office of Rural Development. Created under the 1990 

Farm Bill, the Office of Rural Development’s main function is administering grants, loans, and loan guarantees to support a number of services in rural communities, including the construction and 

maintenance of electric and telecommunications infrastructure, 

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rural business development and retention, water and wastewater 

treatment facilities, and rural housing. 

In continuing with my commitment to bring effective oversight of 

programs within the Federal Government, and as we begin preliminary discussions about the next Farm Bill, it is imperative we look 

at programs under my subcommittee’s jurisdiction to ensure that 

Congress is being an effective steward of the taxpayers’ money and 

that USDA is implementing programs as we intended. 

In Iowa, production agriculture takes the center stage, as our 

state’s fertile soil and ideal growing conditions have allowed us to 

lead the country in the production of pork, corn, and soybeans. In 

addition to that, Iowa is proud to lead the nation in ethanol and 

biodiesel production. Many of the energy programs administered by 

USDA’s Rural Development help support Iowa’s biofuels industry, 

employing over 45,000 Iowans, and nationwide contributing over 

$52 billion to annual GDP. 

Ms. Under Secretary, I look forward to hearing your testimony 

today and asking you some questions in regards to the state of 

USDA Rural Development. 

But, before we hear from you, I want to turn things over to 

Ranking Member Heitkamp for any opening remarks. 

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

THE STATE OF NORTH DAKOTA 

Senator HEITKAMP. Thank you, Chairman Ernst, and thank you 

for being a great partner in putting together this critical hearing. 

Our subcommittee, we want to point out, is the only one so far 

in this Congress in this committee to hold a hearing, and last Congress, when I chaired this subcommittee, we were only one of two. 

I think it highlights for us the importance of rural development. 

I often say this, and I think it is true, with the exception of my 

partner on this subcommittee, we wake up every morning thinking 

about rural America. Not a lot of folks in the Senate do. That is 

because we come from rural America and we know what a great 

opportunity it is to grow our economy if we focus on these areas. 

I do not think there is any doubt that USDA Rural Development 

is one of our country’s greatest success stories. It has brought electricity, clean water, broadband, and critical infrastructure to remote areas of our nation. We have seen great progress, but there 

is still more to do. 

I think a lot of people do not realize it, but 85 percent of our 

country’s persistent poverty counties are in rural America. Poverty 

is not just an urban issue. We need to remember that when it 

comes to these critical issues of economic development. 

I grew up in a small rural community that served our farmers. 

It is a little town called Mantador. If you do not know where that 

is, it is between Barney and Great Bend. 

[Laughter.] 

Senator HEITKAMP. But it tells you—yes, you have been there, 

right? My family, incidentally, was one-tenth the population, so we 

have great bragging rights. 

[Laughter.] 

Senator HEITKAMP. But, growing up in those communities, we 

know how difficult it is for communities to modernize wastewater 

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facilities, expand high-speed internet, or invest in community facilities. USDA Rural Development’s partnership with rural America 

makes that possible. 

I am proud to have been part of writing a 2014 Farm Bill where 

we continued critical investments and improved the way we operate, such as incentivizing greater regional coordination to make the 

best of our federal investments. As we will hear this morning, rural 

economic success is not exclusive to USDA. Other important policies, like the Renewable Fuel Standard, also play an important role 

in providing business certainty and ensuring markets for developing technologies. 

Most people do not know this, but North Dakota has a vibrant 

start-up community and we are proud to have new small businesses popping up all the time. In fact, I recently did a tour of 

northeast North Dakota where I heard from rural developers, and 

one of the issues that I heard, which was fascinating to me, is we 

used to believe in economic development back in the 1990s that if 

you simply created primary sector jobs, and new wealth creation 

jobs, that would revitalize rural communities. What we are finding 

out is that we need to create other kinds of opportunities and look 

at growing communities, whether it is the internet, whether it is 

a more vibrant retail sector, things that would attract businesses 

to those communities. 

In fact, those three communities that I visited in that region 

have almost 100 primary sector jobs wide open with no applicants. 

It is a reminder that the work that we do in building infrastructure 

is absolutely critical, along with affordable housing, which tends to 

be a real challenge in rural America. 

So, I am excited that one of those small businesses is with us 

today, a company that would not exist but for a rural development 

loan and which utilizes RD programs to grow their business. I will 

do a full introduction in a bit, but Dakota Turbines is an excellent 

and perfect example of how federal investments can grow small 

businesses, create jobs, and build a small rural community. 

So, thank you, all of our witnesses, for being here today. I look 

forward to a productive discussion on the importance of rural development and the ways that we can work together to continue 

these investments. 

Thank you, Chairman, and I turn the microphone back to you. 

Senator ERNST. Thank you, Ranking Member. 

Today, for our first panel, I am pleased to welcome Ms. Lisa 

Mensah, the Under Secretary of USDA Rural Development. Ms. 

Mensah had an impressive track record in the private sector before 

being nominated to this role by President Obama and confirmed by 

the Senate in November of 2014. Previously, she was the founding 

Executive Director of the Initiative on Financial Security at the 

Aspen Institute, where she led a national bipartisan effort to promote solutions to the complex problems of helping Americans save 

money, buy homes, and finance retirement. She has also served at 

the Ford Foundation, where she was responsible for the Nation’s 

largest philanthropic grant and loan portfolio of investments in 

rural America. 

In her role as Under Secretary, Ms. Mensah leads the three 

agencies tasked with improving the economic well-being of rural 

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America, the Rural Housing Service, the Rural Utility Service, and 

the Rural Business Cooperative Service. 

Born and raised in Oregon, she is the daughter of an immigrant 

from Ghana and of a former Iowa farm girl, and Ms. Mensah noted 

earlier that her mother was born and raised in Atlantic, Iowa, 

again, one of those small communities, Atlantic, Iowa is where my 

sister and her husband farm, and it is just up the road a bit from 

where I live today in Red Oak, Iowa. 

So, I appreciate it so much. Ms. Under Secretary, I look forward 

to hearing your testimony today and asking you some questions in 

regards to the state of USDA Rural Development. 

So, with that, Ms. Under Secretary, I would love to hear your 

comments. Thank you so much. 

STATEMENT OF LISA MENSAH, UNDER SECRETARY FOR 

RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Ms. MENSAH. Thank you very much, Chairman Ernst and Ranking Member Heitkamp and members of the subcommittee. Thank 

you for the opportunity to be here this morning to discuss the Department of Agriculture’s Rural Development mission area. 

Rural Development, or RD, as we are known in our communities, manages a loan portfolio that is now $212 billion, and we are organized into the three agencies that you mentioned, Rural Utility 

Programs, Rural Business and Cooperative Services, and Rural 

Housing and Community Facilities. Our fundamental mission is to 

increase economic opportunity and improve the quality of life for 

all rural citizens. Our investments support rural residents looking 

for safe and affordable housing, municipalities seeking water, infrastructure, and community facilities, and small rural businesses, coops, and ag producers who are looking to expand to new markets. 

RD investment capital spurs economic development and the jobs 

that come with it. 

I appreciate the authorities and the resources that are provided 

to us by Congress to allow us to continue to work on behalf of rural 

America. Your work on the 2014 Farm Bill renewed our authority 

to strengthen our efforts on our core programs to invest in rural 

America. Through the energy titles, in particular, this legislation 

expanded our ability to spur growth. Rural America is at the forefront of cultivating innovations in the renewable energy sector and 

driving efforts to increase energy efficiency. 

The 2014 Farm Bill also encouraged RD to develop and implement regional strategies for investments in rural America. We set 

aside $316 million in fiscal year 2016, specifically for projects that 

were engaged in regional collaboration and in long-term growth 

strategies, leveraging, and in capitalizing on regional strengths. 

Each day, I am determined to fully utilize the enormous potential and opportunity that RD funds provide to economic growth. 

Since becoming Under Secretary, I have visited many projects to 

see how rural America benefits from our investments. I have also 

met with many of our dedicated field staff, who engage directly 

with local lenders and community partners to solve problems. Both 

our investment dollars and our people are key to delivering economic impact. 

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RD continues to make investments in water, electric, and 

broadband because they continue to be necessary for rural America 

to be competitive. Last year, I traveled to North Dakota to announce a nearly $47 million electric guaranteed loan for Central 

Power Cooperative. This loan will allow the co-op to build line and 

make other system improvements, including funding for smart grid 

projects. 

RD contributes to economic growth. Since 2009, we have created 

or saved more than 450,000 jobs and helped 112,000 rural small 

businesses. There is tremendous opportunity to spur economic development in rural communities through renewable energy technologies. In Iowa, RD awarded the Reinhart family a $16,000 

REAP grant to more efficiently operate their small town grocery 

stores in three different Iowa towns. This grant will pay for upgrades for refrigerators, freezers, and for the installation of highefficiency lighting and cooling fans. 

Since 2009, RD has helped more than a million rural families to 

buy, repair, or refinance homes. In fiscal year 2015, we did not 

leave one dollar left unspent in our program to provide direct mortgages to low and very low-income rural Americans. We understand 

the unique needs of rural residents and we remain committed to 

serving them. 

RD really works in communities to improve the quality of life for 

rural residents. In my travels to North Dakota, I saw the ongoing 

construction of the future, Richardton Health Care, a new nursing 

home and health clinic. A $5.5 million community facilities loan is 

supporting the project, which replaces an existing nursing home 

and clinic that was really inadequate for the changing needs of the 

community. 

I would like to end on RD’s work to help develop low-income communities. RD plays a key role in USDA’s place-based efforts in ensuring that our loan and grant programs are available and accessible, even in persistently poor areas. Our proactive approach to 

community economic development identifies and assists areas of 

greatest need in rural America, and I am committed to providing 

increased opportunities to allow everyone to share in the prosperity 

of a growing economy. 

Congress has provided significant resources to make real economic impacts in rural places, and I assure you, that not only are 

we careful with the dollars we receive, we are always working to 

collaborate to stretch them further. 

So, thank you for your continued interest and your support of RD 

programs and the people who deliver them. I believe together we 

can continue to make key investments in rural America’s future. I 

do appreciate this hearing and the chance to testify and I look forward to your questions. 

[The prepared statement of Ms. Mensah can be found on page 45 

in the appendix.] 

Senator ERNST. Wonderful. Thank you very much, Ms. Under 

Secretary, and we appreciate you taking the time to appear today 

before our subcommittee. 

I would love to go ahead and start with questions and then we 

will turn to the Ranking Member for questions. 

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First, as a veteran of the Armed Services myself, I believe it is 

critical we work to support those that have served our country. 

While I understand the Office of Advocacy and Outreach is the lead 

agency at the USDA for assisting underserved groups, can you update us on how USDA is making sure programs are being inclusive 

of our veterans’ population, and if you could just expound on that 

and let us know where the USDA is in regards to those programs. 

Ms. MENSAH. Thank you for your service, first, and thank you for 

highlighting the important role of veterans, many of whom come 

from rural America. 

Senator ERNST. Right. 

Ms. MENSAH. You are correct that we have an overall agency effort. But, key parts of our efforts with veterans reside in rural development. I would like to speak to one of those areas which was 

strengthened in the Farm Bill, and that is our Value Added Producer Grant Program. 

We made a special effort to make sure those funds were reaching 

veterans. It is often the way people get into new areas of value 

added agriculture. What we find is that this program helps people 

who are new to this, whether it is doing some kind of micro-green 

growing or something that has a high potential of immediate income. I am very proud that program resides in Rural Development, 

and I think it is a good example of how Rural Development’s loan 

and grant programs really support veteran farmers, people who are 

coming in, particularly who are starting out or returning to the 

land. That’s just one of our efforts. 

Think of RD as nearly 5,000 folks, 70 percent of them in states. 

The joy I have is running a field-based agency where there are actual people on the ground who are the neighbors of the veterans, 

who are really there in place. It is those staff members in our localities who help connect our programs every day in a proactive way 

to communities and to people who need us, and that is a particular 

advantage we have. 

Senator ERNST. Wonderful. I thank you for that, and I have visited with a number of veterans, one in particular that returned to 

Iowa and is working in agriculture. He does bison farming, many 

of the veterans have expressed a real connection to the land, and 

it is often very therapeutic, as well, working with animals or working in the soil. We love those programs and we are glad that you 

participate in those, so thank you very much for that. 

There has been a lot of recent attention surrounding lack of adequate drinking water in large urban areas due to lead poisoning. 

There was also a recent article in the Wall Street Journal about 

drinking wells in Vermont testing for high levels of hazardous 

chemicals. What steps are USDA taking to monitor the viability of 

rural water systems and prioritize funding to communities with the 

greatest need? 

Ms. MENSAH. Thank you for highlighting our work in water, and 

as you mentioned before, the age of this agency. Our water and 

waste treatment work is some of our oldest work and some of our 

strongest. 

You asked specifically what kind of steps, and I think it is good 

to think of this agency as working in two ways. One is when we 

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ment for the system maintenance. That is important work. We do 

that every day. Sometimes it takes communities up to three years 

to put in a whole new upgrade and system, so there is constant 

outreach going on. 

But, the other way—I call it the softer side of our rural water 

programs—is the support you give us under the Farm Bill for 

things like circuit riders, technical assistance, ability to work with 

rural water associations throughout rural America. It is our team, 

our engineers, our circuit riders who support those programs that 

enable us to keep working with small systems throughout rural 

America. 

You mentioned small, most of our funds, 85 percent of them, are 

reaching communities of under 5,000 residents. So, that is exactly 

our sweet spot and I think it is an appropriate place for federal dollars. So, thank you for asking about it. 

Senator ERNST. Yes, thank you. Do you happen to know off the 

top of your head, are there any rural communities that you can 

think of out there that are struggling with water issues, where we 

need to focus more of the attention? Of course, Flint has been the 

focus, but I know across Iowa, I personally know of a few communities that are struggling. Do you happen to know of any examples? 

Ms. MENSAH. Well, one recent example was in Sebring, Ohio, 

where our State Director was just there recently. It is one of these 

examples where we can bring to bear our Emergency Water Assistance Grants, cleverly named ECWAG, and we could bring technical 

assistance to bear. So, I do not think there is a state where Rural 

Development is not active with what we call our community program staff, and often, it is to give those alerts, to give assessments. 

These are systems that are maintained by community water 

boards. 

The one that comes to mind is the recent one in Ohio, but really, 

all of our states are active in these programs and the funds you 

give us to support things like technical assistance allow us to be 

proactive with our water portfolio. 

Senator ERNST. Very good. Well, I appreciate that. I know this 

is a struggle. The Ranking Member had mentioned it as well. Many 

of our small communities do not have the taxing base—— 

Ms. MENSAH. Yes. 

Senator ERNST. —to bring their systems up to standards. So, 

that certainly is something that we want to keep an eye on and 

make sure that our citizens are adequately protected with their 

water treatment systems. 

Ranking Member, please, questions. 

Senator HEITKAMP. Thank you so much, Under Secretary, and 

thanks for the continuing commitment that USDA has, not just to 

the farm economy, but the rural economy, which is, I hope, what 

we are talking about today. 

If you are like me, you have traveled all over and you have heard 

a lot of the concerns of rural communities, and it is not just creating those primary sector jobs. It is, in fact, being able to create 

a community environment in which people want to live. 

Ms. MENSAH. Yes. 

Senator HEITKAMP. My great concern is that we will end up, even 

in states like North Dakota, being a place where people will only 

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find opportunity in cities over 50,000, 60,000 people. Now, that 

may sound humorous to some people when we are talking about 

those being cities, but those are our large communities in North 

Dakota. 

One of the challenges I think we have seen overall is what I like 

to call siloing. USDA does these programs, Small Business does 

these programs, Department of Commerce or the Export-Import 

Bank does these programs. Sometimes, it is very confusing to rural 

communities as they look at opportunities to access programs. 

So, as in kind, I would think the umbrella agency for rural development, what can you tell me about your work in trying to bring 

these programs together, get more education out there in terms of 

what is available, and actually coordinate delivery of federal services? 

Ms. MENSAH. Well, thank you, Senator Heitkamp, for the good 

insight that we have to bust some silos if we are going to really 

get to the kind of economic impacts that we are talking about. 

Under this Secretary, we have done so much to really turn 

around the customer styled focus of this whole agency. There has 

been a cultural transformation underfoot at the Department to not 

just do excellent work, but to do more to connect people that come 

to us, not just to say you are here for a home, but to ask if there 

are other needs. I would say that it is a whole effort to look at sort 

of what we call a community economic development approach to 

needs. 

Our strength as an agency of rural development is, again, our 

field presence—— 

Senator HEITKAMP. Right. 

Ms. MENSAH. —and our ability for our State Directors, people to 

be co-located, to share information—— 

Senator HEITKAMP. But, I will tell you, in visiting, people feel 

like these programs are disjointed, that all of a sudden, they will 

hear something from SBA that they had not—— 

Ms. MENSAH. —across the federal—— 

Senator HEITKAMP. —in terms of an opportunity, because everybody is trying to fill up the silo, whether it is the rural water silo, 

whether it is the rural electric silo, whether it is the broadband 

silo. We have not said—we have done this in the Farm Bill by creating a regional focus—— 

Ms. MENSAH. Yes. 

Senator HEITKAMP. —so that everybody kind of gets an example 

of what the needs are. But, I do not feel like, on the other side of 

this, that we have agencies that are as collaborative or as cooperative as maybe what they should be in terms of one-stop shopping 

for programs, what do we know, who is coming to the table. I am 

not saying consolidate programs, but I am saying that we need to 

have a specialist out there who understands the whole broad array 

of opportunities, including opportunities under the Export-Import 

Bank or under SBA. 

I just did a start-up bill. North Dakota has a large start-up community. We are hopeful that we will be able to see some of those 

resources going to rural communities, to use the infrastructure that 

you have spent so much money to build. 

Ms. MENSAH. Yes. 

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Senator HEITKAMP. So, what take-aways do you have, just in 

your short period of time, about how we can better coordinate? 

Ms. MENSAH. My take-away is observing up close our StrikeForce 

Zones and our Promise Zones, and I think what you are pointing 

out is not just intra-agency, but across the federal family. In those 

areas, where we have been bringing the force of all of our partners, 

on the Pine Ridge Reservation, where we have asked to work 

across agencies, my take-away is that that is a very different way 

to work and it is much easier for a community, particularly one 

that does not have often fancy consultants to do all the work for 

it. 

My success is to see where we have done it in places like that, 

where there is a Promise Zone approach, or in Kentucky, where 

they have started something like the ‘‘Shaping Our Appalachian 

Region’’(SOAR) approach—— 

Senator HEITKAMP. Yes. 

Ms. MENSAH. —where they have come together as a community 

first and then brought the federal partners to the table to follow 

a plan. 

I think in the Farm Bill, section 6025, you did give us a boost 

to work at least within our own agency in a way to come together 

regionally, to prioritize things. 

So, two take-aways. Where I have seen it work is where there 

was already a push to do that. 

Senator HEITKAMP. I think it is, not to belabor the point too 

much, but we are going to continue to ask these questions about 

consolidation and coordination, better coordination of these programs, especially in rural communities, where we have not done as 

well in attacking persistent poverty. 

For me, a lot of this lies in maximizing the availability of federal 

resources, maximizing the knowledge of federal resources and 

where we come talk to Penny Pritzker, talk to anyone that I can, 

Maria Contreras-Sweet, about rural development and about making sure that we have communities who know where these programs are and how they can access them, because it is going to 

take more than what we are doing right now to tackle this problem 

of rural and persistent poverty in rural communities. 

Senator ERNST. Senator Tillis. 

Senator TILLIS. Good morning, Madam Chair. I am sorry I am 

running late. I was actually meeting with a group of advocates for 

Alzheimer’s. 

Under Secretary Mensah, I want to thank you for being here. I 

am particularly appreciative of some of the work that your folks 

and the Department are doing to focus on broadband and communications in rural areas. That is something that I did when I was 

in the legislature, and hope that we can come up with a strategy 

that not only expands infrastructure, but also increases the take 

rate, because many people do not realize that even among homes 

in urban areas that have access to broadband, they have only got 

about 47 percent of them signing up. Let us work on something 

that is balanced but not building something with the hope they 

come. This is very, very critical to the rural areas for economic development, for agriculture, for public safety, and a number of other 

things. 

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Also, when I was in the legislature, we focused a lot on development and regional approaches to rural areas. How do we do a better job of providing economic development opportunities, job creation, and housing. One of the things that we focused on is the 

need for regionalization, and looking at it in a different way. I do 

not know about other states, but we tend to define areas along traditional county borders, and what you may find out if you do that, 

that there are these areas, for example: a coastal county like 

Brunswick County could be considered a wealthy county, but it is 

on a band along the coast and it has more in common with adjacent counties. So, how do you go back and rethink the way that we 

look at our state in terms of regional economic zones so that we can 

better work with the Federal Government? Now that I am on this 

side, how can we better work with the state government on rural 

economic development? 

The question I have for you is in your travels, you have seen 

states taking regional approaches to economic development. Can 

you speak to the USDA’s Rural Development work to promote 

those kind of efforts? In other words, incentivize states to come up 

with, and maybe reward, those who seem to be working better on 

a regional basis for economic development? 

Ms. MENSAH. Yes. Thank you, Senator Tillis, and you used the 

exact word about what is the incentive—— 

Senator TILLIS. Yes. 

Ms. MENSAH. —that the Federal Government can give. So, in 

this Farm Bill under section 6025, you gave us a new authority to 

really prioritize grant applications that came to us in some of our 

biggest programs, our Community Facilities Program, now a $2.2 

billion loan program, Community Facilities Grant Program, our 

critical infrastructure program under the Business and Industry 

Program, our Rural Business Development Grants. We were 

incented to do a set-aside. We issued this rule last year, and this 

year, we set aside over $300 million to prioritize applications that 

come to us in these very competitive programs. You have been on 

the other side. You know how competitive it is to get federal 

grants. 

But, we have said, when those grants show evidence of regional 

development collaboration, sometimes across those county lines— 

we were not specific to exactly how it had to be, it looks different 

in other states—but when you show us an economic collaboration 

across regional, you are prioritized for some of those core programs. 

Senator TILLIS. Is that measurable in some way? I mean, how do 

you go about determining the value of one proposal that shows economic collaboration versus another one? How do you do that or 

measure it? 

Ms. MENSAH. Luckily, I have a strong team around us, but it 

really depends on the four different programs. It is obviously a little different for water than if you are doing a Rural Business Development Grant, or a Business and Industry Grant. But, in each 

of these, we have come together to establish a set of priority points, 

so—and that is part of our—we are public about that priority. 

So, we are saying that we have taken some of our core programs, 

both grants and loan, and said there will be a priority. We tried 

it without set-aside officially last summer and we made some of our 

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11 

first awards and we are back at it this year. Already, some of our 

water grants have been awarded using those priority points. 

So, I think you will see this agency has kind of heard that message and heard what was done in the Farm Bill. We understand, 

I think, what Senator Heitkamp was also pointing out, the need to 

collaborate across, that can often lead to stronger work, longerterm work. You see some early—we have made some early gains. 

Senator TILLIS. Right. Thank you. Quickly, because I think it 

could take up time, we may request a meeting so we can talk a little bit about the strategy related to broadband. I am a big proponent of public-private partnerships—— 

Ms. MENSAH. Yes. 

Senator TILLIS. —so that we have something that is sustainable 

and at some point the market forces can take over, make it less 

likely that we have something that state or local governments 

would own. So, I would like to meet with your staff about that. 

Also, we can talk a little bit more about what we refer to as the 

urban crescent, from Charlotte to Greensboro to Raleigh. You are 

seeing cranes in the sky. Housing is coming back and commercial 

development. But I am concerned, since we are about a 49 percent 

rural state—— 

Ms. MENSAH. Yes. 

Senator TILLIS. —I am concerned with affordable housing in the 

rural areas and things that we can do to really promote that, because it not only is for the people who need a place to live, but it 

is also critically important for the workforce to serve the rural 

areas, which all go hand-in-glove with rural development, so—— 

Ms. MENSAH. Exactly. 

Senator TILLIS. —I look forward to meeting with your office to 

talk about that. 

Ms. MENSAH. I look forward, and thank you—— 

Senator TILLIS. Thank you. 

Ms. MENSAH. —for making that connection. 

Senator ERNST. Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much. 

Under Secretary Mensah, as you know, you were just in our 

state—— 

Ms. MENSAH. Yes. 

Senator KLOBUCHAR. —in Little Falls, Minnesota, which seems 

very far from here, at a food hub ribbon cutting, which was a really 

great project, and I thank you for your support of that project. 

Ms. MENSAH. It was a joy to be there with you, and great—biggest food hub I have seen—— 

Senator KLOBUCHAR. Okay. Well, just do not tell the rest of the 

Senators that—— 

Ms. MENSAH. I will not. 

[Laughter.] 

Senator KLOBUCHAR. —that is not a good thing. She did not really say it was the best one. 

[Laughter.] 

Senator KLOBUCHAR. I thought I would start out—I had done 

some work on some provisions in the Farm Bill on beginning farmers, and could you talk about what USDA Rural Development is 

doing to help our youngest farmers overcome some of the chalmw42035 on AGRINON012 with DISTILLER

12 

lenges they face economically as we look at an aging farm population and the fact that we still need to produce food and we need 

people who are running the farms. 

Ms. MENSAH. Thank you, and your question allows me to refer 

to what we just saw together, because what RD has done as it regards beginning farmers is a couple of things. I spoke earlier just 

about the Value-Added Producer Grants, but also, it is our whole 

focus on how a local food, local place’s economy can generate opportunities for new and beginning farmers. 

I think that is the critical story to tell, that some of what RD has 

done is welcome new farmers by increasing the attention to local 

foods, and that means a real economy around food. So, what I was 

able to see in Minnesota is that some of the growers, some of the 

new farmers who entered into the marketplace were able to do so 

because of the aggregation of their food and the marketing. They 

did not have to play all roles to be able to serve a local school district or a hospital or resort communities, and I think that is a new 

approach that the agency has doubled-down on, so that new farmers actually have markets organized for them and aggregation 

roles. To me, that is the key, not only to support how you are adding value to the produce yourself, but how you market, how you 

grow. 

Senator KLOBUCHAR. Maybe when you were in our state, although the particular part you were in does not have quite the 

issues that we have in other areas on the North Dakota border— 

thank you, Senator Heitkamp—and the Iowa border—thank you 

Senator Ernst—— 

Ms. MENSAH. We have the whole—— 

[Laughter.] 

Senator KLOBUCHAR. —regarding housing—— 

Ms. MENSAH. Yes. 

Senator KLOBUCHAR. —and I know you have heard this in other 

places, and hopefully in our state from some of our agriculture 

leaders, but it is a huge problem, not just for the farm communities, but also for rural workforce, in general, for manufacturing 

facilities—— 

Ms. MENSAH. Yes. 

Senator KLOBUCHAR. —from ag equipment manufacturing to 

companies like Digi-Key near the North Dakota-Canadian border 

that have job openings all the time. That is up in Thief River Falls. 

I am really concerned. I know you have the housing programs 

sections 515, 521, 538, and also the Low-Income Housing Tax Credit, but what do you think USDA could be doing more of, or should 

we be doing here in terms of legislation, because I am just—we are 

going to start losing business because we do not have enough workers—— 

Ms. MENSAH. Yes. 

Senator KLOBUCHAR. —and it is going to go to foreign companies 

if we cannot fill these jobs. 

Ms. MENSAH. Yes. 

Senator KLOBUCHAR. The housing is such a critical part of it. 

Ms. MENSAH. One of the joys of being the Under Secretary of 

Rural Development is having these connections between housing, 

infrastructure, and business. Our housing portfolio is our largest 

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13 

portfolio. You have referenced both the need for single-family housing and affordable multi-family housing, and I have both of those 

portfolios under my jurisdiction. They are critical, and they are 

aging. 

We use every tool at our disposal to keep properties, keep them 

modernized, but dollars matter and this is an issue that we see 

coming, both in our rental housing and RD did so much after the 

housing crisis to make sure more people could get into homes, particularly low-income. 

So, what I appreciate is any effort to keep the focus on the needs 

for rural housing. It is an economic need and every dollar will be 

well spent. 

Senator KLOBUCHAR. Right, and as I look at the Southern Minnesota initiative that Tim Penny runs, former Congressman, which 

I know Senator Heitkamp was asking about these regional initiatives, and this is clearly something that they have identified as a 

major challenge. 

One of the things that a few of the mayors have brought up to 

me is this idea that they would build more housing for seniors, 

condo housing, apartments, in the towns, and then that housing 

stock would then open up that the seniors are currently living in 

and that would then be maybe rehabbed some for families with 

children and otherwise, just because building a bunch of new 

houses may not quite work financially—— 

Ms. MENSAH. Right. 

Senator KLOBUCHAR. —and yet the market may be there for 

some of that with this, what I used to call the ‘‘silver tsunami,’’ but 

then I got criticized by senior groups, so I now call it the ‘‘silver 

surge’’—— 

Ms. MENSAH. Okay—— 

Senator KLOBUCHAR. —as we see the aging of the population and 

more seniors, this idea that they probably are not going to want 

to live in their farmhouse or live in a bigger place yet. Then they 

could move closer to town and closer to their friends and health 

care, as a way—sort of a more regional planning way to get at this 

problem. I do not know if you have looked at that. 

Ms. MENSAH. I love the efforts that are innovative to use this 

combination of rental and single-family stock. What I continue to 

feel is that the tools are in place. We have these sections of our 

code, section 515, section 538. They are underfunded. The tools are 

in place to be strong in rural housing. We are here and ready to 

go, and the groundwork is laid. I love the innovative partners, 

often at the nonprofit level, who are ready to work with us. Thank 

you for highlighting that. 

Senator KLOBUCHAR. Okay. Well, thank you, and I will put a 

question about broadband on the record—— 

Ms. MENSAH. Thank you. 

Senator KLOBUCHAR. —and how important that is, but thank you 

very much. 

Thank you, Madam Chair and Senator Heitkamp. 

Senator ERNST. Senator Brown. 

Senator BROWN. Thank you, Madam Chair. 

Thank you very much, Madam Secretary, for joining us. Thank 

you for what you did and what rural utility services did in Sebring, 

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Ohio, with the grant that was there. It was much less of a problem, 

but a significant problem if you lived there, than was Flint, and the 

similarities were—the difference is it was not inflicted by state government like Flint was, but it was ignored by state government for 

too long. The state EPA knew about the contamination and the 

high lead levels in water that people were exposed to and sat on 

it. The state EPA and the state government sat on it for weeks and 

weeks and weeks. But, your grant really mattered, so thank you 

so much for that. 

Ms. MENSAH. Thank you. 

Senator BROWN. What else do you do to help rural communities? 

I mean, when housing stock is at least 50 years old, whether it is 

inner city, whether it is in the ring suburbs, or whether it is small 

towns, the chances of lead paint are pretty high and the chances 

of, obviously, water contamination are higher than we would like. 

What are you doing sort of proactively? 

Ms. MENSAH. Yes. Well, thank you, Senator, and I was able to 

mention, when your Chairman asked about water systems, we 

mentioned Sebring. To me, what it highlights is the tools you have 

already given us, and they are that combination of loan and grant, 

which we are constantly monitoring to get out new and upgrades 

to systems. 

But, it is also the softer side of circuit riders, of investments in 

technical systems, in the Emergency Community Water Assistance 

Grant (ECWAG) Program. Those tools which you give us in the 

2014 Farm Bill and which Congress funds, are our way of staying 

proactive, ahead of the time, working with our borrowers, with 

rural water associations. That is where we are strong. These are 

old systems, often, and we are able to be proactive when we use 

those tools and are able to work with communities. 

So, I need to say thank you for the authorities you give us. I feel 

the tools are there and we want to use every dollar you give us to 

stay active with our communities. 

Senator BROWN. Thank you, and let me ask you briefly on the 

StrikeForce that has been successful around the country. USDA is 

expanding in my state into 11 counties. What can this committee 

learn from the success of the StrikeForce Program? 

Ms. MENSAH. Yes. Well, I love that program. Again, it is our program to target communities of high poverty, but to put a lead staffer also in place, to make sure that somebody—all of our states in 

Rural Development identified at least two communities in their 

states which were StrikeForce. Again, this ability to have someone—I think Senator Heitkamp referred to it as someone who is 

proactive in not just our own agencies, but stretching across federal 

agencies. It is not just the communities’ responsibility to find their 

way through the thicket of federal grants and opportunities. 

One of the big lessons is putting a proactive person in place, asking the agency to turn outward and to help communities, not just 

wait for them to come in and apply for a single effort. That is one 

of the big lessons of the StrikeForce, that and highlighting the fact, 

the statistic that you already said, which is that persistent poverty 

is often a much heavier rural phenomenon and not always known, 

and we have to get at this by both the way we turn outwardly in 

our federal reach, but also the way we partner. I think our Commw42035 on AGRINON012 with DISTILLER

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munity Economic Development efforts have really led to strong 

partnerships with nonprofits, with other philanthropy efforts that 

has shifted how we come into communities. I think those are some 

of the take-aways. 

Senator BROWN. Thank you. 

Thank you, Madam Chair. 

Senator ERNST. Thank you. 

I know I have just a very brief follow-up question. I know the 

Ranking Member has one, as well. 

I would like to follow up on Senator Tillis’ point and really gauging those priority points, as you said, being competitive for grants 

and loans. But, I would also like to follow up on the back side. 

Once those loans and grants have been provided to those communities, to those participants, we want to know how those programs 

are faring, how those loans are doing. Are they being successful? 

One of the new provisions that was passed in the 2014 Farm Bill 

was section 6209, program metrics. This provision requires that the 

Secretary of USDA collect data regarding economic activities created through these grants and loans and measure the short-and 

long-term viability of award recipients and those that are getting 

assistance through those funds. 

So, I know we are still a few years away from having that fully 

implemented, but if you could, Under Secretary, if you would just 

please give us an update on how we are coming with those metrics 

and give us guidance in that area? 

Ms. MENSAH. Well, thank you. You know, I started my career in 

banking and one of the things about being a lending agency is that 

some of the metrics are very clear to begin with. Is the loan still 

paying? Are people still deriving benefit from a lending tool? So, 

some of this, we are ahead of our other partners because we actually have quarterly and annual reports from all of our borrowers. 

So, this is something not new to us on loan performance. 

What is new is to get deeper into jobs and into other economic 

impacts, some of this—the title of this hearing. We are working on 

that regulation, or will be moving that forward. I work for a Secretary of Agriculture who is a fan of measurement in every aspect, 

and he told me when I came in, if you cannot measure it, how do 

you know you are doing this? He has a great card system for doing 

that. 

But, what I can say is that there is a seriousness to this portfolio, to all three of its aspects, its housing, its infrastructure, and 

its business. We have $38 billion a year, and we have authority. 

So, there is a seriousness to the metrics, the deeper metrics of 

short-and long-term impacts, which sometimes you have to ask additional questions, sometimes it is additional expense to find. 

We are putting in place how we will do these measures—some 

of that is tracked and always has been, but I think you are going 

to see some other kinds of routine reports from us about this portfolio. I can say that I am very proud of the kind of core work. Some 

of it is quite obvious. Is the family still in the house? Is the business still producing income in a rural area? 

So, for one thing, it will be wonderful to be able to talk about 

that. My favorite report is our progress report, where we go state 

by state and say what we have done and say a few reports of what 

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16 

has been achieved, and I look forward to doing that more when we 

have a rollout of how we will be speaking about all of our programs. 

Senator ERNST. Wonderful. 

Ms. MENSAH. But, thank you for your interest in the longer-and 

shorter-term impacts. 

Senator ERNST. Very good, and we look forward to having those 

metrics in place and really gauging where we are being successful 

and maybe where we can improve in those areas, as well. 

Ranking Member Heitkamp. 

Senator HEITKAMP. Just to reiterate, and in case you did not get 

it from the questioning, housing is absolutely critical. We have 

done all this wonderful work in creating primary sector jobs. 

Maybe there are 20 jobs in the community. We cannot fill them because people cannot find affordable housing where they live. 

I want to reiterate Senator Tillis’ problem, because it is a problem in North Dakota. Having a county having too broad of a measurement to determine qualification is critical, especially when you 

have such a diverse county as maybe a seaside county, where you 

have very wealthy participants and then the interior, where you do 

not. That happens all across rural America. We need to take a look 

at how we measure qualifications, because it is—the way we are 

doing it right now is not meeting the needs, in my opinion. 

The other issue is when we talk about housing, we have HUD. 

We have weatherization. We have all these other programs. What 

are we doing to coordinate and collaborate so that when we, in fact, 

do what Senator Klobuchar has recommended we do, which is 

begin that process of rehabbing older homes in communities, that 

we know those resources are there to create an environment. 

The third thing, when I talk to people, it is not so much building 

the home, it is the cost of development, whether it is sewer, whether it is city water and sewage, and building that infrastructure and 

look at regional infrastructure development is absolutely critical if 

we are going to meet the needs. 

If you take nothing away from this, take back housing, housing, 

housing, because if you said, what is the largest critical need in my 

rural communities, I would tell you it is affordable and available 

housing. Thank you. 

Senator ERNST. Thank you so much. 

Thank you, Under Secretary Mensah, for your participation this 

morning and the great information that you have provided. You 

can tell, we have a number of members here that are very passionate about their rural communities and ensuring that they are 

successful. So, thank you. We do hope that we will continually improve the effectiveness of these programs. I think some of those 

concerns were shared with you this morning. 

This will conclude the first portion of our hearing this morning. 

For our members, I would ask that any additional questions you 

may have for the record, if you could please submit those to the 

Committee Clerk five business days from today, or by 5:00 p.m. 

next Wednesday, April 13. 

Thank you very much, Under Secretary. 

We will now move to our second panel. Thank you. 

[Pause.] 

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Senator ERNST. Okay. I think we will go ahead and start the second portion of our meeting this morning, and thank you to the 

members of the second panel who are joining us, and I have the 

pleasure of introducing two Iowans to testify before us today, and 

I will then turn to Ranking Member Heitkamp, who will introduce 

our third panelist, who hails from her home State of North Dakota. 

First, Craig Hill. 

Mr. Hill and his family farm near Milo, Iowa, which is not all 

that far from where I live. He is the President of the Iowa Farm 

Bureau Federation and has served in this role for over four years. 

So, thank you very much for stepping up to the plate there, Craig. 

He is a well respected leader in the community and he served as 

the first Chairman of the Iowa Ag State Group, which brings together representatives from all sectors of Iowa agriculture. Additionally, he serves on the American Farm Bureau Board and was 

recently appointed to the USDA’s Agriculture Technical Advisory 

Committee on Trade. 

Welcome, Craig. It is nice to see you again. 

Monte Shaw, another Southwest Iowa farmer, is the Executive 

Director of the Iowa Renewable Fuels Association. Monte works 

tirelessly to promote our vibrant biodiesel and ethanol industry. 

Monte has also worked out here for the Renewable Fuels Association and for numerous candidates and elected officials, including 

Iowa’s senior Senator, Chuck Grassley. 

Craig and Monte, it is great to see you again, and thank you very 

much for taking time away from Iowa and joining us here in the 

Nation’s Capital to testify on this important topic. 

With that, I will turn it over to Senator Heitkamp for her introduction. 

Senator HEITKAMP. It is my distinct honor to introduce you to an 

amazingly entrepreneurial North Dakotan that we have invited 

here to speak. Cris Somerville is co-founder, co-owner, and President of Dakota Turbines, located in Cooperstown, North Dakota. 

Cris has 25 years of experience working with and developing hydraulic, pneumatic, and mechanical systems. He is credited with 

six patents, two of which are for Dakota Turbines, and an additional two patent pendings also for Dakota Turbines. 

He has extensive knowledge and experience in 3–D modeling and 

design software. Taking on difficult projects and providing innovative solutions is something that Cris takes great pride in. Cris is 

more likely to be found in the shop or playing on a wind turbine 

tower than in a board room. He is a hands-on manager that never 

asks an employee to do anything he would not do himself. 

In addition to being co-owner of Dakota Turbines and its parent 

company, Posi Lock Puller, Cris started P.L. Manufacturing, a precision machining company. He is a North Dakota registered journeyman machinist and sits on the Griggs-Steele Empowerment 

Zone board as well as their loan committee. 

Unfortunately, Cris’ wife, Jodi, and three daughters, Morgan, 

Alicia, and Ellie, were not able to be here today with him, but I 

know they share great pride in your accomplishments, as I do, 

Cris. Thanks so much for coming and sharing your information. 

Senator ERNST. Great. Thank you, gentlemen, very much for 

being with us today. 

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Mr. Hill, we will start with your testimony. 

STATEMENT OF CRAIG HILL, PRESIDENT, IOWA FARM 

BUREAU FEDERATION, MILO, IOWA 

Mr. HILL. Good morning. I am Craig Hill, President of the Iowa 

Farm Bureau Federation, representing 159,000 member families 

across the great State of Iowa. I do serve on the Board of Directors 

of the American Farm Bureau. I am a farmer from Milo, Iowa, raising corn, soybeans, and hogs with my wife and son. 

I want to begin by thanking the Chairman of this committee, 

Senator Ernst, who also was raised on a farm herself and understands very well the issues and concerns of rural America. I would 

also like to thank the Ranking Member, Heidi Heitkamp. I want 

to thank you for allowing me the opportunity to share with you my 

testimony today, as well as all of the efforts that you make representing rural America. 

Today, I will talk about the challenges and opportunities that 

Iowans and the people across America face in our rural communities. 

In the farm economy, we are facing many challenges. With lower 

commodity prices, farmers will have to find new, innovative ways 

to remain profitable and continue farming in future years. While 

farmers deal with economic challenges that threaten our profitability, we are also dealing with a Federal Government that continues to pass rules and regulation that threatens our businesses, 

our productivity, and, most importantly, our way of life. 

With new rules, such as Waters of the U.S. and a clean power 

plan, and the decreased RFS, there is a growing disconnect between those that write the rules in D.C., and those that depend on 

the strong, vibrant rural communities in America. As farmers undertake these challenges, we recognize the vast majority of farm 

families rely on off-farm income to diversify their risk and keep the 

family economically viable. That is why it is so important that we 

have vibrant rural economies to sustain those off-farm incomes and 

resources. Today, we must infuse new knowledge, new leadership, 

new entrepreneurship, new business development in our communities. Nothing is more important in those communities. 

I was a member of a group called Making Agriculture Productive 

and Profitable a few years ago when a professor from the University of Missouri stated that farms are today more dependent upon 

rural communities than are rural communities dependent upon 

farms. While Farm Bureau has always recognized the importance 

of strong rural economies, this task force that I served on resulted 

in several ambitious endeavors by the Iowa Farm Bureau and the 

American Farm Bureau. 

In an effort to promote and support rural development across the 

state, the Iowa Farm Bureau launched an effort with Iowa State 

University to encourage entrepreneurship in the classroom, investing in our young folks. Ag Econ 334 is a class that we sponsor with 

a $100,000 contribution each year, and that has evolved into bringing about 200 students to developing not only new ideas for business, but a business plan, and many of those concepts have been 

brought into commercialization and fruition. 

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We also help entrepreneurs with Renew Rural Iowa, and this is 

the second stage of our program, where we offer mentorship and 

coaching to these new young entrepreneurs, assisting them in applying for state and federal funding, as well, through USDA. 

Along with that mentoring role of rural businesses, Iowa Farm 

Bureau helps also in the third level of investing, and we have invested many dollars over the course of years in these new start-up 

businesses. In fact, $32 million has been invested by Iowa Farm 

Bureau across 13 companies that have had an impact in rural 

Iowa. This has resulted in about $125 million of economic impact 

in our rural communities across Iowa. 

In addition to that, we teach entrepreneurs how to utilize USDA 

programs. One of those companies was Harrisvaccines. 

Harrisvaccines leveraged Small Business Innovation Research 

funding and our equity investment dollars from the Iowa Farm Bureau to create a new synthetic vaccine platform, and this vaccine 

platform played a critical role in rapidly responding to both swine 

flu outbreak of 2008 and also played a role in the PEDv outbreak 

of 2013-2014, two devastating disease outbreaks in swine production. 

Nationally, the American Farm Bureau has developed programs 

to further continue this business development. One of the innovative programs that American Farm Bureau administers is the 

Rural Entrepreneurship Challenge. If you are familiar with Shark 

Tank, the TV program, you will recognize this program, because 

the past two years American Farm Bureau has sponsored this, we 

had 128 applicants the first year that competed in this exercise, 

165 companies that competed in the second year, and I will tell you 

with some pride that these companies that won both the first year 

and the second year, ScoutPro and AccuGrain, both came through 

these three tiers of effort through the Iowa Farm Bureau, all being 

Iowa companies that won this American Farm Bureau Award. 

AFBF also has developed a survey of which we will evaluate programs administered by the USDA, and the goal of the survey is to 

pinpoint what is working and what can be improved in these programs. We will use this survey and the results of that to develop 

a series of recommendations for USDA to strengthen those programs and help make them more effective for farmers and ranchers. Those results will be available in May. They are not quite 

available yet, as some 2,000 farmers are being surveyed as we 

speak. We will tabulate those results and provide those to the committee as well as USDA. 

It is important that we continue to support initiatives and improve rural communities through growing incomes, expanding employment, and increasing populations of rural Iowa and rural 

America. Through the efforts of organizations like the Farm Bureau and the USDA Rural Development, I hope that we can continue to improve the health and vitality of rural America. It is a 

collaborative effort, as you mentioned, Senator Heitkamp, a collaborative partnership that we share. 

Thank you. 

[The prepared statement of Mr. Hill can be found on page 41 in 

the appendix.] 

Senator ERNST. Thank you very much, Mr. Hill. 

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At this time, I am going to turn the gavel over to Senator Tillis 

and excuse myself for a vote. I will return. 

But, Mr. Shaw, if you would, please proceed with your testimony. 

STATEMENT OF MONTE SHAW, EXECUTIVE DIRECTOR, IOWA 

RENEWABLE FUELS ASSOCIATION, JOHNSTON, IOWA 

Mr. SHAW. Well, good morning to Chairman Ernst, Ranking 

Member Heitkamp, and other members of the subcommittee. My 

name is Monte Shaw, and I am the Executive Director of the Iowa 

Renewable Fuels Association. 

I would just like to start by noting that it is our focus that renewable fuels have been and remain one of the best tools available 

to promote rural development. 

Growing up on a farm in Iowa, I can tell you that despite years 

of talk about value added agriculture that stemmed out of the farm 

crisis of the 1980s, nothing really changed in our part of the country until the Renewable Fuel Standard kicked production into high 

gear in the 2000s. Then, the American farm economy went on an 

amazing eight-year run of prosperity. So, I think it can be fairly 

stated that no other effort to improve rural economies made the impact that renewable fuels did. 

However, then in late 2013, the Obama Administration proposed 

RFS levels far below statutory levels. The rural economic fallout 

was both predictable and painful. The last two years have seen a 

dramatic downturn in the health of rural America. Corn prices 

have plummeted. Land values fell. Farm income plunged. Agribusinesses have laid off workers by the thousands, and that is just 

in Iowa. 

Today, as farmers look toward the future, it is more often with 

angst than it is with optimism. However, if allowed, renewable 

fuels can once again play a quick and positive role on impacting 

rural economies. 

Looking to the topic here today of the energy title, at least for 

me, in the Farm Bill, I surveyed our producers in Iowa and came 

up with some general observations. 

First, there is strong support for the energy title from the renewable fuels family. Obviously, I have to overview these in the time 

allowed. 

The second main point would be that the energy title does provide a massive return on investment. If you look at fiscal year 

2015, I think we had a total budget in the energy title of $109 million. That leveraged billions in private investments and thousands 

of projects moved forward that were able to make a positive difference in rural communities. 

However, the third point would be that the effectiveness of these 

programs is reduced by a lack of consistent and timely funding. 

Yes, there are some implementation issues we would like to iron 

out, but Congress needs to take responsibility for this. We need to 

recognize that we are well into the second year of a severe rural 

economic downturn and rural leaders here need to push appropriators to properly fund these programs and to stop using them as 

more or less a cash reserve when some other need in some other 

area of the budget comes up. 

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21 

That’s for today, then as you are looking forward to the next 

Farm Bill, the energy title programs should be a priority and funding levels should meet the needs and opportunities that are out 

there for rural America. 

Now, just a few brief observations on specific programs. Early on, 

Iowa plants that sought to use the Biorefinery Assistance Program, 

section 9003, were stymied by a lack of funding. More recently, 

they have told me that the funding cycle has gotten better and we 

have seen projects move forward in Iowa. But looking forward, I 

can tell you that I heard back from several plants that are looking 

at this program for future innovations that if they move forward 

will require large capital expenditures. Therefore, finding ways to 

smooth out the funding and implementation of this program could 

have a meaningful impact on rural economic development. 

The Bioenergy Program for Advanced Biofuels, section 9005, is 

vital to biodiesel producers, helping many withstand volatility in 

both the energy markets and, quite frankly, over the last few years, 

government policies. New cellulosic ethanol producers are also looking toward this program to help provide stability. I want to stress, 

it is not just about cash flow. It is about providing the private sector investors and lenders with confidence that there will be a return on their investment. If properly funded, this program will play 

an important role in helping advanced biofuels reach their full potential. 

The Biomass Crop Assistance Program, section 9010, was designed to help farmers bridge the gap in establishing dedicated energy crops and to perfect harvest, transportation, and storage of 

biomass. However, Iowa’s cellulosic producers tell me that it is simply not working. There needs to be sufficient funding to incent 

farmers to change the old ways of doing things. Just as important, 

it needs to be rolled out in a way that matches the biomass cycle. 

Instead of the middle of the year, the program needs to be rolled 

out by the end of a calendar year to ensure there is time to plan 

and contract with growers. But, despite these shortcomings, if 

properly implemented, BCAP will be—quite frankly, must be—a 

vital program in moving our nation toward advanced renewable 

fuels. 

Finally, the REAP program, section 9007, is one of the most popular energy title programs. Biodiesel producers have used it with 

low-interest loans. Ethanol plants have used it to put in turbines 

to convert excess steam into electricity. But demand for REAP, 

even with some better funding there, has continued to outstrip the 

available funding levels. 

I would also note that Iowans are very disappointed that in the 

last Farm Bill the Congress took REAP’s ability away to incent renewable fuels infrastructure. Under the current Farm Bill, REAP 

is statutorily forbidden from funding blender pumps. Allowing consumers to make their own fueling decisions at the pump is vital if 

you want more competition and you want to boost production of advanced biofuels. 

Finally, and I know I am running out of time here, so I would 

just note that as Senate ag leaders, you could also engage on some 

issues outside the Farm Bill. When REAP was shut down, the 

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22 

ture Partnership, or BIP, and that has been very successful. But, 

predictably, petroleum interests are already asking Congress to 

stop the BIP program. I do not know if we can go back and put 

renewable fuel infrastructure in the REAP program like it should 

be, but for goodness sakes, we can surely stop it from being taken 

out once again here. Let us not make that same mistake. 

I would also be remiss if I did not stress today that the single 

most important policy impacting rural economies is the Renewable 

Fuel Standard. By leveraging access to the marketplace, the RFS 

boosts rural economies. There are myths about the blend wall, but 

if you look at actual sales where consumers have been allowed to 

have the choice of fuels, there is no problem reaching statutory levels. Retailers today with blender pumps are meeting the 2022 RFS 

levels in their sales, not just the levels that are set out today. 

There is no blend wall. There is only a lack of consumer access, 

and that is exactly what the RFS was put in place to do. We urge 

you to oppose any Congressional efforts to pull that back and urge 

the EPA to implement it as it is supposed to, as it was passed. 

So, with that, I would like to thank the Senators for letting me 

be here today, for their dedication to rural America and their recognition of the role that renewable fuels plays, and I would be 

happy to answer any questions. 

[The prepared statement of Mr. Shaw can be found on page 54 

in the appendix.] 

Senator TILLIS. [Presiding.] Mr. Somerville. 

STATEMENT OF CRIS SOMERVILLE, PRESIDENT, DAKOTA 

TURBINES, COOPERSTOWN, NORTH DAKOTA 

Mr. SOMERVILLE. Well, thank you, Chairman Ernst, Ranking 

Member Heitkamp, and subcommittee members, for inviting me 

here to testify before you today. 

My name is Cris Somerville and I am co-owner of the small wind 

company Dakota Turbines from North Dakota. I am also a member 

of DWEA, the Distributed Wind Energy Association, which is our 

national trade group, with over 100 members, dedicated to promoting the distributed wind industry in America. 

Today, I would like to share with you my perspective of the U.S. 

distributed wind energy industry and how it relies on our government’s continued support through effective incentive programs like 

the USDA REAP program and the small wind ITC. 

First, I would like to explain what distributed wind is. It is sometimes referred to as small wind because it is usually a single turbine under 100 kilowatts that serves an individual local site. However, distributed wind can also include larger turbines and community wind projects that are deployed behind the meter. But, large 

wind farms are not included. Electricity produced by distributed 

systems is consumed locally, offsetting power purchased from the 

utility, which results in reduced electric bills. The typical customer 

is rural, because a proper wind turbine installation requires adequate land space and tall towers for unobstructed access to the 

wind. 

Distributed wind has all of the typical renewable energy benefits, 

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23 

ence, and national security. But, what I really want to focus here 

today is one very special benefit, which is made in the U.S.A. 

The U.S. small wind industry is comprised of 90 percent American-made machinery. American small businesses like Dakota Turbines are employing thousands of skilled workers, and we have a 

network of over 3,000 suppliers nationwide. Our projects require 

local construction labor and O&M support, concrete, wiring, trucking, trenching, backhoes, and cranes; all combined typically represent 50 percent of the cost of the system. So, our industry truly 

is American small businesses, which are often rurally located, 

doing work with other American small businesses. When a U.S. 

small wind project receives an incentive, those taxpayer dollars are 

staying in this country, benefiting our small businesses and our 

citizens. 

Just in the U.S., there are literally tens of millions of suitable 

sites for distributed wind systems. They represent the potential of 

1,400 gigawatts of installed capacity. This industry simply has 

enormous potential to be a very significant factor in our domestic 

energy mix, and DWEA’s vision for our industry is to reach 30 

gigawatts of domestic capacity by 2030. This can give rise to 

150,000 new and skilled American jobs. 

Republicans and Democrats alike, in fact, 90 percent of the U.S. 

population want renewable energy to become a bigger part of our 

country’s energy mix. The technology is ready and the people are 

ready, and I would say the planet is ready. All that is needed right 

now is a commitment to longer-term smart policies so that our industry is allowed to grow and reach parity with more mature technologies. 

In terms of federal policy that we support, first and foremost is 

the energy title of the Farm Bill. In particular, we are big proponents of REAP, but we see a little bit of room for improvement. 

This is a very well run program. It has been very successful, funding energy efficiency and renewable energy projects all across the 

U.S. in every single state. In fact, most of my customers of Dakota 

Turbines have been awarded REAP grants. 

I would also like to briefly mention federal tax policy, even 

though that is not the purview of this committee. Dakota Turbines 

and DWEA are urging Congress to extend the small wind ITC for 

businesses and residents in sections 48(c) and 25(d). Though extended for solar, the ITC for small wind and other clean technologies expires this year. If all renewable technologies are not 

treated fairly, then Congress is picking winners and losers and putting valuable growing American small companies, like Dakota Turbines, and American jobs at risk. 

In closing, the U.S. distributed wind industry is all about supporting small businesses and American jobs. Its customers are 

rural and ag related. Supported by strong policies, such as the 

REAP program and the small wind ITC, it is a shining example of 

positive economic development in rural America. I cannot think of 

a more responsible use of taxpayer dollars, and I strongly urge continued federal support. 

So, thank you again for having me here today and I am happy 

to answer any questions. 

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

35 in the appendix.] 

Senator ERNST. [Presiding.] Thank you very much, gentlemen, 

this morning for your testimony. 

We will go ahead and start with proposed questions. The Ranking Member will join us shortly, after she votes. 

First, to all of our witnesses on the panel, I again want to thank 

you for making this trip to Washington, DC. This is a very important topic for all of us and we appreciate the time that you are taking away from home. We do appreciate all that you do back home, 

as well, not only for our farmers, but also to support our rural 

economy. So, thank you for that. 

Thank you, Mr. Somerville, for your work in North Dakota and 

for joining us. 

Both the rural development and energy titles of the Farm Bill 

are extremely important to my state, as they are to many others, 

and as we continue to exercise oversight of the USDA, we also need 

to begin discussions about what the next Farm Bill will look like, 

and I would like to hear your perspective on what programs under 

USDA Rural Development are the most effective, but I think more 

importantly, as well, what improvements need to be made to ensure we are being responsible stewards of our taxpayers’ money. 

So, again, focusing on what programs are really effective, where 

do we see the most good, and then, secondly, are there programs 

that need to be improved, combined, or otherwise. That question 

goes to all the members of the panel, and Mr. Hill, if we could start 

with you. 

Mr. HILL. Well, currently, I think, the business and industry loan 

guarantees that we use in Iowa, rural energy and energy efficiency 

programs are important. The Rural Business Development Grants, 

Intermediary Relending Programs, and Small Business Innovation 

Research are just a few of the examples of what is important. 

But, you mentioned stewardship, and water in Iowa is a very 

critical issue. We have municipalities that are dealing with wastewater, sewer water, water treatment. This is a very big issue for 

our communities and we are going to have to focus on that in the 

next Farm Bill title, as well. That interlocks with, I think, the conservation title, as well. 

We have 11 field offices in Iowa, and they are doing a great job. 

The officials involved there are doing good work and we would not 

want to lose the personnel that provide that technical assistance 

and that help there. 

Simplifying the application process might be something that we 

need to work on. It is one of those things that we need some improvement upon. 

Senator ERNST. Thank you very much. 

Mr. Shaw. 

Mr. SHAW. Yes. There are a number of ideas out there. A couple 

that I might mention, in the 9003 program, I have been told by 

some of our producers that have applied—I do not claim to be an 

expert, I rely on their experiences that I pass along here—that 

some of the times, you actually have to get into full production before the funding or the grant or whatever will be released, and that 

causes you during construction and commissioning to probably go 

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25 

out and have to seek what can be some very, very costly bridge financing, and in some cases that flat out stops the program. 

So, I know we have to be careful and not throw money out there 

that then nothing ever comes of it, but at the same time, if there 

is some way to maybe achieve some benchmarks to where you get 

some funding prior to full operational production so that you do not 

have to seek out and perhaps be stymied by a lack of bridge financing could be something in that program to look at, according to my 

members. 

With the REAP program, it had some problems that I think the 

last Farm Bill addressed, and so that is a case where you can be 

proud that we did not just throw our hands up. We actually tried 

to improve a program. I had a guy tell me he had 18 inches of paperwork for it originally and then got a $5 million loan guarantee 

instead of the 20 he was expecting, and the Senate and the Congress worked with USDA to change the rules so that it is different 

applications for different sizes of things. 

I think now the main issue with REAP is just that there is more 

demand for REAP programs than there is funding, even though it 

has been one of the areas of the Farm Bill energy title that has 

received support more closely to its mandatory funding levels than 

some programs. 

The final one I would say is really take a look at BCAP. BCAP 

needs to be the next REAP. BCAP is simply not working. The funding levels are not there to incent the farmers to make the changes. 

Even when we do roll some programs out, I am told that they are 

rolling them out at an annual time frame in the middle of the summer when it is impossible then to do the work. So, when you have 

two of the leading commercialized cellulosic plants in the nation in 

Iowa, one does not use the program and one got into it and is trying to get out of it because it is not working. I think that is pretty 

bad. 

But, do not give up. I want to be very clear. 

[Laughter.] 

Mr. SHAW. The message here is not to take that problem and 

say, well, fine, we are just going to kill the program. This is a vital 

link to that next step of advanced biofuels, but I think we need to 

fix it. 

Senator ERNST. That is the feedback that we are looking for, as 

well. Are there programs that can go away because there is no 

longer a use for them, but are there programs that exist where 

there is potential, but maybe needs to be restructured so that we 

are seeing taxpayer dollars going to good use. So, thank you for 

those. 

Mr. Somerville. 

Mr. SOMERVILLE. Thank you, Chairman. As far as the small wind 

industry, the REAP program is really absolutely vital. We would 

like to see continued support for that program well beyond 2019, 

increased funding, if available. A small complaint that we believe 

is being addressed is in the scoring process of REAP, how distributed wind applications are competing against more mature technologies within the REAP applications. But, again, I believe that 

issue is currently being taken care of, so we are big fans of REAP. 

We love REAP, and go REAP. 

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[Laughter.] 

Senator ERNST. Very good. Good plug. Thank you very much. 

Craig, beyond my role today examining programs that are in existence through USDA Rural Development, I came to the Senate 

committed to cutting pork and working through unnecessary and 

burdensome regulations, finding where we can get rid of those imposed upon our farmers and in our rural economies. If you could, 

talk about any of those types of regulations, rules that exist out 

there that are hampering industry in our rural areas. What are 

those regulations and why do you see them as being an impediment to developing the rural areas? 

Mr. HILL. I think, speaking for farmers in general, we have an 

understanding of the rules of the game. Conservation compliance, 

a component of the Farm Bill through crop insurance and other 

mechanisms to provide ourselves with—or avail ourselves of any of 

the programs from USDA, we want to be compliant. We understand those rules. 

But, when EPA, an agency of government, creates the uncertainty that they have with Waters of the U.S., it has been something that has just stymied and crippled our farmers. They do not 

understand the rules and they ask for help. What is a definition 

of Waters of the U.S., and what features on their land would be 

permittable or not, what is jurisdictional or not, are unanswered. 

There is not an office in Iowa that can answer those because it is 

the Army Corps of Engineers that would produce that answer—— 

Senator ERNST. Right. 

Mr. HILL. —and there is no office in Iowa. 

So, to implement and execute upon those new rules, new definitions that have never been created before by EPA that do not stand 

up to court decisions and defy, actually, what Congress has set out 

in the Clean Water Act, is just a very, very difficult thing for agriculture to accept. 

Senator ERNST. The way I understand that, the expanded definition of Waters of the U.S. would include what percent of Iowa, Mr. 

Hill? 

Mr. HILL. Most experts would declare 97 percent of Iowa to be 

jurisdictional under the new rule, tributaries being the definition 

that was created that expands that authority across nearly all of 

Iowa. 

Senator ERNST. Yes. 

Mr. HILL. I would make a statement that it is very disingenuous 

when it is said by agencies of government that, for example, 

ditches are exempt. There is no definition for a ditch. There are 

only definitions for tributaries, which is a bed bank high water 

mark, wet or dry, intermittent or perennial, manmade, man-altered, or natural, which that includes everything that conveys 

water. But, yet, it is said that, oh, no, agriculture is exempt. 

Ditches are exempt. There is no definition for a ditch, only a tributary. 

Senator ERNST. Right. 

Mr. HILL. Those kind of things are troubling, and I would ask 

the committee to consider what actually Congress has established 

in the Clean Water Act rather than this agency. 

Senator ERNST. Very good. 

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Mr. Shaw or Mr. Somerville, any thoughts on regulations that 

might be hampering industry in the rural areas? 

Mr. SHAW. Well, and I will not belabor this, because you are well 

aware of it, but the proper implementation of the Renewable Fuel 

Standard would be one area that would have a big boost, and I 

think we have seen that with the data I submitted in my prepared 

remarks. 

But, also, there is S. 1239, which is a bill to equalize the summertime vapor pressures of E10 and E15. We need to move to use 

more advanced biofuels and even more traditional biofuels. We 

need to get to higher blends of ethanol and the largest impediment 

to that, despite a lot of roadblocks thrown up by some of the oil 

companies, the largest impediment to that is this, what I think was 

truly an unintentional regulatory difference between how we handle E10 and E15, which just ties retailers’ hands and they cannot 

sell the fuel. If we could simply make that common sense correction, I think you would see the move to higher blends come pretty 

rapid. If E15 became the new normal like E10 is now, that would 

be seven billion gallons of additional biofuels. That would spur an 

awful lot of rural economic development. 

Senator ERNST. Very good. So, not just the rules and regulations, 

but making sure they are being implemented correctly. 

Mr. SHAW. Absolutely. 

Senator ERNST. Mr. Somerville. 

Mr. SOMERVILLE. Yes, just one quick point. With regards to 

REAP, within REAP is the NEPA rules. We have a little bit of a 

struggle with how NEPA is being interpreted within REAP with regards to it being applied fairly to all distributed energies. For example, solar has a categorical exclusion, but distributed wind systems do not. So, that issue, I believe, is also being taken care of, 

so thank you. 

Senator ERNST. That is good. I appreciate it so much. 

Senator Hoeven. 

Senator HOEVEN. Thank you, Madam Chairman. Thanks for 

holding this hearing. I appreciate it very much, on rural development. 

I would like to thank all of our witnesses for being here and for 

the work that you are doing. In particular, I would like to thank 

Mr. Somerville. Welcome. How are things in Cooperstown? 

Mr. SOMERVILLE. They are very good. Thank you, Senator. 

Senator HOEVEN. Good. With your company, tell me how your 

company is doing. 

Mr. SOMERVILLE. The company is doing well. Dakota Turbines 

has a dozen employees. We have a bright future. We need a little 

bit of help with federal policies, but we are pretty excited to be, 

hopefully, a major player in our small wind industry. 

Senator HOEVEN. How long ago did you start the company, and 

what led you to do it? 

Mr. SOMERVILLE. Well, how far back do you want me to go, Senator? 

[Laughter.] 

Senator HOEVEN. Well, I have four minutes and 46 seconds. 

Mr. SOMERVILLE. Okay. I will use it all. 

[Laughter.] 

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Mr. SOMERVILLE. Well, you know my father, Dean Somerville. 

Senator HOEVEN. Very well. 

Mr. SOMERVILLE. He started our Posi Lock company over 40 

years ago with his invention of the Posi Lock gear and bearing 

puller. Together with my mother, they grew Posi Lock slowly over 

many years. As my two sisters and I grew up, we were involved 

with the company. When we were done with our schooling, we 

found our own place within the family company and we all have 

kind of branched out into other new, exciting areas of interest. 

My sister, Stacy, started Dynamics Marketing, which employs 

150 North Dakota residents in three locations in North Dakota. 

What they do is they are a high-tech teleservices company that focuses primarily on market research. 

My sister, Tamara, is focusing on the Posi Lock sales and marketing efforts, and in particular, international marketing. She has 

grown the Posi Lock sales unbelievably, and more importantly, the 

export markets now make up almost 30 percent of our total sales 

volume. Interestingly, most of that product is going into China. So, 

she is doing some wonderful things with the Posi Lock company. 

In fact, she is going to be here in two weeks to accept an award 

from the Manufacturing Institute as being one of the top 100 

women in business. 

Senator HOEVEN. Fantastic. 

Mr. SOMERVILLE. What I have done with the company is I started the precision machining operations for Posi Lock. We make our 

own precision components for our own products. We also do job 

shop work for other area companies. That was started in large part 

with the help of a zero percent USDA loan. So, I can honestly say, 

without that loan, the precision machining operations would not 

have gotten the start and would not have eventually created Dakota Turbines. So, I really appreciate that program, as well. 

Dakota Turbines was started ten years ago out of my love for renewable energy, and because we had developed engineering and 

manufacturing capabilities, we thought that we could contribute to 

our small wind industry here in America. It has been a long, difficult road. Developing a wind turbine is the equivalent of creating 

an automobile that will drive 150,000 miles per year for 20 years 

with almost zero maintenance over its life. So, it is a very, very expensive and long duration development project, but we are ten 

years in. We have been marketing our products for several years 

and we have a small fleet of 40 wind turbines throughout the 

Upper Midwest. Like I said, our future looks bright. 

Senator HOEVEN. What is the key to getting the utility companies to work with you on the distributed wind piece? 

Mr. SOMERVILLE. Well, that is a loaded question. 

[Laughter.] 

Mr. SOMERVILLE. Well, in a state like North Dakota, we run into 

problems where the fossil fuel industry pretty much has a grip on 

our state. It is hard to make inroads with utilities. It is hard to 

make inroads with legislature when we are such a fossil fuel 

known state, to be honest with you, Senator. 

Senator HOEVEN. Well, what economic model would work for 

them as well as for individuals that want to have the windmills 

and provide the energy? 

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Mr. SOMERVILLE. Great question. I would love to see the utilities 

invest in more renewable energy, specifically distributed wind energy. We believe that distributed wind has a great benefit to the 

utility. Distributed wind, because it is spread out over a vast area, 

it strengthens outlying weak grid systems that we common have in 

areas in rural North Dakota. 

The utilities can benefit from renewable energy by charging a retail rate now for that energy rather than the large wind farms 

where that energy is valued at a wholesale rate. So, we think the 

utilities have great promise to be able to harness distributed wind 

energy, in particular. 

Senator HOEVEN. Right. This is a big step for you, right, because, 

I mean, right now, you can provide energy on the farm or to a 

home or business, wherever. But, kind of the next step for you 

would be that distributed energy piece, right, and so you need an 

economic model that works both for the individual and for the utility company, right? I mean, that is kind of the key we have to figure out, is it not, to really take that next big step? 

Mr. SOMERVILLE. Yes. You are absolutely correct, Senator. Our 

industry is currently developing leasing models that will mimic the 

solar leases that have brought the solar industry their big boom in 

recent years. These small wind leases will allow individuals to get 

into the equipment with a very small or, frankly, no capital investment and take full advantage of a renewable energy system day 

one without the huge burden of the capital expenditures. 

Senator HOEVEN. Thanks for your entrepreneurship. It is a great 

story and we want to see more of that, not just in North Dakota, 

but across the country. Thanks so much. 

Mr. SOMERVILLE. Thank you, Senator, and thank you for your 

support. 

Senator ERNST. Senator Heitkamp. 

Senator HEITKAMP. Thanks, Madam Chairman. 

Cris, just an update on your testimony. You talked about the 

work that we did at the end that provided wind tax credits, production tax credits, and ITCs for solar. We are now working on an 

amendment that would correct and include those who were left behind in that effort. So, from your ears to our work, or from your 

mouth to our work, we are, in fact, working on an amendment that 

would accomplish including small wind ITCs in our FAA reauthorization, so we will keep you posted on that. 

I want to just switch from wind, because, obviously, I believe 

that a lot of your market could be the international market. I have 

been all across the world and have seen firsthand the need for a 

product that you develop, that can be managed locally, that may 

not, in fact, ever need to attach to a grid, but can provide that opportunity for electricity in areas that do not have electricity. 

One of the challenges we have is so much of our public policy has 

really been large command control, with huge distribution systems 

that may not be, in fact, the system that is needed in a village in 

Africa. It may, in fact, be something very similar to what you are 

producing. So, we are very excited and very grateful that you are 

also looking at producing a product that is low maintenance, because I think one of the things we get afraid of is if you put it 

there, can, in fact, the people who live there manage the project. 

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I’m really looking forward to seeing your business grow. I look forward to seeing your efforts populate not only the rural landscape 

in North Dakota, but also across the world. We think that is a real 

growth model. 

Now, with that said, you are also on the Empowerment Zone 

committees. You also work very closely with rural development in 

general, not just in your project. We are looking for some advice 

here on how we can fashion the programs that we have that could 

be more responsive to not just you, but all of the efforts that are 

going on in that region, that Empowerment Zone. I am wondering 

if you have any advice for us relative to priorities for rural development? 

Mr. SOMERVILLE. Well, thank you for the question, Senator. I 

think I am going to have to get back to you on that. 

Senator HEITKAMP. Okay. I mean, it would—— 

Mr. SOMERVILLE. That is a wonderful question. I am just—I am 

at a loss right now. 

Senator HEITKAMP. Just to give you an example, I was all over 

Northeastern North Dakota. I did a panel and a roundtable in 

Walhalla, I was in Cavalier, I was in Grafton, all places that have 

some great primary sector development. I mean, we have Marvin 

Windows, we have biofuels; we have a lot of projects out there. 

Their problem that they have right now is they cannot find workforce, and so, let us say, Cris, that you were able to land a couple 

of big contracts and needed to triple your workforce. Do you think 

you could find folks immediately that could be ready to work and 

develop your business with you? 

Mr. SOMERVILLE. No. That is a terrible problem in our area of 

North Dakota. We have one of the lowest unemployment rates in 

the country. It is very difficult to find workers, particularly that 

have a technical skill. Housing is a big issue in our area. Education 

is another issue. I think that we could do more to promote our 

trade schools. Not everybody has to become a doctor and lawyer. 

It is okay to be a precision machinist. Go get a two-year degree and 

come work for us in Cooperstown, North Dakota. 

Senator HEITKAMP. Yes. We—— 

Mr. SOMERVILLE. We have good jobs in these small towns. 

Senator HEITKAMP. We had a long discussion in these meetings 

about how you educate people who are even in grade school and 

then growing up in high school about what these opportunities are 

and what the skill sets are that people need, and I think we are 

failing miserably because we created a presumption that without a 

four-year degree, you will be an economic failure, which is absolutely not true. 

We are going to work really hard on that piece of it, but I am 

very concerned about this idea of quality of life. By that, I mean 

many of our young folks think you have to live in, in our case, in 

Fargo or Grand Forks or Bismarck or Minot in order to enjoy quality of life, and we need to do a better job selling the Cooperstowns 

and the Walhallas, and there are some great recreational opportunities. You are not that far from a ball game if you want to go 

watch a ball game. 

But, it all is part of that continuum of development of kind of infrastructure and rural places that I think can help your business 

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grow right there in Cooperstown. We have great successes all 

across North Dakota in small communities. I am concerned that as 

we promote those small businesses and as we talk about what we 

do and your patent work and all the things that you are creating, 

we want you to thrive, but we want you to thrive in Cooperstown 

because we think that is a model that is going to grow rural communities. In order to make that happen, we need to make sure 

there is affordable housing, that there are amenities, like you can 

run to the grocery store and get a gallon of milk. That may sound 

like a small thing, but those of us who are in rural North Dakota 

worry about that. Whether, in fact, you have to drive 15 miles to 

get a gallon of milk is a huge impediment to developing our rural 

communities. 

I want to congratulate Mr. Hill and Mr. Shaw, as well. We will 

continue to fight for the RFS. We will continue to challenge the assumptions about the blend wall. Know that one of the things we 

do not say enough on biofuels is we do not talk enough about how 

it is the building block for other advanced manufacturing. You 

know, I used to say, let us move beyond food, fiber, and fuels and 

I got schooled very quickly from the biofuels industry that a lot of 

the beginning process that you would use in advanced manufacturing in agriculture really starts at the work that you have done. 

We are not unmindful in North Dakota. In fact, I think we are 

challenged more by Waters of the United States, given that we are 

the fly zone for the prairie pothole region, given that there are 

very, very few sections of land in North Dakota without some kind 

of water on them, and that has created a huge disruption. 

But, we are serious in this committee and I am serious about 

rural development and making sure that we extend economic opportunity not just to agriculture and agriculture-based industries, 

but that we look at how we can expand and utilize those rural communities and the rural infrastructure that we have. 

So, congratulations. We are all in this fight together, and thank 

you, Chairman, for calling this hearing. 

Senator ERNST. Thank you. I appreciate it very much. 

I just want to follow up briefly with one point, Monte, that you 

had made, with second generation biofuels. There are some challenges that the second generation biofuels have faced, and if you 

could give an example of other energy programs that were supported by the government until they became more mature and they 

could compete on their own. If you would just follow up, that would 

be helpful. 

Thank you. 

Mr. SHAW. Well, the first one that jumps to mind is outside of 

renewable energy. I mean, clearly, we have a hundred years of tax 

credits targeted at petroleum. In the Senate, I think it is now two 

years ago—I would have to look it up and get you the exact site— 

but there was a hearing about the intangible drilling cost expensing provisions that petroleum companies get. They had a CEO of 

a very large fracking company in and he talked about how this was 

very important because it allowed us to try and fail for 20 years 

to make fracking a reality. But because of this very lucrative tax 

provision, they were able to recoup a lot of those costs and try 

again. 

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I could not help but sit there and think, and people were applauding and this was great and America’s success story. But, I 

could not help but think that if you replaced intangible drilling cost 

expensing and fracking with the biodiesel tax credit and biodiesel, 

many of the people around that particular Senate—it was not the 

Agriculture Committee—many of the people around that committee 

table would have been saying, oh, that is horrible. That is picking 

winners and losers. The government should not get involved. 

I do think—you mentioned the FFA—FAA bill. Excuse me. I am 

from farm country, so FFA comes out often. 

[Laughter.] 

Mr. SHAW. But, in the FAA bill, there might be a chance to also 

extend out the advanced biofuels tax credits. Biodiesel and cellulosic ethanol are still very young, very immature, and they have— 

they are showing promise and they are growing and they are becoming more efficient, but we are not there yet. Particularly when 

we are competing against commodities that continue to receive government support, that are profitable and have gotten it for literally 

now, I think, 103 years. I think it goes back to 1913. So, that would 

be an example of something where, let us do the same thing there. 

Biochemicals, section 9003, I think there is some ability there to 

help streamline some stuff to make sure that stand-alone biochemical facilities can apply for that program. In Iowa, at the state 

level, we just passed a biochemical tax credit bill. Anything we 

make out of a hydrocarbon, we can make from a carbohydrate. 

Fuels are just the tip of the iceberg. Whether it is at that renewable fuel plant or across the fence or even a stand-alone facility, 

we are very excited about those opportunities. 

Senator ERNST. Well, great. I thank you for that. I think we have 

some exciting technology. 

I know we do have to wrap up our hearing, but I do want to 

thank all of our witnesses here today and the Under Secretary for 

appearing earlier. The testimonies provided today are valuable to 

us and to all of us as we move through any rules, regulations, and, 

of course, any legislation that is put forward here. 

So, thank you, Senator Heitkamp. Truly, what an advocate you 

are for rural development. We appreciate it so much. 

A lot of real challenges have been identified today and we hope 

that we are able to follow up on those, as well as continuing to 

focus on those programs that are truly working for rural America 

and for the betterment of our United States in general. 

So, again, I want to thank you very much for appearing in front 

of us today and thank you for your time and your attention to 

these types of matters, and we hope to work with you continually 

in the future, as well. 

So, with that, we will go ahead and close the hearing. Thank you 

for attending today. 

[Whereupon, at 11:45 a.m., the subcommittee was adjourned.] 

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