U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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

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

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

64–688 PDF 2011

HEARING TO REVIEW THE VARIOUS

DEFINITIONS OF RURAL APPLIED UNDER 

PROGRAMS OPERATED BY THE U.S. 

DEPARTMENT OF AGRICULTURE

HEARING

BEFORE THE

SUBCOMMITTEE ON RURAL DEVELOPMENT, 

RESEARCH, BIOTECHNOLOGY, AND 

FOREIGN AGRICULTURE

OF THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

FEBRUARY 15, 2011

Serial No. 112–2

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

FRANK D. LUCAS, Oklahoma, Chairman 

BOB GOODLATTE, Virginia, 

Vice Chairman 

TIMOTHY V. JOHNSON, Illinois 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

K. MICHAEL CONAWAY, Texas 

JEFF FORTENBERRY, Nebraska 

JEAN SCHMIDT, Ohio 

GLENN THOMPSON, Pennsylvania 

THOMAS J. ROONEY, Florida 

MARLIN A. STUTZMAN, Indiana 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

STEPHEN LEE FINCHER, Tennessee 

SCOTT R. TIPTON, Colorado 

STEVE SOUTHERLAND II, Florida 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

MARTHA ROBY, Alabama 

TIM HUELSKAMP, Kansas 

SCOTT DESJARLAIS, Tennessee 

RENEE L. ELLMERS, North Carolina 

CHRISTOPHER P. GIBSON, New York 

RANDY HULTGREN, Illinois 

VICKY HARTZLER, Missouri 

ROBERT T. SCHILLING, Illinois 

REID J. RIBBLE, Wisconsin 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

TIM HOLDEN, Pennsylvania 

MIKE MCINTYRE, North Carolina 

LEONARD L. BOSWELL, Iowa 

JOE BACA, California 

DENNIS A. CARDOZA, California 

DAVID SCOTT, Georgia 

HENRY CUELLAR, Texas 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

KURT SCHRADER, Oregon 

LARRY KISSELL, North Carolina 

WILLIAM L. OWENS, New York 

CHELLIE PINGREE, Maine 

JOE COURTNEY, Connecticut 

PETER WELCH, Vermont 

MARCIA L. FUDGE, Ohio 

GREGORIO KILILI CAMACHO SABLAN, 

Northern Mariana Islands 

TERRI A. SEWELL, Alabama 

JAMES P. MCGOVERN, Massachusetts 

PROFESSIONAL STAFF

NICOLE SCOTT, Staff Director 

KEVIN J. KRAMP, Chief Counsel 

TAMARA HINTON, Communications Director 

ROBERT L. LAREW, Minority Staff Director 

SUBCOMMITTEE ON RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND

FOREIGN AGRICULTURE

TIMOTHY V. JOHNSON, Illinois, Chairman 

GLENN THOMPSON, Pennsylvania 

MARLIN A. STUTZMAN, Indiana 

AUSTIN SCOTT, Georgia 

RANDY HULTGREN, Illinois 

VICKY HARTZLER, Missouri 

ROBERT T. SCHILLING, Illinois 

JIM COSTA, California, Ranking Minority 

Member 

HENRY CUELLAR, Texas 

PETER WELCH, Vermont 

TERRI A. SEWELL, Alabama 

LARRY KISSELL, North Carolina 

MIKE DUNLAP, Subcommittee Staff Director

(II) 

(III)

C O N T E N T S 

Page 

Costa, Hon. Jim, a Representative in Congress from California, opening statement ...................................................................................................................... 3

Prepared statement .......................................................................................... 4

Courtney, Hon. Joe, a Representative in Congress from Connecticut, submitted letter .......................................................................................................... 125

Johnson, Hon. Timothy V., a Representative in Congress from Illinois, opening statement ........................................................................................................ 1

Prepared statement .......................................................................................... 2

WITNESSES

Cook, Cheryl, Deputy Under Secretary for Rural Development, U.S. Department of Agriculture, Washington, D.C. .............................................................. 5

Prepared statement .......................................................................................... 7

Submitted questions ......................................................................................... 128

Larson, Hon. Donald, Commissioner, Brookings County, South Dakota; Chairman, Agriculture and Rural Affairs Steering Committee, National Association of Counties, Brookings, SD; on behalf of National Association of Development Organizations .......................................................................................... 82

Prepared statement .......................................................................................... 83

Collins, Ph.D., Timothy, Assistant Director, Illinois Institute for Rural Affairs, 

Western Illinois University, Bushnell, IL .......................................................... 87

Prepared statement .......................................................................................... 89

Fluharty, Charles W., President and CEO, Rural Policy Research Institute, 

Truman School of Public Affairs, University of Missouri-Columbia, Columbia, MO ................................................................................................................. 97

Prepared statement .......................................................................................... 98

Dozier, Mike, Director, Office of Community and Economic Development, 

California State University, Fresno, Fresno, CA ............................................... 103

Prepared statement .......................................................................................... 105

(1)

HEARING TO REVIEW THE VARIOUS

DEFINITIONS OF RURAL APPLIED UNDER 

PROGRAMS OPERATED BY THE U.S. 

DEPARTMENT OF AGRICULTURE 

TUESDAY, FEBRUARY 15, 2011

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON RURAL DEVELOPMENT, RESEARCH, 

BIOTECHNOLOGY, AND FOREIGN AGRICULTURE, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

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

1300, Longworth House Office Building, Hon. Timothy V. Johnson 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Johnson, Thompson, Scott, 

Hultgren, Schilling, Costa, Sewell, Kissell, and Courtney. 

Staff present: Mike Dunlap, Patricia Barr, Tamara Hinton, 

Debbie Smith, Scott Kuschmider, Liz Friedlander, and Jamie 

Mitchell. 

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A 

REPRESENTATIVE IN CONGRESS FROM ILLINOIS 

The CHAIRMAN. This hearing of the Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture to review the various definitions of rural applied under the programs 

operated by the USDA will now come to order. I would ask leave 

of the Committee that my opening statement be submitted and incorporated in the record rather than taking the Committee’s and 

audience’s time reading a relatively lengthy statement verbatim, I 

would ask leave of the Committee to submit that. 

The statement is ordered incorporated in the record. 

As everybody here is aware, both the Members of the Committee 

and the audience, the purpose of this bill is to deal with questions 

of rural under relative provisions of Federal law, in particular, the 

2008 Farm Bill. There are concerns that have been evidenced and 

voiced over some period of time that because of too expansive a definition and/or because of failure of various Administration agencies 

to narrow in and report the underlying purpose of the bill, could 

be undermined and that spurring rural competitiveness in the global market through infrastructure, investment and business lending 

and assistance might be impaired, and that is a good part of the 

reason why we are here. 

Let me also point out that the gentleman from Connecticut, my 

friend, Mr. Courtney, not a Member of the Subcommittee, has 

2

joined us today. Ranking Member, Mr. Costa, and I have consulted 

and we are pleased to welcome him to join us in the questioning 

of witnesses, unless there is any objection. Hearing none, leave is 

granted. Mr. Courtney, we are pleased to have you with us. 

[The prepared statement of Mr. Johnson follows:]

PREPARED STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE IN

CONGRESS FROM ILLINOIS

Good morning, and welcome. In the coming months this Subcommittee will be 

conducting a full review of the activities under its jurisdiction, including agricultural 

research, extension services, biotechnology, trade promotion, and our topic today, 

rural development. We will also be reviewing the status of programs specifically authorized in the 2008 Farm Bill, and how USDA has utilized these authorities. 

The farm bill provided for a number of programs intended to spur rural economic 

development. Through infrastructure investments, business lending, and assistance 

for community facilities, rural development programs are designed with the purpose 

of helping our rural communities compete in a global market. As the agency responsible for implementing these programs USDA is charged with ensuring rules are 

written in a timely manner so that rural America can receive the greatest benefit 

possible. 

Members of this Subcommittee understand that assisting small, rural communities carries with it a great many challenges. Not the least of which is ensuring 

that the limited funds available are targeting only rural communities and not diverted to urban areas. 

While we appreciate the USDA’s commitment to bringing assistance to rural communities, there are several areas that concern me and the Subcommittee that the 

responsibilities laid out by Congress in the 2008 Farm Bill are not being met. Furthermore, after repeated assurances that adequate staff was available to complete 

work on rural broadband and loan programs, despite an influx of funds from the 

stimulus, I fear these funds have been administered to the detriment rural communities. I hope that USDA can provide the Subcommittee with solid evidence that 

rural America will benefit from the program before those authorities expire. 

It is the purview of Congress to determine how the money entrusted to the Federal Government is spent, and where that money is targeted. Today we will be looking at a key aspect of how funds are targeted through the various rural development 

programs operated by USDA. In an effort to properly target communities, decision 

makers rely on the definition of ‘rural’. However, defining rural continues to be a 

challenge for policy makers at all levels. 

It is our understanding that USDA has used their waiver authority under section 

6018 of the Farm Bill to fund projects in areas the Under Secretary for Rural Development deemed to be ‘rural in character.’ We look forward to an update on how 

many of the 146 eligible areas were awarded funds for rural development projects. 

There are 16 Federal agencies operating 88 rural development programs. Virtually none of these programs have identical definitions of what it means to be 

rural. In most cases, the definitions reflect the specific nature of the program. 

With so many agencies and programs targeting rural development, coordination 

is important. I hope that our witnesses today can provide some insight as to where 

greater coordination should be sought among the various agencies, and whether efficiencies might be gained. 

The 2008 Farm Bill required USDA to submit a report to Congress that would 

review the various definitions of rural, describe the effects that the variations in 

those definitions have on those programs, make recommendations for ways to better 

target funds through rural development programs, and determine the effect of the 

changes to definitions of rural on the level of rural development funding and participation in those programs in each state. 

Unfortunately, USDA has not yet completed their work due last summer. Today’s 

hearing will provide an opportunity for USDA to update the Committee on how the 

revised definitions of rural have affected our programs. We hope that USDA will 

also be able to provide an assurance of when their report will be forthcoming. 

We are pleased that USDA is with us this morning to give an update on these 

issues. In addition to USDA’s testimony, we are pleased to have a panel of distinguished individuals with tremendous expertise in economic development. We appreciate the time and effort each of them has put into preparing their testimony and 

traveling to be with us this morning and we look forward to their remarks. 

3

Finally, it is clearly within the jurisdiction of the Congress, the full Committee, 

and this Subcommittee to propose changes in the law that would better address 

these issues and our overarching goal of serving the needs of rural America. I appreciate the ongoing relationship with USDA and the Subcommittee on Rural Development, and want to work together to achieve mutual goals. However, there should 

be no question that it is the Congress, and not unelected administrative agencies, 

who will set the policy for the United States.

The CHAIRMAN. For his preliminary remarks I would turn the 

microphone over to my friend, the distinguished Ranking Member 

from California, Mr. Costa. 

OPENING STATEMENT OF HON. JIM COSTA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. COSTA. Thank you very much, Mr. Chairman. Good morning 

to all who are here this day, Members of the Subcommittee, on a 

bipartisan basis. I know we look forward to working together as we 

deal with many of the challenges of the subject matter that this 

Subcommittee has jurisdiction over, from rural development to research, biotechnology and foreign agriculture. All of us, in one way 

or another, are touched by the impacts of our agricultural districts. 

The importance of agriculture to America’s ability not only to maintain its tremendous ability to feed itself, but to export our agricultural products throughout the world. 

I like to say nobody does it better than we do in terms of food, 

fiber and the quality and the yield of those food and fibers, and 

also using cutting-edge technology. 

Mr. Chairman, today’s hearing is very important, and I am 

pleased that you took the time to focus on this, and to have our 

testimony from not only the USDA, but also our witnesses on our 

second panel, the focus on statutory and regulatory definitions of 

rural as they are applied to the United States Department of Agriculture in the various programs as to whether or not we qualify in 

our respective states as to that rural definition. 

Many of us, Chairman Johnson, you and I and others, worked 

very hard on the 2008 Farm Bill to ensure that it reflected and represented the needs of U.S. agriculture, and on a bipartisan basis 

we did a pretty good job. It was the only bill—for the new Members—that actually in that Congress followed regular order in both 

Houses and actually was vetoed by the President. And on a bipartisan basis, we overrode the veto. 

So, it is important to note the history of the 2008 Farm Bill as 

we focus on reauthorization in 2012. But this morning’s hearing is 

very important, I believe, and I again want to thank you. We have 

many areas in the nation, take mine as an example, that are rural, 

that have tremendous agricultural production, that are in the top 

ten agricultural counties in the nation, agricultural counties in 

terms of farm output on the farm gate. In other words, they are 

what we count in terms of gross receipts. My counties, Fresno 

County, and Kern County have been number one and number 

three, respectively, for decades. Fresno County is the largest agricultural county in the nation. Kern County is number three. Tulare 

County represented by Congressman Nunes is number two, the 

largest dairy county in the nation, yet none of those counties in the 

whole region qualify under the rural definition. 

4

I would love to invite you. I know my other colleagues would love 

to invite you to the San Joaquin Valley, the heartland of California’s farm breadbasket. We don’t fit under the rural definitions, 

and I would submit to you that having farmed there myself and my 

family for 3 decades, we are pretty rural, yet under the USDA’s 

definitions we don’t qualify. And it is like our tax dollars come here 

to Washington, but they don’t come back to the areas I represent. 

You will see the maps and our witnesses will demonstrate that in 

their testimony, there are a host of areas throughout the United 

States that fall in that same category. 

I don’t know if it is possible to establish a nationwide definition 

for rural as we continue to deal with the challenges, not only like 

mine, but elsewhere in the country. But, I think everyone here, the 

USDA included, would be hard-pressed to come up with a singular 

definition as to what it means to be rural in each state in the nation. 

So I am looking forward to the testimony, Mr. Chairman, as we 

wrestle with this effort, as we try to ensure that our communities 

throughout the country are able to participate in the farm bill as 

we hoped and intended it to be when we passed it on a bipartisan 

basis in 2008. 

So I thank you, and I look forward to listening to the testimony 

and I will submit the rest of my comments for the record. 

[The prepared statement of Mr. Costa follows:]

PREPARED STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM

CALIFORNIA

Good morning, Chairman Johnson. Thank you for calling today’s hearing and I 

congratulate you on being named Chairman to this Subcommittee for the 112th 

Congress. I look forward to working with you and all the Members on both sides 

of the aisle on the many issues under our jurisdiction. I am proud of what this Committee has accomplished in a bipartisan fashion during my time in Congress and 

I hope we can continue down that road for the next 2 years. 

Today’s hearing is an important one, because the various statutory and regulatory 

definitions of ‘rural’ applied to USDA Rural Development programs have a significant effect on rural communities in my district and home state. California continues 

to struggle with eligibility for these programs, whether it is rural housing, health, 

or essential community facilities, largely because of the criteria used to define rural 

communities. 

The use of rural definitions as basic eligibility criteria has created a separate set 

of problems. On the one hand, the establishment of different criteria for what is 

rural depending on the program has created a great deal of confusion, even among 

economic development professionals who in many cases are familiar with RD programs. 

Another problem is the nationwide application of a given rural definition. I think 

everyone here, USDA included, would be hard-pressed to come up with a singular 

definition that accurately portrays what it means to be rural in each and every 

state. Unfortunately, these definitions do apply and often exclude communities and 

their residents from financing essential infrastructure like housing, basic utilities, 

and health facilities. 

Definitions based on population or distances from urbanized areas also do not 

take into account other socioeconomic factors that could elevate communities to be 

ideal candidates for RD programs. Migration flows have caused some cities to grow 

above the population cutoff without the accompanying increased economic development and diversified economies that many people associate with urban areas. But 

they are rapidly losing their eligibility for rural programs that aim to meet these 

goals. The Central Valley of California has seen this play out time and time again. 

Recent farm bills have made tweaks to the definition of rural, so I look forward 

to hearing from both panels on whether or not a new approach is needed. It’s no 

secret that Rural Development is under the budget microscope, even with nearly all 

of their programs being oversubscribed. If more rural communities can be better 

5

served with a different set of criteria or a different regionally-based approach to development, then that is something this Committee should consider for the next farm 

bill. I hope USDA will be able to provide this Committee with some suggestions 

from the lessons it has learned from the administration of awards not just in annual 

appropriations, but the Recovery Act funds to certain RD programs that aimed to 

bolster essential infrastructure. 

Once again, I welcome today’s witnesses and I look forward to their testimony. 

I yield back my time.

The CHAIRMAN. Thank you, Mr. Costa. I would like to remind 

Members that after at the conclusion of each panel, that they will 

be recognized for questioning in the order of seniority for Members 

who were here at the start of the meeting. That is fairly traditional 

and common in each Committee. After that, Members will be recognized in order of arrival. I appreciate your understanding and the 

clerk will be supplying me that list as we progress through the testimony. 

Our first panel consists of one member. I would like to welcome 

our first witness to the table, specifically Ms. Cheryl Cook, Deputy 

Under Secretary for Rural Development, U.S. Department of Agriculture, in Washington. Ms. Cook, please begin when you are 

ready. I don’t want to preempt in any way what you choose to do. 

If you want to summarize from your statement, which we have in 

full, we would be more than happy to give you more time to actually respond to questions and articulate the points you want to 

make, but that is entirely up to you. Proceed. 

STATEMENT OF CHERYL COOK, DEPUTY UNDER SECRETARY 

FOR RURAL DEVELOPMENT, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Ms. COOK. Thank you, Mr. Chairman. Good morning to you and 

to Ranking Member Costa, and to other Members of the Subcommittee. It is my pleasure to be here today to discuss the issue 

that perhaps more than any other caused me to leave a perfectly 

good job in the Pennsylvania Department of Agriculture that I enjoyed very much to come back to USDA. We simply have to do 

something about how we account for rural resources. In the interest of time, I would like to just submit my statement for the record, 

make a few brief opening comments and get right to your questions. 

My written statement includes a complete listing of all of our 

statutory definitions with respect to what is an eligible rural area. 

While there are variations among them, one thing they have in 

common is that they serve as a basic test of eligibility. They are 

gates, if you will. If you don’t meet the standard, we don’t even 

take your application; a gate does not open. 

The other thing our several eligibility standards have in common 

is that they rely almost entirely on the total population as the definition of rural. That leaves out other obvious characteristics of a 

rural area compared to a metropolitan area, including some that 

might be of use to this Committee as well as to USDA in targeting 

resources to the areas of greatest need and best opportunity. 

Every state and territory has areas that are more rural than others, certainly based on total population, but also based on other 

factors like population density, the presence of natural assets like 

lakes and forests, whether zoning exists and the types of land uses 

6

that are authorized in that zoning, the prominence of production 

agriculture, as Congressman Costa was explaining, and the role 

that agriculture plays in the local domestic product and its workforce. 

There are many, many definitions, among them, whether the 

community is large enough to get its own share of Community Development Block Grant funds from HUD, or Community Services 

Block Grant funds from HHS. 

Once that basic eligibility is determined, though, and the gate 

opens, both our several statutes and agency regulations do provide 

additional tools to USDA Rural Development staff for targeting resources, particularly grant funds to communities that have the 

smallest population and the lowest median income. 

USDA’s Economic Research Service has done extensive work on 

how to best target resources to rural areas. And I am pleased to 

tell you that tomorrow they will be releasing an interactive atlas 

online that will give all of us a handy tool for mapping the characteristics that I have described, and others, that can help us all literally see where rural America is. As the new Census rolls out, 

that becomes more important. I am sure ERS would be happy to 

come do a demonstration of their new atlas tool for Subcommittee 

Members and staff. 

The need to apply a single nationwide standard in each program, 

along with the variety of standards that exist under current law—

everything from 10,000 in the case of the Water and Waste Disposal program, to no rural area requirement at all in some other 

cases—has been challenging for Rural Development staff and exasperating for our customers. 

I can give you examples of these challenges from my past life as 

State Director for Rural Development in Pennsylvania. I also know 

many of you can, and some of you already have, given me examples 

that you are dealing with every day as your constituents call you 

in frustration. 

In addition, it would appear that Congress has some frustration 

around this too. In 2008, the farm bill did give us some authority 

for what is called the ‘‘rural in character’’ exception to recognize 

that rapidly urbanizing areas may still contain pockets of communities that are essentially still rural in character. This is a start 

in flexibility but doesn’t quite do the whole job. 

In addition, every year, Members of Congress add general provisions to our appropriations law declaring that for whatever program a certain community that is otherwise not eligible, because 

its population is over that single nationwide standard, is nonetheless deemed to be rural until the next decennial Census comes out. 

Of course, that is going to happen between now and when Congress 

writes the next farm bill. And so we are going to have communities 

that think they are safe, because they have had a general provision 

that no longer will be in effect. We will also have communities as 

the Census data rolls out that have been eligible and won’t be anymore. 

And finally, we will have some communities that have not been 

eligible, but due to population loss, will become so. I am reminded 

of the 2000 Census. The City of Harrisburg, which is the state capital of Pennsylvania, dipped below 50,000 population, and for the 

7

first time became eligible for the Business and Industry Loan 

Guarantee program. This opened up the whole of south central 

Pennsylvania to that program for the first time. 

We are often asked in Rural Development, why do you have 

housing and business and energy programs? Why do you do health 

clinics? There are whole departments of the Federal Government 

that do these things, so why do you do them too? And the answer 

we give is that Rural Development has a unique role in the Federal 

family. We alone have the field structure, 47 state offices, 500 area 

offices where our staff can work shoulder to shoulder with rural 

communities to help them identify all of the resources that are out 

there, ours and other agencies, get them through the application 

process and help them succeed. 

Rural Development also plays a somewhat unique role within 

USDA. We are not unmindful that we do what we do within the 

Department of Agriculture. I want to congratulate my fellow Pennsylvanian Congressman Thompson for his Subcommittee chairmanship on the conservation side. 

The definition we have for eligible rural area in business programs includes every place except communities greater than 50,000 

and adjacent urbanized areas. What that does is drive us out of the 

adjacent urbanized areas into open space and farm land. In states 

that have been experiencing rapid sprawl——

The CHAIRMAN. If the gentlelady could bring your remarks to a 

close, our time has expired. 

Ms. COOK. Sure. I would be happy to do that. 

For states that have experienced urban sprawl, that makes it 

particularly challenging to balance the priorities of USDA. 

Finally, Mr. Chairman, there are a few instances in which current law does provide the ability to go into urban areas quite directly. That includes the energy title of the farm bill, it includes 

programs that can benefit food deserts, and it include renewable 

energy from the Rural Utilities Service both in rural and non-rural 

areas. 

And with that, I will stop and address any questions you have. 

[The prepared statement of Ms. Cook follows:]

PREPARED STATEMENT OF CHERYL COOK, DEPUTY UNDER SECRETARY FOR RURAL

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

Chairman Johnson, Ranking Member Costa and Members of Subcommittee, it is 

my pleasure to be with you today to discuss one of the most fundamental, and vexing questions we face in USDA Rural Development—how ‘‘rural’’ is defined, and 

what role rurality should play in how we function on behalf of the U.S. Department 

of Agriculture. 

These are fundamental questions for USDA , as we exist to provide economic and 

community development to overcome obstacles based on rurality. Rural areas have 

experienced economic stress from long-term poverty and decades of population decline. Federal assistance from USDA is essential to these communities as they often 

don’t have access to private capital markets and have limited access to assistance 

from other departments in the Federal Government. Moreover, they do not have the 

total population to support repayment of a bond to finance critical infrastructure 

needs or their population is so widespread that such a system would be prohibitively 

expensive. 

These questions are vexing because, under current law, rurality is used to determine a project’s basic eligibility for most of our programs and is defined almost solely in terms of total population thresholds. As a result, a single standard for program 

eligibility is applied equally in New Jersey and New Mexico, in Alabama and Alaska, in Virginia and the Virgin Islands. Given that each state has the right to deterVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
8

mine its own municipal structures, a single standard that may sound simple in theory can be difficult to apply in practice. For example, Congress added language in 

the 2002 Farm Bill limiting the universe of eligible applicants for the Water and 

Waste Disposal program of Rural Utilities Service (RUS) and the Community Facilities program of Rural Housing Service (RHS) to ‘‘cities, towns, and unincorporated 

areas’’ whose populations did not exceed the previously established population limits. Such language does not properly account for the variety of local forms of government including townships, boroughs, and other municipalities that in many states 

describe the very less-populated municipalities those programs are intended to 

reach. It also overlooks some of the structural uniqueness of several of the original 

colonies—in the role of a town and the status of a village, for example—dating back 

to the original Plymouth settlement in the 17th Century. 

Further, relying almost solely on total population as the definition of rural leaves 

out other obvious characteristics of a rural area compared to a metropolitan area. 

Those characteristics might help direct USDA Rural Development’s resources to 

areas of greatest need and opportunity. Every state and territory have areas that 

are more rural than others, certainly based on total population, but also based on 

other factors such as population density, the presence of natural assets like lakes 

and forests, zoning regulations and land uses that might be covered in local ordinances, the prevalence of production agriculture and its infrastructure in the area’s 

gross domestic product and workforce, whether a community qualifies for its own 

share of Community Development Block Grant funds from the Department of Housing and Urban Development or Community Services Block Grant funds from the Department of Health and Human Services or has to compete for some of the remainder after urban centers have taken their share, and so forth. USDA’s Economic Research Service (ERS) has done extensive work on rurality, as have the other witnesses you will hear from today. Much of ERS’ work is available on-line through 

virtual briefing rooms found at http://www.ers.usda.gov/Briefing/. ERS also is 

about to release a new interactive atlas looking at many characteristics of rural 

areas. I believe it will be a very useful tool for Congress, USDA, and our private 

sector partners in rural economic and community development. Mr. Chairman, I’m 

sure that my colleagues in ERS would gladly do a demonstration of the new atlas 

for Subcommittee Members and staff. 

Applying a single standard to determine rural eligibility along with the variety 

of standards that exist in current law has been challenging for Rural Development 

staff and exasperating for applicants and lenders. 

Apparently, it also has been a source of frustration for Members of Congress. In 

recognition of the problems created by the rural area definitions, the 2008 Farm Bill 

provided the Under Secretary with limited authority to determine areas that do not 

meet the rural area definition as ‘‘rural in character’’ and thus an eligible rural 

area. While helpful, this authority has proven far too limited to fix the problems 

with the current definitions of rural area. In addition, each year Congress adds a 

series of general provisions to the agriculture appropriations legislation declaring 

that a certain municipality is deemed to be rural even though its population exceeds 

the statutory eligibility standard for that program. 

Given that those general provisions largely expire with the release of new decennial Census data, the timing of today’s hearing is even more important. Many communities that have been eligible by reason of a general provision will not be after 

the new 2010 Census data is released. Further, the Census data will show that 

other communities no longer are eligible rural areas for certain programs, while still 

others that have experienced population loss might become eligible for the first time 

in decades. Now is an incredibly important time to review rurality and begin determining the best way to achieve our shared objectives of helping to create economic 

opportunities for rural citizens and helping them improve their quality of life. Mr. 

Chairman, I congratulate you and the other Members of the Committee for digging 

into these questions now. 

USDA Rural Development administers over 40 different programs through its 

three agencies—Rural Utilities Service, Rural Housing Service, and Rural BusinessCooperative Service—delivered through 47 Rural Development state offices and 

nearly 500 area offices. These programs were authorized by several different laws. 

A complete set of all of our statutory ‘‘rural area’’ definitions is attached to my testimony as Appendix 1. I would like to focus the balance of my testimony today on 

three of those laws: the Consolidated Farm and Rural Development Act, or 

CONACT; the Rural Electrification Act; and the Farm Security and Rural Investment Act, which was amended by the Energy title of the 2008 Farm Bill. 

Section 343(a)(13) of the CONACT defines ‘‘rural’’ and ‘‘rural area’’ for programs 

of USDA Rural Development authorized therein, principally business programs and 

community-based programs. In general, the Act provides a definition of ‘‘rural’’ or 

9

‘‘rural area’’ that is, ‘‘any area other than—(i) a city or town that has a population 

of greater than 50,000 inhabitants; and (ii) any urbanized area contiguous and adjacent to a city or town described in clause (i)’’. This definition would act as a default 

definition for new CONACT programs, and is historically the definition applied to 

the business programs of Rural Business-Cooperative Service (RBCS). 

The CONACT provides separate definitions for two additional program areas. For 

the Water and Waste Disposal direct loans, guaranteed loans, and grants of Rural 

Utilities Service, the Act defines ‘‘rural’’ and ‘‘rural area’’ as a, ‘‘city, town, or unincorporated area that has a population of not more than 10,000 inhabitants’’. For the 

Community Facilities direct loans, loan guarantees, and grants of Rural Housing 

Service, the Act defines ‘‘rural’’ and ‘‘rural area’’ as a, ‘‘city, town, or unincorporated 

area that has a population of not more than 20,000 inhabitants’’. 

The Rural Electrification Act’s definition of eligible ‘‘rural area’’ for Rural Utilities 

Service’s electric loan and loan guarantee programs was changed in the 2008 Farm 

Bill from ‘‘any area of the United States not included within the boundaries of any 

city, village, or borough having a population exceeding 1,500’’, to instead align with 

the Community Facilities program definition in Rural Housing Service, i.e., municipalities with a total population not more than 20,000. However, those Rural Electric 

Cooperatives which still had an outstanding loan with RUS at the time and had 

been eligible under the prior definition retained their eligibility—once rural, always 

rural. 

With the exception of Section 9007, the Rural Energy for America Program, the 

portions of Title IX of Farm Security and Rural Investment Act of 2002 assigned 

to Rural Development do not have a statutory requirement that projects be financed 

in a rural area. Proposed rules nonetheless including a ‘‘rural area’’ eligibility requirement comparable to other business programs were published by Rural Business-Cooperative Service (RBCS) for the Biorefinery Assistance Program (§ 9003), 

the Repowering Assistance Program (§ 9004), and the Bioenergy Program for Advanced Biofuels (§ 9005) on April 16, 2010 with a 60 day public comment period. Our 

intent was to have these programs mirror other types of business financing programs available from RBCS. Interim final rules for all three programs have been 

published. 

Rural Development staff administering these loans, loan guarantees, and grants 

must ensure that funds are invested only in eligible areas. Once basic eligibility is 

determined, both the CONACT and agency regulations provide additional tools for 

targeting resources, particularly grant funds, to communities with the smallest populations and the lowest median household incomes. For examples:

• The RUS Special Evaluation Assistance for Rural Communities and Households 

(SEARCH) program makes predevelopment planning grants for feasibility studies, design assistance, and technical assistance, to financially distressed communities in rural areas with populations of 2,500 or fewer inhabitants for water 

and sewer projects (§ 306).

• The RUS technical assistance grants for water and sewer projects provide highest priority to communities with fewer than 5,500 residents (§ 306).

• The RHS Community Facilities Grant program directs the Secretary to provide 

higher Federal grant shares for facilities in communities that have lower community population and income levels, and creates a separate grant program for 

rural communities with extreme unemployment and severe economic depression 

(§ 306).

• The RBCS Rural Business Enterprise Grant program gives highest priority to 

projects in communities with fewer than 5,000 residents (§ 310B).

These additional priorities are applied as applications are scored or evaluated by 

Rural Development staff. Our success in targeting in loans, loan guarantees, and 

grants was one of several things discussed in Economic Information Bulletin Number 65 published by ERS in April 2010. This study found, among other things, that 

USDA’s rural development programs provide more funding per capita to totally 

rural areas (non-metro counties with less than 2,500 Census-defined urban residents) and to distressed non-metro areas (persistent poverty, low employment, and 

population loss counties) than to non-metro areas in general. The study is available 

on-line at www.ers.usda.gov/Briefing/ruraldevelopment/eib65.

The Rural Development Mission Area is often asked why USDA offers programs 

that offer assistance for home ownership, business and community development, 

public and waste water projects and electrical and biofuel ventures given that there 

are a number of other agencies that provide similar services. USDA provides these 

services specifically to rural communities that might not otherwise receive this 

funding. Moreover, our field structure allows our applicants to rely on Rural DevelVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
10

opment staff in state and area offices and assist them in the application process. 

However, the problem is that we only have the ability to bring our entire tool box 

to municipalities of fewer than 10,000 residents that are not adjacent to an urbanized area. Elsewhere, our role involves helping to find other partners to do what we 

are prevented from doing ourselves because of eligibility standards. 

Rural Development also plays a somewhat unique role as the primary economic 

development arm of the Department of Agriculture. Eligibility standards for our 

loan, grant, and loan guarantee programs can lead to conflict with the Department’s 

other priorities and missions, particularly in states that have been grappling with 

significant urban sprawl. By eliminating from the CONACT eligibility definition for 

business programs not just those cities and towns larger than 50,000 inhabitants 

but also the adjacent urbanized areas, Rural Development focuses financing in 

projects outside the incorporated area on surrounding farmland and open spaces. 

Prior to returning to USDA in March 2009, I served for 6 years as Deputy Secretary for Marketing and Economic Development in the Pennsylvania Department 

of Agriculture (PDA). One of my duties was to chair the Agricultural Lands Condemnation Approval Board, whose approval was required before state or local government entities could condemn preserved farmland for road improvements or other 

public uses. Our standard was to allow the conversion of farmland only when there 

was no reasonable and prudent alternative. 

My PDA experience now stands in stark contrast to an eligible rural area standard for USDA’s business programs that makes conversion of farmland the attractive 

first choice rather than the last resort for siting a business project. In several states, 

rapid sprawl has created urbanized areas in locations that were rural by anyone’s 

measure only a decade ago. Congress took its first steps towards acknowledging 

sprawl problems in the 2008 Farm Bill by creating the potential for exceptions in 

the business programs. Projects could be sited in urbanized areas if, on a case-bycase basis, the Under Secretary for Rural Development determined that the site remained ‘‘rural in character’’. Attached to my testimony as Appendix 2 is a spreadsheet showing how RBCS has administered that new flexibility in Fiscal Years 2009 

and 2010. 

Finally, Mr. Chairman, Congress has acknowledged that there are circumstances 

in which the best economic opportunities for rural people—no matter how ‘‘rural’’ 

is defined—can be realized by financing projects located in urban areas with access 

to infrastructure and markets. The CONACT, for example, allows cooperatives to finance agricultural value-added processing ventures in urban areas through the 

Business & Industry Loan Guarantee program, provided the purpose of the co-op 

is help producers within an 80 mile radius of the facility and that jobs created 

would go primarily to rural residents. 

The 2008 Farm Bill added three additional examples. In addition to the new programs in the Energy title, Section 6015 created a carve-out in the CONACT of at 

least five percent of funding in the Business & Industry Loan Guarantee program 

for local and regional food systems, with priority for projects that benefit urban, 

rural, or tribal underserved areas, often called food deserts. Also, section 6108 

amends the Rural Electrification Act to authorize electric loans for renewable energy (solar, wind, hydropower, biomass, or geothermal sources) for resale to rural 

and non-rural residents. 

Just as Congress has recognized in these programs that people in rural communities sometimes benefit from the economic activity that occurs in neighboring nonrural areas, USDA has been working with its current programs to respond to many 

rural communities’ efforts to organize on a more regional basis. This work recognizes that USDA has the responsibility to utilize our programs in such a way that 

best supports the hard work and ingenuity of those who live in rural communities. 

As this work progresses, we believe that it may also inform this important discussion around rural definition. 

Mr. Chairman, we look forward to receiving new Census information over the 

coming months and with it a clear view of how rural America has changed over the 

last decade. We also look forward to continued discussions with this Subcommittee 

as to how best to meet evolving needs of rural citizens, helping them seize opportunities for economic growth that will help rural communities thrive. Thank you for 

holding today’s hearing, and I would be happy to address any questions at this time.

11

APPENDIX 1


11202001
12


11202002
13


11202003
14


11202004
15


11202005
16


11202006
17


11202007
18


11202008
19


11202009
20


11202010
21


11202011
22


11202012
23


11202013
24


11202014
25


11202015
26


11202016
27


11202017
28


11202018
29


11202019
30


11202020
31


11202021
32


11202022
33


11202023
34


11202024
35


11202025
36


11202026
37


11202027
38


11202028
39


11202029
40


11202030
41


11202031
42


11202032
43


11202033
44


11202034
45


11202035
46


11202036
47


11202037
48


11202038
49


11202039
50


11202040
51


11202041
52


11202042
53


11202043
54


11202044
55


11202045
56


11202046
57


11202047
58


11202048
59


11202049
60


11202050
61


11202051
62


11202052
63


11202053
64


11202054
65

APPENDIX 2

Rural Area Exceptions Requests 

State Town Outcome 

Date of

Response to 

State 

AL Montgomery Not eligible—No string; within a city of greater 

than 150,000; not within UA within 1⁄4 mile 

of rural area 

4/8/2009

AR West Memphis Eligible String 4/2/2009

AR Bryant Eligible String 1/13/2010

AR Benton Eligible String 1/13/2010

AR Jacksonville Eligible String 1/13/2010

AR Cabot Eligible String 1/13/2010

CA Alpine Eligible String 1/13/2010

CA Auburn Eligible String 1/13/2010

CA Healdsburg Eligible String 1/13/2010

CA Galt Eligible String 1/13/2010

CA Exeter Eligible String 1/13/2010

CA Farmersville Not eligible—No string 1/13/2010

CA Durham Eligible String 1/13/2010

CA Gilroy Eligible String 1/13/2010

CA Cherry Valley Eligible String 1/13/2010

CA Beaumont Eligible String 1/13/2010

CA Banning Eligible String 1/13/2010

CA West Sacramento Not eligible—No string; but there are two 

strings to the west and south that are eligible 

1/13/2010

CA Graton Eligible String 1/13/2010

CA Sebastopol Eligible String 1/13/2010

CA Atwater Eligible String 1/13/2010

CA Riverbank Not eligible—No string; but there is a string to 

the east that is eligible 

1/13/2010

CA Anderson Eligible String 1/13/2010

CT North Grosvenordale Eligible String 6/12/2009

CT Durham Eligible String 1/25/2010

CT Thomaston Eligible String 1/25/2010

CT Plymouth Eligible String 1/25/2010

CT Tolland Eligible String 1/25/2010

CT Crystal Lake Eligible String 1/25/2010

CT Westbrook Eligible String 1/25/2010

CT Essex Eligible String 1/25/2010

CT Deep River Eligible String 1/25/2010

CT Woodbury Eligible String 1/25/2010

CT Southbury Eligible String 1/25/2010

IL East Dubuque Eligible String 5/7/2009

IL Beecher Eligible String 5/7/2009

IL Winnebago Eligible String 5/7/2009

IL Belvidere Eligible String 5/7/2009

IL Sugar Grove Eligible String 5/7/2009

IL Yorkville Eligible String 5/7/2009

IL Elburn Eligible String 5/7/2009

IL Morton Eligible String 1/13/2010

IL Lebanon Eligible String 3/1/2010

KY Henderson Eligible String 3/24/2009

KY Catlettsburg Not eligible—No string 9/28/2009

KY Russell Not eligible—No string 9/28/2009

KY Raceland Not eligible—No string 9/28/2009

KY Wurtland Not eligible—No string 9/28/2009

MA Amesbury Not eligible—No String 3/24/2009

MA Southbridge Eligible String 9/28/2009

MA Boxford Eligible String 1/25/2010

MA Byfield Eligible String 1/25/2010

MA Georgetown Eligible String 1/25/2010

MA Ipswich Eligible String 1/25/2010

MA Topsfield Eligible String 1/25/2010

MA Essex Eligible String 1/25/2010

66

APPENDIX 2—Continued

Rural Area Exceptions Requests 

State Town Outcome 

Date of

Response to 

State 

MA Gloucester Eligible String 1/25/2010

MA Manchester Eligible String 1/25/2010

MA ockport Eligible String 1/25/2010

MA Ayer Eligible String 1/25/2010

MA Groton Eligible String 1/25/2010

MA Shirley Eligible String 1/25/2010

MA Upton Eligible String 1/25/2010

MA Carver Eligible String 1/25/2010

MA Lakeville Eligible String 1/25/2010

MA Middleboro Eligible String 1/25/2010

MA Paxton Eligible String 1/25/2010

MA Rutland Eligible String 1/25/2010

MA Charlton Eligible String 1/25/2010

MA Leicester Eligible String 1/25/2010

MA Spencer Eligible String 1/25/2010

MA Northbridge Eligible String 1/25/2010

MA Uxbridge Eligible String 1/25/2010

MA Whitinsville Eligible String 1/25/2010

MA Fairhaven Eligible String 1/25/2010

MA Mattapoisett Eligible String 1/25/2010

MA Acushnet Eligible String 1/25/2010

MA East Freetown Eligible String 1/25/2010

MA Monson Eligible String 1/25/2010

MA Palmer Eligible String 1/25/2010

MA Three Rivers Eligible String 1/25/2010

MA Southwick Eligible String 1/25/2010

MA Westfield Eligible String 1/25/2010

MA Easthampton Eligible String 1/25/2010

MA Northampton Eligible String 1/25/2010

MA Hadley Eligible String 1/25/2010

MA Hatfield Eligible String 1/25/2010

MA Middleton Not eligible—No string (but there is a string 

BETWEEN the two towns) 

3/1/2010

MA North Andover Not eligible—No string (but there is a string 

BETWEEN the two towns) 

3/1/2010

MA Amesbury Eligible String 9/28/2009

MI Buchanan Eligible String 3/24/2009

MI Romeo Eligible String 11/18/2009

MI Washington Township Eligible String 11/18/2009

MI Mason Eligible String 1/25/2010

MI Sparta Eligible String 3/1/2010

MI Comstock Park Not eligible—No string 3/1/2010

MN St. Joseph Eligible String 3/1/2010

MN St. Cloud Not eligible—No string 3/1/2010

MN Dilworth Eligible String 3/1/2010

MN La Crescent Eligible String 3/1/2010

MO Pevely Eligible String 4/2/2009

MS Tougaloo Not eligible—No string; within a city of greater 

than 150,000; not within UA within 1⁄4 mile 

of rural area 

1/25/2010

MT Bonner Eligible String 6/12/2009

MT West Riverside Eligible String 6/12/2009

NC Canton/Clyde Eligible String 3/24/2009

NE Bellevue Not eligible—No string 5/7/2009

NE Plattsmouth Eligible String 5/7/2009

NE La Vista Not eligible—No string 5/7/2009

NE Papillion Not eligible—No string 5/7/2009

NE Elkhorn Not eligible—No string 5/7/2009

NE South Sioux City Eligible String 5/7/2009

NE Dakota City Eligible String 5/7/2009

NJ Newton Eligible String 8/14/2009

67

APPENDIX 2—Continued

Rural Area Exceptions Requests 

State Town Outcome 

Date of

Response to 

State 

NJ Flemington Eligible String 8/14/2009

NJ Clayton Eligible String 9/28/2009

NJ Hackettstown Eligible String 1/25/2010

NJ Lebanon Eligible String 1/25/2010

NJ Clinton Eligible String 1/25/2010

NJ Annandale Eligible String 1/25/2010

NJ High Bridge Eligible String 1/25/2010

NV Johnson Lane Eligible String 8/14/2009

NV Indian Hills Not eligible—No string 8/14/2009

NV Moundhouse Eligible String 8/14/2009

NY Camillus Pending—Meets the RIC 1⁄4 mile from rural 

area test. 

OH Xenia Eligible String 1/13/2010

OH Troy Eligible String 1/13/2010

OH Tipp City Eligible String 1/13/2010

OR White City Eligible String 4/2/2009

OR Jacksonville Eligible String 4/2/2009

OR Ashland Eligible String 4/2/2009

OR Talent Not eligible—No string 4/2/2009

OR Coburg Eligible String 4/2/2009

OR Turner Eligible String 4/2/2009

OR Wilsonville Eligible String 4/2/2009

OR Butteville Eligible String 4/2/2009

OR Boring Eligible String 4/2/2009

OR Pleasant Home Eligible String 4/2/2009

OR Cornelius Not eligible—No string 4/2/2009

OR Forest Grove Not eligible—No string 4/2/2009

OR Talent Eligible String 9/28/2009

OR Cornelius Eligible String 9/28/2009

OR Forest Grove Eligible String 9/28/2009

PA Scranton Pending—Meets the RIC 1⁄4 mile from rural 

area test. 

PA Mahoning Township Eligible String 6/12/2009

PA Lehigton Borough Eligible String 6/12/2009

PA Parryville Borough Eligible String 6/12/2009

PA Towamensing Township Eligible String 6/12/2009

PA Franklin Township Eligible String 6/12/2009

PA East Penn Township Eligible String 6/12/2009

PA Bowmanstown Borough Eligible String 6/12/2009

PA Palmerton Borough Eligible String 6/12/2009

PA Lower Towamensing 

Township 

Eligible String 6/12/2009

PA Scranton Not eligible—No string; two points on UA 

boundary not at least 40 miles; not within 1⁄4

mile of rural area 

11/6/2009

PA New Kensington Eligible String 1/25/2010

PA Green Lane Eligible String 1/25/2010

PA Pennsburg Eligible String 1/25/2010

PA Red Hill Eligible String 1/25/2010

PA East Greenville Eligible String 1/25/2010

PA Richland Not eligible—No string 1/25/2010

PA Quakertown Not eligible—No string 1/25/2010

PA Trumbauersville Not eligible—No string 1/25/2010

RI South Kingstown Eligible String 6/12/2009

RI Burrilville Eligible String 6/12/2009

RI Exeter Eligible String 9/28/2009

RI Parts of Smithfield Eligible String 1/25/2010

RI Parts of North Smithfield Eligible String 1/25/2010

RI Parts of North 

Kingstown 

Eligible String 1/25/2010

68

APPENDIX 2—Continued

Rural Area Exceptions Requests 

State Town Outcome 

Date of

Response to 

State 

RI Tiverton Eligible String 1/25/2010

RI Portsmouth Eligible String 1/25/2010

RI Middletown Eligible String 1/25/2010

RI Newport Eligible String 1/25/2010

RI Jamestown Eligible String 1/25/2010

RI North Smithfield Not eligible—Within UA of a city that exceeds 

150,000; not within 1⁄4 mile of rural area 

3/2/2010

TN Gallatin Eligible String 5/7/2009

TN Springfield Eligible String 5/7/2009

TN Nolensville Not eligible—No string 5/7/2009

TX Corpus Christi 

(Deannexation) 

Approved by Under Secretary under the RIC 1⁄4 mile from rural area provision. 

1/16/2009

UT Lehi Not eligible—No string; two points on UA 

boundary not at least 40 miles; not within 1⁄4

mile of rural area 

4/8/2009

The CHAIRMAN. Thank you so much for your comments. And let 

me start, and at least get your initial response to a couple of preliminary points. 

The first is, I am assuming from what I know, the definition of 

rural and the specific size that constitutes rural is variable, at 

least according to the nature of the project, is that right? 

Ms. COOK. That is correct. The Consolidated Farm and Rural Development Act has a default definition which is the business programs definition: anywhere except a city or town greater than 

50,000 including adjacent urbanized areas. The CONACT goes on 

to provide exceptions in the Water and Waste Disposal program 

where it is anyplace except cities, towns and unincorporated areas 

greater than 10,000, and for the Community Facilities program 

where it is anywhere except 20,000. 

The CHAIRMAN. I know there are a number of them on the list. 

I also understand that your Department, either pursuant to law or 

because you have assigned that to yourself, has the ability to take 

applications to deviate from the strict standards of the statute, is 

that right? 

Ms. COOK. There is only one case where we can deviate. That is 

where Congress gave us that authority in section 6018(a) of the 

farm bill. In the case of the business programs, where the definition is anywhere except 50,000 including adjacent urbanized areas, 

we were given a ‘‘rural in character’’ exception for the adjacent urbanized area. This language recognizes that there may be a cases 

where an area that has been rapidly urbanizing still retains its 

rural character. That is a statutory provision provided in the 2008 

Farm Bill for the first time. 

The CHAIRMAN. And I assume as we go through the process, and 

you determine and we determine that there are areas where there 

either is too much latitude or too little that you will interface with 

us and provide recommendations so that it is, in fact, the Congress 

and not the Department who is setting those criteria. 

69

Ms. COOK. These are, in fact, statutory definitions established by 

the Congress. We look forward very much to working with you. We 

have already been working with your staff. They have been terrific. 

The CHAIRMAN. Ms. Cook, you included, or at least there is included in the written copy of your testimony a report on what we 

call rural area exception requests. We understand almost 150 localities were deemed to be ‘‘rural in character’’ for purposes of approving certain projects. I am wondering if you could provide the Committee at the appropriate time an analysis of how those 146 localities ultimately receive funds, how much they each received and 

what projects were implemented in each locality. 

Ms. COOK. We would be happy to do that. That appendix is that 

‘‘rural in character’’ exception authority I mentioned in 6018(a). All 

of those applicants would have been rural business entrepreneurs 

looking to start or expand a business in a rural area, and frankly 

you wouldn’t go through that much trouble if you didn’t have a live 

project. So my guess would be that most of those that received the 

exception went ahead and did the project. 

The CHAIRMAN. In the course of the fiscal year, let’s say the current fiscal year, the previous fiscal year because then you will have 

a fuller idea, what has been the total amount of money that has 

flowed into these programs under your jurisdiction, approximately? 

Ms. COOK. Are we speaking budget authority or program level. 

The CHAIRMAN. Well, both. 

Ms. COOK. Program level is about $20 billion—approximately $20 

billion. 

The CHAIRMAN. Then you want to distinguish between the two 

so that Members of the Committee understand what you are talking about? 

Ms. COOK. Certainly. I know you understand, but for the benefit 

of folks who might be watching this from their living room on the 

Internet, the budget authority is the money that Congress actually 

appropriates for our programs. We don’t operate exclusively loan 

programs, but most of what we do is loan. And so under the Credit 

Reform Act of 1990, Congress established a process by which annually we look at the risk attached to those loans, because the idea 

is when you make a loan, you get the money back, with interest. 

So what is the actual cost to the Federal Government of that 

loan dollar? It is the risk of that one or two or three people in 100 

who don’t pay you back. So annually we go through an exercise 

with the Office of Management and Budget to arrive at what is 

called a subsidy score, which is multiplied times the amount Congress actually appropriates in order to arrive at our program level. 

It is how we get from a very small amount of budget authority to 

a relatively large amount of program level in loans and loan guarantees that are provided in rural areas. 

The CHAIRMAN. If I had to use a figure that would most capsulate what you provide, what is that to the average layman, $20 

billion? 

Ms. COOK. Twenty billion dollars in program level approximately, 

yes. 

The CHAIRMAN. Okay. I appreciate your response and with that, 

I would turn the microphone over to the distinguished Ranking 

Member, Mr. Costa. 

70

Mr. COSTA. Thank you again, Mr. Chairman. 

I have a number of questions, so let’s go through quickly, okay, 

Ms. Cook? 

Do you think that the varying definitions of rural as they are applied to the Rural Development program is a workable system? Do 

you think it is in need of some repair? Or is it about time that we 

look at a whole brand new approach? 

Ms. COOK. We are making it work——

Mr. COSTA. I understand that part. 

Ms. COOK. Those are the rules that we have. 

Mr. COSTA. But I asked you a question——

Ms. COOK. Congressman, I think we all share the objective of trying to make sure that the resources Congress appropriates for rural 

people and rural communities gets to rural people and rural communities. And the question is——

Mr. COSTA. But can it under the current system? 

Ms. COOK. And what is the best way to do that? I do think there 

are some opportunities to improve on our current system with different definitions——

Mr. COSTA. But you don’t think we ought to start over? 

Ms. COOK. Start over with a clean sheet of paper? 

Mr. COSTA. With a whole new approach towards the definitions 

as opposed to tweaking the existing rural definitions. 

I mean, in your opening statement you made some interesting 

comments about once it is qualified, then it is qualified in one, and 

if it is not qualified, how do you get in the loop? 

Ms. COOK. I think the existing regulations do give us the ability 

to target resources, beyond the eligibility standard, to places of 

greatest need and best opportunities. The question——

Mr. COSTA. I am not sure that reflects ability. What do you hear 

from your state rural development directors on these issues? They 

are closer to the communities, and you, in your previous life, indicated expertise or experience with this. 

Ms. COOK. It can be difficult. I won’t deny that. We have, for example, the water program and the Community Facilities program. 

The Rural Utilities Service has the water program; the Rural 

Housing Service has CF. Both of those programs are available to 

municipalities, tribes and nonprofit organizations. Both of those 

groups of communities would expect that they would have a very 

common, very similar definition in those programs. And it is just 

not the case. There are many communities in Pennsylvania, for example, that have more than 10,000 population but not more than 

20,000 population. And we have to go and tell them if you want a 

library or a hospital or a school that is fine, but we can’t give you 

the sewer that would serve the library hospital or school. 

Mr. COSTA. Do you think that makes any sense? 

Ms. COOK. It is difficult. We have——

Mr. COSTA. No. I said do you think that makes any sense? I understand it is difficult. In my opening statement, I have explained 

I have those similar situations. I have a community in Coalinga 

that has 10,000 people, it is an hour from Fresno. Fresno is the 

sixth largest city in California. So because we have Fresno, with 

over a half million people, we have largest agricultural county in 

71

the nation, but we get none of this rural funding. That doesn’t 

make any sense. 

Ms. COOK. It can be difficult to justify to a community. I live in 

a rural township of 13,000 people. It is very difficult to explain to 

my township supervisors why they would be eligible for a library 

or a hospital but not for public water or sewer. 

Mr. COSTA. That is what I mean getting back to the definitions, 

and do we need to do more than simply tweak it? 

Ms. COOK. It gets equally challenging in states like California 

that have a number of metropolitan areas with urban areas around 

them to be able to go into a community that is under 10,000. 

Mr. COSTA. It is difficult, but what you are saying is it is not 

working. So, if it is not working, we ought to look at it. 

Do you think there are different ways—all the budget programs 

with our need to get our financial house in order and the cutbacks 

that we are going to have to make, they are under a budget microscope. Do you think there is a different way to apply definitions or 

different ways to evaluate applications altogether that would do 

more with the same amount of funding, or with less amount of 

funding? 

Ms. COOK. Bearing in mind that each of the three agencies in 

Rural Development has——

Mr. COSTA. They are oversubscribed. 

Ms. COOK. Yes, are oversubscribed, but also have programs with 

zero or negative subsidy scores, meaning we are actually making 

money for the government operating the electric program, the telecommunications program, the guaranteed housing program, those 

are negative subsidy score programs. So it is not a matter of those 

programs necessarily being oversubscribed. 

In other cases, water and wastewater, in particular, yes, we are 

oversubscribed. 

Mr. COSTA. And so how are we going to get more with less, with 

the cutbacks that are inevitably going to occur. 

Ms. COOK. What we have been doing is partnering. For example, 

each state has a revolving loan fund that gets capitalized by EPA 

and other state resources that we try to partner with. We do lose 

some efficiency frankly in areas that have urban and rural approximate to each other where it might actually be cheaper to the rural 

area to tap on to a larger existing urban system than to create a 

new system themselves. 

Mr. COSTA. My time has expired. But thank you very much, Mr. 

Chairman. 

The CHAIRMAN. The chair would recognize the gentleman from 

Georgia, Mr. Scott, for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Ms. Cook, I live in a very small county, Turner County in Georgia, and I was raised in Tift County, just south of there. And I 

guess my question is as we look at these definitions, and one of the 

challenges for any of these truly rural communities with regard to 

economic development, when you are at the Chamber of Commerce 

and they put the five largest employers on the sheet of paper, it 

is, in many cases, the school system, the hospital, if there is a hospital, the county government, the city government, very little priVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00075 Fmt 6633 Sfmt 6601 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
72

vate industry, I guess, is my concern, very little tax base to support 

the local government operations. 

And my question gets back to this: If we, with more flexibility 

for the Department and the definition of rural, wouldn’t in the end 

we allow money to shift from those communities that truly are 

rural? 

I mean, every dollar that is spent in a community that qualifies 

as rural but it is really not rural, isn’t that a dollar that is taken 

away from rural communities that these were actually set up to 

help? 

Ms. COOK. We have two parallel systems here, Congressman. 

What we have been talking about so far is the eligibility standard 

and who actually gets to even submit an application. 

The distribution of the money that is appropriated by Congress 

goes by a funding formula that is regulatory in nature. And that 

funding formula, with some variations, is 50 percent total rural 

population, and 50 percent poverty and unemployment. Through 

that formula we have been able to drive dollars into persistent poverty counties like many of the counties in Georgia. That still is on 

the table. 

There is also the scoring process. Once we have determined 

somebody has an eligible project in an eligible area, we go through 

a scoring process that includes things like more points for smaller 

communities, and more points for lower median household income 

areas. Almost program by program, I can show you in both statute 

and regulation continued efforts to drive dollars into the most rural 

areas. 

The real question for these various definitions really is who gets 

to even give us the application. 

Mr. SCOTT. From a national award standpoint, though, of the 

money, you are confident that when you look at where the money 

is going that it truly does end up in the rural communities? 

Ms. COOK. The funding formulas apply to the Water and Waste 

Disposal program in the Rural Utilities Service, the housing programs of Rural Housing Service and the Community Facilities program of Rural Housing Service, the Business and Industry Loan 

Guarantee funds in Rural Business-Cooperative Service, IRP, the 

intermediary lending program, and the Rural Business Enterprise 

Grants. Those programs have enough dollars in the pot that we 

suballocate to states based on the formula that I just shared with 

you, half rural population, half poverty and unemployment. 

In the case of programs that are administered from Washington, 

D.C. by annual NOFA, the process allows within the body of the 

NOFA to recruit applications from those targeted areas. So yes, to 

answer your question, I am confident we are able to put dollars 

into the areas where they are most needed. 

Mr. SCOTT. My concern is how the definition is going to drive 

which communities actually receive the funds. And Mr. Chairman, 

I will yield my time back to the chair at this time. 

The CHAIRMAN. The gentleman yields his time. The chair would 

recognize the lady from Alabama, Ms. Sewell, for 5 minutes. 

Ms. SEWELL. First let me just say it is a pleasure to be a part 

of the Subcommittee, and I look forward to working with all of my 

colleagues. I, too, share my colleague, Mr. Scott’s concern, about 

73

the characteristic of rural. I represent Selma, Alabama, which is 

where I am from. It is located in a county that is very much within 

the definition of rural, of truly rural. And by taking money away 

and broadening the definition, I am quite concerned that moneys 

are not going to get to areas that are truly rural or under the definitions, the most rural. 

We have persistent poverty in the counties that I represent. And 

so I would like for you to elaborate a little bit more about the distribution of funds and how that distribution in the formula will 

still make sure that areas like the ones I represent actually get 

funding. 

Ms. COOK. Each state office receives an allocation of funds in the 

larger program areas. The statute, CONACT in particular, and the 

regulations that the agencies have adopted to implement the 

CONACT further, add that once you have an eligible project, additional provisions drive those funds to the smallest communities. 

For example, the Rural Business Enterprise Grants, for most 

points, are awarded for communities of less than 5,000 population, 

even though the eligible area definition is 50,000—that is anywhere except 50,000 in adjacent urbanized areas. The best point 

score is to those communities smaller than 5,000. 

So using the existing targeting scoring process, we are able to 

continue to drive those dollars into the smallest and poorest areas 

in each state. We are not changing each state’s total funding share. 

But within that funding share they do have, the state directors do 

have the ability to target those dollars. 

Ms. SEWELL. Great. For me, I know that we are waiting for the 

Census to come out as far as reapportionment. My bet is that given 

that we have had such a big loss of population in the district that 

I represent, that the Census will most likely mean that there is 

less influence, rural influence in the House of Representatives, as 

well as—as far as where the dollars are going. 

And I just want to know what steps the USDA is taking to ensure that these most rural areas of Alabama, and in America in 

particular, don’t lose out on the funding sources that are available 

to them, even after reapportionment. 

Ms. COOK. In the interests of full disclosure, we are looking at 

the regulatory process that we control as well. That basic formula 

is based on, well, at least for the 20 years that I have been watching it, it has been half total rural population and half poverty and 

unemployment data. 

For the half that is total rural population, in areas like you are 

describing where Katrina or some other event has caused very significant loss of population, you are hurt by that. So we are looking 

at the formula from the regulatory standpoint, too, in terms of 

maybe accounting for the first time for out-migration, for example. 

The Economic Research Service did a study for us on what that 

would mean. It very much would drive dollars into the Delta, and 

into the heartland states to help target those resources to the most 

rural areas. 

Ms. SEWELL. Thank you. I yield back the rest of my time. 

The CHAIRMAN. The chair would recognize the gentleman from Illinois, Mr. Hultgren for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

74

Thank you, Ms. Cook. I appreciate your being here today. A 

quick question, one of your suggestions was to consider how the 

Department of Housing and Urban Development distributes funds 

as a factor for determining a community’s eligibility for rural development funding. I wonder if you could just clarify for me and Committee Members how linking your program to rural development 

agency is going to help you find rural communities most in need? 

Ms. COOK. Well, you have to start somewhere, Congressman, and 

I think it is fair to say that state and local governments all over 

this country are hurting and have been severely affected in their 

own ability to provide for their citizens by the economic downturn 

and the, as yet, incomplete economic recovery. 

I will speak to my experience in Pennsylvania. In Pennsylvania, 

the larger cities get their own share of Community Development 

Block Grants. And with 2,500 municipalities, there are an awful lot 

of them that are left at the end of the day who compete for what 

remains after the urban centers have gotten their share. 

That is all there is for those folks, unless someone else can find 

a way to reach out and incorporate their needs into our rural area 

consideration. You have to start somewhere. You could start at 

20,000, the Community Facilities definition, you could start at 

50,000. You have to start somewhere, some sort of continuum within the Federal family that says if it isn’t urban, perhaps it is rural. 

That seems like as good a place as any to start that conversation, 

not to say you would get funded, but that we would at least take 

the application and compare it against other applications, again, 

using the tools available to us to target resources to the most rural 

areas that we serve. 

Mr. HULTGREN. Thank you. I look forward to continuing this dialogue. And I yield back the balance of my time, Mr. Chairman. 

Thank you. 

The CHAIRMAN. The chair would recognize the gentleman from Illinois, Mr. Schilling. 

Mr. SCHILLING. Thank you, Mr. Chairman. It is good to see you, 

Ms. Cook. I just have something quickly. One of the most frequent 

complaints is just how onerous the application process is. And what 

can we do to try to expedite, I am kind of new to all this arena. 

This is my first time in politics. So what can we do to kind of get 

things to run through a little bit easier for the rural communities 

to—do you understand what I am asking? The application process 

basically. 

Ms. COOK. The application process in terms of the length of some 

of our forms and——

Mr. SCHILLING. Right. 

Ms. COOK. Recognizing we serve a wide variety of constituents, 

there is room for improvement. In the case of the community programs like the water and wastewater disposal program, or the 

Community Facilities program, rural communities don’t have fulltime grant writers on staff. In a lot of cases, they don’t even have 

full-time staff at all. They are not full-time themselves, as a matter 

of fact. And it is daunting for them to try to fill that out themselves. That is where we rely on our staff who are out in the field 

to assist with that process. 

75

Some communities do have consulting engineers, for example, 

who may help with water and waste applications and help put 

those together. 

Where we have been focusing our attention on trying to simplify 

our processes are in the programs that apply directly to individuals, in particular, single-family housing, and our business program, our Business and Industry Loan Guarantee program where 

it is an individual entrepreneur approaching a bank and then the 

bank approaching us for a loan guarantee. 

We are looking at our entire regulation to see if there aren’t 

ways to streamline and simplify those programs and hopefully the 

forms and processes that go with them get simplified too. 

Mr. SCHILLING. And then the other thing, since we are talking 

about the loan programs is we all are aware that there are some 

major cuts coming in the, all the anticipated budget is going to be 

sharply lower, the lower the program due to the higher subsidy 

rates, I guess, in the Business and Industry Loan programs, could 

you briefly just update us on the status of the loan portfolio? Highlight the changes in the default. I know you hit a little about that 

when we first got going on the default, it was kind of low. But as 

we continue going in this downturn, do you see the default going 

higher? 

Ms. COOK. We haven’t yet. We did experience, both in the Business and Industry Loan Guarantee program and the Guaranteed 

Single-Family Housing program a fairly large influx of new loan 

guarantees as a result of the American Recovery and Reinvestment 

Act. So just in terms of sheer volume, the portfolio, for example, 

in guaranteed 502 has doubled. So it is not unreasonable to think 

the number of problem children at the end of the day will increase 

as well. As a percentage of the portfolio, though, we are holding our 

own. We are outperforming other Federal agencies in housing, and 

we are even outperforming the private sector in housing. 

In the Business and Industry Loan Guarantee program, again, 

we are within historical levels of default there as well. 

Mr. SCHILLING. Very good. Thank you for your time. With that, 

I yield back. 

The CHAIRMAN. The chair would recognize gentleman from Pennsylvania, Mr. Thompson. 

Mr. THOMPSON. Thank you very much, Mr. Chairman, Ranking 

Member. Ms. Cook, it is always good to see you. First of all, my 

thanks for the USDA folks back in Pennsylvania. They do a great 

job from the state director to the local offices. 

In your written statement you mention that a series of general 

provisions of the agriculture appropriations legislation declaring 

that a certain municipality is deemed to be rural even though its 

population exceeds the statutory eligibility standard for the program. Can you describe the real effect that this has on rural development programs? 

Ms. COOK. Well, we have talked about how under section 6018(a) 

we have some exception authority for the business programs for 

areas that remain ‘‘rural in character’’. We don’t have that exception authority when it comes to the Water and Waste Disposal program or the Community Facilities program. And so those two, in 

76

particular, are where we see Members of Congress adding general 

provisions to our appropriations bill. 

I was talking earlier, with Congressman Costa, about cases 

where you have a community like the one I live in, 13,000 population if you want a Community Facilities project, a hospital, a library, fine; if you wanted public water or sewer, not fine. 

A general provision is something that might address the water 

and sewer eligibility. And we did that in a few states throughout 

the Northeast last year and the year before trying to address particularly the water and wastewater disposal program and the 

10,000 population limit. 

Mr. THOMPSON. I know one of the, I don’t know whether it is a 

slogan, motto, I don’t know if it is official or not, but rural economic 

development builds rural communities from the ground up. And we 

have seen success there. 

You mention oftentimes when an area receives eligibility for 

rural development programs, that their eligibility is essentially 

grandfathered in, as frankly I view it, as programs are successful, 

and the communities grow, what ideas do you have to ensure that 

an area shouldn’t automatically be eligible for Rural Development 

programs just because they have qualified in the past? 

Ms. COOK. Well, again, there is eligibility to apply, and then 

there is your score and whether we are actually going to fund you 

compared to somebody else’s application. 

The eligibility to apply issue is this standard of 10,000, 20,000, 

and 50,000. Whether we are going to fund you is a completely different issue. It depends on the strength of your idea, it depends on 

what resources the community might bring to the table, or what 

the individual entrepreneur might bring to the table. There are a 

number of other factors that go into the decision to actually make 

a loan or guarantee a private lender’s loan. 

It does get tricky. The City of Harrisburg, for example, dipped 

below 50,000 and suddenly became eligible for business programs. 

Did Harrisburg suddenly start growing corn? No. Is it suddenly 

more rural than it was the week before the Census data came out? 

No. 

And the opposite is true as well. South Middleton Township 

where I live was 13,900+ in the 2000 Census. Given the number 

of townhouses that have sprung up around me in the last 10 years, 

it wouldn’t surprise me at all to find out that South Middleton 

Township is now over 20,000. Has that changed the rural nature 

of where I live in the township? No. No, it hasn’t. 

Mr. THOMPSON. How about in relation to the whole definition of 

rural or rurality in relation to the, do you see any problems dealing 

with that definition relation, specifically to the energy title of the 

farm bill? 

Ms. COOK. The energy title of the 2008 Farm Bill with one exception did not include a statutory rural area requirement at all for 

the programs that were assigned to Rural Development. We, nonetheless, in an effort to be as consistent as we could between the energy programs and the business programs, put in our proposed rule 

a 50,000 standard—that is anywhere except 50,000 and adjacent 

urbanized area requirement. Through the public comment process, 

we have reached a point where, at the end of the last week and 

77

right up to yesterday, we published interim final rules in the section 9003, 9004 and 9005 program in which we have dropped that. 

And so we, in fact, have no rural area requirement in those three 

programs. 

The exception is the REAP program, the Rural Energy for America program, which is actually a product of the 2002 Farm Bill and 

was put within the CONACT comparable to the business program. 

It still has a rural area definition, although Congress, in the 2008 

Farm Bill, clarified that if you are a farmer, you will be eligible for 

REAP no matter where your farm happens to be. So the proposed 

rules to implement those changes are forthcoming. 

Mr. THOMPSON. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Proceeding to a second round, I will make my 

comment and questions relatively brief. I have a concern, perhaps 

the converse of what the Ranking Member has, that too expanded 

definitions, too fully granted exceptions undermine the underlying 

purpose of the Act, and that is, to provide the economic infrastructure for the economic development of truly rural areas. And I 

would, I guess, before I ask the question I do, simply urge the 

Under Secretary urge the Department to understand that there are 

other programs that reach some of the other goals that various 

Members want them to do without depleting an already too limited 

source of funding for Rural Development. 

Let me just ask two relatively quick questions and take your answer and then I am sure somebody may have some more questions 

before going to the next panel. 

I know that the last farm bill required your Department to submit a report to Congress that would review the various definitions 

of rural and then accordingly, to describe the effects those multiple 

definitions have, participation in them and then finally to recommend different ways to better target funds for rural development. 

As I understand it, that report was due last summer, and to my 

knowledge, we haven’t received that yet. A, is that the case? B, 

why? And C, what can we expect? 

Ms. COOK. Yes, Congressman, the farm bill required within 2 

years of the date of enactment, that report, as you mentioned. That 

is in 6018 subsection (b). We do not have that report before you, 

although the first part of it is attached to my testimony, and that 

was the question of what are the rural area definitions. That is Appendix 1 of my testimony. 

The second part, how have the different definitions affected what 

we do, has been some of the discussion here today, although we 

will provide you more detail on that. 

The third question, what should we do about it in the next farm 

bill is the reason we haven’t provided the report to you timely as 

the bill required, for two reasons. The first is the energy programs 

that I just discussed with Congressman Thompson. We wanted to 

get through the public notice and comment period with the new energy title of the farm bill to establish, once and for all, whether a 

rural area requirement would attach or not. 

And as I said, it was just yesterday that we published an interim 

final rule, the section 9003 rules. 

78

The second reason was we were frankly experimenting through 

the American Recovery and Reinvestment Act in the Broadband 

Initiatives Program with how to make the best possible effort to 

target those resources under the Recovery Act to the most rural 

and most remote places. We did two Notices of Funding Availability under that program, that was not complete in time to provide the benefit of that experience by June, but will be complete 

in time to provide you the report by this coming June. 

The CHAIRMAN. The last point is that a good many people who 

have observed the operation of the Department, and specifically, 

applicable various mandates provided in the 2008 Farm Bill are 

really, deeply concerned about the failure of the Department to 

fully or adequately implement the rural broadband program. It 

gets to be an increasingly critical area issue as we proceed. 

Can I receive the assurance from you, Madam Secretary, that 

you will make that your first priority and that hopefully the next 

time you are here, we will have dramatic progress in that regard? 

Ms. COOK. Congressman, this is something that warrants its own 

hearing. The 2002 Farm Bill that created the broadband program 

made it a 100 percent loan program, and it really shouldn’t be a 

surprise to anyone that communities that can’t afford 100 percent 

loan, and that need some grant money have not been coming to us 

to apply for that program. That is the experiment we were fortunate enough to do with the moneys entrusted to us by Congress in 

the American Recovery and Reinvestment Act. 

We had an opportunity, finally, to apply some grant dollars along 

with loan dollars and make a concerted effort to reach the most 

rural and most remote communities with those funds. 

The CHAIRMAN. Thank you. I recognize the distinguished Ranking Member. Proceed, Mr. Costa. 

Mr. COSTA. Thank you, Mr. Chairman. 

I want to continue on that line of questioning that I did earlier, 

and many states across the country, including California, encourage protection of rural and agricultural lands through different 

mechanisms, whether it is in Pennsylvania as you described, or Illinois. They also concentrate services in more urban areas while the 

agricultural lands or rural lands are adjacent within counties, for 

example, and so within those counties, many of the community facilities, in essence, serve a large percentage of rural residents. 

What authority, if any, does the USDA currently have to award 

funding to facilities that serve rural populations but are located in 

areas that don’t meet the rural criteria? 

Ms. COOK. Very little. Under the Consolidated Farm and Rural 

Development Act, we do have the ability to locate a food processing 

facility that is controlled by a cooperative of producers in an urban 

area. But under Community Facilities or Water and Waste Disposal, we do not have that flexibility. 

Mr. COSTA. Would that require statutory change? 

Ms. COOK. It would. 

Mr. COSTA. So a rule change wouldn’t get it. What is the current 

process by which the United States Department of Agriculture has 

to establish that an area is ‘‘rural in character?’’ You, in your opening statement, talked about definitions that are used to qualify. 

79

What is ‘‘rural in character’’ and what do you do to apply an area 

or region that is rural in character? 

Ms. COOK. The definition of ‘‘rural in character’’ and the process 

by which we make that determination are both spelled out in section 6018(a) of the farm bill. It is a fairly exhaustive process of trying to determine whether an area has been rapidly urbanizing. 

There is also what is affectionately called the Wilkes-Barre Scranton exception for those of us from Pennsylvania where if you can 

lay a string between two metropolitan areas and that string is 

longer than 40 miles, that there may be some area within that that 

is still ‘‘rural in character.’’ To be honest with you, Congressman, 

I have a bachelor’s degree in English, I have a law degree, I have 

been living in Pennsylvania for 30 years now and know where 

Wilkes-Barre and Scranton are and have traveled between them 

hundreds of times, and I still have to go to our Associate General 

Counsel, David Grahn, to help me understand whether an area is 

‘‘rural in character’’ or not because it is one of the most complex 

decisions that we make. 

Mr. COSTA. Well I don’t want to belabor this issue, not to take 

issue with the Chairman necessarily, but again, and I would like 

to invite the Subcommittee to the valley if it is deemed appropriate 

at some point in time, but I don’t know about this string between 

Wilkes-Barre and—I have only been in that area once, but I would 

like to find out where to get some more of that string. 

My district is almost 160 miles in length so that is longer than 

the 40 mile string, so I would need a little more string. In Fresno 

County, I have 15 cities of which only two are in excess of the 

50,000 population. The others are really between 10,000 and 20,000 

population, and I have a handful that are under 10,000 in population at distances as long as an hour away in driving time from 

the larger metropolitan area. In Kings County, I have one city over 

50,000 and the others are very rural, long distances. In Kern County with the exception of the City of Bakersfield, all the outlying 

areas are under 20,000 population, and very, very rural. I still have 

one-school districts that are four classrooms, literally less than 100 

children in a school district. 

So how you define ‘‘rural in character’’ and how constituents not 

only in the great San Joaquin Valley, but also throughout the country that are rural, as rural can be, cannot be allowed to be able to 

participate is a disservice to the tax dollars that they send to 

Washington. 

Ms. COOK. The ‘‘rural in character’’ exception, again, applies only 

in the business programs and is intended only to give a small 

carve-out opportunity from that language about adjacent urbanized 

areas. If you have communities that are under 20,000, they are eligible for Community Facilities. It is a clear bright line. You are either above 20,000 or you are not. If you have communities below 

10,000, it is a clear bright line; they are either eligible for Water 

and Waste Disposal or they are not. 

I had the occasion on several occasions last year actually to come 

up and explain to very intelligent Members of Congress that 10,200 

was more than 10,000. But if you have some that are under 10,000, 

they are eligible for water and waste, but they may not be eligible 

or the Business and Industry Loan Guarantee program because of 

80

that extra language about not greater than 50,000 and adjacent urbanized areas. In that case it is the, ‘‘and adjacent urbanized 

areas’’ that is causing you trouble. 

Mr. COSTA. For the record, Mr. Chairman, I know my time has 

expired, but we will substantiate that all the Members of Congress 

tend to be very bright. 

The CHAIRMAN. We have three members of the panel, or not 

members of the panel, Members of the Committee, who in order, 

Mr. Scott, Mr. Hultgren and Mr. Schilling, Mr. Thompson, do any 

of you wish to engage in further questions? 

Mr. SCHILLING. I just have one. 

The CHAIRMAN. Mr. Schilling. 

Mr. SCHILLING. Can you comment further on how the current formula for awarding funds to each state is calculated? And then, the 

second part of the question is how changes in the definition of 

rural impacted the level of funding received by states, especially Illinois? 

Ms. COOK. Most of our conversation today, Congressman, has 

been about how we determine who is eligible to apply for the program and not about how we distribute the dollars that are appropriated to us. That discussion is regulatory in nature, and the definition is 50 percent rural population as defined by the Census Bureau, which is something different yet, namely non-metro areas 

under 2,500. The other 50 percent is poverty and unemployment. 

We have been looking at whether those factors are still the right 

answer, 50 years later, or however long it has been that we have 

been using that formula, at least the 20 years that I have been 

paying attention. We are looking at factors like out-migration and 

others to see if maybe it is time that we adjust the formula to ensure that our dollars are, in fact, distributed to the areas that most 

have rural and rural needs. 

Mr. SCHILLING. Very good. Thank you Ms. Cook. I yield back. 

The CHAIRMAN. Mr. Thompson. 

Mr. THOMPSON. Just real quick, Mr. Chairman. 

Ms. Cook, the Rural Development Policy Act in 1980 established 

USDA’s lead agency on rural development, and I certainly believe 

this Subcommittee wants to make sure we keep that in place. We 

have seen in other agriculture issues encroachment by EPA and 

other agencies into ag-related initiatives or business really to the 

detriment of our farms, and our rural communities. Recognizing 

there is a role for collaboration here as necessary, how is the USDA 

demonstrating this leadership role today? And how have you been 

successful in getting other agencies to support your efforts as the 

lead agency on rural development? 

Ms. COOK. Probably the best example I can give you is when the 

Department of Housing and Urban Development last year put out 

their Notice of Funds Availability for regional planning and development. Of the $100 million that was available, $25 million of that 

was made available for rural planning and development. 

Similarly, other agencies have been identifying the need to get 

into rural areas. I would love to take credit for it but it is really 

Secretary Vilsack who is getting his colleagues in other departments to recognize the need to invest in rural America. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

81

The CHAIRMAN. With that, we thank you, Ms. Cook, for your testimony. I thank the Members of the Committee for their questions. 

We invite the second panel to come forward to the appropriate 

place. We will recognize them and proceed. 

There are four witnesses on panel two. I will introduce two and 

then, for obvious reasons, let my colleagues on the Committee introduce the other two. 

The first is the Honorable Don Larson, Commissioner of Brookings County, South Dakota, Brookings County Commission Office, 

Brookings, South Dakota. Glad you are here with us. 

Mr. Charles Fluharty, President and CEO, Rural Policy Research 

Institute, Columbia, Missouri. 

And I would ask Mr. Schilling, my colleague from Illinois, to introduce at least one of the other two witnesses. 

Mr. SCHILLING. Thank you, Mr. Chairman. Thank you for putting 

this on today. I really appreciate it. 

I have the honor of introducing one of the witnesses on the second panel this morning, the distinguished Dr. Timothy Collins. He 

is the Assistant Director of the Illinois Institute of Rural Affairs at 

Western Illinois University, located in Macomb, Illinois, home of 

the Leathernecks. The IIRA was founded in 1989 and focuses on 

research in rural areas of Illinois. We are lucky to be joined by the 

doctor, who is one of five Ph.D.s at the IIRA. Most importantly, he 

resides in Bushnell, Illinois, with his lovely wife and son. I just 

want to thank him for being here today and look forward to visiting with you. 

I yield back. 

The CHAIRMAN. Mr. Costa, I know you have a witness who comes 

from your district. 

Mr. COSTA. Yes. Thank you very much, Mr. Chairman, Members 

of the Subcommittee. 

Mike Dozier is currently the Director of the Office of Community 

and Economic Development at California State University at Fresno, Fresno State. ‘‘Go, Bulldogs.’’ He is also the lead executive of—

that happens to be my alma mater—lead executive for the California Partnership for the San Joaquin Valley and the director of 

the Fresno State Connection for Rural Development, which well 

qualifies him to speak to us this afternoon. 

Let me just quickly say that collaboration covers eight counties, 

27,515 square miles, most of it rural, and some of the most productive agricultural land in the entire world. So we look forward to 

hearing Mr. Dozier’s testimony here this morning with his broad 

range of experience and background with the subject matter at 

hand. 

The CHAIRMAN. Thank you, Mr. Costa. 

Thank you, Mr. Schilling. 

With that, I would recognize the gentleman Mr. Larson for 5 

minutes with regard to his testimony. 

You can proceed. 

82

STATEMENT OF HON. DONALD LARSON, COMMISSIONER, 

BROOKINGS COUNTY, SOUTH DAKOTA; CHAIRMAN,

AGRICULTURE AND RURAL AFFAIRS STEERING COMMITTEE, 

NATIONAL ASSOCIATION OF COUNTIES, BROOKINGS, SD; ON 

BEHALF OF NATIONAL ASSOCIATION OF DEVELOPMENT

ORGANIZATIONS 

Mr. LARSON. Thank you, Mr. Chairman, Ranking Member Costa 

and Members of the Subcommittee for the opportunity to appear 

before you today. 

As stated before, I am Don Larson. I am a county commissioner 

from Brookings County, South Dakota. I serve as chair of the National Association of Counties Agriculture and Rural Affairs Steering Committee. I am honored to bring the collective perspective of 

our nation’s rural counties and regional development organizations 

today as I represent NACo, National Association of Counties, and 

the National Association of Development Organizations, NADO. 

We appear before you here today as your partners to work with 

you to ensure that the Rural Development Programs are successful 

and help you make any changes or whatever is necessary to increase that success level. 

Today I would like to visit about two main points. First, rural 

people and places are increasingly operating in dynamic regional 

economies, and our community is one that is doing so. The USDA 

Rural Development Programs must be reshaped so that we promote and give greater flexibility to the successful regional approaches and local collaborations which has become vital in my 

community. 

Rural counties and regions are often arbitrarily placed into categories by academics and the Federal Government. But we at 

NACo and NADO do not have specific policy or recommendations 

on proper population criteria for specific USDA programs. But as 

you consider this topic, the most important fact to remember is 

that rural places do not fit nicely into a box, but they do exist as 

a region. Therefore, we encourage you to focus on providing us enhanced flexibility for our Rural Development state offices so that 

we may provide assistance that fits the uniquely rural nature of 

our states by focusing on several rural regions, both multi-town, 

multi-county, and multi-funding these regions’ strategic priorities. 

The importance of your Federal investment in regional planning 

and project implementation is very clear in eastern South Dakota 

where I am from. My County of Brookings, South Dakota, through 

regional planning and innovative partnerships with our other partners as outlined in the testimony I submitted to you, created the 

South Dakota State University Innovation Campus, the first research park developed in the State of South Dakota. The innovation campus provides a place where people and ideas are coming 

together to enhance the economic vitality of our region. At our locality it requires us that in our region we actually take in parts 

of our neighboring States of Minnesota, Iowa, maybe a corner of 

Nebraska, and a corner of North Dakota. 

The county and the city put up the upfront money, and the First 

District Association of Local Governments helped us to develop the 

business plan and regional strategy with the Federal EDA funding. 

These planning investments provided vital gap funding that help 

83

make our regional vision a reality. And I stress the words regional 

concept.

My second main point is that Congress and the Administration 

should work together in a bipartisan manner to make Rural Development Programs a priority within the farm bill reauthorization. 

Our ag sector needs more investments in our rural community infrastructure to remain competitive both from a quality-of-life perspective as well as the production, transport, and safety of our ag 

food and energy products. 

The agricultural sector is a primary beneficiary of just about 

every investment made by USDA Rural Development, whether related to our improved water and wastewater treatment facilities; 

our improved housing options for our workers, our citizens; more 

affordable access to business financing; and assistance for valueadded production marketing; and cheaper and reliable services 

from our rural electrics, our telephone and broadband cooperatives. 

The next farm bill offers a unique opportunity for Federal policymakers to start testing and pursuing our new Federal policies for 

rural development. NACo and NADO will support all of the titles 

of the reauthorization of the farm bill, but call on Congress and the 

Administration to place particular emphasis on crafting a bill that 

provides us the enhanced resources to Rural Development Programs and policies that enhance rural prosperity. 

We seek to be your partner in this endeavor. We promise to work 

with you to streamline and improve existing programs that invest 

in rural America, pay even bigger dividends than they have in the 

past. 

Mr. Chairman and Members of the Committee, we all know that 

every dollar of new wealth generated can ultimately be traced back 

to the soil. That is our job in rural America is to protect that soil 

and do everything we can to provide and increase the wealth of 

this great nation. 

Thank you, Chairman Johnson, Ranking Member Costa, and 

Members of Subcommittee, for the opportunity to have a few moments of your precious time this morning. I will be here for any 

questions you may have. 

[The prepared statement of Mr. Larson follows:]

PREPARED STATEMENT OF HON. DONALD LARSON, COMMISSIONER, BROOKINGS

COUNTY, SOUTH DAKOTA; CHAIRMAN, AGRICULTURE AND RURAL AFFAIRS STEERING

COMMITTEE, NATIONAL ASSOCIATION OF COUNTIES, BROOKINGS, SD; ON BEHALF OF

NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS

Thank you, Chairman Johnson, Ranking Member Costa and Members of 

the Subcommittee for the opportunity to testify today on the various definitions of ‘‘rural’’ applied under programs operated by the U.S. Department 

of Agriculture.

My name is Don Larson. I am a County Commissioner in Brookings County, 

South Dakota and I serve as chair of the National Association of Counties’ (NACo) 

Agriculture and Rural Affairs Steering Committee. Brookings County is located in 

the eastern corner of South Dakota and has a population of around 30,000 people. 

My goal today in covering this important topic is to give you some concrete examples from my county and region and I’m honored to also bring the collective perspective of our nation’s rural counties and regional development organizations as I represent NACo and the National Association of Development Organizations (NADO). 

NACo and NADO look forward to working with you in this Congress as you consider 

ways to improve USDA’s Rural Development portfolio during the farm bill reauthorization process. We share your deep commitment to rural America and believe that 

84

through our working partnership, rural individuals, communities, farmers, ranchers 

and all other rural businesses will be given more flexibility to expand their economic 

potential and compete in the global economy. 

About the National Association of Counties 

Established in 1935, the National Association of Counties (NACo) is the 

only national organization representing county governments in Washington, D.C. All 3,068 counties in the United States are members of NACo. NACo 

provides an extensive line of services including legislative, research, technical and 

public affairs assistance, as well as enterprise services to its members. 

NACo’s membership drives the policymaking process in the association through 

11 policy steering committees that focus on a variety of issues including agriculture 

and rural affairs, human services, health, justice and public safety and transportation. Complementing these committees are two bipartisan caucuses—the Large 

Urban County Caucus and the Rural Action Caucus—to articulate the positions of 

the association. NACo’s Rural Action Caucus (RAC) represents rural county elected 

officials. 

About the National Association of Development Organizations 

Building on more than 4 decades of experience, the National Association of Development Organizations (NADO) represents the nation’s 520 regional development organizations. The association supports Federal programs and policies that promote 

regional strategies, partnerships and solutions for addressing local community and 

economic development needs. 

As public sector entities, each of the nation’s regional development organizations 

is typically governed by a policy board of local elected officials, along with representatives from the private, nonprofit and educational sectors. These entities are a key 

catalyst for strategic planning, partnerships and initiatives that are designed to 

meet locally-identified needs and conditions. The core philosophy of regional development organizations is to help local officials and communities pool their limited resources to achieve economies of scale, build organizational skills and professional expertise, and foster regional collaborations. 

Overview 

In my testimony, Mr. Chairman, I want to make two main points.

• Rural people and places are increasingly operating in dynamic regional 

economies and USDA Rural Development programs must be reshaped 

to promote and give greater flexibility to these successful regional approaches and local collaborations.

• Congress and the Administration should work together in a bipartisan 

manner to make rural development programs a priority within farm 

bill reauthorization. 

Moving Towards a Regional Approach 

Counties and regions are used to being arbitrarily placed into categories by academics and bureaucrats. In fact, when it comes to defining rural, the Federal Government is all over the map. The population criteria for major programs within 

USDA Rural Development varies from limiting eligibility to rural areas with under 

2,500 people to areas with under 50,000 people. For example, water and wastewater 

project eligibility is limited to areas with a population under 10,000 people, community facility projects are limited to areas with a population under 20,000 people and 

most business programs are limited to areas with a population under 50,000 people. 

NADO and NACo do not have policy on the proper definition of rural or recommendations on population criteria levels for specific programs. The reality is that 

the definition of rural is very place specific and subjective. Rural areas exist within 

counties of various population densities, and these rural places interact with each 

other and urban centers in their region. As you consider this topic, the most important fact to remember is that rural people and places do not fit nicely into a box. 

Our organizations encourage you to avoid getting bogged down in the regional fights 

that erupt when definitions are considered. Instead, we encourage you to focus on 

providing enhanced flexibility for USDA Rural Development’s state offices to provide 

assistance that fits the uniquely rural nature of their states, by focusing on serving 

rural regions, both multi-town and multi-county. 

Currently, USDA Rural Development programs all too often are structured to 

serve individual communities rather than larger county and multi-county regional 

strategies and goals. In today’s economy, our rural places are not served well by 

stove piped programming, but rather need Federal investments to help with crafting 

85

and implementing strategic regional plans that capitalize on the unique economic 

assets and unique vision of people, businesses and organizations in these regions. 

Therefore, I recommend an enhanced emphasis on tools to help local officials, private sector leaders and nonprofit entities join together to develop and implement regional strategies that leverage regional assets and opportunities. These tools should 

be flexible enough to allow rural communities to work with their urban and suburban partners. At the same time, USDA Rural Development funding should be directed towards the prioritized assets and needs of rural communities and regions. 

Traditionally, the rural economic development landscape was dominated by counties and municipalities acting as their own economic islands in which neighbors 

competed for industries and manufacturing jobs through tax incentives. This landscape is changing. It is being replaced by vibrant regional economies in which prospering and successful rural regions are tied together in clusters of innovation that 

are supported by integrated plans for workforce, economic development, research 

and infrastructure. This change is being accelerated by the Great Recession, which 

has led local governments to work more collaboratively as regions in order to provide strategic infrastructure and economic development services in difficult times. 

USDA Rural Development’s programs should be updated in order to better meet the 

demands of this changing landscape. 

The fiscal situation facing all levels of government—Federal, state and local—is 

dire. Therefore, our investments must be based upon the best economic research 

available. Historically, policymakers have thought it was impossible for municipalities and unincorporated rural areas to work together as one county or for multiple 

counties to work together. The prevailing notion was that our interactions in economics and football were the same. We met regularly, but only in competition 

against each other. 

I’m happy to report that this old notion is becoming less and less prevalent. Our 

towns and counties can no longer afford to compete in a race to the bottom against 

each other in search of the next big manufacturing plant. No, instead we are being 

forced to consider new ways of governing in an era of limited government resources. 

We are working together more efficiently and are streamlining services. NACo and 

NADO pledge to work with you to improve USDA’s portfolio of rural development 

programs in order to assist with this changing dynamic. 

One model for updating USDA’s Rural Development programs is the U.S. Economic Development Administration’s (EDA) very small but effective economic development district (EDD) planning program, which is the only national program that 

requires local communities to think and plan regionally. Historically, the agency has 

rewarded local governments and grantees with a ten percent Federal bonus within 

its public works and economic adjustment assistance programs if they engage in 

multi-county planning and development. This successful model should be enhanced 

and expanded within the USDA Rural Development mission area. It should also be 

adapted to USDA Rural Development’s clientele by providing incentives for both 

multi-county planning and integrated planning among municipalities and unincorporated areas within a single county. 

The cutting edge research flowing from our nation’s economists and trusted rural 

policy experts continues to demonstrate that multi-state, multi-county and multitown approaches to local economic competitiveness are critical to a vibrant rural 

economy. Organizations such as the Federal Reserve Bank of Kansas City, the 

Southern Growth Policy Board, the Rural Policy Research Institute and the Council 

on Competitiveness have all issued reports and policy briefs stressing the need for 

Federal incentives, resources and programs that support regional community and 

economic development, especially in small metropolitan and rural regions. 

And these studies are being validated by on-the-ground experiences. In January, 

NADO sponsored a regional innovation forum with 25 practitioners from across the 

nation. NADO learned that rural development organizations and their private, public and nonprofit sector partners are already pursuing new and creative strategies 

at the regional and statewide levels. Many of these new approaches cut across Federal agency silos, including community development, economic development, housing, transportation and workforce development. 

In my County of Brookings, South Dakota, through regional planning and innovative partnerships we created the South Dakota State University Innovation Campus, the first research park developed in the state of South Dakota. Sited on 125 

acres, the Innovation Campus is located next door to South Dakota State University 

(SDSU). 

The SDSU Innovation Campus provides a place where people and ideas come together in our region to combine the experience of university, business, industry and 

government in an environment that uses innovation and critical thinking to genVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00089 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
86

erate new ideas, promote research, entrepreneurialism and business mentoring—

providing opportunities to keep our best and brightest in South Dakota. 

The SDSU Innovation Campus is the product of the SDSU Growth Partnership, 

a 501(c)(3) nonprofit corporation whose partners include Brookings County, the City 

of Brookings, Brookings Economic Development Corporation, South Dakota State 

University, the South Dakota State Foundation and a State Representative. The 

county and city put up front money, and the First District Association of Local Governments helped develop a business plan and grant application for EDA funding. 

These planning investments provided vital gap funding that helped make our regional vision a reality. The First District serves 11 counties and 75 communities 

within the counties of Brookings, Clark, Codington, Deuel, Grant, Hamlin, 

Kingsbury, Lake, Miner, Moody, and Roberts. 

The site includes retail and support services. Local private developers have developed a 120 unit housing complex, The Innovation Village, on property adjacent to 

the park. The campus has walking, jogging and biking trails, and open green spaces, 

and is also accessible via public transportation. All of the private development on 

the innovation campus becomes a part of our local tax base. 

The economic success story in Brookings County and our region, along with our 

innovation campus, clearly demonstrate that rural communities and institutions can 

make substantial progress by working regionally to achieve economies of scale, technical expertise, workforce pool and infrastructure financing to compete nationally 

and globally. The project has helped Brookings County and our region prosper. In 

fact, we enjoy one of the lowest unemployment rates in the country at around four 

percent. 

However, rural unemployment in the nation has remained high overall, despite 

the strong performance of the agricultural sector. Other rural communities would 

like to start planning and implementing regional strategies but do not have the 

funding to get started. Reorienting USDA towards a regional approach would provide needed resources to assist rural communities with seed money for planning, or 

as in our case, additional funds to expand our regional development efforts. In our 

region, we could expand the principles of the innovation campus project to additional parts of our region. Our county could also link to other efforts such as our 

regional farmers’ market initiative, our Seed Technology Laboratory, and our youth 

learning center. 

This new approach will save time and money for rural counties who have trouble 

navigating the array of stove piped programs at USDA. The vast majority of counties and municipalities in our nation lack the financial, human and technical resources individually that are required to compete with urban centers. These same 

rural communities lack the expertise needed to navigate and apply for the alphabet 

soup of excellent programs offered by USDA. These communities are not asking for 

a free lunch. However, they do need a jump start. Federal investments that help 

fund strategic regional planning activities and provide seed funding for implementation can help provide rural business and community leaders with the leverage they 

need to begin something that creates wealth and jobs. 

While regional innovation and competitiveness strategies are essential for small 

metropolitan and rural America in today’s global economy, it is equally important 

that USDA Rural Development and other Federal community and economic development agencies make smarter and more strategic investments based on these regional priorities and strategies. Too frequently, Federal officials make funding 

awards that may be important in a specific, more isolated area. In today’s challenging fiscal environment, we need to ensure that our limited Federal rural development resources are tied to regional and local strategies and assets. 

Making Rural Development a Priority 

Our agricultural sector needs more investments in our rural community infrastructure to remain competitive, both from a quality of life perspective as well as 

the production, transport and safety of agricultural food and energy crops. Rural Development in the farm bill context shouldn’t be viewed as a competitor, but as a 

complementary component. The agricultural sector is a primary beneficiary of just 

about every investment made by USDA Rural Development, whether related to improved water and wastewater treatment facilities, improved housing options for 

workers, more affordable access to business financing, assistance for value-added 

production marketing or cheaper and reliable services from rural electric, telephone 

and broadband cooperatives. 

One of our nation’s most innovative, internationally competitive and export-driven 

sectors is agriculture. It is essential that we continue to maintain a highly competitive and robust domestic agricultural sector, including for international trade and 

domestic consumption. However, as we have witnessed during the current economic 

87

downturn, intense global competition and technological advancements, combined 

with severe economic recessions, typically results in a ‘‘pattern of creative destruction’’ that runs counter to the public sector’s desire for job growth. Rural America 

is all too familiar with this reality. For example, the number of farmers will most 

likely continue to decline and the percentage of farmers who rely on off-farm income 

to survive will continue to accelerate. The same can be said for manufacturing and 

natural resource industries across rural America where the drive for innovation, 

cost cutting and cheaper labor are necessary to compete with emerging markets. 

The next farm bill offers a unique opportunity for Federal policymakers to start 

testing and pursuing new Federal policies for rural development. This means that 

longstanding programs and policies anchored within the USDA Rural Development 

mission area will need to be examined and to evolve. We need to be thinking more 

about advantaging regional assets, promoting value-added uses of commodities and 

positioning rural America to participate in the knowledge economy. 

NACo and NADO will support all titles in the reauthorization of the farm bill, 

but call on Congress and the Administration to place particular emphasis on 

crafting a bill that provides enhanced resources to rural development programs and 

strategies that promote rural prosperity. NACo, NADO and the other 30 national 

organizations that make up the Campaign for a Renewed Rural Development will 

work in a bipartisan manner with Congress and the Administration to increase the 

effectiveness of this vital mission area of USDA. 

USDA Rural Development programs leverage community resources to develop the 

infrastructure necessary to compete in the global economy. This includes both traditional physical infrastructure but also community and human resources. Infrastructure development remains one of the most significant roadblocks to economic development and competitiveness in small town and rural America. USDA Rural Development is effective at helping communities overcome these roadblocks, but needs to 

maintain at least level funding and more strategically directed funding in the coming fiscal years to meet these infrastructure needs. These programs help rural businesses and entrepreneurs and provide the vital community and economic development loans and grants necessary for rural local governments to provide the base infrastructure necessary for businesses to compete in the global economy. 

In conclusion, I would like to reiterate my two key points. First, rural people and 

places are increasingly operating in dynamic regional economies and USDA Rural 

Development programs must be reshaped to promote and give greater flexibility to 

these successful regional approaches and local collaborations that do not fit nicely 

into rural definitions. Second, Congress and the Administration should work together in a bipartisan manner to make rural development programs a priority within farm bill reauthorization. NACo and NADO seek to be your partner in this endeavor. We promise to work with you to streamline and improve existing programs 

so that investments in rural America pay even bigger dividends in the future. 

Thank you again, Chairman Johnson, Ranking Member Costa and Members of 

the Subcommittee for the opportunity to testify this morning on behalf of NACo and 

NADO on these critical rural development issues. I appreciate your time and interest. I look forward to answering any questions.

The CHAIRMAN. Thank you, Mr. Larson. 

With that, we would recognize the gentleman who is listed as the 

second witness on our panel, Dr. Collins. You want to proceed? 

STATEMENT OF TIMOTHY COLLINS, PH.D., ASSISTANT

DIRECTOR, ILLINOIS INSTITUTE FOR RURAL AFFAIRS, 

WESTERN ILLINOIS UNIVERSITY, BUSHNELL, IL 

Dr. COLLINS. Good morning. Mr. Chairman, Committee Members, thank you for allowing me to testify today. 

More than 20 years ago, the Illinois Governor designated the Illinois Institute for Rural Affairs a statewide clearinghouse for rural 

issues. The U.S. Department of Agriculture is an important partner. Today’s presentation will focus on effects of the various rural 

development definitions on funding and participation in Illinois, 

the changing rural landscape, and recommendations for targeted 

Rural Development Programs. 

Metropolitan-rural definitions have been refined periodically 

since early in the 20th century. More finely drawn distinctions—

88

USDA’s urban influence, county typology, and rural-urban continuum codes—now help characterize America’s changing and diverse rural areas. 

By the broadest definition, the Illinois landscape has become 

more urbanized, with 26 of our 102 counties designated metropolitan in 1980, 28 in 1990, and 36 today. In a 2005 report about 

changing Census definitions, we expressed concerns about potential 

impacts on the eight new metro counties and micropolitan counties 

generally. Our concerns have not been borne out so far. The Bureau of Economic Analysis includes micropolitan counties in nonmetropolitan analyses. Our USDA State office said there has been 

little change in program dollars for the affected counties that became metropolitan. Several have received USDA business and community projects, loans, and grants since the definitions were 

changed. 

It is important that we continue to target Rural Development 

Programs to outlying metro communities or counties also. For example, rural Macoupin County, Illinois, was placed in the St. Louis 

metro area in 2003 because of commuting patterns influenced partly by Interstate 55. But land use, predominantly agricultural and 

forest and scattered small incorporated and unincorporated places, 

makes Macoupin a rural bedroom area. In fact, the county lost 2.5 

percent of its population between 2000 and 2009. It has continued 

to receive USDA funding. 

USDA’s descriptive county codes help target Rural Development 

Programs toward where they are needed, including metropolitan 

counties with rural characteristics. The codes also give IIRA standing to work in rural interface counties. With this in mind, we offer 

some recommendations. 

USDA codes are needed to help refine USDA programs for local 

governments at the Census tract level and in wider regions. They 

can facilitate growth and change, while preserving our vital agricultural capacity. 

The multiplicity of Federal rural definitions is overly complicated. IIRA, for example, must, through our Small Business Development Center, deal with Small Business Administration rules 

that do not adequately account for differences between the more 

densely populated Chicago area and our 12 county rural region. 

Rural definitions could be consolidated, with USDA as the prime 

agency for defining rural. 

True to the original conceptualization of micropolitan, it is important to remember that these smaller cities anchor their rural regions. Mainly they offer a key to effective regional rural development. 

The coming reapportionment of Congressional districts may further weaken rural political influence. Monitoring the definition of 

rural is an ongoing task to ensure that rural needs are met. 

Thank you again for the opportunity to testify, and I look forward to questions and discussion. 

[The prepared statement of Dr. Collins follows:]

89

* Testimony prepared by: Timothy Collins, Ph.D., Assistant Director; Christopher D. Merrett, 

Director; William Westerhold, Faculty Assistant; and Karen Poncin, Operations Manager. 1 As a rural community and economic development agency, IIRA helps rural communities 

build a better life. It also conducts rural research and works with various agencies and organizations on rural outreach and policy. 2Westerhold, William. Collins, Timothy. ‘‘Census Definition Changes May Influence Rural Policy in Illinois.’’ Macomb: Illinois Institute for Rural Affairs at Western Illinois University. Rural 

Research Report, Spring, 2005. http://www.iira.org/pubs/publications/IIRAlRRRl646.pdf,

2005. Accessed February 2011. 3 Bureau of Economic Analysis Regional Economic Accounts. Local Area Personal Income.

http://www.bea.gov/regional/reis/default.cfm?selTable=CA1-3§ion=2. Accessed February 

2011. 4For example, a $2.4 million Rural Development loan helped the Macoupin County Mental 

Health Association move into its new building in Carlinville. Meanwhile, Community Memorial 

Hospital in Staunton received $237,800 from Rural Development to expand its telemedicine 

services. Both of these examples are from the Illinois USDA Annual Report, http://

www.rurdev.usda.gov/il/forms/AR06.pdf, accessed February 2011. 

PREPARED STATEMENT OF TIMOTHY COLLINS, PH.D., ASSISTANT DIRECTOR, ILLINOIS

INSTITUTE FOR RURAL AFFAIRS, WESTERN ILLINOIS UNIVERSITY, BUSHNELL, IL * 

Mr. Chairman, Committee Members. Thank you for allowing me to testify today. 

More than twenty years ago, the Illinois Governor designated the Illinois Institute 

for Rural Affairs as statewide clearinghouse for rural issues (Appendix A).1 The U.S. 

Department of Agriculture is an important partner. 

Today’s presentation will focus on:

1. Effects of the various rural development definitions (Appendix B) on funding 

and participation in Illinois;

2. The changing rural landscape; and

3. Recommendations for targeted rural development programs.

Metropolitan-rural definitions have been refined periodically since early in the 

twentieth century. More finely drawn distinctions—USDA’s urban influence, county 

typology, and rural-urban continuum codes—now help characterize America’s changing and diverse rural areas. 

By the broadest definition, the Illinois landscape has become more urbanized, 

with 26 of our 102 counties designated metropolitan in 1980; 28 in 1990; and 36 

today. In a 2005 report about changing Census definitions, we expressed concerns 

about potential impacts on the eight new metro counties and micropolitan counties 

generally.2 Our concerns have not been borne out so far: the Bureau of Economic 

Analysis includes micropolitan counties in non-metropolitan analyses.3 Our USDA 

state office said there has been little change in program dollars for the affected 

counties. Several have received USDA Business and Community Projects loans and 

grants since then. 

It is important that we continue to target rural development programs to outlying 

metro counties. For example, rural Macoupin County, Illinois, was placed in the St. 

Louis metro area in 2003 because of commuting patterns influenced partly by Interstate 55. But land use—predominantly agriculture and forest and scattered small 

incorporated and unincorporated places (Map 1) makes Macoupin a rural bedroom 

area. In fact, the county lost 2.5% of its population between 2000 and 2009. It has 

continued to receive USDA funding.4

USDA’s descriptive county codes help target rural development programs toward 

where they are needed, including metropolitan counties with rural characteristics. 

The codes also give IIRA standing to work in rural-urban interface counties. With 

this in mind, we offer recommendations:

• USDA codes are needed to help refine USDA programs for local governments, 

at the Census tract level, and in wider regions. They can facilitate growth and 

change while preserving vital agricultural capacity.

• The multiplicity of Federal rural definitions is overly complicated. IIRA, for example, must, through our Small Business Development Center, deal with Small 

Business Administration rules that do not adequately account for differences between the more densely populated Chicago area and our 12 county rural region. 

Rural definitions could be consolidated with USDA as the prime agency for defining rural.

90

5Tweeten, L., and G. Brinkman. 1976. Micropolitan development: Theory and practice of greater-rural economic development. Ames: The Iowa State University Press.

• True to the original conceptualization of ‘‘micropolitan,’’ 5 it is important to remember that these smaller cities anchor their rural regions. Mainly, they offer 

a key to effective regional rural development. 

• The coming reapportionment of Congressional districts may further weaken 

rural political influence. Monitoring the definition of rural is an ongoing task 

to ensure that rural needs are met.

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

91

Map 1: Land Use Map of Macoupin County

Illinois 

Source: University of Illinois at Urbana-Champaign. Natural Resources 

Geospatial Data Clearinghouse. http://www.isgs.illinois.edu/nsdihome/

webdocs/landcover/landcover99-00.html. Accessed February 2011.


11202055
92

APPENDIX A: ABOUT THE ILLINOIS INSTITUTE FOR RURAL AFFAIRS

The Illinois Institute for Rural Affairs (IIRA) was founded in 1989 as a companion 

agency to the Illinois Governor’s Rural Affairs Council and is focused on research, 

policy analysis, and technical assistance in rural areas of Illinois. IIRA assists rural 

communities and their leaders to expand their capacity to improve their quality of 

life. IIRA also acts as a bridge between local leaders and the state and Federal 

agencies that provide rural programs. Following is a glimpse at some of the things 

IIRA does to build rural communities in our state. 

IIRA receives about 25% of its annual budget through Western Illinois University, 

where it is located. The remaining funding is raised through grants. Because of this 

dependence on grants, IIRA is an entrepreneurial organization that constantly seeks 

new opportunities. 

The staff of about 40 includes five Ph.D.s and 25 master’s level outreach specialists and about 20 students. IIRA has created grant-funded outreach and research 

programs in a number of areas, including economic and community development; 

housing and health; transportation; rural schools; and alternative energy using wind 

and biomass (Figure 1). IIRA’s research is not only theoretical; it is intended to be 

applied in the local communities. 

IIRA partners with public and private agencies on rural local development and 

enhancement efforts with the goal of developing sustainable communities. Efforts 

involve building local support to create a community vision and plan for achieving 

that vision. IIRA’s holistic model links research, outreach, and policy activities. 

Figure 1

IIRA’s approach to rural development is predicated on the idea that community 

and economic development occur hand in hand. This recognizes the dynamic complexities of rural communities and the importance of strong community life as the 

basis for strong national economic and civic life. This is the rationale for IIRA’s approach that links strategic planning and visioning, technical assistance, and implementation in communities (Figure 2). These strategies are often mixed to provide 

a wide spectrum of assistance to rural communities throughout the state. As a result, IIRA has developed a national reputation for innovative programs and services. 

Figure 2


11202056 11202057
93

APPENDIX B: MULTIPLE DEFINITIONS OF RURAL

Source: http:www.ers.usda.gov/data/ruraldefinitions/IL.pdf.


11202058 11202059
94

Source: http:www.ers.usda.gov/data/ruraldefinitions/IL.pdf.


11202060 11202061
95

Source: http:www.ers.usda.gov/data/ruraldefinitions/IL.pdf.


11202062 11202063
96


11202064 11202065
97

The CHAIRMAN. Thank you, Dr. Collins. 

The next gentleman on our panel is Mr. Charles Fluharty from 

the Rural Policy Research Institute in Columbia, Missouri. 

STATEMENT OF CHARLES W. FLUHARTY, PRESIDENT AND 

CEO, RURAL POLICY RESEARCH INSTITUTE, TRUMAN 

SCHOOL OF PUBLIC AFFAIRS, UNIVERSITY OF MISSOURICOLUMBIA, COLUMBIA, MO 

Mr. FLUHARTY. Thank you, Mr. Chairman, Ranking Member 

Costa. It is a pleasure to be with you again. 

This is the fifth farm bill in which we have testified and begun 

to work with the two committees, and at each time we begin with 

this question: What is rural; how do we address it? It is truly unfortunate that that is the point that we have to begin, but we do. 

It is simply a reality, and the questions today point that out. 

We go back quite a way in this regard. These issues started in 

1972 with the Act, and what we have today is an incremental stepping up of Federal effort as spatial settlement patterns changed 

over time. But it is important to note what existed in rural and 

urban in agriculture at that time and how we have not kept pace 

with that, frankly, Mr. Chairman, in our Federal targeting. 

When we began this, rural and urban were quite distinct. They 

did not intersect a great deal, and local communities had pretty 

much complete control of their futures and their economies, as did 

agriculture. Over the last 40 years through these five, eight farm 

bills, those specific categories are now not nearly as clear. They are 

very interdependent, and the reality is that in today’s global economy, regions compete—not communities, not just firms—and the 

reality is agriculture today does not stand alone. 

As you know, Mr. Chairman, today the average farm household 

gets 92 percent of its farm income from the broader rural economy, 

and, in fact, over half of our nation’s rural people live in metropolitan areas. These categories simply have changed, and the challenge 

you have and the challenge USDA has is how do we deal with that. 

And I would simply say it is a very, very sobering task because 

rural America is so diverse. If each Member talks about the unique 

challenges in targeting and formula in their district, we are going 

to have 20 or 30 different variations. 

But I want to point to the challenge I have heard this morning. 

You have two North Star principles articulated for Federal policy, 

and they are divergent 100 percent. The reality is a definition is 

not a policy goal. You are articulating two: first of all, the stated 

goal to assure the most remote, the most rural, and the most disadvantaged areas of our nation in rural character fulfill the 1980 

statutory obligation by USDA to assist. That is absolutely critical. 

But, Congressmen, the other point is when you talk about the 

relative economic sectors in a community, it is true that the firms 

often are not there in these rural areas, and that is the second 

major principle that the Ranking Member is raising. If we are 

going to think about moving from Federal dependency to wealth 

creation, we are going to have to think about an innovation strategy that links rural regions to micropolitan regions and smaller 

new clusters, a huge challenge for all of you because they are so 

diverse policy goals. But let me simply say we are honored to work 

98

with you again this year and suggest three options in my final moments. 

First, you could tinker at the edges with these definitions. Happens every time. And good men and women, such as the Secretary, 

will try to adjust to what you decide to do. 

The second would be to rethink the dynamics, the allocations, the 

waivers, and the carve-outs. I would recommend you at least look 

at that. We have not done that well. 

But finally, I would like for you to look at a new option of dividing those allocations, and that would mean moving from a tactical 

targeting approach as your strategy to an innovation and investment approach. 

A lot of innovation is being talked about in this town. My worry, 

and a RUPRI worry, is that ends up all being about metropolitan 

entrepreneurship and innovation. In fact, we have 88 Rural Economic Development Programs. They are largely siloed, and they 

don’t build scale and mass for entrepreneurship. 

In closing, I ask you to look at these micropolitan regions. There 

are 600 of them. They are the regional growth hubs for every major 

sector. They could be aligned with contiguous rural countryside, actually building the rural innovation framework that largely reflects 

where the private sector is going. 

We are honored to work with you in the future. We know the 

challenge is great, and we know you have two diverse policy goals. 

We wish you well on that journey and want to assist however we 

can. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Fluharty follows:]

PREPARED STATEMENT OF CHARLES W. FLUHARTY, PRESIDENT AND CEO, RURAL

POLICY RESEARCH INSTITUTE, TRUMAN SCHOOL OF PUBLIC AFFAIRS, UNIVERSITY OF

MISSOURI-COLUMBIA, COLUMBIA, MO 

Thank you, Chairman Johnson, Ranking Member Costa, and Members of 

the Subcommittee. It is an honor to appear before you again, as consideration of the farm bill reauthorization begins.

I am Charles W. Fluharty, President and CEO of the Rural Policy Research Institute, and a Research Professor in the Harry S Truman School of Public Affairs at 

the University of Missouri-Columbia. I applaud your leadership to assure rural development concerns receive greater attention in these farm bill deliberations, and 

I encourage you to craft a bold and innovative new approach in the Rural Development Title. 

The Rural Policy Research Institute (RUPRI) 

RUPRI is a non-partisan, external policy research institute, originally envisioned 

in 1990 by the Agriculture Committees of the Congress, and funded since then to 

provide objective analyses regarding the rural implications of public policies and 

programs. We are honored to be entering our third decade of service to the Congress 

this year. 

RUPRI is a national research institute, with founding sponsorship from Iowa 

State University, the University of Missouri, and the University of Nebraska. Continual service is provided to Congressional Members and staff, executive branch 

agencies, state legislatures and executive agencies, county and municipal officials, 

community and farm groups, and rural researchers. Collaborative research relationships also exist with numerous institutions, organizations, and individual social scientists worldwide. To date, over 300 scholars representing 16 different disciplines 

in 100 universities, all U.S. states, and 30 other nations have participated in RUPRI 

projects, which address the full range of policy and program dynamics affecting 

rural people and places. Collaborations with the OECD, the EU, the German Marshall Fund, the Inter-American Institute for Cooperation on Agriculture, the InterVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00102 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
99

national Rural Network, and other international organizations are framing RUPRI’s 

comparative rural policy foci. 

Overview 

As you know, Mr. Chairman, I have been honored to appear before this Committee many times, over the years. With each farm bill reauthorization, I return to 

testimony which I offered as the current bill was being considered, to assess whether either the intervening years have altered my policy perspective, or policy prescriptions recommended have been so successfully executed, as to merit a reordering 

of recommended policy actions. Usually, despite successes along the way, the major 

structural challenges remain. 

Such is the case this time around. In my testimony before this Committee on 

March 21, 2007, I offered a very detailed assessment of the current rural context, 

and argued for a new rural policy vision: Regional Rural Innovation, Collaboration, 

and Strategic Investment. That testimony, and the specific analyses which supported it, exist in this Committee’s record and I refer Members and staff interested 

in these greater details to that document. 

In that testimony, I suggested four ‘‘Guiding Twenty-First Century Rural Policy 

Principles.’’ These remain the central tenets of a forward-leaning rural policy, and 

should continue to guide Committee action:

Three critical Federal policy dynamics must be addressed:

• The Federal Government must increase the current level of Federal rural investment in essential public services, including infrastructure, broadband and 

community capacity.

• To do this, the Federal Government must overcome a significant and ongoing 

rural Federal funding disadvantage.

• In doing so, the Federal Government must also reverse recent disinvestments 

in rural programs.

A new rural policy framework must be created:

• It should center upon rural innovation, entrepreneurship, collaboration and 

strategic investments.

• This must incent public, private and philanthropic investment cooperation, 

and build regional frameworks for action.

• Special attention must be given to diversity, gender, poverty and immigration 

concerns.

Several ‘‘North Star’’ principles must drive program design, including:

• Asset-based development.

• Flexibility and local input.

• Investment in new intermediaries.

• Attention to the importance of working landscapes and natural resources; 

arts, heritage and culture; and renewable fuels, energy and entrepreneurial 

agriculture.

The Federal Government must create a framework which acknowledges and 

builds upon the growing interdependence of urban, suburban and rural areas 

and constituencies.

It is gratifying to acknowledge major advances on a number of these principles, 

since passage of the last farm bill. However, we are all aware that we are in a very 

different place today. As tectonic structural shifts in our economy have transformed 

broader economic policy approaches, driven by global competition, policy innovations 

to adapt to these dynamics in ways which specifically address our nation’s rural regions have lagged behind. This challenge has been exacerbated by the Great Recession, which has created unprecedented budget deficits for state and local governments, and reduced available resources to support innovative efforts to address 

these capacity disadvantages. 

For over a decade, RUPRI has encouraged new policy and practice approaches to 

create a brighter future for rural communities, families, and economies. These have 

been posited upon asset-based development, entrepreneurship, innovation, and new 

governance models, within a regional framework. Many of these once misunderstood 

or resisted approaches are now becoming mainstream rural economic development 

components. However, if these innovations are to succeed, we must acknowledge 

that in today’s world, rural and urban outcomes are increasingly intertwined, and 

are becoming ever more interdependent, as are their citizens and economies. 

100

Acknowledging this reality will challenge those with entrenched political advantage from continuing reliance upon categorical programs and grants, in both rural 

and urban constituencies. However, while these categorical grants are very necessary for rural communities, particularly those in underserved regions, they are no 

longer sufficient. Just as rural communities must unite in regional innovation collaborations, metropolitan policymakers and advocates also must acknowledge the 

dependence of their citizens upon the rural resources which sustain their urban existence. 

For these innovations to truly advantage rural people and places, the Agriculture 

Committees of Congress must move to a new Rural Development vision. This must 

link rural communities, small urban areas, and rural regions, while providing new 

approaches to scale and leverage Federal, state, and local investments, across the 

public, private, and philanthropic sectors. 

We look forward to working with this Committee as this dialogue moves to more 

substantive policy alternatives for achieving these outcomes. My current testimony 

will be limited to addressing alternatives to the current deficiencies in the existing 

rural definitions formul#. 

The Context for Rural Policy Change 

For this approach to gain traction within the policy arena, decision-makers must 

acknowledge the rural context which informs RUPRI’s belief in the importance of 

Rural Regional Innovation. The contextual fabric which I outlined in 2007 has not 

altered. Indeed, these dynamics have deepened and intensified, and are becoming 

more evident over time:

• There is no one rural America. It is a diverse, dynamic and ever-changing landscape, and public policy must address these new realities.

• Rural development investments must move beyond categorical programs and 

grants. A new vision must be sought, and systemic commitments to change the 

rural landscape must be funded.

• Rural entrepreneurship and innovation systems are essential, if we are to optimize new Federal commitments to assist rural regions in capturing their competitive advantage in a global economy. These approaches must be framed in systemic ways, to link with other public, private, NGO and philanthropic resources.

• New governance models must be lifted up, and successful new public and social 

entrepreneurship efforts replicated.

• Rural poverty remains a searing and silent national tragedy.

• Current ag policy has many goals, but we must acknowledge it has failed to adequately assure broad-based rural economic growth. This Committee must, finally, address this structural challenge within your jurisdiction.

The severe Federal budgetary challenges under which this Committee must now 

initiate action only heighten the importance of attention to these paramount structural dynamics. 

Two Rural Development Title Challenges 

This Committee faces two significant challenges, as it begins work to better frame 

rural development policy to twenty-first century dynamics. One is the continuing dependence of the Agriculture Committees on outmoded definitions of ‘‘rural’’ as the 

sole mechanism for targeting resources to rural America. The problem which exists 

in the current ‘‘rural’’ definitions is widely acknowledged. Legislators recognize its 

inadequacy for addressing the uniqueness of the local rural circumstance. Our 

USDA colleagues have an equally frustrating challenge in attempting to fairly and 

equitably administer these programs. Consequently, everyone remains frustrated, 

accusations abound, and transaction costs grow worse, as the ‘‘waiver’’ option becomes the ‘‘default rule.’’ Surely, this failure is speaking volumes, and we can and 

must do better, by and for all concerned. 

The second is the dire circumstances which rural governments face in responding 

to the impacts of the Great Recession, drastically declining Federal resources, very 

modest rural philanthropic resources, and the need, given these realities, for evergreater safety net services to their citizens. The relevance of a Rural Regional Innovation approach for addressing both challenges is clear. An approach which seeks 

to advance the regional competitiveness of asset-based economies, seeks greater 

local engagement and flexibility in establishing priorities for shared Federal, state, 

and local investments, and forces local collaboration regarding priority setting and 

program execution, becomes increasingly attractive. The current crises are creating 

new opportunities. Local jurisdictions are recognizing they must work together to 

ensure scarce Federal resources are leveraged to the maximum, services are consoliVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00104 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
101

dated where possible but never duplicated, efficiencies are captured, and local creativity rewarded. 

The Futility of ‘‘Rural’’ Definitions, As A Mechanism for Rural Policy Innovation 

Simply put, there is no one definition of ‘‘rural.’’ As the Members of this Committee know well, rural America is amazingly diverse, from multiple perspectives. 

In reality, from a Federal standpoint, a ‘‘rural’’ definition is a non-specific, changeable, and horribly imprecise composite of a disparate set of variables, differing 

across Federal policies and programs, which is used to target resource allocations. 

This is not a policy goal. This is an administrative construct. Unfortunately, initiating policy discussions by focusing attention upon the question of what should be 

a ‘‘rural’’ definition deflects consideration of a far more important question, and Federal policy failure: the lack of a stated goal for Federal investments in non-metropolitan geographies. 

Various definitions are used for the tabulation of data by Federal agencies. Numerous other definitions exist across Federal agency programs, targeting resources 

toward rural people and places. Two major types of rural definitions are used for 

the statistical tabulation of data, the official designations of ‘‘urban’’ and ‘‘rural’’ by 

the U.S. Census Bureau, and Core-Based Statistical Areas as defined by the Office 

of Management and Budget. The U.S. Census Bureau defines urban areas as core 

blocks and block groups with an overall population density of 1,000 people per 

square mile, and surrounding blocks with an overall density of 500 people per 

square mile. These urban areas range in overall population from about 2,500 to 

nearly 2,000,000. According to this definition, anything that is not defined as 

‘‘urban’’ is considered ‘‘rural.’’ The Census divides these urban areas into two types: 

urbanized areas with an overall population greater than 50,000, and urban clusters 

with an overall population less than 50,000. 

There are significant drawbacks for using these definitions for policy targeting. 

First, these boundaries are only defined once every 10 years, with the decennial 

Census. Also, these urban area boundaries do not perfectly align with the jurisdictional boundaries of cities and towns. Finally, there is very limited data at the subcounty level, making it difficult to assess more localized conditions and trends, to 

inform resources targeted toward sub-county areas. The American Community Survey data will now attempt to address this challenge with 5 year moving averages 

with social, demographic, and economic estimates for every Census tract and block 

group in the U.S. However, this averaging will create additional challenges. 

Core-Based Statistical Areas are built from the Census Bureau’s Urban Area Designations, as ‘‘functional regions’’ around urban centers, based on county boundaries. 

Urbanized areas of 50,000 or more population form the principal city of a metropolitan area, and the county or counties containing this urbanized area form the core 

county (or counties) of that metropolitan area. Surrounding counties with high commuting flows to this area are included as outlying counties. Micropolitan areas are 

defined in much the same way, with a principal city of population between 10,000 

and 49,999, and including surrounding counties based on commuting. 

These definitions also have significant policy targeting drawbacks. Non-metropolitan counties, which include both micropolitan and non-core counties, are often 

equated with rural. However, both metropolitan and non-metropolitan counties contain both urban and rural territory. This, of course, leads to some very confounding 

specific examples, particularly in the western U.S., with widely varying characteristics across geography. For example, the Grand Canyon is in the Flagstaff Metropolitan Area. Over half of all rural people actually reside in metropolitan counties. And, over 40 million metropolitan residents reside outside of large urbanized areas. The following table shows population by both county designation 

and urban and rural geography, and illustrates that county level geography does not 

accurately reflect urban and rural population distributions. It is important, then, to 

look beyond county level designations when targeting rural populations for policy 

impact.

Distribution of Population 

Urbanized 

Areas 

Small Cities 

and Towns Rural Total 

Metropolitan 192,064,228 1 10,338,988 1 30,176,724 232,579,940

Micropolitan 255,305 14,976,437 14,299,972 2 29,531,714

Noncore 18,588 4,704,763 14,586,901 2 19,310,252

102

Distribution of Population—Continued

Urbanized 

Areas 

Small Cities 

and Towns Rural Total 

Total 192,338,121 30,020,188 59,063,597 281,421,906

1 40.5 million people live outside urbanized areas in metropolitan counties. 

2 48.8 million people live in non-metropolitan counties. 

Urban and rural population figures from Census 2000; CBSA status from the December 2005 classifications.

As mentioned above, this all leads to some very confusing realities, from a definitional standpoint. The most ‘‘rural’’ states, in terms of population percentage, only 

account for under 7% of the total U.S. rural population (Vermont: 62%; Maine: 60%; 

West Virginia: 54%; Mississippi: 51%; and South Dakota: 48%). Conversely, the five 

states that account for over 25% of our nation’s total ‘‘rural’’ population are all usually viewed as quite ‘‘urban’’ (Texas: 3.6 million; North Carolina: 3.2 million; Pennsylvania: 2.8 million; Ohio: 2.5 million; and Michigan: 2.5 million). 

Clearly, non-metropolitan residents should be included when targeting rural populations. While non-metropolitan counties do include some urban residents, with few 

exceptions non-metropolitan urban residents live in small cities and towns, which 

are not targeted in urban programs. Though unintentional, urban programs tend to 

advantage larger urbanized areas, often failing to address the needs of smaller cities 

and towns within metropolitan counties, which can become excluded from both 

urban programs, and rural programs which target only non-metropolitan residents. 

Given these dynamics, and the level of rural population within metropolitan areas, 

policymakers seeking to address the needs of rural people, where they live, must 

explore new alternatives for program funding. Furthermore, advanced broadband 

and transportation infrastructure further cloud these definitions, if we are to consider each as discrete entities. All of this cries out for serious reconsideration of 

rural definitions as a sole policy targeting mechanism. 

Micropolitan areas become very attractive geographies for such regional innovation strategies. In most cases, the principal city in micropolitan areas is the core 

regional driver for economic activity and service delivery, with anchor institutions 

across most of the critical sectors, including health, education, workforce, transportation, human services, entrepreneurship, and innovation. Creating regional approaches which align these micropolitan areas with contiguous, non-core county economic efforts should be given serious policy consideration. 

The Impact of the Global Recession on Local Rural Governments 

The Great Recession is having a particularly challenging impact on rural communities and the units of government seeking to serve them. The deficit numbers are 

sobering. These rural governments face numerous challenges—dealing with decreasing tax revenues, declines in Federal and state support, and significantly expanding 

service needs, particularly in social services. These cuts also have huge impacts on 

local economies, which also must weather declining property values, household incomes, and consumer spending. 

These difficulties exacerbate the ongoing structural disadvantages of underresourced rural governments, already struggling with very limited capacity, challenging service delivery costs, diseconomies of scale, and unique socioeconomic and 

demographic circumstances. Economists Alison Felix and Jason Henderson, in a recent Main Street Economist publication of the Kansas City Federal Reserve Bank, 

suggest local governments really have only three options: raising revenue, reducing 

overall spending by cutting services, or reducing costs by becoming more efficient 

in service delivery. 

Of these, they suggest the latter is the most politically palatable, and suggest four 

potential approaches for increasing this efficiency: consolidation, inter-municipality 

cooperation, internal reorganizing, or privatization. While each of these have merit, 

local government consolidation remains fraught with difficulty, organizationally, culturally, and politically. Internal reorganization and privatization are more acceptable alternatives, but by far the most promising is the potential for regional collaboration among local governments, a process that is already well advanced in many 

rural geographies. 

While current budgetary challenges offer a convenient raison d’eˆtre for regional 

collaboration, a much more promising process would be one in which Federal and 

state policies also advantage such dynamics. Development organizations, councils of 

governments, metropolitan and/or regional planning organizations, and other operVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00106 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
103

ational models already exist. The Obama Administration has developed several significant regional policy efforts across Federal agencies, all designed to enhance 

place-based policy opportunities. 

It is important for all local governments to take advantage of any potential opportunity. But Federal decision-makers have a unique obligation to our nation’s rural 

governments, where per capita Federal commitments for non-metropolitan community resources were $433 per capita less in 2009 than those to metropolitan areas. 

Beyond the public sector, the rural disadvantage in philanthropic funding also remains significant. A 2004 report by the National Committee for Responsive Philanthropy, ‘‘Beyond City Limits: The Philanthropic Needs of Rural America,’’ found that 

out of 65,000 grant-making foundations, only 184 made grants characterized as 

‘‘rural development.’’

In closing, I would like to reiterate three points. First, while categorical grants 

remain important, they are insufficient for capturing the ultimate rural opportunities before us. Dynamic regional economies are the key to rural America’s competitiveness in a global future, and USDA RD programming must be reshaped to advantage regional collaborations, which currently do not align well with existing ‘‘rural’’ 

targeting dynamics. 

Second, we must seek creative new policy approaches which better advantage 

micropolitan regions and smaller urban places which align their regional strategies 

with those of non-core rural counties contiguous to them. Opportunities abound 

here, including those in renewable energies, regional food systems, transportation, 

education, health, and entrepreneurship policy. Finally, this Committee retains statutory responsibility for all of rural America, not just agriculture. Fortunately, never 

have the interests of mainline agriculture and rural economic development been 

more closely aligned. 

Thank you, again, Chairman Johnson, Ranking Member Costa, and Members of 

the Subcommittee for the opportunity to testify this morning on these critical rural 

development issues. Your continued leadership in crafting a twenty-first century 

Rural Regional Innovation Policy is critical, and I look forward to working with you 

over the course of these farm bill discussions. I look forward to answering any questions.

The CHAIRMAN. Thank you so much for your testimony, Mr. 

Fluharty. 

And last on our panel is Mr. Mike Dozier, director of the Office 

of Community and Economic Development, Cal State University, 

Fresno. 

STATEMENT OF MIKE DOZIER, DIRECTOR, OFFICE OF

COMMUNITY AND ECONOMIC DEVELOPMENT, CALIFORNIA 

STATE UNIVERSITY, FRESNO, FRESNO, CA 

Mr. DOZIER. Chairman Johnson, Ranking Member Costa, Members of the Subcommittee, thank you. I find this an honor that you 

asked me to come and testify on this particular matter. 

I want to point out that I was born and raised in the rural Pennsylvania community of Lock Haven, and after 5 years in the Air 

Force and completion of college, I began my professional career in 

working in two communities in the San Joaquin Valley, Livingston 

and Atwater. 

I am now the Director of the Office of Community and Economic 

Development at Fresno State, and Fresno State is a Hispanic Serving Institution with a Hispanic enrollment of 36 percent. In my capacity as director, I am also lead executive of the California Partnership for the San Joaquin Valley and the Fresno State ConnectRural Development Center. The partnership is a public-private regional collaboration that covers the eight counties and 27,515 

square miles. It is the largest and the most productive agricultural 

region in the United States. That collaborative was established by 

Governor Schwarzenegger in 2003. 

104

The RDC is a resource center for rural communities that includes 

17 on-campus and off-campus partners with broad range of expertise in economic development, housing, community infrastructure, 

land-use planning, and finance. 

Detailed information about both of these initiatives are included 

in your packet. 

The USDA’s definition of rural impacts the eligibility of communities and individuals to receive financial assistance. Rural Development has several different definitions for its programs as we 

have heard today. These definitions are not standardized, and they 

are often confusing. 

Different programs and services at the state and national level 

define rural area, rural community, and rural city and/or county in 

a variety of ways. Some programs use definitions such as ‘‘communities under 50,000 that are rural in nature, areas of less than 

2,500 not in Census places,’’ or ‘‘non-metro county.’’

Further evidence of issues with current USDA definitions can be 

found in the definition of metropolitan counties. The vast majority 

of California is considered to be metropolitan, and all eight counties of the San Joaquin Valley are considered to be metropolitan. 

Approximately 80 percent of California’s total mass is rural, and 

agriculture remains a major economic driver and employer for most 

of the area. California’s 2007 farm gate of $36.6 billion outpaces 

number two, Texas, at $19.1 billion and accounts for approximately 

13 percent of U.S. agricultural cash receipts. In 2007, California exported $10.9 billion in agricultural products; nine out of ten of the 

nation’s top-producing agricultural counties are in California. Fresno County alone has farm receipts greater than 29 individual 

states: $5.4 billion in 2007. 

Despite this, assessing or accessing USDA programs in California has long been difficult for our rural communities due to definition of rural and the limited number of USDA offices and staff. 

The San Joaquin Valley, the largest agricultural region in United 

States by size and by production, does not have one single nonmetro county. 

Now, if you take the definition of communities of 50,000 or less 

in rural in nature, the following is true of the San Joaquin Valley: 

There are 16 urban cities. There are 46 unurban or non-urban cities. There are 445 unincorporated communities. There are 122 Census place designated places. Fifty-five percent of the population 

would live in those 16 cities; 45 percent of the population lives in 

communities outside or under 50,000; and 36.4 percent of the population lives in communities with a population of 20,000 or below; 

27 percent of the population lives in rural unincorporated communities. 

In 2005, the Congressional Research Service released a report on 

California’s San Joaquin Valley which recognized that by a wide 

range of indicators, the San Joaquin Valley is one of the most economically depressed regions in the United States. 

The San Joaquin Valley continues to face challenges at magnitudes that are simply not experienced elsewhere. Average per 

capita incomes are 32 percent lower; college attendance 50 percent 

lower; and health care, access to health care, 30 percent lower than 

the state; and incidences of violent crimes are 25 percent more. 

105

The CRS report confirmed what we in the region had long suspected: Every county in the San Joaquin Valley has historically received fewer Federal funds than the national per capita average or 

for California. More recently, the U.S. Census Bureau’s Consolidated Federal Funds Report showed that per capita funding for the 

eight county San Joaquin Valley was 42 percent of the national average and 35 percent of the California State average. 

So how is it the richest agricultural area in the United States 

with the highest levels of poverty gets less than the State of California or the nation in per capita Federal funding? Arguably the 

issue before you today, the rural definition, is a good reason for 

that. Quite frankly, without a definition of rural that fits the needs 

and realities of rural California, USDA program dollars——

The CHAIRMAN. The gentleman’s time has expired. You want to 

bring your comments to a close? 

Mr. DOZIER. Yes. 

Without it, the dollars would be serving the most underserved in 

rural regions of the nation. Additionally, the funds will not be effectively delivering programs and services to the population they were 

designated to assist. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Dozier follows:]

PREPARED STATEMENT OF MIKE DOZIER, DIRECTOR, OFFICE OF COMMUNITY AND

ECONOMIC DEVELOPMENT, CALIFORNIA STATE UNIVERSITY, FRESNO, FRESNO, CA 

Mr. Chairman and Members of the Subcommittee,

Thank you for the opportunity to address you on this matter. My name is Mike 

Dozier. I was born and raised in the rural Pennsylvania community of Lock Haven. 

After 5 years in the Air Force and completion of college, I began my professional 

career by working in two rural communities in the San Joaquin Valley—Livingston 

and Atwater. I am now the Director of the Office of Community and Economic Development at California State University, Fresno, a Hispanic Serving Institution 

with Hispanic enrollment of 36%. In my capacity as Director, I am also the Lead 

Executive of the California Partnership for the San Joaquin Valley (Partnership) 

and the Fresno State Connect-Rural Development Center (RDC). The Partnership 

is a public-private regional collaboration that covers eight counties, 27,515 square 

miles, in the largest and most productive agriculture region in the United States. 

The RDC is a resource center for rural communities that include 17 on-campus and 

off-campus partners with a broad range of expertise in economic development, housing, community infrastructure, land use planning, and finance. More detailed information on both initiatives is attached for your review. 

The USDA definition of ‘‘Rural’’ impacts the eligibility of communities and individuals to receive financial assistance. Rural Development has several different definitions for its programs. These definitions are not standardized and are often confusing. Different programs and services at the state and national level define rural 

area, rural community, and rural city and/or county in a variety of ways. Some programs use definitions such as ‘‘communities under 50,000 that are rural in nature,’’ 

‘‘areas of less than 2,500 not in Census places,’’ or ‘‘non-metro county.’’ Further evidence of issues with current USDA definitions can be found in the definition of 

‘‘Metropolitan’’ counties. The vast majority of California is considered to be metropolitan—including the entire eight county San Joaquin Valley! (See map below). 

Approximately 80% of California’s total land mass is rural and agriculture remains a major economic driver and employer for much of that area. California’s 

2007 farm gate of $36.6 billion far outpaces number two Texas at $19.1 billion and 

accounts for approximately 13% of U.S. agricultural cash receipts. In 2007 California exported $10.9 billion in agricultural products. Nine out of ten of the nation’s 

top producing agricultural counties are in California. Fresno County alone has farm 

receipts greater than 29 individual U.S. states: $5.345 Billion in 2007. Despite this, 

accessing USDA programs in California has long been difficult for our rural communities due to definition of rural and the limited number of USDA offices and staff.

106

The San Joaquin Valley, the largest agricultural region in the United 

States by size and by production, does not have one single non-metro County.

Source: Map prepared by ERS from U.S. Census Bureau data.

If you consider the definition that determines rural as ‘‘communities under 50,000 

that are rural in nature,’’ the following is true of the San Joaquin Valley:

• 16 urban cities in SJV (50k or more).

• 46 cities considered ‘‘non-urban’’ (under 50k).

• 445 unincorporated communities.

• 122 Census designated places (CDP) in SJV.

• 55% of SJV population lives in 16 urban cities that have populations of 50k+.

• 45% of SJV population lives in communities with populations of 50k and below.

• 36.4% of SJV population lives in communities with populations of 20k and 

below.

• 27% of SJV population lives in rural unincorporated communities.

In 2005, the Congressional Research Service released a report on California’s San 

Joaquin Valley which recognized that ‘‘by a wide range of indicators, the SJV is one 

of the most economically depressed regions of the United States’’ (CRS Report 

RL33184). By a wide range of indicators, the San Joaquin Valley continues to face 

challenges at magnitudes that are simply not experienced elsewhere. Average per 

capita incomes in the San Joaquin Valley are 32% lower than the statewide average, 

college attendance is consistently half the statewide average, access to healthcare 

is 31% lower and incidences of violent crime are 24% higher in the San Joaquin Valley than the statewide average. 

The CRS report confirmed what we in the region had long since suspected: every 

county in the San Joaquin Valley has historically received fewer Federal funds than 

the national per capita average or for California. More recently, the U.S. Census Bureau’s Consolidated Federal Funds Report shows that per capita funding for the 

eight-county San Joaquin Valley in 2009 was 42% below the U.S. average and 35% 

below the California state average. So how is it that the richest agricultural 

area in the United States, with the highest levels of poverty, gets less than 

the State of California or the nation in per capita Federal funding?

Arguably, the deficit in Federal investment has been the development of funding 

formulas, and even more directly associated with the topic of today’s hearing, the 

definition of ‘‘rural’’ used in program eligibility criteria. The fundamental problem 


11202066
107

for the San Joaquin Valley is that we are a rural region—home to five of the ten 

most agriculturally productive counties in the United States—however we often find 

ourselves ineligible to compete for USDA dollars as a result of some of the current 

definitions of rural used by USDA. Quite frankly, without a definition of rural that 

fits the needs and realities of ‘‘rural California,’’ USDA program dollars will not be 

serving the most underserved and rural regions of the nation. Additionally, the 

funds will not be effectively delivering programs and services to the populations 

they were designed to assist. 

Thank you for your time and consideration. 

ATTACHMENT 1

Fresno State Connect-Rural Development Center—Connecting Everyone to 

Opportunity 

I. Need: Profile of a Stressed Region 

California’s San Joaquin Valley (SJV) comprises eight counties—Fresno, Kern, 

Kings, Madera, Merced, San Joaquin, Stanislaus and Tulare—that account for a 

growing population of 3,880,304 with 47 percent Hispanic. Within the eight-county 

region, there are 46 incorporated small rural cities with populations under 50,000. 

The 731,127 residents in these communities comprise 18 percent of the total population in the Valley. 

One-quarter of California’s total population live in unincorporated communities. 

There are 220 low-income unincorporated communities in the eight-county region, 

which is home to 1,090,468 people, or 27 percent of the SJV’s total population. 

The SJV remains one of the most stressed regions in the country with 45 percent 

of its population living in small and rural communities under 50,000. 

In a 2010 study, the Associated Press Economic Stress Index (APESI) revealed 

that seven of the SJV’s eight counties were among the top 20 stressed counties in 

the nation. Index scores were determined using a county’s bankruptcy rate, along 

with the foreclosure and unemployment rates. A county is considered stressed if it 

receives an index score exceeding 11. All but one SJV county had index scores above 

22. 

The SJV has been one of the hardest hit regions with the national home foreclosure crisis. The region is home to four of the ten cities in the country with the 

highest home foreclosure rates. With one in eight homes foreclosed, the North SJV 

Cities of Modesto, Merced and Stockton respectively rank four, five and seven nationally. The City of Bakersfield in the South SJV ranks nine nationally with one 

in nine of its 268,989 housing units in foreclosure. 

The SJV also has some of the highest unemployment rates in the country. The 

unemployment rates as a whole are largely reflective of the even higher rates in 

small rural communities. According to the California Employment Development Department, as of December 2010 the SJV experienced an unemployment rate of 17.4 

percent, 5.1 percent higher than the state unemployment rate of 12.3 percent and 

eight percent higher than the national rate of 9.4 percent. Small and rural communities in the SJV fare much worst, with some communities experiencing unemployment rates upward of 40 percent (Mendota, 43 percent). Moreover, the U.S. Department of Labor reported in January 2010 that the San Joaquin Valley accounts for 

six of the ten metropolitan areas with the worst unemployment rates in the country. 

Furthermore, a disparity exists between per capita income in the SJV and California as a whole. In 2009, the U.S. Department of Commerce reported an average 

per capita income of $27,885 for the State of California. The average per capita income for SJV was 32 percent lower at $18,834.

Figure 1. San Joaquin Valley vs. State of California 

Indicator CA SJV Year 

Unemployment (%) 12.3 17.4 December 2010

Per Capita Income ($) 27,885 18,834 2009

Median Household Income ($) 58,925 44,947 2009

Population Living in Poverty (%) 14.2 20 2009

Regarding median household income, the SJV was also at a disadvantage to the 

rest of the state. The U.S. Census Bureau reported in 2009 that California’s median 

household income was $58,925. The SJV’s median household income was 24 percent 

lower at $44,947. The SJV also had more of its population living in poverty in 2009. 

According to the U.S. Census Bureau’s Small Area Income and Poverty Estimates, 

20 percent of the SJV’s total population was living in poverty. The comparable staVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00111 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
108

tistic for the state was 14.2 percent. With limited resources, this is the grim reality 

that confronts this region. 

Last, the SJV has also faced inequitable investment by private industry and Federal and state governments. The regional neglect of investment is highlighted by the 

U.S. Census Bureau’s Consolidated Federal Funds Report which shows that per capita funding for the eight-county SJV ($6,038.48) in 2009 was 42 percent below the 

U.S. average ($10,395.56) and 35 percent below the California State average 

($9,360.24). 

The SJV is confronting circumstances that undermine quality of life in the region. 

In view of the calamities described above, the dire need for a resource center such 

as the Fresno State Connect-Rural Development Center (FSC–RDC) is evident. 

II. The Value of FSC–RDC 

Rationale 

The recent economic downturn, and a lack of investment, has left many small and 

rural communities with depleted resources to carry out projects that are essential 

to their infrastructure, economy, and overall quality of life. As it is often the case, 

the lack of resources and personnel preclude available staff from executing the essential tasks. Therein lays the significance of the FSC–RDC: to provide small and 

rural communities across the eight-county SJV (targeted communities) a consolidated one-stop clearinghouse for accessing technical assistance and project management services for a variety of community needs. The FSC–RDC will connect these 

communities to myriad of indispensable expertise and resources to ensure that these 

predominately impoverished communities’ needs are met efficiently, effectively and 

affordably. 

Origins and Functionality 

The concept for the FSC–RDC began in April 2010 with the establishment of the 

Fresno State Connect (FSC) program. The FSC–RDC is aligned with the principal 

of public service that is a pillar of Fresno State. The Office of Community and Economic Development (OCED) serves as the administrator for the FSC–RDC. OCED 

processes service requests from targeted communities and refers them to appropriate on-campus and off-campus partners. After OCED conducts the referral, the 

target community and RDC partner negotiate terms of service. A record of all RDC 

activities is kept by OCED using an intranet website. Attachment A provides an illustration of the FSC–RDC’s functionality. Attachment B provides descriptions for 

each of the FSC–RDC committed partners. 

Role of the Small Communities Network 

The Small Communities Network (SCN) is a consortium of small and unincorporated rural communities throughout the SJV who share resources, information, 

and expertise to solve each others’ community needs. All FSC–RDC partners will 

collaborate closely with the SCN to both solicit and receive project requests from 

targeted communities. All FSC–RDC partners will actively promote its services and 

resources through SCN mediums. Aside from receiving service requests from targeted communities themselves, FSC–RDC partners will also receive referrals from 

the SCN on behalf of its members. All RDC partners, however, will also take a 

proactive approach in reaching out to targeted communities to determine, from 

them, what the nature of their needs are and what terms of service should look like. 

109

Figure 2. Boundary Map of San Joaquin Valley

Note: The FSC–RDC will foster collaboration among eight counties and 

provide services to targeted communities in an area that is larger than the 

State of West Virginia (27,515.4 square miles). 

ATTACHMENT A

Fresno State Connect-Rural Development Center—Connecting Everyone to 

Opportunity 

Rural Outreach 

As the Secretariat of the Partnership, the Office of Community and Economic Development (OCED) at Fresno State, has facilitated the development of the Rural Development Center (RDC). The RDC is a key component of the Fresno State Connect 


11202067 11202068
110

(FSC) program created by OCED to provide a link between the University and the 

community at large. The RDC is aligned with the principal of community outreach 

that is a pillar of Fresno State. The RDC is currently made up of the following oncampus and off-campus partners:

On-Campus Partners:

• CERECC: Center for Economic Research and Education of Central California.

• CMP: Lyles College of Engineering, Construction Management Program.

• CRPC: Community and Regional Planning Center.

• CWI: California Water Institute.

• HHS: College of Health and Human Services.

• Lyles Center—TCP: Lyles Center for Innovation and Entrepreneurship—Technology Commercialization Program.

• OCED: Office of Community and Economic Development.

• UBC: University Business Center.

Off-Campus Partners:

• CALED: California Association for Local Economic Development.

• CCRH: California Coalition for Rural Housing.

• CITD: Center for International Trade Development.

• CVBI: Central Valley Business Incubator.

• FAHCC: Fresno Area Hispanic Chamber of Commerce.

• FCOG: Fresno County Council of Governments.

• RCAC: Rural Community Assistance Corporation.

• SHE: Self-Help Enterprises.

• USDA–RD: U.S. Department of Agriculture-Rural Development.

Representatives from each of the current RDC partners have been meeting once 

a month, since October 2010, to continue planning the development of the RDC. The 

Fresno State departments and off-campus organizations associated with the RDC 

have committed their ongoing partnership to provide specific expertise to rural communities of the San Joaquin Valley. Despite the lack of current funding, the RDC 

has already begun to provide services to rural communities, such as Biola, 

Firebaugh, San Joaquin and Tranquillity in rural Fresno County. OCED serves as 

the administrator of the RDC. It processes service requests from targeted communities and refers them to on- and off-campus partners best suited to service the request or need. At that point targeted communities will work directly with RDC partners to determine the scope of work. All service being provided by any and all RDC 

partners is being documented using an internal RDC intranet site. Attachment A

provides an illustration of the RDC’s functionality, while Attachment B offers descriptions of each of the RDC committed partners. 

OCED also is supporting the efforts of the Small Communities Network (SCN). 

Established in 2009, The SCN is a consortium of small and unincorporated rural 

communities throughout the SJV who share resources, information, and expertise 

to solve each others’ community needs. OCED is working closely with the SCN to 

plan the organization’s next workshop on February 25, 2011 in the rural community 

of Livingston (Merced County). The workshop’s purpose is to introduce the RDC 

partners and their resources/services, while providing SCN members an opportunity 

to share their needs with the RDC. 

OCED has worked on several grant applications to fund the RDC activities, which 

include:

• USDA Rural Business Enterprise Grant (2010, not awarded).

Purpose: Implement the Rural San Joaquin Valley Community and Economic 

Development Plan for SJV rural communities that are members of the Small 

Communities Network.

• HUD Hispanic Serving Institutions Assisting Communities Grant (2010, 

not awarded).

Purpose: Establish the infrastructure for the RDC and provide funding to associated partners for initial service contracts with SJV rural communities.

• USDA Rural Community Development Initiative (2010, pending).

Purpose: Implement the Pathways to Rural Economic Progress—San Joaquin 

Valley: An Integrated Housing and Economic Development Capacity-Building 

Project for rural communities.

111

• HUD Rural Innovation Fund (2011, pending).

Purpose: Provide housing and economic development assistance to Goshen, a 

Census designated place in Tulare County.

• USDA Agriculture and Food Research Initiative—Foundational Program: Agriculture Economics and Rural Communities (2011, pending).

Purpose: Promote development in the rural communities of the SJV through entrepreneurship, small business development and the facilitation of technical assistance via the Rural Development Center.

112


11202069
113


11202070
114

ATTACHMENT B

Fresno State Connect-Rural Development Center—Connecting Everyone to 

Opportunity 

Small Rural Cities 

There are 46 incorporated small rural cities in the San Joaquin Valley with populations under 50,000. Many of these cities are members of the Small Communities 

Network. The Fresno State Connect-Rural Development Center will reach out to 

these cities directly or through the Small Communities Network. 

Unincorporated Rural Communities 

One-quarter of California’s total population lives in unincorporated communities. 

There are 220 low-income unincorporated communities in the eight county San Joaquin Valley region, which is home to 1,090,468 people, or 27 percent of the San Joaquin Valley’s total population. Many of these communities have representation in 

the Small Communities Network. The Fresno State Connect-Rural Development 

Center will reach out to these communities directly or through the Small Communities Network. 

Rural Special Districts 

Special districts deliver highly diverse services including water, closed captioned 

television, mosquito abatement, and fire protection. Most special districts serve just 

a single purpose, such as sewage treatment. Others address a multiplicity of needs, 

as in the case of community service districts, which can offer up to 16 different services. Districts’ service areas can range from a single city block to vast areas which 

cross city and county lines. Many of the San Joaquin Valley’s rural special districts 

are members of the Small Communities Network. The Fresno State Connect-Rural 

Development Center will reach out to these special districts directly or through the 

Small Communities Network. 

Rural Community Based Organizations 

Fresno State Connect-Rural Development services will also be made available to 

community-based organizations that support rural cities, unincorporated rural communities, and rural special districts. Many of these organizations are active participants of the Small Communities Network. The Fresno State Connect-Rural Development Center will reach out to organizations directly or through the Small Communities Network. 

Small Communities Network 

Established in the Fall of 2009, the goal of the Small Communities Network 

(SCN) is to create a unified voice for rural communities in the San Joaquin Valley 

to pool resources, carry enhanced political clout, engage in regional planning initiatives while maintaining community culture, and develop appropriate community 

and economic development strategies that will lead to greater equity and quality of 

life. Members of the network include city staff and elected officials, business owners, 

workforce development personnel, planners, members of nonprofit and communitybased organizations and representatives for state and Federal elected officials. The 

SCN is currently staffed by the California Coalition of Rural Housing and the Office 

of Community and Economic Development at Fresno State. The SCN will serve as 

a referral mechanism for members to the Fresno State Connect-Rural Development 

Center. 

Fresno State Connect-Rural Development Center 

The Fresno State Connect program exists to further Fresno State’s role in community engagement. Located within the Office of Community and Economic Development (OCED) at Fresno State, Fresno State Connect will act as a clearing-house of 

information regarding the University’s extensive inventory of knowledge, experts, 

and resources. The goal is to connect the off-campus community with Fresno State 

by referring inquiries to appropriate University entities in a more effective and efficient manner. The Rural Development Center is one of the initial programs offered 

through Fresno State Connect. 

CERECC: Center for Economic Research and Education of Central California 

The Center for Economic Research and Education of Central California (CERECC) 

is an ancillary unit of the Department of Economics at Fresno State. The mission 

of CERECC is to integrate and utilize the expertise of the Department of Economics 

on a broader regional basis. The goal of CERECC is to enhance economic development in our region through the promotion of quality economic research and ecoVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00118 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
115

nomic education. To realize this goal, CERECC provides economic research on issues 

relevant to the Central Valley and brings this information to local educators and 

the community. 

CMP: Lyles College of Engineering, Construction Management Program 

The Construction Management Program (CMP) resides in the Lyles College of Engineering at Fresno State. It is an interdisciplinary program that is committed to 

educating the future professionals in the construction industry. These professionals, 

who are known as constructors, will execute architectural designs, apply engineering principles, manage project resources, and represent suppliers and manufacturers 

in the construction industry. The program places emphasis on the acquisition of 

both fundamental theoretical knowledge and the application of current practices in 

the industry. The program strives to provide assistance to the student in the development of personal qualities including human sensitivity, disciplined reasoning, and 

communications. 

CRPC: Community and Regional Planning Center 

The Community and Regional Planning Center (CRPC) is located within the College of Social Sciences at Fresno State and is designed to serve as a planning-related knowledge clearinghouse for the San Joaquin Valley. Through its faculty, associates and students, it will develop and deliver technical assistance to communities, 

addressing issues such as affordable housing, land use planning, zoning, environmental assessment, and energy conservation. It will support planning-related 

knowledge sharing and innovation through disseminating best land use practices, 

encouraging peer learning, publishing data analysis and research, and incubating 

and testing new ideas for sustainable development and resource conservation in the 

region. 

CWI: California Water Institute 

The California Water Institute (CWI) is an academic center of excellence for research, education, and policy analysis of issues involving water resources. Faculty, 

scientists, and technicians of the CWI laboratory collaborate with government agencies, other academic and research institutions, and private industry on a variety of 

projects by providing expert services in areas of environmental and water analyses. 

Within CWI is the Center for Disadvantaged Communities Water Assistance, whose 

purpose is to help small community drinking water and wastewater treatment systems develop the tools necessary to protect the public health and safety of the surrounding environment. It does this through the sharing and direct application of 

knowledge designed to improve the physical, financial, and organizational components of systems as they strive to increase the availability of safe, sustainable and 

reliable drinking water and wastewater treatment for all Californians. 

HHS: Health and Human Services 

The primary mission of the College of Health and Human Services (HHS) at Fresno State is to provide a professionally oriented education at the undergraduate level 

and provide graduate programs in specialized disciplines that serve the needs of students and the emerging needs of residents and health and human service providers 

in the San Joaquin Valley. The College’s laboratories, centers and institutes, working with faculty in each academic program, address issues of bridging health policy, 

nursing, social services, children, and obesity as well as other challenges facing all 

segments of the population across the region. Also included are several off-campus 

research and training centers which serve as catalysts to bring together the resources of the College and community professionals, agencies and organizations to 

improve the health and welfare of communities located within the region. The fundamental process linking all programs within the college is professional collaboration based on a common vision and a commitment to service. 

Lyles Center-TCP: Lyles Center for Innovation and Entrepreneurship-Technology Commercialization Program 

The Technology Commercialization Program (TCP) is managed by the Lyles Center for Innovation and Entrepreneurship at Fresno State. TCP helps entrepreneurs, 

small and medium businesses; local governments and nonprofit agencies achieve 

commercial success by conducting market research, idea feasibility, idea development, identifying intellectual property, recommending intellectual property protection mechanisms, and assisting in ideas to market commercialization. 

OCED: Office of Community and Economic Development 

The Office of Community and Economic Development (OCED) is dedicated to 

aligning Fresno State’s intellectual capacity and innovation-driven economic develVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00119 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
116

opment initiatives to improve the competitiveness and prosperity of the San Joaquin 

Valley. In supporting economic development innovation, OCED collaborates with regional industry clusters to develop a strategic approach to development, technology 

transfers, workforce development initiatives, infrastructure needs, and collaborative 

industry relations. Three direct results of OCED’s activities are the California Partnership for the San Joaquin Valley (Partnership), the Regional Jobs Initiative (RJI), 

and Fresno State Connect. The initiatives are based on the idea that regional economies are made up of a series of related industries, or clusters, that benefit one another. The initiatives continue to convene experts and leaders committed to sustainable community and economic development, environmental stewardship, and human 

advocacy for the San Joaquin Valley region. 

UBC: University Business Center 

The University Business Center (UBC) serves as the outreach arm for the Craig 

School of Business at Fresno State offering professional development programs and 

state of the art meeting facility. The UBC focuses on providing businesses and professionals with services and resources to foster growth, job creation and economic 

prosperity. Built in 1987 with donations from private businesses the UBC has an 

impressive history of serving private enterprises and public organizations in California’s Central Valley. 

CALED: California Association for Local Economic Development 

The California Association for Local Economic Development (CALED) is the premier statewide professional economic development organization dedicated to advancing its members’ ability to achieve excellence in delivering economic development 

services to their communities and business clients. CALED’s membership consists 

of public and private organizations and individuals involved in economic development: the business of creating and retaining jobs. 

In the Central Valley, CALED has focused its efforts on technical assistance and 

has led strategic funding trips with representatives from the U.S. Economic Development Administration, the U.S. Department of Agriculture-Rural Development, 

and the California Housing & Community Development. These highly successful 

trips enabled smaller communities to identify funding sources for much needed infrastructure and job-creating projects. This work is just one example of the continuous effort CALED has put into encouraging economic development in California’s 

rural communities. 

CCRH: California Coalition for Rural Housing 

Formed in 1976 following a farm worker housing conference, the California Coalition for Rural Housing (CCRH) is one of the oldest state low-income housing coalitions in the country. Through advocacy, organizing, research, and technical assistance, its goal is to make the case for rural housing improvement and strengthen 

the capacity of the nonprofit and public sectors to provide affordable housing and 

related facilities. Members are primarily community-based nonprofit and public developers, including the largest self-help housing producers in the U.S., as well as 

local government officials, and local activists concerned about rural quality of life. 

CCRH administers the San Joaquin Valley Housing Collaborative, a regional organization comprised of government and nonprofit representatives from the eight county 

region, as well as the Small Communities Network. 

CITD: Center for International Trade Development 

The Center for International Trade Development—Fresno (CITD) was founded in 

1989 as part of the State Center Community College District (SCCCD) outreach efforts to assist new and existing industries. It is also one of ten statewide initiatives 

funded by the California Community Colleges, Economic & Workforce Development 

Program (EWDP). In 1998, the Fresno Center was officially designated as one of the 

14 CITD offices in the State of California. Today the Fresno Center is the leading 

provider of export trade research, education, and training in Central California. It 

was named the CITD’s Ag-Hub, and with a Memorandum of Agreement with the 

California Department of Food and Agriculture (CDFA), hosts all incoming food and 

agricultural international buying missions to California. The mission of the CITD 

is to advance California’s economic development and global competitiveness by providing quality training and services to small to medium sized enterprises that are 

potential or current exporters or importers. The Center serves over 500 businesses 

each year and conducts over 20 export workshops with an average annual turnout 

record of over 200 businesses. 

117

CVBI: Central Valley Business Incubator 

The Central Valley Business Incubator (CVBI) is a 501(c)(3) nonprofit organization that provides business incubation services and technical assistance to entrepreneurs and innovators. Its overarching goal is to foster community and economic 

growth opportunities through the development of small business. CVBI also has a 

Virtual Incubator that enables it to provide web-based technical assistance and 

training aimed to support entrepreneurs and innovators in the creation and launch 

of new small businesses. CVBI’s Virtual Incubator is a robust, content-rich, technical assistance and training site that leverages a unique user-friendly and intuitive 

interface via the Internet. CVBI’s Virtual Incubator provides its services in both 

English and Spanish and enables communities to offer complete business incubation 

services, without the costs of traditional bricks and mortar rent or staff expenses. 

FAHCC: Fresno Area Hispanic Chamber of Commerce 

The Fresno Area Hispanic Chamber of Commerce (FAHCC) is committed to developing strategies and setting policies to better serve all business interests in the 

Fresno area, and assist in accomplishing their goals towards growth, while keeping 

in mind the number of Spanish and English speaking business owners interested 

in the welfare of the Fresno Area Hispanic community. It is also committed to effectively utilize existing resources by forming productive partnerships with corporations, small businesses, community and government entities in order to provide 

Spanish and English-speaking members with quality programs and opportunities. 

FCOG: Fresno Council of Governments 

The Fresno Council of Governments (FCOG) is a voluntary association of local 

governments. FCOG fosters intergovernmental communication and coordination, undertakes comprehensive regional planning with an emphasis on transportation, provides for citizen involvement in the planning process and supplies technical services 

to its member governments. FCOG is a member of the Regional Policy Council 

(RPC), which is the lead agency for San Joaquin Valley Blueprint coordination activities and is committed to incorporating rural communities in the San Joaquin 

Valley into this regional planning process. In all these areas FCOG serves as a consensus builder to develop an acceptable approach on how to handle problems that 

do not respect political boundaries. 

RCAC: Rural Community Assistance Corporation 

The Rural Community Assistance Corporation (RCAC) is a nonprofit organization 

that provides technical assistance, training and financing so rural communities 

achieve their goals and visions. RCAC’s work encompasses a wide range of services 

including technical assistance and training for environmental infrastructure; affordable housing development; economic and leadership development; and community 

development finance. These services are available to a variety of communities and 

organizations including communities with populations of fewer than 50,000, other 

nonprofit groups and tribal organizations. 

RCAC seeks new partnerships and opportunities to advance comprehensive community development and is committed to green initiatives in its programs and its 

organizational operations. The core values have been rooted in RCAC culture from 

the beginning: Quality, Respect, Integrity, Cooperation and Commitment. 

SHE: Self-Help Enterprises 

Self-Help Enterprises (SHE) is a private, nonprofit 501(c)(3) tax exempt corporation established under the laws of the State of California. Its mission is to improve 

the living conditions and community standards of low-income families in an eightcounty rural area of California’s San Joaquin Valley. Over the past 35 years, SHE 

has assisted small disadvantaged communities develop over 100 water and wastewater projects for over 26,000 people in the eight San Joaquin Valley counties. SHE 

has provided technical assistance to the water and/or sewer providers in these disadvantaged communities to enable them to address critical community facilities 

needs. SHE has also assisted 5,839 families to build their own homes through the 

mutual self-help housing program, developed and owns 1,154 deed restricted affordable rental units, repaired or rehabilitated 5,907 homes, and financially assisted 

1,369 families in the purchase of their first home. 

SHE has found that lasting community empowerment comes through the active 

participation of the community organizations that represent and serve them. Each 

of these communities has a governing board that is composed of volunteers who are 

responsible for all infrastructure matters, including compliance with regulations, 

budgeting and procurement, setting user rates, collecting user fees, staffing decisions, and system operation and maintenance. SHE staff provide training to community board members to help them work with project engineers, contractors, a mulVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00121 Fmt 6633 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
118

titude of funders, local government, and all other stakeholders and is glad to be a 

partner in the efforts of the Rural Development Center. 

USDA–RD: U.S. Department of Agriculture-Rural Development 

USDA Rural Development is committed to helping improve the economy and quality of life in rural America. Its financial programs support such essential public facilities and services as water and sewer systems, housing, health clinics, emergency 

service facilities and electric and telephone service. It promotes economic development by supporting loans to businesses through banks, credit unions and community-managed lending pools. USDA Rural Development offers technical assistance 

and information to help agricultural producers and cooperatives get started and improve the effectiveness of their operations. It also provides technical assistance to 

help communities undertake community empowerment programs. USDA Rural Development has a $115 billion portfolio of loans and will administer $20 billion in loans, loan guarantees and grants through our programs in the current fiscal year. It achieves its mission by helping rural individuals, communities 

and businesses obtain the financial and technical assistance needed to address their 

diverse and unique needs. With Service Centers in Kern, Fresno, Merced, Stanislaus 

and Tulare Counties, USDA Rural Development is well equipped to offer its services 

and resources to all rural communities in the San Joaquin Valley.

The CHAIRMAN. Thank you. 

Now we will go to our questions. As Chairman, I am going to 

defer and recognize the distinguished Ranking Member, Mr. Costa. 

Mr. COSTA. Thank you very much, Mr. Chairman. 

Each witness here has testified that the current definitions of 

rural are not working to the degree that they could be. Maybe it 

is not fair to summarize that they are unworkable, but certainly in 

listening to your testimonies, all of you indicated that there are 

needs that rural communities have that cannot finance their own 

infrastructure regardless of the size of the definitions. 

And so let me focus first on Mr. Dozier because my time is limited. 

Can you think of any other area in the country that has as much 

of an agricultural identity as the area that we are familiar with, 

the San Joaquin Valley that you and I have both spoke of, yet is 

not considered rural as defined by the Federal agencies? 

Mr. DOZIER. Actually I cannot. Like I said, I grew up in Pennsylvania. I also spent time in Georgia, and in the Air Force I was in 

Mississippi and rural areas, and none of them compare to the San 

Joaquin Valley. 

When I look at some of the cities in those rural areas outside of 

California, agriculture is a sector there, but in California, it is the 

sector. You cannot find a city, incorporated or unincorporated, 

within the San Joaquin Valley that does not have some tie to agriculture. 

Mr. COSTA. In that sense, what are the chief infrastructure needs 

that are not being currently met by the Rural Development Assistance Programs? Are other programs filling the gaps? 

Mr. DOZIER. Not really, no. The USDA has provided a number 

of different water and sewer projects for the smaller communities, 

but there are a number of those communities that are agriculture 

in nature that cannot. 

Mr. COSTA. What would be the ideal fix that could allow us to 

tap into the rural development? I asked the question of the previous witness about how it is defined as ‘‘rural in character.’’

Mr. DOZIER. And I have had time to think about that. Under 

30,000 would be great in our instance. You could simply go by Census, persistent poverty by Census track, and include under 30,000. 

119

Mr. COSTA. Under separate testimony for the record, if you could 

submit any other ideas, I think that would be helpful, Mr. Dozier. 

Mr. Fluharty, you are not shy about your testimony about Rural 

Development getting the short end of the stick when it comes to 

funding. Exactly how under-funded do you think RD Programs are? 

And given the recent budget situation which I described earlier 

under the microscope and likely to be cut back further, what do you 

think this means for future rural development? 

Mr. FLUHARTY. The critical question, the Federal syllogism for 

the next decade would be, ‘‘Should the Federal Government be 

doing this, should this agency be doing this, and what is the level 

of funding?’’ There is no doubt at all that the 1980 Act gives your 

leadership in this Committee this responsibility. 

The reason I urge a new model around regional innovation is 

that USDA can do nothing that isn’t statutorily-directed by this 

agency—by this Committee, and the reality is they are tremendously hamstrung given the fact that we essentially have a set of 

historical artifacts as these definitions to work around. 

As one example, per capita income for community resources is almost $500 less per capita for rural than urban across the United 

States. In rural America, we have 168 rural philanthropies. There 

are over 60,000 in the United States. We have a huge disadvantage. And rural America is amazingly diverse. I don’t care what 

Member we bring up here, it is going to be different where we are. 

Mr. COSTA. I think we all know that. 

Mr. FLUHARTY. So your challenge then about what we do there 

is exactly the same challenge that the Secretary raised. I want to 

suggest that the Small Cities Program in CDBG, which will also 

be cut significantly, could radically be altered to leverage with 

USDA and EDA and transportation moneys over time to raise a 

linked investment to build some local priorities, flexibility, and accountability. I believe we have to look in that regard. There simply 

is not going to be sufficient funding in any one. 

Mr. COSTA. All right. And if you can expand upon that for the 

record later on, we would all appreciate that. 

I have one question of Dr. Collins and Mr. Larson. And I am running out of time. 

Expand on what you mean by regional approach to rural development beyond just the planning stage. Does that translate into specific infrastructure projects? And how can we—they can be prohibitively very expensive when you cover larger areas. 

Dr. COLLINS. I come at this from a community development perspective, and from our institute’s perspective, the infrastructure is 

certainly important, but it is the people investments that are the 

most important. 

But what I would do, quite simply, is ditto what Mr. Fluharty 

says about the need to look at the importance of these micropolitan 

areas and look at the flows of traffic, information, money, and people into and around those areas. I think that they are the anchors 

of future rural development. 

Mr. COSTA. My time has expired. I don’t know, Mr. Chairman, 

if you want to allow Mr. Larson to answer the question or not. 

The CHAIRMAN. Sure. 

120

Mr. LARSON. Well, briefly, Mr. Chairman, what we do—and you 

referred to the regional concept and the collaborative efforts. What 

is going on in my part of the country, in South Dakota, and basically South Dakota is all considered rural, is we are working together as government entities in various political subdivisions and 

even the private sector, and we are all putting, ‘‘skin in the game’’ 

in working together to achieve these goals. And it is the Rural Development Assistance that would be applicable to any of these 

projects is a big help, but yet at the same time we are all working 

together. We are getting the broad base of the community and even 

a cross-section of our region around our community, and everyone 

is involved, and it has been very successful. 

The CHAIRMAN. Thank you. 

I recognize the gentleman from Illinois, Mr. Schilling. 

Mr. SCHILLING. Thank you, Chairman. 

This question is for Dr. Collins. In your testimony, you state that 

multiple Federal definitions of rural make things overly complicated. As a state agency that works with all of these definitions, 

please give us your thoughts on the USDA’s definitions, and then 

maybe elaborate on the benefits of streamlining these definitions. 

Dr. COLLINS. As a researcher, the definitions are very helpful because they do help with the—understanding some of the diversity 

of rural America. I think in practice, as I briefly stated in my testimony, we have not so much felt the impact with the communities 

where we work because we, as a government agency, tend to work 

with the smallest communities. Lots of times we are talking 3,000, 

4,000, 5,000 people. So we get in under—in areas where the USDA 

rules are applicable. 

However, because of the changes, and given the Federal budget 

situation, I think there should be deep concern in any redrawing 

of these regulations about what these definitions are going to mean 

to the communities that are undergoing the most change and will 

undergo the most change in the next 10 years. 

Mr. SCHILLING. Very good. 

And then my second and last question is also to Dr. Collins. You 

mentioned that monitoring the definition of rural is vital to making 

sure the rural needs are being met. In your view what are the most 

important needs of rural America today, and what opportunities do 

you see for the 2012 Farm Bill, and how to help meet them? 

Dr. COLLINS. Well, I would concur with Mr. Fluharty’s discussion 

of the importance of looking at the micropolitan areas and their importance. I think that the dynamics of rural are such, and conditions change so rapidly, that one needs to be aware of how quickly 

things can change. 

Just for example, I believe it is in the past month or 2, the Federal Reserve issued—the Kansas City Federal Reserve issued a report about the increasing debt load of farmers. We are not making 

any new farmland, and, in fact, we are taking it away through 

urban development in those fringe areas. 

I think an important thing to consider in all of this, especially 

given the at least influence of bioenergy or the importance of bioenergy, we really need to be looking at a strategy of not just statelevel, but national-level farmland preservation that goes beyond 

the Conservation Reserve Program and some of the other programs 

121

that are out there, because this energy issue, we are going to be 

asking double duty of our land. We are going to be growing feedstocks for energy, and we are going to be growing feedstocks to feed 

ourselves. 

So, this is one of the most significant things that we are facing. 

I think it has tremendous implications for regional rural development. 

Mr. SCHILLING. Very good. Thank you, doctor. 

With that, I yield back. 

The CHAIRMAN. The gentleman from Pennsylvania, Mr. Thompson. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

I also wanted to thank the Ranking Member for his invitation to 

come to his Congressional district. The fact is we already sent one 

of our best and brightest, having—living my whole life from Mr. 

Dozier’s hometown. So I will start my questions on that end of the 

table. 

There seems to be an overarching theme of that a one-size-fitsall approach for defining rural does not work, yet simultaneously, 

the current approach with different definitions is also problematic. 

In your view, what would be the better approach. 

Mr. DOZIER. I wish that I had an answer that would just blow 

you out of the water, but I don’t. I think that basically trying to 

compare California and its counties to Pennsylvania, or to Georgia, 

or to any of the other states is really difficult to do for a lot of different reasons, and the same holds true for South Dakota. It holds 

true for Texas. So it is really difficult to answer the question. 

I think that it is—there are brighter men than me, brighter 

minds than mine that can come together and give you that answer. 

But unfortunately, it is not working right now, it is confusing, and 

if there is some consistency to it, we are all going to be a lot better 

off. 

But I do believe in Mr. Fluharty’s feelings regarding innovation, 

and that those things cannot be excluded from the rural areas. 

They are looked at in the metro areas, and that has been one of 

the criticisms. The rural areas have it as well. 

Mr. THOMPSON. Do you believe that more regional input would 

be helpful when determining eligibility for Rural Development Programs? 

Mr. DOZIER. I do. I very much do. Our regional approach with 

the California Partnership for the San Joaquin Valley is a yardstick for a lot of people to follow. We have a broad—ten work 

groups that deal with everything from economic development to air 

quality issues within that region, and I believe that out of that 

could come a good definition. 

Mr. THOMPSON. Right. 

Mr. Fluharty, your testimony mentions the need to link rural 

communities to urban areas. Could you provide more detail on 

what such a linkage would look like. 

Mr. FLUHARTY. Actually this is happening all over right now. 

And I will use the micropolitan as a concern, because I don’t want 

to suggest that it is only the micropolitan areas. 

Those regional growth hubs of 10,000 to 50,000 are non-metropolitan, so they are eligible for non-metropolitan funding. We must 

122

link them to the contiguous rural counties that are non-core and 

think about distributed energy and renewables, food systems, 

transportation, health care service, human services. 

There are multiple examples out there. I will use one. We worked 

with AgStar, which is the Farm Credit System in Minnesota, on a 

34-county effort led by AgStar, and as a result of that, the Mayo 

Clinic and the Hormel Institute realized they had huge opportunities in that region that, frankly, would never have occurred in rural 

innovation had not the initiative funds, which are philanthropies, 

the mayors of those major cities, the county commissioners, and a 

regional framework began to think about an innovation strategy. 

Counties are doing it everywhere right now. 

And I want to suggest that that is a great new linkage that absolutely helps us as a committee politically. This Committee must 

maintain control of rural futures. You must do that because agriculture is so key to it. Linking to our urban sisters and brothers 

assists us in making that argument to HUD and DOT, et cetera. One last point. You have 50 state directors. This is the only Department with essentially a watchdog, an ombudsman and a collaborator for your programs in a state. I would suggest we really 

should think about how we link your mandates and your legislative 

future to directions to a state director that can work with Governors and others in building regionally appropriate strategies. It 

has to come from the dirt because every place is different. 

Mr. THOMPSON. Thank you. 

Dr. Collins, just real quickly, you mentioned and I heard 

micropolitan cities mentioned a number of times. You mentioned 

how they serve for an anchor for development efforts in their region. How do these cities fit into your approach to rural development? 

Dr. COLLINS. Well, I will talk about my backyard, I guess, in 

Macomb. And, by the way, I do have a Pennsylvania connection. I 

worked in Gettysburg for a while. 

Macomb and western Illinois have been losing population now 

since largely the turn of the century, with the exception of 

Macomb, where Western Illinois University is located. Our county 

began to lose population in 1980. It is a university town, and the 

university numbers are fairly stable. 

One, the focus——

The CHAIRMAN. Limit your comments. 

Dr. COLLINS. I will be very brief. 

There are two ways to do this. One is to use our regional universities, but also to work more closely with our community colleges 

and perhaps our local school systems. 

The CHAIRMAN. We are coming to a point, unfortunately, when 

the building is no longer going to be ours, or at least the room, so 

I will certainly entertain any further questions from the Majority 

or Minority with respect to any of these witnesses, and, if not, proceed to conclude the hearing. Does anybody else have anything 

they want to address to the panel? 

Let me just make a couple of comments. Before I do that, I would 

like to call on the distinguished Ranking Member, my friend, Mr. 

Costa for any closing remarks he has. Please turn off the timer 

here. 

123

Mr. COSTA. Well, I will be very brief. I just want to thank you, 

Mr. Chairman, for the hearing this morning. I think that we all 

represent facets of rural America, and as we look toward various 

efforts to get our nation’s fiscal house in order, programs that 

many of our communities have benefited from in the past and, we 

hope, in the future are important, and we need to be smart about 

the cuts we make to ensure that we extend the ability for our rural 

taxpayers’ dollars, who care as much as anybody does about ensuring that their Federal tax dollars comes back home to their needs. 

And rural America is challenged every day on a host of issues 

that we know in terms of economic development, and education, 

and in other ways that I think this hearing points out, and I want 

to thank you again for the time and the effort. We will work together in a bipartisan fashion with the United States Department 

of Agriculture to do a better job. 

The CHAIRMAN. Thank you, Ranking Member Costa. 

Let me just make a couple of quick concluding remarks and then 

some business affairs, if you will. 

I, too, want to thank both panels and all of the Members of the 

Committee for some superb questions and great responses. I think 

we really made some progress here. I think that over the course 

of the next year, 2 years, even less, we are going to have some clear 

realities and facts. First of all, as we see this week, we are going 

to—across the board at all levels of government, we are going to 

be dealing with spending cuts, and how we fit within the parameters of those, and how this program survives and flourishes despite cuts. 

We have the ongoing issue of needs within rural America and 

how the Department’s administration of this program meets or 

doesn’t meet those needs. And then obviously we have the rewrite 

of the farm bill that will have a dramatic effect on all of the contours that we deal with. And my hope is that we can work individually, but certainly collectively, to meet some mutual goals. 

Let me also acknowledge and thank our outstanding staff on 

both the Republican and Democratic side. They really make us look 

good, and I am very grateful for their input and their work. They 

really serve an extremely valuable role in this Committee. 

And last, thank you for your attendance at this important hearing. Under the rules of the Committee, the record of today’s hearing will remain open for 10 calendar days to receive additional material and supplementary written responses from the witness to 

any question posed by a Member. 

The hearing of the Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture is hereby adjourned. 

[Whereupon, at 11:55 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

124

125

SUBMITTED LETTER BY HON. JOE COURTNEY, A REPRESENTATIVE IN CONGRESS FROM

CONNECTICUT

October 7, 2009

Hon. THOMAS J. VILSACK, Secretary,

U.S. Department of Agriculture, 

Washington, D.C.

Dear Secretary Vilsack:

We write to urge you to reconsider and amend USDA’s 2004 Administrative Notice that clarifies the definition of the terms ‘‘rural’’ and ‘‘rural areas’’ for certain 

Rural Development programs. 

As you may know, beginning in June, several entities in our states began receiving notification that their applications for Federal grants, loans, and loan guarantees under the Community Facility and the Water and Waste Disposal programs 

could not be approved because the entities were located in areas that do not conform 

to USDA’s definition of ‘‘rural’’ and ‘‘rural areas.’’ Before June, these applicants 

would have been eligible for the programs for which they applied. Indeed, many applicants had qualified for and received assistance under these programs in the recent past. The denial of these applications stems from a USDA Office of General 

Counsel (OGC) legal opinion issued on June 29, 2009, which itself was predicated 

on a prior legal opinion and an Administrative Notice both handed down in 2004. 

At issue is how USDA has traditionally viewed rural communities in the Northeast. Under the statute, ‘‘rural’’ and ‘‘rural area’’ means a ‘‘city, town, or unincorporated area that has a population of no more than 10,000 inhabitants’’ for the purposes of Water and Waste Disposal assistance. A similar definition applies to the 

Community Facility program except that the population cap is 20,000 inhabitants. 

In the absence of an explicit definition of a ‘‘city, town, or unincorporated area,’’ 

USDA had previously interpreted the statute to include distinct population centers 

such as boroughs, villages or other subdivisions of incorporated areas. (For brevity’s 

sake these subdivisions will collectively be referred to as ‘‘villages.’’) These villages 

resulted from the unique development of the Northeast, and in part, reflect the fact 

that the municipalities, not counties, are the prevailing jurisdictions of local government—with counties merely demarking historical geographical regions. Villages are 

typically quasi-municipal jurisdictions whose status as distinct communities has 

been recognized by the Census Bureau as Census Designated Places (CDPs) within 

larger towns. Arguably, many of the these villages already meet the definition of 

the cities or towns adopted under USDA’s Administrative Notice, since they have 

special purpose charters from the state, elected leadership, and fixed boundaries. 

Yet, applications for entities located in these areas were rejected on the basis of the 

OGC’s opinion. 

After reviewing the OGC legal opinions, it appears that the change in USDA’s interpretation was not required by revisions to the statute made under the 2002 Farm 

Bill. In fact, the definition of ‘‘rural’’ and ‘‘rural area’’ under the Community Facility 

and Water and Waste Disposal programs has not changed since the 1990’s. Instead 

it appears that USDA was attempting to develop a workable and consistent national 

policy for a number of rural development programs. While such an objective is laudable in theory, a universal definition fails to account for the uniqueness of how communities have developed in the Northeast. Knowing the effects on the eligibility of 

communities in our states, USDA should not have taken such a significant discretionary action without an opportunity for meaningful public scrutiny and comment. 

We recognize that this issue did not originate during your tenure. Nonetheless, 

USDA’s policy is creating hardship in communities that have been among those 

most severely impacted by the economic crisis. We believe that this situation could 

largely be remedied through a new administrative policy that recognizes the historic 

view USDA has taken with respect to villages. There is precedent for USDA accommodating such anomalies: the 2004 Administrative Notice itself created a special 

rule for Puerto Rico. Moreover, the 2004 legal opinion notes that there was at least 

one other interpretation of the definition of city or town that USDA could have relied on, specifically the use of CDPs. 

We believe that it is particularly important for USDA to craft an administrative 

remedy, since we were not informed of USDA’s nearly 6 year old policy change until 

it began to be enforced at the end of June 2009. As a result, we did not have opportunity to address the issue in the 2008 Farm Bill. 

On a related matter, we note that Subsection 6018(b) of the 2008 Farm Bill requires the Secretary to prepare an assessment of the various definitions of ‘‘rural’’ 

and ‘‘rural area’’ for different USDA programs and the effects these variations have 

126

on programs. The Secretary is also required to make recommendations for ways to 

better target funds through rural development programs and to report on the effect 

that changes under the 2008 Farm Bill have had on the funding and participation 

in each state. In light of USDA’s unilateral action in this area already, this report 

has additional interest to us. We ask that you provide us with the status of your 

progress on this report and request a briefing for our staffs as soon as possible. 

Finally, there are several procedural questions related to the Administrative Notice and the OGC legal opinions that we would appreciate answers to:

(1) After the Administrative Notice and first OGC opinion were issued in 2004, 

what steps were taken to ensure that the new definitions these documents set 

forth were applied? Why did it take more than 5 years and second legal opinion 

for USDA to begin implementing its ‘‘new’’ definition in our states?

(2) Has this policy been enforced uniformly in all states?

(3) The 2004 Administrative Notice on which the OGC’s legal opinions are based 

on expired on February 28, 2005. What was the purpose of expiration and what 

standing does the Administrative Notice have now that it has expired?

(4) The 2004 legal opinion stated that Rural Development ‘‘must revise’’ its Administrative Notice to define ‘‘unincorporated areas’’—Did Rural Development 

ever revise the Administrative Notice as the OGC suggested? If not, why not? 

Did the OGC make any subsequent requests for Rural Development to amend 

the Administrative Notice?

Thank you for your attention to this issue and we look forward to your prompt 

reply. Should you have any questions, please contact John Hollay from Rep. Joe 

Courtney’s staff [Redacted]. 

Sincerely,

127

Hon. JOE COURTNEY; Hon. RUSH D. HOLT;

Hon. BILL PASCRELL, JR.; Hon. JOHN W. OLVER;

Hon. ROSA L. DELAURO; Hon. JAMES P. MCGOVERN;

Hon. FRANK A. LOBIONDO; Hon. PATRICK J. KENNEDY;

Hon. BILL DELAHUNT; Hon. CHRISTOPHER S. MURPHY;

Hon. BARNEY FRANK; Hon. FRANK PALLONE, JR.;

Hon. JOHN F. TIERNEY; Hon. JOHN B. LARSON;

Hon. NIKI TSONGAS; Hon. JAMES R. LANGEVIN;

Hon. ALBIO SIRES; Hon. JAMES A. HIMES.

November 12, 2009

Hon. JOE COURTNEY, 

U.S. House of Representatives, 

Washington, D.C.

Dear Congressman Courtney:

Thank you and your colleagues for your September 23, 2009, letter regarding the 

definition of ‘‘rural’’ as it applies to the Department of Agriculture (USDA) Rural 


11202071 11202072 11202073 11202074 11202075 11202076 11202077 11202078 11202079
128

Development’s community-based programs for water and wastewater disposal systems and for essential community facilities. I truly appreciate your support for these 

USDA Programs and your passion for ensuring that the areas of your states in need 

of affordable financing can be served. 

I know, too, that you realize the challenge we face in applying a statutory standard nationwide based on the concept of a city or town when our Federal system of 

government simply requires that states and territories have complete autonomy in 

defining their municipal structures. While some unique circumstances were addressed by the farm bill directly, notably Hawaii and Puerto Rico, the colonial 

states’ unincorporated villages within incorporated towns were not. 

Your letter noted that the circumstances leading to the June 29, 2009, opinion 

from legal counsel occurred before this Administration took office and that those actions could have been more transparent. I agree. In line with the policies of the 

Obama Administration, we are committed to a rapid, open process to address your 

concerns. Because this matter is of the utmost importance to me, I have directed 

the Under Secretary for Rural Development to take two steps. First, he will provide 

a revised Administrative Notice to all affected Rural Development State Offices 

clarifying that unincorporated villages within incorporated municipalities may be 

considered separate cities or towns for purposes of population thresholds for program eligibility provided that they meet characteristics one might expect to find in 

a municipality, such as a separately identifiable village name, a post office, or other 

indicators of a community that will last through the life of the loan that is being 

requested. 

Second, in response to this matter Rural Development will be soliciting public 

comments through an Advanced Notice of Proposed Rulemaking (ANPR) on defining 

‘‘rural’’ in an equitable manner across the nation in the near future. We would appreciate your input on developing a consistent method for determining which areas 

are considered ‘‘rural.’’ We look forward to receiving your comments during the 

ANPR comment period. 

Thank you again. I look forward to working with you to revitalize America’s rural 

economies. 

Sincerely,

Hon. THOMAS J. VILSACK,

Secretary,

U.S. Department of Agriculture. 

SUBMITTED QUESTIONS

Response from Cheryl Cook, Deputy Under Secretary for Rural Development, U.S. Department of Agriculture 

Question Submitted by Hon. Timothy V. Johnson, a Representative in Congress from 

Illinois 

Question. Ms. Cook, your testimony indicates you feel USDA should have more 

flexibility in deciding where rural development projects are deployed, and that the 

current definitions are too prescriptive. Yet, the results of the 2008 Farm Bill debate 

on this topic are due in large part to projects being cited near urban areas. What 

is unique about the flexibility you are contemplating that would address concerns 

this Committee might have about funds being used near urban areas? 

Answer. The provisions of Section 343(a)(13) of the Consolidated Farm and Rural 

Development Act (CONACT) address simply the area considered eligible to apply for 

Rural Development’s community and business programs. Other sections of that law, 

specifically Sections 306–306E and 310B address congressional priorities in funding 

applications received, and target our funds—particularly grant funds—to the smallest, poorest areas. Changes made to the former would not affect the latter. 

For example, the Rural Business Enterprise Grant program is subject to the eligible rural area standard of 343(a)(13)(A)—anywhere except a city or town greater 

than 50,000 and adjacent urbanized areas. However, Section 310B provides that priority consideration be given to applications for this program from municipalities, 

tribes, or nonprofit organizations in communities of under 5,000. Similarly, a municipality of 9,500 residents would be eligible to apply for Water & Waste Disposal 

funding since they would be below the standard in Section 343(a)(13)(B) of 10,000; 


11202080
129

however, priority for grant funds and technical assistance goes to applicants with 

fewer than 5,000 residents under Section 306. 

Changing standards for eligibility to apply for Rural Development programs to 

provide commonality for our customers or to account for features beyond total population does not affect prioritization provided elsewhere in the Act for the smallest, 

neediest communities. 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) made no 

changes with respect to areas eligible to apply for community-based programs. The 

Water & Waste Disposal program and the Community Facilities program remain at 

10,000 and 20,000 respectively. The flexibility in Section 6018(a) of the farm bill, 

which provided for areas remaining ‘‘rural in character’’, applies only to 50,000 population definition of rural that predominately applies to the business programs, like 

the Rural Business Enterprise Grant program described above. . What is unique 

about the possibilities discussed during the hearing and in my written testimony is 

the broader applicability to all programs in terms of the places from which an application could be accepted. 

Questions Submitted by Hon. Collin C. Peterson, a Representative in Congress from 

Minnesota 

Question 1. Ms. Cook, in your testimony you note that some communities currently eligible for USDA rural development programs because they currently meet 

the population thresholds may not be eligible in the future depending on the results 

of the next Census. If a multi-year loan award was made when the recipient fit 

within the population limit pre-Census, does that loan stay active post-Census? Can 

you elaborate on any other effects the Census would have on active borrowers? 

Answer. Rural Development generally does not make multi-year loan awards, 

though once obligated, appropriations law generally allows a period of five years 

from the end of the fiscal year in which funds were awarded to fully use the funding. In the few cases where a multi-year grant can be awarded, e.g., the Rural Business Opportunity Grant and the Rural Cooperative Development Grant, both of 

which allow for 2 year grants, the entire amount is obligated the first year. If an 

applicant was in an eligible rural area at the time the loan or grant was obligated, 

that status would continue as the project moves forward and funds are drawn down. 

In prior years, new census data created challenges for applicants with large community-based projects that required a series of applications in order to fund multiple project phases over multiple fiscal years. When the only standard for eligibility 

is total population, a change in that population could affect eligibility for later 

project phases.

Question 2. Ms. Cook, can you describe your points system when evaluating applicants? What criteria are used, and what do you place the highest value on? 

Answer. Currently, each program regulation identifies the exact evaluation process for that program, drawing from statutory requirements and priorities where provided. Additionally, programs administered by a single nationwide competition normally identify scoring criteria in their regulation or in the body of a Notice of Funds 

Availability, or NOFA. 

In the case of most loan programs under the jurisdiction of this Subcommittee, 

once the applicant and the area in which the applicant wishes to receive financial 

assistance are determined eligible, evaluating an application generally turns to: (1) 

the strength of the idea for which financial assistance is being sought; and (2) 

whether a particular application is entitled to priority consideration. 

With regard to the former, most regulations evaluate various aspects of feasibility. 

Does the idea use proven technologies? Does the applicant have the management 

experience to operate successfully (and, if not, do we have technical assistance programs that could be brought to bear)? Does the applicant have a reasonable chance 

of repayment ability based on financial projections? Is there a market study to suggest sufficient demand for the goods or services to be financed? Is the applicant also 

financially invested in the project or is the Federal Government being asked to 

shoulder all the risk? Is the workforce able to meet the needs of this project without 

jeopardizing the success of others? In the case of community-based programs, does 

the project as proposed lead to a reasonable end user rate for public services? 

With regard to the latter, statutory language in the CONACT especially provides 

additional prioritization for certain applications in certain programs based on total 

population size and median household income. Other statutes, such as the Farm Security and Rural Investment Act of 2002, also articulate evaluation criteria and provide priorities for funding for projects offering the best energy ‘‘bang for the buck’’. 

My testimony suggested that perhaps other factors could be considered in this 

evaluation process to ensure that Rural Development’s programs benefit the rural 

people who need them most. In so doing, perhaps Congress could reevaluate the sinVerDate 0ct 09 2002 11:12 Mar 16, 2011 Jkt 041481 PO 00000 Frm 00133 Fmt 6621 Sfmt 6621 I:\DOCS\112-02\64688.TXT AGR1 PsN: BRIAN
130

gle eligibility standard of total population to also consider other factors that lead 

to higher priority applications. The model I had in mind was the second NOFA 

under the Broadband Initiatives Program, or BIP. 

The first BIP NOFA, issued in 2009, attempted to invest the largest share of 

grant funds in those most isolated communities that we had been unable to reach 

with the regular Broadband program created in the 2002 farm bill, and that were 

the hardest for the private sector to reach alone. That program offers only loan 

funds, and applicants generally have come from more populous, economically stronger areas that can afford the debt service rather than sparsely populated isolated 

communities. In the Water & Waste Disposal program, where projects regularly exceed $10 million in cost, Rural Utilities Service has been able to assist smaller, 

poorer communities by supplementing loans with grant funds. In the Broadband 

program, where projects have exceeded $100 million, no grant funds are available. 

The American Recovery and Reinvestment Act authorized the BIP program, and for 

the first time enabled the Agency to pair loan and grant funds together to arrive 

at more affordable subscription rates. In the first NOFA, applicants generally could 

expect to receive up to 50% grant and 50% loan toward their total project, but remote rural areas could receive 100% grant funds. 

While the policy objective of the first BIP NOFA was sound, the implementation 

of a NOFA that limited availability of full grant funding to applicants in remote 

rural areas proved challenging. As if defining ‘‘eligible rural area’’ weren’t difficult 

enough, then we had to define ‘‘remote’’. By contrast, the second BIP NOFA offered 

most applicants a mix of up to 75% grant, 25% loan, but considered a range of factors and took a more flexible approach in determining when the Administrator could 

waive that general rule and fully fund a project with grant funds. The NOFA provided that:

The Administrator may grant a request for waiver for a larger grant component 

based on the following factors:

1. Distance From Non-Rural Areas—The Administrator will consider the distance from the focus of the proposed funded service areas from the closest 

non-rural area.

2. Rural Area Targeting—The Administrator will consider the percentage of the 

proposed funded service area that is above the 75 percent [of the service area 

being rural] requirement.

3. Density—The Administrator will consider the density of the proposed funded 

service area, calculated from the population and area totals of all proposed 

funded service areas taken from the mapping tool.

4. Median Household Income—The Administrator will consider the median 

household income of the proposed funded service area, comparing the county 

median household income to that of the State median income level. For applications serving multiple counties, the Administrator will weigh the percentages of all counties.

5. Unemployment—The Administrator will consider the state unemployment 

level compared to the National Unemployment Level in the state of the proposed funded service area. For applications serving multiple states, the Administrator will weigh the percentages in each State.

Using this multi-faceted methodology, the Administrator was able to target remaining BIP grant funds to the most rural areas with the greatest need. Again, the 

CONACT already provides for some of these types of priority considerations in some, 

but not all, of our programs. I think this sort of potential exists throughout Rural 

Development, and look forward to further discussion with the Subcommittee as to 

how this sort of prioritization could be incorporated to consistently target our resources.

Question 3. Ms. Cook, what is the reasoning for the ‘‘once rural, always rural’’ policy as it relates to rural electric cooperatives with a long, continuous borrowing history in some programs? Are there any such borrowers that now primarily serve 

urban or suburban areas? 

Answer. The policy you mention is a statutory requirement of the Rural Electrification Act of 1936. While Rural Development seeks to protect taxpayers’ investments by enabling borrowers to meet their existing obligations, our mission is to ensure that the program benefits the rural borrowers who need them most. 

Rural electric cooperatives were established to deliver electric power to rural 

areas because there was no profit for investor-owned utilities to deliver service. The 

business structure of these cooperatives in many cases precludes their use of the 

financing available to investor-owned utilities. 

131

Fewer than 10 percent of the consumers served by RUS’ electric borrowers could 

be considered nonrural based on a study completed in 2005 using census bureau delineations. The business structure that rural electric cooperatives employ to provide 

reliable and affordable power to rural consumers is also a consideration in Rural 

Development’s mission. 

Question Submitted by Hon. Larry Kissell, a Representative in Congress from North 

Carolina 

Question. Ms. Cook, within Rural Development programs both Grants and Loans 

are often available for our Rural Communities. It is my understanding that if a community does not qualify for a grant, they often can be considered for a loan. Many 

of the Rural Communities in my district are not eligible for grants, and pursue 

Rural Development loans. Is my assumption correct that part of your evaluation for 

some loan programs is the ability of the applicant to pay back the loan? If so, does 

this mean you would prioritize a rural area that might be in a more secure economic 

condition versus another? Do you feel that USDA’s approach is consistent with the 

goal of assisting those communities most in need? 

Answer. USDA’s approach is consistent with the goal of assisting those communities most in need. Independent of the discussion of a lack of consistency in the 

standards for eligible rural areas, which apply equally to loans and grants, applicants from the smallest, poorest communities receive priority for grant funds and 

the lowest interest rate for loan funds. This is true both for the Water & Waste Disposal program and the Community Facilities program. The Rural Business Enterprise Grant also is targeted by Congress to the smallest areas, providing priority 

to applications from municipalities, tribes, and nonprofit organizations in communities below 5,000. 

Further, in our community programs, especially the Water & Waste Disposal program, communities, normally, receive a combination of loans and grants for a particular project. The mix of loan and grant is generally determined on the ability of 

the community to support the repayment of the loan. Communities that have a 

stronger economic foundation will receive a higher loan to grant mix than communities that are in a more fragile economic state. By targeting the loan/grant mix in 

this manner, Rural Development is able to extend its budget authority to serve more 

communities while still prioritizing assistance to those communities with the greatest need. 

Questions Submitted by Hon. Joe Courtney, a Representative in Congress from Connecticut 

Question 1. Madame Secretary,

As you are aware Connecticut, like other northeastern states, is unique in that 

we lack unincorporated areas. Additionally, we have townships, villages and other 

community designations which inhibit our ability to be eligible for and receive funding for community facilities or water and waste projects. 

As you know, in 2009, an opinion issued by the Office of General Counsel, which 

overturned a long standing practice at the department to recognize the unique challenges we in the northeast face when determining eligibility for rural development. 

This opinion suspended the long standing practice of recognizing villages, townships 

and boroughs common to Northeast states as separate identifiable communities 

whom are eligible for rural development funds based on their own populations, not 

that of the town in which they are encompassed. It should be noted that this was 

a policy that was in place for more than 40 years. 

As you know, I sent a letter in October 2009 cosigned by 17 of my colleagues seeking Sec. Vilsack’s support for reversing the decision of the General Counsel which 

he did. I have submitted a copy of that my letter and the Secretary’s response for 

the record. 

However I still have some concerns that I would like to ask you about. 

In a letter dated November 12, 2009, Secretary Vilsack wrote that ‘‘Rural Development will be soliciting public comments through an Advanced Notice of Proposed 

Rulemaking on defining ‘rural’ in an equitable manner across the nation in the near 

future.’’ It is my understanding that no such proposed rule has been released yet. 

When does USDA expect to release that proposed rule? 

Answer. Please see below.

Question 1a. Also included in that letter was a statement from Secretary Vilsack 

indicating that ‘‘Municipalities may be considered separate cities or towns for purposes of population thresholds for program eligibility provided that they meet characteristics one might expect to find in a municipality, such as separately identifiable 

village name, a post office, or other indicators of a community that will last through 

the life of the loan that is being requested.’’ Does this remain the policy of USDA 

132

in determining eligibility for rural development funds for communities in Connecticut today? 

Answer. While the majority of states began as unincorporated territories now dotted with incorporated municipalities, most states in the Northeast are entirely incorporated. However, several northeastern states—notably, Massachusetts, New 

York, and Pennsylvania—recognize in state law the concept of a ‘‘village’’, an unincorporated population cluster lying wholly within an incorporated municipality. In 

MA and NY, villages lie within incorporated towns. In PA, villages lie within incorporated townships. 

When I was a state director in Pennsylvania during the 1990s, the general rule 

in the Northeast region was that if a water or sewer project actually would serve 

fewer than 10,000 people, the project could proceed. Thus, a village of fewer than 

10,000 people, where centralized services like water or sewer were more necessary 

than in the outlying farmland, could be considered even if the total population of 

the township in which the village was located exceeded 10,000. 

In the 2002 Farm Bill, Congress added the words ‘‘city, town, or unincorporated 

area’’ to the pre-existing eligibility standards of not more than 10,000 for the Water 

& Waste Disposal program and 20,000 for the Community Facilities program. The 

legislative history of that addition suggests that Congress specifically intended to 

curb what had been common practice in Pennsylvania and other northeastern 

states. With the new language, an applicant is the municipality rather than a portion of a municipality or even a single-purpose sewer or water district. The entire 

population of the municipality therefore would be applied to the eligibility standard, 

even if less than the total population would be served. This language was unchanged by the 2008 Farm Bill. 

In 2009, the Office of General Counsel determined that instructions given its 

Northeast regional office in 2004 with respect to this issue had not been fully implemented, and addressed that with additional staff instructions. In the same timeframe, policy leaders in Rural Development determined that additional guidance for 

state offices was warranted to ensure that we would follow the law as Congress enacted it in 2002 and again in 2008. An Administrative Notice was issued to the 

northeastern state offices explaining the current state of the law yet recognizing 

that an ‘‘unincorporated area’’ in the Northeast was something entirely different 

than in other states. We determined that in using the words ‘‘city or town’’ Congress 

meant any incorporated municipality. We also acknowledged that, even though 

states might not have any unincorporated geographic areas, an unincorporated population center within an incorporated municipality might be able to apply in its own 

right if it met the characteristics of a municipality aside from formal incorporation, 

such as providing other services or having a separate ZIP Code or separate recognition as a Census-designated place. 

That Administrative Notice does remain in effect pending regulatory action on the 

definition of ‘‘city, town, or unincorporated area’’. The Advanced Notice of Proposed 

Rulemaking (ANPR) mentioned in the Secretary’s 2009 letter was placed on hold 

until final determination was reached on whether a rural area eligibility standard 

comparable to other business programs of Rural Business-Cooperative Service would 

or would not be included for the new energy programs authorized in title IX of the 

farm bill. The statutory language does not apply a rural eligibility standard to the 

Section 9003, 9004, or 9005 programs of the Farm Security and Rural Investment 

Act of 2002. In an effort to gain consistency across the Agency with its CONACT 

programs, proposed rules including that requirement were published in April 2010. 

Interim final rules reflecting public comment in favor of removing the eligibility 

standard were published in February 2011, clearing the path to resume work on the 

ANPR for other programs.

Question 2. In 2009, the same year USDA overturned the long standing policy of 

rural development eligibility in my state of Connecticut and others, the Pennsylvania state rural development office also issued a contradictory opinion (PA AN No. 

1238) regarding the state of Pennsylvania. The language in that exemption is as follows ‘‘In consultation with the National Office, we have determined that areas in 

townships in should not be considered as being ‘in a city or town.’ Therefore all 

townships in Pennsylvania should be considered as rural areas regardless of the 

population of the township.’’ I recognize that this was a state office opinion but the 

fact that it was done so in consultation with the ‘‘national office’’ concerns me. Can 

you explain why USDA issued this opinion in January 2009 for Pennsylvania and 

then issued a contradictory opinion later that year for Connecticut and other states? 

Furthermore, if this was a state office determination, why did the office of general 

counsel not overrule this decision when they issued a contradictory decision on Connecticut’s eligibility? 

133

Answer. In 2009, the new Pennsylvania State Director was asked by his staff to 

reissue a specific state Administrative Notice that his predecessor had developed in 

2003 in response to the ‘‘city, town, or unincorporated area’’ language Congress 

adopted in the 2002 Farm Bill. That document attempted to declare all Pennsylvania townships as eligible rural areas. Upon my learning of that document in November 2009, it was rescinded. Nevertheless, it underscores some of the challenges 

in trying to have a single nationwide eligibility standard when that standard is applied to municipal structures created by each state and territory. 

PA has about 100 cities of the 1st through 4th class, with class being determined 

by total population. A few cities of the 4th class would meet the eligible rural area 

standard of the Community Facilities program (20,000) but generally not the Water 

& Waste Disposal program (10,000). Further, Pennsylvania has 2,500 incorporated 

municipalities, exactly one of which is incorporated as a town, the Town of 

Bloomsburg, a college town whose population is about 12,700. Pennsylvania has no 

unincorporated geography whatsoever, just the ‘‘village’’ concept of an unincorporated population center within an incorporated township. Pennsylvania has 1,000 

boroughs and 1,400 townships, but Congress only mentioned ‘‘city or town’’ in the 

revised eligibility standard. The State Director in place at that time interpreted 

‘‘city or town’’ literally, and knowing that Pennsylvania had one of the largest rural 

populations not served by public water or sewer, attempted to address townships 

through an Administrative Notice. 

Of the 1,400 townships in Pennsylvania, 1,297 have 10,000 or fewer residents. Assuming that Congress simply listed ‘‘city’’ or ‘‘town’’ as examples of incorporated municipalities rather than literally meaning only municipalities incorporated as cities 

or as towns could apply, those 1,297 PA townships would meet eligibility standards 

for the Water & Waste Disposal program and the Community Facilities program. 

The problem was with the 103 whose populations are over 10,000 and particularly 

with the 23 in sprawl-affected areas whose populations are over 20,000. A blanket 

declaration of rurality for all townships was inappropriate, and that Administrative 

Notice is no longer in effect.

Æ