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

55–885 PDF 2010

HEARING TO REVIEW RURAL WATER 

INFRASTRUCTURE

HEARING

BEFORE THE

SUBCOMMITTEE ON RURAL DEVELOPMENT, 

BIOTECHNOLOGY, SPECIALTY CROPS, 

AND FOREIGN AGRICULTURE

OF THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

MARCH 23, 2010

Serial No. 111–45

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

COLLIN C. PETERSON, Minnesota, Chairman 

TIM HOLDEN, Pennsylvania, 

Vice Chairman 

MIKE MCINTYRE, North Carolina 

LEONARD L. BOSWELL, Iowa 

JOE BACA, California 

DENNIS A. CARDOZA, California 

DAVID SCOTT, Georgia 

JIM MARSHALL, Georgia 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HENRY CUELLAR, Texas 

JIM COSTA, California 

BRAD ELLSWORTH, Indiana 

TIMOTHY J. WALZ, Minnesota 

STEVE KAGEN, Wisconsin 

KURT SCHRADER, Oregon 

DEBORAH L. HALVORSON, Illinois 

KATHLEEN A. DAHLKEMPER, 

Pennsylvania 

BOBBY BRIGHT, Alabama 

BETSY MARKEY, Colorado 

FRANK KRATOVIL, JR., Maryland 

MARK H. SCHAUER, Michigan 

LARRY KISSELL, North Carolina 

JOHN A. BOCCIERI, Ohio 

SCOTT MURPHY, New York 

EARL POMEROY, North Dakota 

TRAVIS W. CHILDERS, Mississippi 

WALT MINNICK, Idaho 

———

FRANK D. LUCAS, Oklahoma, Ranking 

Minority Member 

BOB GOODLATTE, Virginia 

JERRY MORAN, Kansas 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

MIKE ROGERS, Alabama 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

K. MICHAEL CONAWAY, Texas 

JEFF FORTENBERRY, Nebraska 

JEAN SCHMIDT, Ohio 

ADRIAN SMITH, Nebraska 

ROBERT E. LATTA, Ohio 

DAVID P. ROE, Tennessee 

BLAINE LUETKEMEYER, Missouri 

GLENN THOMPSON, Pennsylvania 

BILL CASSIDY, Louisiana 

CYNTHIA M. LUMMIS, Wyoming 

PROFESSIONAL STAFF

ROBERT L. LAREW, Chief of Staff 

ANDREW W. BAKER, Chief Counsel 

APRIL SLAYTON, Communications Director 

NICOLE SCOTT, Minority Staff Director 

SUBCOMMITTEE ON RURAL DEVELOPMENT, BIOTECHNOLOGY, SPECIALTY CROPS, AND

FOREIGN AGRICULTURE

MIKE MCINTYRE, North Carolina, Chairman 

BOBBY BRIGHT, Alabama 

JIM MARSHALL, Georgia 

HENRY CUELLAR, Texas 

LARRY KISSELL, North Carolina 

WALT MINNICK, Idaho 

K. MICHAEL CONAWAY, Texas, Ranking 

Minority Member 

DAVID P. ROE, Tennessee 

GLENN THOMPSON, Pennsylvania 

BILL CASSIDY, Louisiana 

SCOTT KUSCHMIDER, Subcommittee Staff Director

(II) 

(III)

C O N T E N T S 

Page 

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

statement .............................................................................................................. 3

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

McIntyre, Hon. Mike, a Representative in Congress from North Carolina, 

opening statement ................................................................................................ 1

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

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, prepared statement ................................................................................................... 5

Walz, Hon. Timothy J., a Representative in Congress from Minnesota, prepared statement ................................................................................................... 5

WITNESSES

Adelstein, Hon. Jonathan, Administrator, Rural Utilities Service, U.S. Department of Agriculture, Washington, D.C. ....................................................... 6

Prepared statement .......................................................................................... 8

Supplementary material .................................................................................. 49

Submitted questions ......................................................................................... 49

Locklear, Rhonda, Water and Wastewater Director, Town of Pembroke, North 

Carolina, Pembroke, NC; on behalf of National Rural Water Association ...... 24

Prepared statement .......................................................................................... 25

Submitted question .......................................................................................... 52

Fierros, Christina, Chief Operations Officer, Midwest Assistance Program, 

Rural Community Assistance Partnership, Savannah, MO ............................. 27

Prepared statement .......................................................................................... 29

Norton, J. Michael, Executive Director, Northwest Arkansas Economic Development District; President, National Association of Development Organizations, Harrison, AR; on behalf of National Association of Counties ................ 31

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

Larson, Troy, Executive Director, Lewis & Clark Regional Water System, 

Sioux Falls, SD ..................................................................................................... 37

Prepared statement .......................................................................................... 39

Kahl, P.E., Paul F., Deputy Director of Public Works, Allegany County, Maryland, Cumberland, MD ........................................................................................ 40

Prepared statement .......................................................................................... 42

(1)

HEARING TO REVIEW RURAL WATER 

INFRASTRUCTURE 

TUESDAY, MARCH 23, 2010

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON RURAL DEVELOPMENT, 

BIOTECHNOLOGY, SPECIALTY CROPS, AND FOREIGN

AGRICULTURE, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:11 a.m., in Room 

1300 of the Longworth House Office Building, Hon. Mike McIntyre 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives McIntyre, Bright, Minnick, 

Conaway, Thompson, Cassidy, and Herseth Sandlin. 

Staff present: Claiborn Crain, Tyler Jameson, Scott Kuschmider, 

Clark Ogilvie, James Ryder, April Slayton, Patricia Barr, Mike 

Dunlap, Jamie Mitchell, and Sangina Wright. 

OPENING STATEMENT OF HON. MIKE MCINTYRE, A 

REPRESENTATIVE IN CONGRESS FROM NORTH CAROLINA 

The CHAIRMAN. Good morning. Welcome to today’s hearing to review the state of water and wastewater disposal infrastructure in 

rural communities and the needs and challenges that these communities face. I am Mike McIntyre from the State of North Carolina. Thank you for your indulgence this morning. We usually are 

very prompt on starting, and I apologize for the unusual delays I 

had today. But I want to thank you for your patience and will 

make up for the time. I will shorten my opening statement so we 

can get right back to where we would have been in terms of time 

today. 

I do want to welcome back to this Subcommittee Mr. Jonathan 

Adelstein of the Rural Utilities Service. RUS is one of the several 

Federal agencies that administers water and wastewater programs, 

and they are the only one whose funding is directed entirely to 

rural communities. I also want to extend a special welcome to Ms. 

Rhonda Locklear, who will be testifying on our second panel today. 

Ms. Locklear is the Water and Wastewater Director of the Town of 

Pembroke, North Carolina, in my home county of Robeson County. 

So, Rhonda, we especially welcome you to come up here and join 

us today here in Washington. 

We are here today to examine the infrastructure needs and investment in rural areas and the long-term health of our water systems, which are so important. With that, I will cut short the other 

2

4 to 5 minutes of remarks to keep us on time, and I will call on 

the Ranking Member, Mr. Conaway. 

[The prepared statement of Mr. McIntyre follows:]

PREPARED STATEMENT OF HON. MIKE MCINTYRE, A REPRESENTATIVE IN CONGRESS

FROM NORTH CAROLINA

Good morning, and welcome to today’s hearing to review the state of water and 

waste disposal infrastructure in rural communities and the needs and challenges 

these communities must meet. As Chairman of the Subcommittee, I want to thank 

all of you for being here, and I want to especially thank our witnesses who will be 

testifying before us today. 

I want to welcome back to this Subcommittee Mr. Jonathan Adelstein of the Rural 

Utilities Service. RUS is one of several Federal agencies that administers water and 

wastewater programs, but they are the only one whose funding is directed entirely 

to rural communities. I also want to welcome Ms. Ronda Locklear, who will be testifying on our second panel today. Ms. Locklear is the Water and Wastewater Director 

of the Town of Pembroke, North Carolina, which is in my Congressional district. 

We are here today to examine the water infrastructure needs and investment in 

rural areas. The long-term health of water systems is important to those of us who 

represent rural constituencies since the overwhelming majority of community water 

systems in America serve populations of fewer than 10,000 people according to EPA 

statistics. 

Rural communities that fit in this category have the same responsibility to provide safe, sustainable and affordable public drinking water and wastewater services 

to their citizens as urban and suburban cities do. Yet many of these communities 

are challenged by a small tax base and limited or no ability to issue bonds to finance 

such services or make timely system improvements when they are needed. And 

some of these smaller systems serve areas of extreme poverty whose citizens are at 

great risk from not having access to safe and sanitary water, particularly in communities along the southern border. 

At the same time, they must meet the same regulatory requirements for safe and 

sanitary drinking water and wastewater treatment as larger, well-capitalized systems. 

There are a number of programs across several Federal agencies that are in place 

to help bridge this gap and allow small communities to benefit from new or refurbished water systems. USDA’s Rural Utilities Service provides loans, grants, and 

loan guarantees to build and maintain systems, and provide technical assistance to 

meet water quality standards. Like many programs in Rural Development, RUS 

water and waste disposal funds fill the void that is not provided through private 

financing. 

RUS programs have been rated among the best in the Federal Government with 

regard to its low delinquency rate and overall effectiveness in serving its mission. 

RUS systems have been in existence for many years, with personnel in place both 

nationally and in the states to help provide effective oversight. 

The need for assistance in rural America is so great that they have dealt with 

a significant application backlog for many years. I am pleased that the Recovery Act 

provided $1.38 billion in grants and loans to reduce the backlog, and I look forward 

to hearing Administrator Adelstein’s assessment of his agency’s oversight of obligating Recovery Act funds alongside FY10 program dollars. 

Whether a rural community utilizes RUS to meet their water infrastructure needs 

or uses another tool in its financing toolbox, all of them know what having reliable 

water and waste systems mean to their standard of living. The availability of safe, 

clean water is the most basic of human needs, regardless of where you live. But in 

addition to that, I hope our second panel today can stress to this Committee the 

importance of these systems to the growth of their communities. The things many 

of us in Congress have prioritized when it comes to rural development: new housing, 

health and education facilities, the creation and growth of small businesses—none 

of that takes place without strong water infrastructure. 

I believe that all of us here want make sure the investments made in rural America return the highest value for every taxpayer dollar spent. Today’s hearing is one 

more examination of the rural development funding that is our responsibility. I look 

forward to hearing from today’s witnesses and get their perspective on how we can 

make sure that every dollar that is spent in rural America is one that improves the 

quality of life for rural citizens.

3

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A 

REPRESENTATIVE IN CONGRESS FROM TEXAS 

Mr. CONAWAY. Thank you, Mr. Chairman. I too want to thank 

our witnesses today, and thank you for holding this hearing. There 

are 16 Federal agencies involved in administering more than 88 

programs that target rural development. It is most important that 

we maintain a close watch on how the Administration implements 

these programs and safeguards taxpayer dollars. In particular, we 

want to know that the funds are helping rural localities comply 

with Federal mandates during one of the most significant economic 

downturns we have had. Almost 1 year ago, this Subcommittee received testimony addressing innovative approaches to rural development. Since that time, USDA has continued to implement the 

2008 Farm Bill, as well as had the opportunity to begin disbursing 

the funds and implementing the new programs provided for in the 

stimulus bill. 

I was interested to hear Secretary Vilsack continue to talk about 

a Regional Innovation Initiative in Rural Development during his 

testimony before the Appropriations Committee last month. I hope 

that Mr. Adelstein will be able to provide additional details on this 

particular initiative. Specifically, the Committee would be interested to know who will lead the regional coordination efforts and 

how the USDA has embarked on a concerted effort to leverage resources from the many other agencies involved in rural development. 

Ensuring the coordination of the many agencies involved in rural 

development activities is important. It is the duty of our Committee 

to ensure that the Administration’s efforts are additive and not duplicative. This morning we will be focusing on the acute infrastructure needs throughout small towns in the United States. As environmental regulations become more stringent and the cost of constructing facilities rise, small communities are finding it increasingly difficult to finance new systems. The enormous capital outlays needed to finance even modest water infrastructure projects 

are beyond the reaches of most rural communities. It is important 

to remember above all that these programs are not social programs 

or welfare programs but a tool to enable small communities to comply with costly Federal mandates. While the stimulus bill provided an additional $1.3 billion for 

water and wastewater projects, that funding came with strings attached. In response to questions from this Subcommittee last year, 

USDA confirmed that the Davis-Bacon provisions and the Buy 

American provisions mandated in the stimulus bill would add significant cost to any project funded with stimulus dollars. In fact, 

the USDA estimated that the stimulus projects would cost 10–20 

percent more under the Davis-Bacon and Buy American programs 

than if we had not had those artificial restrictions in place. 

We are concerned that this will significantly slow USDA’s 

progress in addressing the backlog in water and wastewater applications. Even though USDA has been obligating available funds according to the deadlines laid out in the stimulus bill, less than 1⁄2

of 1 percent of the stimulus funds have actually gone out the door 

for water and wastewater projects. This includes both direct loans 

and grants listed in the latest activities report. I hope the testiVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00007 Fmt 6633 Sfmt 6601 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
4

mony this morning will help the Subcommittee better understand 

how USDA’s initiatives are prioritizing applications, when projects 

will be actually completed, and how much the backlog has been addressed. Again, I would like to thank our witnesses for taking the 

time to be with us today and giving us this update on how they 

are assisting rural communities in the ever-expanding list of mandates and requirements passed down from the ivory towers of 

Washington. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Conaway follows:]

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

CONGRESS FROM TEXAS

I thank the Chairman for holding this hearing today. 

With 16 Federal agencies involved in administering more than 88 programs that 

target rural development, it is important to maintain a close watch on how the Administration implements these programs and safeguards taxpayer dollars. In particular, we want to know that the funds are helping rural localities comply with 

Federal mandates during one of the most significant economic downturns we have 

had. 

Almost one year ago, this Subcommittee received testimony addressing innovative 

approaches to rural development. Since that time, USDA has continued to implement the 2008 Farm Bill, as well as had an opportunity to begin disbursing the 

funds and implementing the new programs provided for in the stimulus bill. I was 

interested to hear Secretary Vilsack continue to talk about a regional innovation initiative in rural development during his testimony before the Appropriations Committee last month. I hope that Mr. Adelstein will be able to provide additional details on this initiative. 

Specifically, the Committee would be interested to know who will lead the regional coordination efforts and how USDA has embarked on a concerted effort to 

leverage resources from the many other agencies involved in rural development. Ensuring the coordination of the many agencies involved in rural development activities is important. It is the duty of this Committee to ensure that the Administration’s efforts are additive and not duplicative. 

This morning we will be focusing on the acute infrastructure needs throughout 

small towns in the United States. As environmental regulations become more stringent and the costs of constructing facilities rise, small communities are finding it 

increasingly difficult to finance new systems. The enormous capital outlays needed 

to finance even modest water infrastructure projects are beyond the reaches of most 

rural communities. It is important we remember above all, that these programs are 

not social programs or welfare programs, but a tool to enable small communities to 

comply with costly Federal mandates. 

While the stimulus bill provided an additional $1.3 billion for water and wastewater projects, that funding came with strings attached. In response to questions 

from this Subcommittee last year, USDA confirmed that the Davis-Bacon and Buy 

American provisions mandated in the stimulus would add significant costs to any 

project funded with stimulus dollars. In fact, the USDA estimated that stimulus 

projects would cost 10–20% more with Davis-Bacon and Buy American than without. We are concerned that this will significantly slow USDA’s progress in addressing the backlog in water and wastewater applications. 

Even though USDA has begun obligating available funds according to the deadlines laid out in the stimulus bill, less than 1⁄2 of one percent of the stimulus funds 

have actually gone out the door for water and wastewater projects. This includes 

both direct loans and grants listed in the latest activity report available. I hope that 

testimony this morning will help this Subcommittee better understand how USDA’s 

initiatives are prioritizing applications, when projects will actually be completed, 

and how much of the backlog has been addressed. 

I would like to thank the witnesses for taking time to be with us today and give 

us an update on their work to assist rural communities in meeting the ever-expanding list of mandates and requirements passed down from Washington. 

Thank you Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Conaway. Indeed, the availability of safe clean water is the most basic of human needs, and 

so we do take this very seriously. We appreciate your work. It is 

5

easy to get caught up in the bureaucracy and the paperwork and 

the applications, but in the end we can’t have good health clinics, 

schools, attract businesses, have a good economic development atmosphere or a good quality of life for families if we don’t get in the 

clean water and get rid of the dirty water. It is that simple and 

basic and that much of a necessity in the daily routine of life. So 

thank you for coming to share how you are improving the quality 

of life today and, indeed, how what you do will make a difference 

in the quality of lives throughout this country. 

I would encourage witnesses to use the 5 minutes provided for 

their statement to highlight the most important parts of your statement, and if you need additional time to summarize, then please 

go ahead and prepare to do that at this moment. Your full written 

statement will be submitted in its entirety to the Committee 

record. Also, with regard to other statements that other members 

of the panel would like to give in terms of an opening, those can 

be submitted for the record and will be made part of the record. 

The chair would expect that any other Members that may come in 

may also be allowed to put forth their statements into the record 

as well. 

[The prepared statements of Mr. Peterson and Mr. Walz follow:]

PREPARED STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN

CONGRESS FROM MINNESOTA

Thank you, Chairman McIntyre, for holding this hearing today to focus on efforts 

to ensure that rural communities can meet the water and waste disposal infrastructure needs for their citizens. 

Depending on where you live in the United States, the challenges facing water 

infrastructure systems vary greatly. While my colleagues from California are dealing with the impact of severe drought on their water systems, in my part of the 

world, the Red River often brings so much water that it threatens to inundate many 

of the communities along its banks. The river crested over the weekend, and it looks 

like it won’t be as bad as it has been in past years, but the impact of the floods 

on our rural water systems can be overwhelming. 

USDA’s Rural Utility Service provides a tremendous service, identifying and responding to the unique water needs of rural communities. Because many rural 

towns have low tax bases and limited resources to maintain and upgrade water systems, RUS is often the only option out there to help them get safe drinking water 

into their homes. 

These programs are some of the best in Rural Development, not only because safe 

and sanitary water is a basic need, but because these programs are generally managed well, with historically low default rates. As a result, RUS receives a large number of applications every year. 

The Recovery Act included significant funds to address the backlog of applications 

for RUS water and wastewater grants and loans. I hope that today, we will hear 

about the progress being made to address the backlog with that additional funding. 

Again, thank you Chairman McIntyre for holding this hearing today. I want to 

thank all of the witnesses for joining us, and I look forward to their testimony. 

PREPARED STATEMENT OF HON. TIMOTHY J. WALZ, A REPRESENTATIVE IN CONGRESS

FROM MINNESOTA

Chairman McIntyre and Ranking Member Conaway:

I understand that Mr. Troy Larson, Executive Director of the Lewis & Clark Regional Water System, will be testifying before you today. I would like to express my 

strong support for the Lewis & Clark Regional Water Project and my great appreciation for the work that Troy, Chairman Red Arndt and the many others involved 

with Lewis & Clark do. 

A region cannot grow without reliable access to safe and clean water. When completed, the Lewis & Clark Regional Water System will provide protected and reliVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
6

able drinking water to over 300,000 people in Minnesota, South Dakota, and Iowa 

This vital pipeline will distribute safe water to members in a 5,000 square mile 

area; roughly the size of the State of Connecticut. The project will improve the quality of life of area residents by addressing water quality, supply and infrastructure 

problems. 

The system will also serve as a catalyst for regional economic growth in both the 

short and long terms. The economic impact to the region from construction of the 

project will be significant and will include the creation of 3,730 construction related 

jobs. The direct, indirect and induced impact of the operation and maintenance of 

the facilities after construction is estimated to be over $7 million annually for the 

region, creating 74 permanent positions. 

States and members of the project annually allocate 20% of the funding needed 

for completion of the project With the U.S. Government responsible for 80% of the 

project, Lewis & Clark is dependent upon Federal funding for the amount of construction it is able to complete each year. Currently the project is scheduled for completion in 2019, but the project received $27 million in FY 2009 only to have its appropriations cut to $10 million in FY 2010 At this level, cities in Minnesota will not 

be connected to the pipeline until 2030. The residents of our state should not have 

to wait this long for safe water and economic progress. 

In order to properly plan and achieve its objectives, for a project of this scale, the 

system needs a stable funding source which is allocated annually and according to 

its capability. I strongly support the important work that Lewis & Clark is doing 

to better the lives of those in rural communities.

The CHAIRMAN. We would like to welcome now the witness on 

our first panel to the table, Mr. Jonathan Adelstein, Administrator, 

Rural Utilities Service, U.S. Department of Agriculture. Thank you 

for your service, and please begin. 

STATEMENT OF HON. JONATHAN ADELSTEIN,

ADMINISTRATOR, RURAL UTILITIES SERVICE, U.S.

DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. ADELSTEIN. Thank you, Mr. Chairman, for holding this critical hearing. Ranking Member Conaway and Members of the Subcommittee, thank you for the opportunity to testify. It is good to 

see my own Congresswoman is here, Congresswoman Stephanie 

Herseth Sandlin. Thank you for coming. We have, since 1940 under 

the water program, worked steadily to help communities improve 

their environment and the quality of life for rural residents, as you 

said, Mr. Chairman. Our job is never done though. We thank you 

on the Subcommittee for your ongoing support of our water programs. This hearing really draws a critical highlight to such great 

work that we look forward to continuing to do together with this 

Subcommittee. 

For most of us, clean drinking water is available at the turn of 

the faucet, but for too many rural residents unsanitary drinking 

water, aging infrastructure, and daily trips to community wells are 

too often a grim reality. President Obama, Secretary Vilsack, our 

Under Secretary Dallas Tonsager, and I are committed to addressing this in every way we can. USDA is working to build a stronger, 

more sustainable rural America that is repopulating and thriving 

economically. Ensuring that rural communities are equipped with 

modern water and wastewater infrastructure is a fundamental necessity to making that possible. 

RUS is proud to be the vehicle through which rural communities 

can access affordable water services. In the past 8 years, RUS has 

provided over $13 billion to rural communities for rural water and 

waste infrastructure. In Fiscal Year 2009 additional funding 

through the Recovery Act helped us to reach a new milestone, inVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00010 Fmt 6633 Sfmt 6601 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
7

vesting a total of $2.5 billion in new and improved rural water systems. In Fiscal Year 2010 we continued to fund projects with the 

remaining Recovery Act funds, as well as the $1.3 billion provided 

through the Fiscal Year 2010 appropriations. We do anticipate that 

we will be able to commit all those funds by the end of the fiscal 

year. Through ARRA our water program received $1.38 billion in budg- et authority, which we expect will translate into $3.3 billion in investments in rural water projects. To date, we have announced 

over 642 ARRA projects across the country totaling more than $2.3 

billion. Nearly 1⁄3 of that has gone to communities with over ten percent unemployment, and over $230 million has gone to areas of 

persistent poverty. 

We are well on our way to obligating all ARRA funds by September 30, and there are three factors that have contributed to our 

success so far. First, our interest rates are at their lowest in program history. We offer three rate tiers: market, intermediate, and 

poverty rate. The farm bill assured that those rates fluctuated with 

the market rate. 

This change was especially beneficial to low-income communities 

that are facing very tight credit markets. Lower interest rates enable us to offer lower-cost loans to more communities and target 

our grant funding to communities that need it most. Second, we are 

partnering with other agencies to share in the funding of these 

projects. The $2.3 billion approved has been combined with $558 

million contributed by other government agencies and by the applicants themselves. Third, we have leveraged the local relationships 

of our technical assistance providers, some of whom are represented here today. Through ARRA, RUS provided $14.2 million 

to supplement the existing RD Circuit Rider contract. This allowed 

the National Rural Water Association to increase its staff through 

2010 to help communities identify their needs and to help them 

apply for ARRA funding. Further, we awarded a $5 million Technical Assistance and 

Training Grant to the Rural Community Assistance Partnership. 

Their field teams help us identify communities with needs, particularly those in persistent poverty areas. Recipients such as the 

Yuma County Improvement District have benefited from these kind 

of efforts. Through ARRA, the district received $18.2 million in 

funding to bring affordable sewer service to over 1,000 residences 

in their Colonias community, and leveraging funds from other 

agencies made this $23 million project a reality. The ARRA projects 

have funded to date a diverse array of projects; as diverse as rural 

America itself. 

For many communities the funding has provided an opportunity 

to replace aging infrastructure. In Union Springs, Alabama, for example, the local water authority couldn’t afford the cost of repairing leaking, aging water lines. Thanks to a $1.7 million loan from 

RUS, upgrades to their water lines would mean increased water 

pressure and that will provide sufficient fire protection for the community. In other cases, funding allows the extension of service to 

previously unserved areas. In Wythe County, Virginia, RUS funding will extend public water service to 178 homes. Residents there 

are currently served by wells, many of which have tested positive 

8

for coliform, so the $5.3 million in funding means safe, clean water 

for county residents. 

ARRA funds are also cultivating regional initiatives all over the 

country. Consistent with the goals of the Recovery Act, these 

projects are currently creating urgently-needed jobs. Just as importantly they are providing the foundation for economic development 

and more jobs for years to come in rural communities. As we approach the 40th anniversary of Earth Day on April 22, our program 

stands out as an investment in a cleaner environment and needed 

infrastructure. Our ability to offer these critical programs is a result of your work, so it is an honor to work with you on behalf of 

the 50 million Americans in our rural communities. I certainly appreciate your continued oversight. I thank you for holding this 

hearing and look forward to your questions. 

[The prepared statement of Mr. Adelstein follows:]

PREPARED STATEMENT OF HON. JONATHAN ADELSTEIN, ADMINISTRATOR, RURAL

UTILITIES SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman McIntyre, Ranking Member Conaway and distinguished Members of 

the Subcommittee, thank you for this opportunity to update you on the Water and 

Wastewater Disposal Loan and Grant Program of the Rural Utilities Service, part 

of the United States Department of Agriculture’s (USDA) Rural Development Mission Area (RD). 

Many of us take for granted the ease with which we can turn on our faucets and 

access clean drinking water. But for many rural residents, unsanitary drinking 

water, aging or nonexistent infrastructure, and daily trips to a community well 

present a grim reality. President Obama, Secretary Vilsack, and Rural Development 

Under Secretary Dallas Tonsager are committed to building a stronger and more 

sustainable rural America that is repopulating and thriving economically. Ensuring 

that rural communities are equipped with modern, reliable water and wastewater 

infrastructure is a fundamental starting point. 

The challenge remains the same, providing service in rural areas that are relatively expensive to serve due to low population density or difficult terrain. Poverty 

rates in rural America remain much higher than national averages. While the recent economic downturn has dramatically impacted all segments of our population, 

much of rural America has been dealing with increasing unemployment and decreasing population for many years. In the current economy, these challenges have 

grown even more acute. Our rural residents are aging, and young people, who see 

no job opportunities for themselves in their rural hometowns, move to the nearest 

urban centers to seek employment. If we are going to give our young people who 

want to stay where they grew up that choice, basic water infrastructure is a prerequisite. 

Rural Development’s RUS is proud to be the vehicle through which rural communities can provide improved access to affordable water and wastewater services to 

their residents. In just the last 8 years alone, more than $13 billion in loans and 

grants has been provided through RUS for rural water and waste infrastructure. In 

Fiscal Year (FY) 2009, thanks to additional funding made available through the 

American Recovery and Reinvestment Act (ARRA or Recovery Act), the Water and 

Waste Disposal Loan and Grant program reached a new milestone, investing a total 

of $2.5 billion in new and improved rural water and waste systems, higher than any 

other year in program history. More than 1⁄2 of that funding was made possible by 

the Recovery Act. In FY 2010, we continue our efforts to fund needed projects with 

the remaining ARRA funds, as well as the $1.6 billion provided to the Program 

through FY 2010 appropriations. 

More than 70 years ago, Congress saw a need for improved access to quality water 

in rural areas and created our program to address that need. Congress understood 

then, as we do now, that affordable and reliable water and wastewater infrastructure are the building blocks for a healthy and safe community. 

Water’s impact stretches well beyond basic public health. Modern, reliable water 

and waste infrastructure also provides the foundation for economic growth for decades to come. Food producers, grocery stores, restaurants, manufacturing plants and 

even utilities providers rely on water and waste services to support their daily business operations. A rural community with these services can attract new businesses, 

9

1 A final figure will be determined by the final aggregate loan/grant split, on a project-byproject basis. 

creating jobs and opportunities for its rural residents, while a town or rural area 

lacking these essential services is clearly handicapped, both in its immediate quality 

of life and in its ability to build for the future. 

As we approach the 40th Anniversary of Earth Day on April 22nd, our Water Program funding stands out as an investment in a cleaner, more sustainable environment, as well as an important investment in basic rural infrastructure. Since 1940, 

USDA programs have been working steadily and quietly to transform communities 

and enhance the quality of life for rural residents. Still, our job is never done, and 

we look forward to continuing our work with this Subcommittee to advance our ongoing efforts. Your support has made a key difference in countless lives, and we at 

RD Rural Utilities Service (RUS) thank you for making it possible for us to establish basic infrastructure in so many parts of Rural America. 

Recovery Act Update 

Through the ARRA, RD’s Water and Environmental Program received $1.38 bil- lion in budget authority, which we anticipate will translate to a total $3.3 billion 1

investment in rural water infrastructure. The ARRA funds are being implemented 

through our existing Water and Waste Disposal program in the form of loans and 

grants to provide access to clean drinking water and sanitary sewer, solid waste and 

storm drainage facilities in communities of 10,000 or less. I am pleased to report 

that the program, to date, has announced over 642 ARRA projects in 49 states and 

Guam, totaling more than $2.3 billion. With numerous project announcements lining 

up for our Earth Day events around the country, we are on track to fully obligate 

all ARRA funds by September 30th, 2010, as the statute requires. 

Our RD offices in the states are working hard to ensure that this critical ARRA 

funding is reaching the communities that need it most. We are doing so at a pace 

that enables us to maintain the quality of underwriting that is the cornerstone of 

our program. Nearly 1⁄3 of ARRA funding provided to date has gone to communities with unemployment above ten percent. Also, more than $230 million in ARRA funds 

has been provided for projects serving areas of persistent poverty. In addition to the 

dedicated efforts of RD staff in Washington, D.C., and across the country, three factors have contributed to our success to date. 

First, our interest rates are currently at their lowest in program history. Depending on a household’s income and health risk, our program offers three tiers of interest rates: market, intermediate and poverty rate. The 2008 Farm Bill amended the 

interest rate structure to ensure that the poverty and intermediate rates fluctuate 

with the market rate by setting the poverty rate at 60 percent of the market rate 

and the intermediate rate at 80 percent of the market rate. The market interest 

rate is based on the 11 Bond Index, published by Bond Buyer for general obligation 

bonds. Currently, the market rate is four percent, intermediate is 3.25 percent and 

the poverty rate is 2.375 percent. 

The 2008 Farm Bill change in interest rate structure has been positively received 

by communities across rural America. It is particularly beneficial to communities 

working to recover from economic challenges and limited credit markets. As these 

communities seek to provide safe, affordable water and wastewater services to their 

residents, access to reasonable financing is critical. The lower interest rates allow 

us to offer lower cost loans to more communities and use grant funding only when 

necessary. In addition, it has allowed us to target our grant funding to the projects 

in economically challenged areas that need more grant funding than would be available in a typical funding year. The result is that we have been able to provide 

grants where needed and maintain a loan to grant ratio of 60 to 40 percent in our 

ARRA implementation and 70 to 30 percent in our regular program. 

Second, we have continued our tradition of partnering with other agencies and organizations to share in the funding of these critical projects. The $2.3 billion approved has been combined with $558 million contributed by other Federal and state 

agencies and by the applicants themselves. 

Third, we have leveraged the strong community relationships of our technical assistance providers to implement the Recovery Act. In July 2009, USDA announced 

$14.2 million to supplement the existing RD Circuit Rider Program contract in Fiscal Years 2009 and 2010. With this additional funding, the National Rural Water 

Association increased its capacity to help rural communities identify their water and 

waste infrastructure needs and prepare the documentation necessary to apply for 

RD ARRA funding. This much needed assistance is provided at no cost to small 

rural communities that may not have the resources or expertise to prepare a project 

proposal. 

10

2 Colonias are small, unincorporated communities found in Arizona, California, New Mexico, 

and Texas and are generally within 150 miles of the United States and Mexico border. Colonias 

generally have issues such as lack of a potable water supply, lack of adequate sewage systems, 

lack of decent, safe and sanitary housing, inadequate roads, and drainage. 

On top of this, in early March 2010, we awarded a $5 million Technical Assistance 

and Training Grant, made possible by ARRA, to the Rural Community Assistance 

Partnership (RCAP). The RCAP’s field teams will continue our efforts to identify 

communities with water and waste infrastructure needs, particular those in areas 

of persistent poverty. The technical assistance providers have been a tremendous resource for recipients of RUS funding for rural water and waste infrastructure. Although the funds are being processed through existing programs, the ARRA included reporting and other requirements new to our customers. With the help of circuit riders and other technical assistance providers, communities receiving funding 

are also offered a helping hand with these reporting requirements. As a result, program recipients have a very high reporting compliance rate. 

Recipients, such as the Yuma County Improvement District, have benefited from these factors. Through ARRA funding, the District was awarded a loan of $2 million 

and a grant of $16.2 million to bring public sewer service to more than 1,000 residences in Yuma, Arizona, a Colonia 2 first established in 1900. We worked to bring together various funding partnerships that made this $23 million wastewater 

project a reality for the community. Partners included the Arizona Department of 

Environmental Quality, the Water Infrastructure Finance Authority of Arizona, the 

Border Environmental Cooperation Commission, the U.S. Environmental Protection 

Agency , and the North American Development Bank. 

Community Impact 

The ARRA projects funded, to date, are as diverse as rural America itself. For 

many communities, the funding provided an opportunity to replace aging infrastructure and invest in a better future for their residents. For example, The Town of 

Rose Hill, North Carolina will use a $1.58 million loan and a $1.7 million grant to 

construct a new supply well to replace their current well, originally constructed in 

1939. In addition, the town will no longer need to rely on their 60 year-old water 

tank to serve their 670 residents. Instead, the community will use ARRA funds to 

construct a new 300,000 gallon elevated storage tank and install new water lines 

and automated meter readers throughout the system. 

The Town of St. Johnsbury, Vermont received $15 million in funding to separate 

and upgrade its 75 year old water and sewer lines. The town is under a state order 

to separate the storm water from the sewer lines as raw sewage overflows into three 

rivers during rain events. Due to the age of the system, the town loses 759,000 gallons per day of water, more than it provides to customers. The modernization of the 

system will provide clean and safe water and sewer services and protect the environment. 

In Union Springs, Alabama, a new tank and upgrades to older, leaking water 

lines will mean increased water pressure to provide sufficient fire protection for the 

community. This area of Alabama has experienced severe drought conditions over 

the last several years, and the local water authority could not afford the high costs 

of repairing their aging, damaged water lines. Thanks to a low-interest, $1.75 million loan from RUS, the community will have a reliable water source and sufficient 

water pressure to protect their residents from fires. 

In other cases, funding allows for the extension of service to previously unserved 

or underserved areas. In Wythe County, Virginia, RUS is providing funding to extend public water service to 178 homes. Residents in this community are currently 

served by private wells, springs, and cisterns. Many of the wells have become contaminated, testing positive for both total coliform and fecal coliform. A $5.4 million 

loan-grant combination will help the county install new water lines, a new storage 

and a new pump station. In Hand County, South Dakota, the Mid-Dakota Rural 

Water system received a $12 million loan to improve their water system, increase 

the supply of treated water to meet growing demands, and add new users for the 

first time since 2006. In Hancock County, Tennessee, the 850 residents of Sneedville 

will soon have a permanent and reliable source of water, thanks to an $828,000 

loan-grant combination which will fund a water treatment system and a clearwell 

tank. This improved water system will also connect 25 new, unserved customers in 

the nearby community of Treadway. 

The ARRA funds are also cultivating regional initiatives to provide service to 

unserved and economically challenged areas. A good example is the Ozark Mountain 

Regional Water Project in Arkansas that was awarded $19.37 million loan and 

$36.36 million grant to construct an intake structure and water treatment plant on 

11

Bull Shoals Lake. The project will also include construction of five water storage 

tanks and over 100 miles of transmission line extending from northern Boone County to Newton and Searcy Counties in Arkansas. The new system will provide a dependable supply of quality water to 19 rural water systems, of which many are facing water quality and/or quantity problems with existing wells. Fifteen of these systems serve persistent poverty communities. Without ARRA funding, it likely would 

have taken several years to obtain the necessary funding for these much needed 

projects. 

These water and waste disposal projects, made possible by the ARRA, are creating 

urgently needed jobs building these systems now, and will provide the foundation 

for economic development and more jobs into the future for rural communities. The 

ARRA is putting people back to work, like individuals from Berlin, Maryland. The 

Town of Berlin received a $5.98 million loan and a $5.8 million grant to upgrade 

and expand the wastewater treatment system to comply with more stringent environmental regulations and to prepare the Town for expected growth and development. As a result of the ARRA-funded Berlin project, 65 individuals have now returned to work/who had been let go due to the economy. In addition, the local Berlin 

economy, from hardware stores to lunch establishments, has benefited from this 

project. As with many of our projects, USDA partnered with the Maryland Department of the Environment, the Department of Housing and Community Development, and the town of Berlin to make this project happen. 

The ARRA water and waste projects are also spurring economic change and development. In Coopersville, Michigan, ARRA funds are being put to work to renovate 

and expand a wastewater treatment plant. The expansion will facilitate the conversion of an abandoned General Motors/Delphi automotive plant into a milk processing facility by Continental Dairy. Continental Dairy will invest more than $90 

million in plant renovations and plans to create 60 new jobs at the plant initially. 

In the Town of Millport, Alabama, funds will be used to make needed repairs to 

the existing water treatment plant, construct a new well and provide a new storage 

tank. With these improvements, the system will provide better quality and quantity 

of water to 452 residences (approximately 1,160 individuals) and 44 large and commercial users in rural Lamar County, Alabama. As a result, a local industry, Steel 

Dust Recycling, will be able to expand its services, creating 20 new jobs. 

These are just some of the many examples of how rural communities are 

leveraging funds available through the ARRA to reinvest in critical infrastructure 

and improve the quality of life for current and future residents. 

Looking Ahead 

Our priorities for the year ahead are clear. We will continue to seek out and fund 

critical rural water and waste projects with our remaining Recovery Act funds. We 

will also work with our borrowers to ensure that the systems funded move to construction quickly to help create jobs and revitalize the rural economy. Construction 

oversight and loan servicing will be more critical than ever to ensure that ARRA 

funds result in well-built, sustainable systems that provide quality water and waste 

services to rural communities for years to come. 

The need for clean, safe, reliable water remains high in rural America. After 70 

years, even the communities that already were served in the past are coming back 

as their infrastructure ages and as they outgrow capacity predicted decades ago. 

That need is particularly amplified in areas such as the Colonias on our southern 

border. An estimated 400,000 people along the U.S.-Mexico border lack in-home access to water and must haul water from central watering points or untreated 

sources. These households face an elevated risk of communicable diseases including 

Hepatitis A, shigellosis, and Impetigo due to limited hand-washing and bathing. In 

the months ahead, we will work to improve outreach, coordination and program delivery in the Colonias and other areas with unique needs. 

Our ability to offer programs to create economic opportunity and enhance the 

quality of life in rural America is a result of your work. It is an honor and privilege 

to work with you on behalf of the 50 million Americans in our rural communities. 

We look forward to working closely with Congress and our Federal partners 

throughout the Obama Administration in improving the quantity and quality of affordable water and waste disposal services throughout rural America. 

Thank you again for inviting me here to testify and I will be glad to address any 

questions you have.

The CHAIRMAN. Thank you, sir. Thank you for your timely testimony, and in the interest of time I am going to restrict myself to 

just one question so our panel can go ahead and ask their questions. I just simply want to ask you, some people have raised the 

12

issue that after the Recovery Act addresses the application backlog, 

the program may become indeed even more popular than it has 

been. It could mean that you will end up with an even bigger backlog than when you started, which would be of concern to many 

more rural communities. Has the combination of the Recovery Act 

funds and the regular program funds cut into the backlog? What 

is the current status of the backlog? 

Mr. ADELSTEIN. Well, ARRA and the regular appropriations this 

year, as I said, were unprecedented in their level, and they enabled 

us to provide a lot of funding to deal with that backlog. And, as 

you said, new projects and new proposals have poured in. With 

$2.5 billion in Fiscal Year 2009 alone it was a record level, but demand remains very high. As you know, the needs are extraordinary 

in rural communities and new applications are being received every 

day in our state offices. The rural communities really need this 

commitment, and they have noted the fact that this is an opportunity to reinvest. They have seized on that opportunity, so we currently have $3 billion in requests pending and we are going to use 

our remaining ARRA and appropriations through the regular Fiscal 

Year 2010 appropriations to fund as many of those as we can. 

The CHAIRMAN. Thanks. Mr. Conaway. 

Mr. CONAWAY. Thank you, Mr. Chairman. Mr. Adelstein, we are 

going to vote on a bill tomorrow, H.R. 4899, that will rescind about 

$100 million in rural development programs. Can you give us a 

quick synopsis of what that would do to your programs—$100 million for rural development programs will be rescinded tomorrow, 

money taken away from you that you thought you were going to 

have? 

Mr. ADELSTEIN. I am not sure exactly where those rescissions 

would be. I am sorry. I could get back to you. 

Mr. CONAWAY. So your agency has not been consulted at all? 

This is just added-on to from on high that says they will take the 

money away from you, there is no planning on how that money will 

be taken away from you? 

Mr. ADELSTEIN. Well, none of the rescissions, as far as I know, 

would affect the Rural Utilities Service that I administer. 

Mr. CONAWAY. You don’t cover rural development programs? 

Mr. ADELSTEIN. I really just administer the Rural Utilities Service program that in this case are not——

Mr. CONAWAY. So to your knowledge no one on the—the sponsors 

of this bill have not contacted your agency to see what impact a 

$100 million rescission would have? 

Mr. ADELSTEIN. Well, they haven’t contacted RUS particularly, 

but I guess the $59 million in disaster funding, the budget team 

is working on this at Rural Development. Certainly, RUS is working on it, Under Secretary Dallas Tonsager, and the Secretary, but 

not RUS in particular. We are not affected. 

Mr. CONAWAY. All right. In your statement, you said we have 

$2.3 billion from USDA and it is combined with the $558 million 

from other Federal and state agencies. The farm bill authorized 

funds for nonprofit groups to help communities identify funding opportunities and prepare the applications. We would be interested in 

knowing USDA’s specific role in seeking the $558 million from 

other sources and what role applicants and assisting organizations 

13

played in securing the necessary funds. Could you elaborate on 

which other agencies contributed and exactly how USDA activities 

led to this collaboration? 

Mr. ADELSTEIN. We would, particularly with the EPA, which has 

a large amount of funding under ARRA for State Revolving Funds 

that they provided funding to. So, we work very closely with the 

EPA, and also with HUD. CDBG grants are available for this purpose, and our state offices work closely with them to determine how 

we can share in certain projects. Sometimes EPA will fund a 

project and sometimes RUS will fund one. Sometimes we will share 

funding together in order to leverage all the different Federal resources that are out there, as well as state resources to make sure 

that we are meeting the needs and also effectively leveraging the 

funds that we have. We are not the sole source so that folks don’t 

become overly reliant on us. 

Mr. CONAWAY. Was there any not-for-profit, non-governmental, 

not-for-profit organizations that were able to pitch in on this too? 

Mr. ADELSTEIN. There is a lot of help from NRWA and from 

RCAP that we provided funding to for the Circuit Rider and the 

technical assistance and training programs. 

Mr. CONAWAY. As the, your words, unprecedented level of funding in 2009, 2010, can you talk to us about how you relaxed the 

standards so that you could get more money out, or did you relax 

standards on your evaluation process? How did the flood of 

money—when money is scarce we make better decisions than when 

money is not scarce. Can you talk to us about how you protected 

the taxpayer dollars from the human nature of spending money 

that you might not otherwise have spent? 

Mr. ADELSTEIN. We have not relaxed the standards at all. Congress, in its great wisdom provided three percent of the funding for 

administration of the program, and our state staff and our national 

staff have used that to hire additional folks. The people that we 

have have worked incredible hours to meet this demand. There are 

people in the states that really believe in this program and they 

have never had an opportunity like this. They have seen the unmet 

needs out in the field and they have always wanted an opportunity 

like this to deal with the backlog, to deal with the unmet needs, 

and they have worked very long hours. I think on September 30 

a lot of folks are just going to collapse in exhaustion because they 

have never worked this hard. We have not relaxed the standards. 

Mr. CONAWAY. Okay. And the folks that you have hired, they will 

continue on once this funding is no longer there? If they collapse, 

will they continue on the taxpayer payrolls even though we don’t 

have those huge funding levels? 

Mr. ADELSTEIN. The temporary ones won’t be able to continue on. 

Now there are ways we might find—because they are fully trained, 

we hate to lose them. We have some holes and openings coming up, 

and we are trying to find ways to get those people into existing 

holes or replace people that are retiring. Since they are trained and 

up and running, we don’t want to lose all the skills that we have 

developed. But some of them we are going to lose because when 

that funding cuts off on September 30 the temporaries have to 

leave. 

14

Mr. CONAWAY. I would certainly encourage you to keep the best 

and brightest for the retirees, but I would also encourage you that 

continuing to grow government and employee base while it looks 

like a jobs bill, it is not, so be judicious about your staff levels, and 

I yield back. 

The CHAIRMAN. Thank you, Mr. Conaway. Mr. Bright. 

Mr. BRIGHT. Yes, sir. Thank you, Mr. Chairman, and, thank you, 

Mr. Adelstein, for joining us today as we discuss an issue that is 

of utmost importance to most, if not all, of the communities we represent here in Congress today. In my district water and wastewater 

infrastructure rehabilitation is needed in nearly every municipality, and I have 93 municipalities in my 16 counties in Alabama 

and southeast Alabama. It is not uncommon in southeast Alabama 

for a community to experience water and wastewater infrastructure 

so debilitating that water outages are common and clean, 

uncontaminated drinking water is not always guaranteed. Two 

towns in my district, Repton and Louisville, which are both in rural 

areas, have been working on sewer and water rehabilitation 

projects for some time now. 

I have met with the mayors of these towns on multiple occasions 

to view their sewer infrastructure and can attest to their needs. 

Unfortunately, there is only so much we can do with STAG grants 

and the appropriations process. Programs like the water and 

wastewater disposal loan program at RUS are critical to meeting 

these needs, but many communities aren’t getting help. Too many 

of the communities in my district are not getting sufficient help. 

For this reason, I am pleased to have you here testifying today and 

look forward to working with you and your agency at the local level 

to get funding for communities like the ones I have just named in 

my district. You mentioned one, and I do appreciate your help in 

Union Springs. That was much needed and very much appreciated 

by the people there, so thank you very much for working with us 

there. 

I only have one question, and that is I am sure you have been 

exposed to a number of projects similar to the ones I have just 

mentioned, and would like for you to talk more in detail about 

what types of projects qualify for funding through the water and 

waste water disposal loan program at RUS, if you could, this morning. 

Mr. ADELSTEIN. We fund a wide array of projects including 

wastewater treatment, sewer, both sanitary and storm sewer 

projects. We fund the treatment of it. We fund an array of different 

projects. We also fund solid waste projects to make sure that they 

don’t pollute the water resources in a community and to make sure 

that they are properly managed. So we are really broad in ranging 

from folks that really know how to work with water in the community and make sure that communities can have it treated properly 

to protect the environment, and also make sure that they have 

clean water for their own needs. 

Mr. BRIGHT. Could you, in more detail, explain to me what we 

are doing to ensure the communities that we have just identified 

are taking advantage of these programs that you offer? 

Mr. ADELSTEIN. Our state office works closely with the communities themselves. For example, our state office in Alabama has caVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00018 Fmt 6633 Sfmt 6601 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
15

reer professionals that do this work. We also have enormous help 

from our Circuit Rider program and our technical assistance and 

training grants which we are able to expand this year through the 

Recovery Act. The Circuit Riders, on a 5 year contract, will go out 

under NRWA and help folks to build operational, managerial, and 

financial capacity in all 50 states. They really get out in the field 

and help folks. Technical assistance and training is also available 

to help multiple entities assist specified regions in helping folks to 

identify and evaluate water solutions in their communities, and to 

deal with problems they have for water and waste disposal problems. 

To prepare applications, they can help to improve the operation 

and maintenance of existing programs, so we really work in partnership with our contractors in RCAP and NRWA in the field. Our 

field staff working together with them will help communities identify solutions to problems they have and to craft applications that 

can be funded by us for loans and grants to deal with whatever 

problems they may be facing. 

Mr. BRIGHT. Thank you very much, Mr. Adelstein. Mr. Chairman, I yield back the remainder of my time. 

The CHAIRMAN. Thank you, Mr. Bright. Mr. Thompson. 

Mr. THOMPSON. Thank you, Mr. Chairman, and Ranking Member. Mr. Adelstein, thank you so much for being with us today. 

RUS, I really appreciate you, what your agency does. I think you 

are uniquely positioned to observe the challenges of rural communities on these infrastructure questions related to aging infrastructure, but also on just trying to comply with the Federal mandates 

that many of these municipalities and authorities have to comply 

with. And we talked briefly about that before this session started. 

Compounded for those communities in my district is the fact that 

my municipalities, townships, boroughs, the authorities that they 

form to deal with these infrastructure issues were located in the 

Chesapeake Bay Watershed, and resources really are very limited 

to comply. And I want to thank you because your agency actually 

is one of the only hopes that those municipalities have those authorities to do that. But, we only have so many resources, especially, with all the other priorities that this Administration has 

showered upon us to fund. 

So the other side of it is dealing with how do we reduce those 

mandates or at least hold them in check, get some more time. Has 

RUS ever—because you have the documentation obviously. Your 

field workers are working with these communities all the time. You 

have the documentation, I would assume. Have you ever used that 

to weigh in with other parts of the Administration, the agencies, 

such as the EPA, to say, you know what, we are doing our best but 

these mandates are going to bankrupt these authorities, the townships, the boroughs. And I am not saying repeal mandates although I would support to have many of them, but have you ever 

weighed in to say how about a little more time, how about an extension? Give them a little more time in years to comply with these 

things. I think RUS is just uniquely positioned to be able to be an 

expert in terms of documenting and demonstrating that need to 

other parts of the Administration that actually administer these 

mandates. 

16

Mr. ADELSTEIN. We work very closely with the EPA day in and 

day out on making sure folks can meet the standards. In my time 

there, I don’t believe there have been any new requirements put 

on. A lot of them were pre-existing and we have not weighed in 

with them as far as I know. Our potential borrowers see all kinds 

of needs, as you said, to improve and upgrade their water treatment facilities to comply with regulations that are imposed on 

them. Our program can of course finance these projects, but, as you 

said, the applicant has to be eligible and we have to have funds 

available. There are a lot of demands to help folks meet those 

standards. 

Mr. THOMPSON. I am glad to hear that you do communicate with 

folks like EPA and any other agency that has oversight of those. 

Do they ever listen to what you have to say? Do they ever—is there 

any hope, that is what I am saying, I guess. 

Mr. ADELSTEIN. They are the experts. We do discuss the impact 

of regulatory action on rural water systems and work with other 

agencies on the issue of health and the environment. We need to 

deal with the requirements they come up with, and of course the 

demands on our program are very large, in order to meet the compliance needs. But our expertise isn’t so much on human health effects or knowing exactly what level of coliform might or might not 

be damaging or what level of——

Mr. THOMPSON. And I understand. And I would just go on to my 

second question to you. I am just encouraged that where your expertise is, it is identifying how realistic it is that these communities are able to comply, as opposed to penalizing them with tremendous fines and penalties, providing extensions, giving more 

time for compliance. That buys them quite a bit when we can’t provide them the resources to do that. You mentioned that a total of 

$2.5 billion in new rural water and waste systems came through 

the ARRA and the stimulus, and I agree that certainly those funds 

are very much needed in rural areas. While the funding no doubt 

is helpful to rural infrastructure projects, have you seen any kind 

of impact that the money has had on local jobs? 

Mr. ADELSTEIN. Yes, we have seen that. When a project is obligated construction activities begin. Over 600 projects have been obligated so far, and the final design, bidding, and construction is ongoing as soon as they do that. We have held 32 groundbreakings 

so far on ARRA projects. But we are really at the height of the bidding cycle now as spring is coming upon us, faster in some parts 

of the country than others. We see an increase in bidding and more 

construction is expected in the spring and summer. We have already seen some. We have already seen a lot of pre-construction activities begun on many of our projects. 

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

The CHAIRMAN. Thank you very much. Mr. Cassidy. 

Mr. CASSIDY. Thank you very much. Thank you. Mr. Adelstein 

has already identified himself as a man of rare sensitivities. He 

loves Cajun music so I appreciate that. A couple questions. I think 

staff may have answered one but I want to confirm. If you have 

a community with a population of less than 10,000 but wishes to 

build capacity because they anticipate growth to a population of 

50,000 over the next decade, are they able to use this money not 

17

just for the capacity of where they are now, less than 10,000, but 

also with the capacity of which they anticipate being, which would 

be 50,000? 

Mr. ADELSTEIN. We really try to keep folks reasonable in the 

scope of what they are doing. Communities who lack the capacity 

to complete engineering and environmental components can get 

help in several ways. We provide technical assistance and offer 

grants for planning activities. We look at their projections for 

growth and sometimes communities have very aggressive projections, and we don’t necessarily want to use scarce Federal dollars 

for a projection that may or may not happen. We can’t necessarily 

know what kind of growth there is going to be, so we tend to be 

fairly modest and conservative in saying that sometimes these communities that want to grow quickly and want to build huge water 

systems in anticipation of vast population growth, we try to restrain them somewhat and say what are these assumptions? Is this 

something that you really want to fund and can you finance it because the concern is if they are building a project for 50,000 or 

10,000 and that level of population growth doesn’t happen, they are 

not going to be able to pay us back because——

Mr. CASSIDY. So, in a sense you review their business plan? 

Mr. ADELSTEIN. Yes, we do a business plan. Exactly. And we look 

at their assumptions for growth. 

Mr. CASSIDY. So if you were on the outskirts of Houston, you 

would say, yes, it looks pretty good, and if you were on the outskirts of Ducayne Town, you would say think again. 

Mr. ADELSTEIN. Yes, if they say they have a certain plant coming 

in and they know exactly what it is, and their level of certainty——

Mr. CASSIDY. That leads me to my next question. Sorry to cut 

you off but obviously we have limited time. What is your method—

obviously, it is a competitive grant process, and many of the small 

towns in my community, frankly, don’t have the resources in which 

to hire somebody to shepherd this through the process. What is 

your method, and I am sure that is a common problem——

Mr. ADELSTEIN. It is. 

Mr. CASSIDY. What is your method of ranking in this competitive 

process? Which application or loan guarantee application takes 

precedence? 

Mr. ADELSTEIN. We look at a couple different factors. First, in 

terms of the ARRA funds, we looked at the backlog and dealt with 

that, and then we mandated a priority for shovel-ready projects. 

We wanted to get those going. And then we set aside ten percent 

for persistent poverty counties, and on top of that we then allocated 

according to our regular state allocation formula which takes into 

account the overall size of the rural population, level of rural unemployment, and level of rural poverty. And we are doing projects 

as soon as they come in. As soon as they are ready to roll, we are 

funding them as quickly as we can. 

Mr. CASSIDY. And, again, going back to my small communities 

with the limited—they don’t have engineers on staff, for example, 

so I kept on thinking that shovel-ready project criteria for the community which is most poverty-ridden is almost an oxymoron. They 

don’t have the money to come up with the project, and yet they are 

18

the ones who need it the most, et cetera, et cetera, et cetera. Do you 

follow what I am saying? 

Mr. ADELSTEIN. Yes. That is why we set aside ten percent of the 

ARRA funding for persistent poverty counties, and we have actually exceeded that. We have gotten 11 percent of the funding to 

persistent poverty counties. The way we deal with those is, first of 

all, our state staffs really concentrate on that. And, second, our 

technical assistance and training program has pre-planning grants 

to help, particularly, those very poverty stricken communities get 

funds to help prepare to do this. The technical assistance teams 

will actually help through our contract, help them to develop the 

application and flush out what it is they need because——

Mr. CASSIDY. So if my Congressional office then took your agent 

around to all the communities which meet the definition of high 

poverty, we could begin doing, I use the technical term, pre-planning application. 

Mr. ADELSTEIN. You can get a grant for pre-planning through our 

technical assistance and training program, which is a program we 

have been operating for many years and it really——

Mr. CASSIDY. Now does this also include—because I am sure the 

Army Corps at times has to be involved and they have their own 

grant application process, which I think it is up to the communities 

to fund typically. Does this grant application also help fund the 

other agencies’ environmental impact statement, et cetera?

Mr. ADELSTEIN. Yes, it helps with the overall planning, so it 

helps people with compliance with EPA requirements. It helps 

them meet state permitting. In other words, the plan is a comprehensive one. Our technical assistance helps people develop an 

overall application, which would include all the environmental 

work, all the state work, all of the engineering. 

Mr. CASSIDY. And what is the typical size of these grants? The community back home just had a $500 thousand bill for an Army 

Corps study. They couldn’t afford it. So what is the typical size of 

these planning grants? 

Mr. ADELSTEIN. Well, in Fiscal Year 2009 we did grants to ten entities, for a total of $19.5 million, so these are regional entities. 

They help multiple communities. And on top of that we have the 

Circuit Riders as well that can help out in training——

Mr. CASSIDY. So, hard cash, roughly about $500 thousand per grant, $19 million divided by ten, something like $490 thousand, 

correct? 

Mr. ADELSTEIN. It would average around $2 million. 

Mr. CASSIDY. Two million dollars? 

Mr. ADELSTEIN. With about $20 million——

Mr. CASSIDY. I am sorry. You are right. Okay. Thank you very 

much, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Cassidy. We welcome today our 

full Committee Member Stephanie Herseth Sandlin. I have consulted with Ranking Member Conaway, and we agree to have her 

sit in. Welcome and we are glad to have you ask any questions you 

would like. 

Ms. HERSETH SANDLIN. I appreciate that, Mr. Chairman. Thank 

you for allowing me to participate in the Subcommittee hearing 

today. Jonathan, welcome. It is a pleasure to have not just one but 

19

two South Dakotans testifying in today’s hearing, and I think that 

that indicates how important rural water systems are and the 

projects that you administer under the RUS in states like South 

Dakota. Again, thank you, Mr. Chairman, for holding this hearing 

to highlight the importance of rural water systems. It is not only 

a true life line for citizens, residents, who live in rural communities 

across the country, but often play a crucial role in supporting local 

economic development. Jonathan, your written testimony notes 

that the Recovery Act allowed the water and waste disposal loan 

and grant program to achieve the highest ever 1 year total investment of $2.5 billion in new and improved rural water and wastewater systems. 

And your testimony notes that in Hand County, South Dakota 

the Mid-Dakota Rural Water system was allocated a $12 million 

loan to make improvements to the system, boost supply of treated 

water, and to take on new customers for the first time in 3 years. 

I would appreciate it if you and your office could forward to me the 

specifics of other South Dakota specific projects that has benefited 

from this loan and grant program. But if you could just summarize 

in your opinion the overall effect on rural communities of the 

USDA rural water and wastewater Recovery Act funding Congress 

approved last year, some of which have been distributed, others of 

which you are looking to obligate, just summarize what you believe 

the overall impact has been and is going to be for these rural communities over the course of the upcoming months and years. 

Mr. ADELSTEIN. Thank you. We will get to the details on all the 

South Dakota projects. There have been quite a few because of the 

big needs in South Dakota for this, like the example you cited without having additional capacity new people can’t move into town, 

new businesses can’t move in. And we see this in community after 

community that without water resources many of these small rural 

systems are at capacity, so you can’t get another home in there, 

you can’t get another business in there. Rural development comes 

to a standstill without additional water capacity. That is why I said 

in my statement that this is really a foundational basis for economic development. Now that is one basis of it, but the other issue 

is that folks are often drinking water that is just not what we expect in this country. 

When I came on this job, I wasn’t even aware of how bad the situation is in certain parts of the country, and how really unacceptable some of the conditions are, for example like the Colonias, and 

some of the more rural parts, the Indian Reservations. It is something that most Americans would object to if they knew—and there 

has been a series recently in the New York Times you might have 

seen about how bad it can be. This project is a critical project in 

rural areas that is actually helping these communities deal with 

urgent health needs that are, literally, making their people sick 

and their children sick. People are afraid to give their children 

water, and they can’t afford to go out and buy it and treat it themselves. They expect their municipalities to do it, and without the 

help of the Federal Government, without the help of this program, 

we wouldn’t be able to meet the needs of these communities and 

the health of our children are profoundly affected. 

20

On top of that there are environmental issues. I mentioned Earth 

Day is coming up. But it is incredible to see the way that some of 

these rural areas don’t have adequate water treatment facilities or 

storm facilities. There is all kind of run-off into our critical estuaries, into our water systems, into our ground water, that is causing damage for future generations and that is sometimes rendering 

the water unusable. The reason people like to live in rural areas 

often is because of the pristine environment and because it is a 

wonderful place where there is fresh air, there is room. They prize 

their environment and they don’t like to see what happens with the 

degradation of their environment, but without help their water systems are contributing to real problems for the wells in the area, the 

drinking water for the whole community. 

And we are helping people deal with open lagoons. We are helping them deal with areas that don’t have sewer systems. We are 

helping them, for the first time, to really protect the environment 

in profound ways. We are helping the economic development, we 

are helping the immediate health care, and protecting the environment of our rural communities, so we appreciate your support for 

this program. 

Ms. HERSETH SANDLIN. Thank you. And I would just make the 

further point that this isn’t just an investment in the people who 

currently reside in these communities. I am convinced that the investment in aging infrastructure in small rural communities across 

the country is an investment in the future of folks who are going 

to be looking to move to more rural areas as the other programs 

you administer with broadband make it increasingly likely that we 

can have small business and entrepreneurs moving and growing 

jobs in areas that don’t suffer some of the congestion and quality 

of life issues of those living in urban areas. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, ma’am. Mr. Adelstein, what is the 

ratio between loans and the loan/grant combinations for water and 

waste disposal systems, and if I can ask you also how do you decide 

what the break is between loans and grants? 

Mr. ADELSTEIN. Well, the ratio is 70 percent to 30 percent in our 

regular program. We found it 60:40 in the ARRA program, and that 

is based on what kind of applications are coming in. It is kind of 

based on whether or not we are getting folks that are applying for 

more grants. We found, for example, when you set aside ten percent for persistent poverty that there is more of a need for grant 

funds than loan funds. And we are targeting funds to smaller, lowincome communities. We are seeing larger projects in communities 

that were formerly held back due to funding not being available, 

so it is just a higher grant ratio. We held back a ten percent grant 

in the national office reserves to deal with that, so we are seeing 

slightly higher grant levels under ARRA than we did under the traditional program. 

The CHAIRMAN. Are there any projects that are funded entirely 

by grants? 

Mr. ADELSTEIN. No. Everyone is required to provide a loan to 

some extent or another. We do provide much higher loan amounts 

for certain projects, but everybody is going to get some revenue, we 

presume, from these projects because we know they are going to 

21

have customers. We know they are going to get some revenues so 

we want them to be able to repay to make it a sustainable project. 

The CHAIRMAN. And who would be the point person in your agency, especially for smaller communities that can’t afford to have 

grant writers, do you have somebody that can assist them or direct 

them in how best to make their applications? 

Mr. ADELSTEIN. Yes. Our state office staff on the ground, usually 

the state director would be the first place for a Member of Congress 

to contact that would get you to the right person in the state that 

would be able to help. On top of that the technical assistance and 

training programs would be able to help a particular community. 

Our Circuit Rider program also can help communities to deal with 

their immediate needs, so I would recommend going through our 

state office staff to find out who could help that particular community. 

The CHAIRMAN. Thank you, sir. Mr. Conaway, do you have an additional question? 

Mr. CONAWAY. Just a couple things, very quickly. You caught my 

attention when you said you have held a ten percent national reserve. That is ten percent of what? 

Mr. ADELSTEIN. Ten percent of the overall amount that was appropriated for the program under ARRA. 

Mr. CONAWAY. Okay, but those funds have to be obligated by 

September 30 of this year. Ten percent is a lot of money. It is what, 

a billion? How much does ten percent equal? 

Mr. ADELSTEIN. Well, budget authority would be about $130 million. 

Mr. CONAWAY. Okay. You have plans to either give that back to 

the taxpayer or spend it appropriately? 

Mr. ADELSTEIN. We have plans to have all of the funds obligated 

by September 30. We traditionally do set aside a reserve of five to 

ten percent. This is pretty typical for a program to see where in 

the end we need to——

Mr. CONAWAY. The persistent poverty definition, is that in law 

some place or is that something that you all developed? 

Mr. ADELSTEIN. That is in regulation. I am not sure if it is in 

law. 

Mr. CONAWAY. Okay. So we know what that is. You must need 

the wisdom of Solomon. You mentioned Colonias and Indian Reservations as being some of the worst places. Did all of those get 

taken care of first? How do you make that decision between saying 

no to a community that is on the top of your list as being the worst 

water to saying yes to someone who is further down the list? How 

did you come to that? 

Mr. ADELSTEIN. Well, as soon as we get a Colonia application in 

complete, we are funding it if it is eligible. None of them are being 

held up at all. We are kind of taking them as quickly as we can 

and getting those funds out the door. 

Mr. CONAWAY. Given the old adage from Tip O’Neill that all politics is local, we have a Concho Water Snake that is on the endangered species list. That snake is on the verge of getting off the list, 

and the problem right now is the bureaucracy at Fish and Wildlife 

and some lawyers someplace in the system. We have a community 

that wants to build a multi-million dollar project on cleaning the 

22

river, improving water flow, creating ripples, bank restoration and 

stabilization, all those projects are going on, which would mean 

better water for the folks downstream obviously. And yet we can’t 

get anything done. Do you guys ever take positions for or against 

your sister agencies, in this instance, Fish and Wildlife? Do you 

ever venture boldly into that particular arena? 

Mr. ADELSTEIN. We really don’t. We wait for the environmental 

reviews to be approved before we fund the project so we are kind 

of at the mercy of the other agencies. 

Mr. CONAWAY. Yes, we have a $350,000 presence or absence 

study that has to be done on a snake that really is—we will go 

through that later. I yield back, Mr. Chairman. Thank you. 

The CHAIRMAN. Thank you. Mr. Bright, do you have an additional question? 

Mr. BRIGHT. I do have a little follow-up, a statement of clarification, and hopefully assistance to my Ranking Member. I have a 

phobia of snakes so any way I can help you get around that, let 

me know. You have my vote. Administrator, one follow-up question. 

You mentioned the ten percent that you set aside—earmarked for 

these funds. How do you rank the projects within that tenth percentile? It is amazing to me because I have 93 communities out 

there, and I have traveled through those 93 over the last year, and 

I am going back to them, and they are continuously submitting to 

me requests for revenues or help for water systems out there. Out 

of the 93, I had 16 requests this year for me to help them with a 

water treatment plant within their community. And many of those, 

not all 16, would be very similar to what my colleague was describing as small rural communities, probably fewer than a couple thousand people, and they don’t have the staff to administer or to even 

apply for these monies. How do you rank those communities within 

that tenth percentile? 

Mr. ADELSTEIN. We are fortunate this year to have enough funds 

to fund all of the needed projects within that category. No projects 

have been denied so far that have been ready to go. I think you 

hit the nail on the head as far as what the issue is at getting those 

applications up and in position. And you hit on it as well that these 

low income communities are struggling to go through all the effort 

to do this. That is why we have the technical assistance and training. That is why our state staffs work with low income communities to do it. If they can get a project in front of us and get it 

ready to go with all the permits, we are funding them as they are 

coming in the door for all of our priority projects. 

Mr. BRIGHT. Thank you very much. I yield back the time. Mr. 

Chairman. Thank you very much. 

The CHAIRMAN. Thank you. Any additional questions, Mr. 

Thompson? 

Mr. THOMPSON. I just want to touch briefly on energy. You talked 

about how RUS works with energy, and I want to see if you can 

elaborate on that. 

Mr. ADELSTEIN. We have a $6.5 billion energy program financing 

energy projects in generation, transmission and distribution. We 

are really proud of a 75 year history of ensuring that rural areas 

have electricity at affordable rates. We are the old Rural Electrification Administration, and I am a historian by training, so the 

23

first thing I did when I got this job is read this book. And today 

we are still making sure, and there is an enormous demand, making sure that all of our rural electric co-ops have adequate financing at very reasonable rates at no cost to the taxpayer because they 

always pay us back. We do that $6.5 billion loan program for no 

budget authority because we are able to get paid back. We are very 

zealous in how we review these applications and we make sure 

that they are done in a way that is fiscally prudent and financially 

stable. So that is our energy program in a nutshell. 

Mr. THOMPSON. And just a quick follow-up to that. In my district 

we are home of the heart of the Marcellus Shale natural gas. Is 

there any money from the stimulus or perhaps within your funding 

that goes towards water treatment that is specific to dealing with 

that energy area in terms of the processing of frac water following 

use with drilling for natural gas? 

Mr. ADELSTEIN. Not that I am aware of, no. 

Mr. THOMPSON. Okay. Thank you. 

The CHAIRMAN. Thank you very much, Mr. Thompson, and thank 

you so much, Mr. Adelstein. We will welcome the second panel to 

come forward. Mr. Adelstein, if you have additional comments. 

Mr. ADELSTEIN. I just wanted to say something for the record. 

Apparently, the rescission legislation may affect RUS. I need to 

look at that. Our budget office has been aware of this and I need 

to follow up and respond in more detail on exactly what the impact 

may be, and I can follow up also for the record very quickly with 

your office as far as what the impact would be on Rural Development overall. 

Mr. CONAWAY. Okay. If you wouldn’t mind doing that because 

this thing may be voted on tomorrow or the next day. 

Mr. ADELSTEIN. We will get back to you today. 

Mr. CONAWAY. Thank you, sir. 

The CHAIRMAN. Thank you. And we have been joined by the 

Chairman of the overall Agriculture Committee, Mr. Peterson. Mr. 

Peterson, before we conclude this particular panel with Mr. 

Adelstein, do you have any comments or questions? All right. Well, 

thank you for joining us and thanks again to Ms. Herseth Sandlin 

for joining us. That will conclude this first panel. We will ask our 

second panel to please prepare to come to the table, and you will 

be introduced momentarily. Thank you, Mr. Adelstein. 

Mr. ADELSTEIN. Thank you, Mr. Chairman. 

The CHAIRMAN. We would now like to welcome our second panel 

that has come before us today before the Subcommittee. Ms. 

Rhonda Locklear, Water and Wastewater Director of the Town of 

Pembroke, North Carolina, on behalf of the National Rural Water 

Association. Again, Rhonda, welcome, from our home county of 

Robeson County in North Carolina. It is good to have you here. 

Also, we welcome Ms. Christina Fierros, the Chief Operations Officer of the Midwest Assistance Program of the Rural Community 

Assistance Partnership in Savannah, Missouri. Mr. Michael North, 

President of the National Association of Development Organizations, an organization that we have long worked with and appreciate the good work that you do through the years in helping smaller communities. He is from Harrison, Arkansas on behalf of the 

National Association of Counties. We know the county commisVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00027 Fmt 6633 Sfmt 6601 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
24

sioners were just in town in the last couple of weeks. Mr. Troy 

Larson, Executive Director of the Lewis & Clark Regional Water 

System of Sioux Falls, South Dakota. And we are glad to have you 

here today, and Ms. Herseth Sandlin, I know, has welcomed you 

as well. And Mr. Paul Kahl, the Deputy Director of Public Works 

for Allegany County in Cumberland, Maryland. 

Welcome to each of you. The chair would again like to remind 

Members that following the full Committee’s chair’s lead, they will 

be recognized for questioning in order of seniority. Visiting Members who are not full-time Members of the Subcommittee will be 

recognized for questioning after all Subcommittee Members have 

had a chance to do so. We appreciate the Members’ understanding. 

So now we will begin the testimony from the panel. As you recall, 

you each have 5 minutes. Please highlight your testimony during 

that 5 minutes so we can make sure we can have your complete 

and accurate comments. Ms. Locklear, you may begin. 

STATEMENT OF RHONDA LOCKLEAR, WATER AND

WASTEWATER DIRECTOR, TOWN OF PEMBROKE, NORTH 

CAROLINA, PEMBROKE, NC; ON BEHALF OF NATIONAL 

RURAL WATER ASSOCIATION 

Ms. LOCKLEAR. Thank you, Chairman McIntyre, Ranking Member Conaway for allowing me the opportunity to testify before this 

Committee. I want to specifically explain how USDA investments 

have enhanced the quality of life in my hometown of Pembroke, 

North Carolina. I am Rhonda Locklear, a native of Robeson County, and a member of the Lumbee Tribe. I am currently the Water 

and Wastewater Director for the Town of Pembroke. I am a graduate of Pembroke State University, now known as the University 

of North Carolina at Pembroke, and I am also a proud member of 

the North Carolina Rural Water Association. 

USDA investments have drastically improved the economic and 

public health of Pembroke. We were paralyzed because of the inadequacies of our water and wastewater treatment facility. Excessive 

inflows and infiltration washed all the microorganisms out of the 

wastewater treatment plant and into the Lumber River. Essentially no treatment occurred until this population could be regrown. The Division of Water Quality issued a special order of consent which stopped any and all additional flow into the wastewater 

system. This action halted the growth of our community. Pembroke’s economic growth and development catalyzed in 1992 when 

USDA loaned $1.4 million to upgrade the wastewater treatment facility. The 5,000 gallon a day facility went to 1.3 million and it included a wastewater certified laboratory. 

Storm water is still an issue but the difference is we remove 94 

percent of the pollutants. Replacing aged water and sewer lines, as 

I heard earlier, is a great endeavor and would correct the problem. 

Small communities like Pembroke would need the continued support and assistance of USDA to accomplish these goals. Due to expanded capacity of the wastewater treatment facility, we have now 

the fastest growing university in the UNC system. Their population 

in 1992 was roughly 1,700. It has jumped to 6,800 in 2010. They 

are the largest employer and the largest water and sewer user in 

the Town of Pembroke. With property values escalating from $30 

25

million to $140 million it is easy to see the impact USDA has had 

on our community. 

Pembroke once again sought to improve infrastructure by increasing their water capacity and improve water quality. State and 

USDA assistance enabled us to build a new water treatment facility and add a fourth elevated water storage tank. We then met 

minimum water pressure requirements for fire suppression which 

kept insurance rates down. It decreased the potential health hazards and also supplied water for new homes and businesses in 

Pembroke. Thousands of jobs have been created since businesses 

like Wal-Mart, True Value, McDonald’s, and a multitude of health 

care units have located in Pembroke. 

The Lumbee Tribe is building 100 homes. They have plans to 

build 400 more new homes. Their new tribal complex sits to the 

right of our 32 acre recreational park, and we also support a 600 

acre commerce and technology center. We also have a new hotel 

that opened in December to accommodate overnight visits in Pembroke, which we hadn’t had for quite some time. All these great accomplishments are because of God, sincere officials like yourself, 

and USDA programs. While USDA has provided funding for rural 

communities the North Carolina Rural Water Association has provided the training, the financial management, and the on-site technical support to ensure facilities operate at the highest level. Experienced professionals empower operators, board members, and communities with the knowledge to understand their system. They also 

save millions of dollars that are intended for infrastructure so we 

don’t have to pay expensive consultants. 

They also help assist us with aging staff and taking that knowledge into the future. Small communities lack the resources to address large issues that would go without assistance if it were not 

for USDA programs. Federal and state programs would like to 

serve large affluent communities, but the USDA Rural Development staff ensures persistent poverty counties like Robeson can 

prosper. Thank you, Chairman McIntyre, and Ranking Member 

Conaway and this Committee for your support. And I will be glad 

to answer any questions that you have. 

[The prepared statement of Ms. Locklear follows:]

PREPARED STATEMENT OF RHONDA LOCKLEAR, WATER AND WASTEWATER DIRECTOR, 

TOWN OF PEMBROKE, NORTH CAROLINA, PEMBROKE, NC; ON BEHALF OF NATIONAL

RURAL WATER ASSOCIATION

Thank you Chairman McIntyre and Ranking Member Conaway for allowing me 

the opportunity to testify before this Committee. I want to specifically speak from 

a holistic point of view to explain how USDA investments in infrastructure have enhanced the quality of life in my hometown of Pembroke, North Carolina. 

I am Rhonda Locklear and I am a native of Robeson County and a member of 

one of the largest American Indian tribes, known as the Lumbee. I am presently 

the Water and Wastewater Director for the Town of Pembroke. I am a graduate of 

Pembroke State University, a university that is drenched in local roots that is now 

known as the University of North Carolina at Pembroke. I am also a proud member 

of the North Carolina Rural Water Association, an association committed to providing the highest quality support to the systems across the state through training 

and on-site technical assistance. 

The USDA investments in the Town of Pembroke have delivered tremendous results for both the economic and public health of the entire community. Prior to these 

investments, the economic growth was paralyzed due to inadequate drinking and 

wastewater treatment and capacity limitations. Any amount of rain water caused 

26

excessive inflows and infiltrations into our wastewater treatment facility which 

washed all microorganisms needed for wastewater treatment into the Lumber River. 

Essentially no treatment occurred for a period of at least 10 days after a significant 

rain, which is the time required for a community of microorganisms to be re-grown. 

This scenario was constantly repeated, requiring the North Carolina Department of 

Environment and Natural Resources Division of Water Quality to issue a Special 

Order of Consent permit. Facilities with this type of permit cannot accept any additional flow until the facility has been upgraded. This action essentially halted the 

economic growth of our community. 

Existing homes, businesses, and institutions could not expand without the basic 

services of water and sewer. New businesses would not entertain locating in an area 

without these services. Our community’s economic growth and development catalyzed in 1992 when USDA loaned $1.4 million to the Town of Pembroke. With this 

loan, the wastewater treatment facility was upgraded from 500,000 gallons per day 

to 1.3 million gallons per day. The upgraded facility also included a fully certified 

laboratory, which is one of two municipal labs in Robeson County. I began my career in the water industry serving as the first Chemist in this lab. 

Storm water is still an issue, entering the wastewater facility through an aged 

collection system of pipes and manholes, yet the plant is consistently removing 94 

percent of the pollutants. Repairing and replacing water and sewer lines would 

eliminate this problem but it is a great endeavor and must be accomplished over 

a number of years. Pembroke is representative of small rural communities and systems across the nation that will continue to need USDA support and assistance in 

the future. 

Now I would like to address the direct benefits of these investments. Due to the 

expanded capacity of the wastewater treatment facility, the University of North 

Carolina at Pembroke (UNCP) was able to expand to become the fastest growing 

university in the UNC system. The student body was approximately 1,723 in 1992, 

increasing to 6,433 as of spring 2010. Beginning in 2006, UNCP entered their largest expansion; five new buildings are underway totaling $33 million in construction 

cost and the creation of numerous jobs. UNCP Pembroke is currently the largest 

employer in the Town of Pembroke with 287 instructors and 307 functional staff. 

With property values escalating from $30 million in 1992 to $140 million in 2009, 

it’s easy to see the direct positive financial impact these investments continue to 

have on our community. 

Following that initial investment, Pembroke once again sought to increase their 

water capacity as well as improve its quality. State and USDA assistance enabled 

us to build a new water treatment plant. Two new wells supply water to one treatment unit. Prior to this, Pembroke could not remove iron or effectively add chemicals that enhanced water quality and usages. A fourth elevated water storage tank 

was also added to our distribution system to increase the system’s water pressure. 

This allowed Pembroke to meet the minimum water pressure requirements for fire 

regulations necessary to keep insurance rates down. At the same time we looped together water lines that were formally dead ends. This prevented iron and other debris from accumulating in dead zones, avoiding potential health hazards. 

Combined, water and wastewater are the single most important service required 

for community health and economic growth. Businesses like Wal-Mart, Pembroke 

True Value Hardware, various corporate and local restaurants, and a multitude of 

professional and health care related facilities are now constructed and operating because of this infrastructure development. The majority of these investments were 

from USDA. All of this growth has contributed to the creation of thousands of jobs. 

The Lumbee Tribe has built new homes in this area and at the end of this construction phase, 101 homes will have reached completion with plans to build 400 

more in the future. This activity will improve the living conditions of this impoverished community. The Lumbee’s continue to grow with the development of a new 

Tribal Complex and Boys and Girls Club, which debuted in December of 2009. Next 

to the Tribal Complex is a 32 acre recreational park that was erected in 2008. The 

Town embarked on a program that will promote healthy activities for kids, teens, 

and parents, in an effort to improve the quality of life and health for our community. 

As of December 2009, a new hotel was constructed allowing for the first time the 

ability to accommodate overnight visits for athletic events, visitors, and business activities. This same infrastructure supports COMtech, a 600 acre commerce and technology center, currently housing and supporting various business and industry. It 

is a managed professional complex that promotes economic development through instructional, industrial, and private growth. The goal of Robeson, Hoke, Scotland, 

and Columbus Counties is to attract pharmaceutical industries with an educated 

and trained work force, while putting our displaced textile laborers and construction 

27

contractors back to work. All of these opportunities are available only because adequate water and wastewater infrastructure exists due to USDA funding. 

While USDA has provided funding for rural communities, the North Carolina 

Rural Water Association has provided the training, energy audits, certification, financial management, environmental compliance, governance and on-site technical 

assistance necessary to ensure that facilities operate at the highest level possible. 

This assistance actually saves money and protects the community and government’s 

investments by ensuring efficient and sustainable practices are followed. This is 

truly a great combination. I can’t say enough about these experienced professionals 

that empower operators, board members, elected officials and communities with the 

support and knowledge they need to understand every aspect of their systems and 

facilities. Because of the important services provided to systems by Rural Water, 

millions of dollars meant for infrastructure and equipment are actually used for 

their intended purpose instead of paying for expensive consultants. 

All communities have leaders. Some are elected; others are just concerned citizens 

that want to improve the quality of life in their community. These elected officials 

and citizens have a vital partner. The USDA Rural Development staff is always 

there to help—whether it’s by providing critical infrastructure, securing affordable 

housing, providing broadband, securing business assistance or helping obtain essential community facilities. Their field structure and experienced staff are unique. The 

staff and offices are located throughout these rural communities across the nation 

which allows them to serve communities that are both small and remote. In many 

cases communities that lack the capacity and resources to address many of their 

large issues would go without assistance if it were not for these USDA programs 

and the employees that make them work. Federal and state agencies would have 

it much easier if they just served larger and more affluent communities, but the 

Rural Development mission is different—they are there to ensure rural America is 

not left behind and that these communities prosper. Robeson County is a perfect example. This county, unfortunately, is listed as a county with persistent poverty. 

With USDA as our partner and the continued local leadership and vision, we will 

soon leave that designation behind. We are on track. I would like to thank this 

Committee and my friends in the Rural Development offices across the State of 

North Carolina for your continued support. 

In summary, the face of Pembroke has significantly improved due to USDA’s involvement. Our citizens have a better quality of life because of USDA’s investment 

in our town. Men and women can acquire jobs in retail, construction, health fields, 

and industry to support their families. UNCP is offering even more educational opportunities to prepare us for tomorrow. We exemplify the fact that no community 

can grow and improve without the sustaining resources of water and wastewater 

services. 

Thank you Chairman McIntyre and Ranking Member Conaway for allowing me 

to testify and I would be happy to answers any questions that you may have at this 

time.

The CHAIRMAN. Thank you, Ms. Locklear, and thank you for your 

timely testimony. Ms. Christina Fierros. 

STATEMENT OF CHRISTINA FIERROS, CHIEF OPERATIONS

OFFICER, MIDWEST ASSISTANCE PROGRAM, RURAL

COMMUNITY ASSISTANCE PARTNERSHIP, SAVANNAH, MO 

Ms. FIERROS. Thank you, Chairman McIntyre, and Ranking 

Member Conaway for the opportunity to address the Subcommittee. USDA Rural Development programs play a vital role in 

rural America and the RCAP network appreciates your efforts to 

ensure that they are working as intended, particularly in today’s 

economically challenging times. My name is Christina Fierros. I am 

the COO for the Midwest Assistance Program based in Minnesota 

and serving nine upper Midwest states. MAP is part of the national 

RCAP network which helps small rural communities address their 

water, wastewater, and other community development needs. We 

provide technical assistance and training that build the capacity 

and sustainability of small water and wastewater systems, and we 

assist them with development of needed facilities. 

28

Each year we serve more than 800 communities with funding 

provided through USDA’s water and waste disposal program. For 

example, the Town of Laporte is a small town of 150 people in 

north central Minnesota. A number of years ago, the local officials 

discovered the septic tanks and systems were failing and polluting 

individual water wells. About that same time, they found a number 

of the wells were also contaminated with petroleum. The town 

faced two expensive infrastructure problems at the same time. 

Local officials contacted MAP for assistance. We worked with them 

to hire an engineer who would design an affordable community system, prepared funding applications, and completed numerous related requirements and followed the projects to completion of a new 

community water and wastewater system. 

In a town of 150 people, it is rare that the local residents have 

the time or the capacity to manage this process without assistance. 

Much of rural America’s water and wastewater infrastructure is at 

or near the end of its useful life. According to the most recent EPA 

needs assessment surveys, small rural systems need more than 

$100 billion for water and wastewater infrastructure improvements 

over the next 20 years just to maintain their current service levels. 

Complicating this need is the fact that small utilities have even 

fewer customers among whom to spread those costs, making it difficult to achieve the economies of scale found in larger systems. As 

a result, their customers on average pay three times more for 

water and wastewater services then do urban customers. 

In order to make most infrastructure projects affordable, Rural 

Development provides grant and loan funds. Without them, public 

health, the environment, and the prospects for future development 

would suffer. Rural Development staff on the ground does a tremendous job working with the communities that have these water 

and wastewater funding needs. They provide guidance on funding 

requirements, process applications, service loans, and steer communities to technical assistance providers such as RCAP when needed. 

Under the American Recovery and Reinvestment Act, Rural Development is providing more than $3 billion in additional water and 

wastewater infrastructure funding. Along with technical assistance 

to help communities access the funding, Rural Development staff 

at all levels have worked diligently to make more than 600 funding 

awards to date, and as we enter the 2010 construction year many 

rural communities will see the impact of that investment. 

One example of this impact is Priest River, Idaho, a community 

of 2,000 people that needed to upgrade its water system. However, 

the $6 million project would have resulted in unaffordable user 

rates for residents without Federal assistance. Another RCAP partner, the Rural Community Assistance Corporation, worked with 

Priest River officials to adopt reasonable rates that would cover 

debt service for the project. As a result, Rural Development awarded $4.3 million in Recovery Act funding, and other monies were secured through the state to complete the project financing package. 

When the project is complete, Priest River will have adequate 

water pressure and fire flows, reduce operating cost and a distribution system that will serve them for decades. 

Projects like this one show the impact of rural development programs in small town rural America. While most of its people don’t 

29

think about water that comes out of their tap or what happens to 

the water that goes down the drain, Rural Development and local 

officials are working to ensure that their drinking water is safe and 

that their wastewater doesn’t pollute the lakes and streams for 

wildlife in downstream communities. Therefore, we urge you to 

support robust grant and loan funding for Rural Development’s 

water and wastewater disposal program so that infrastructure 

projects will be affordable for the communities they are intended 

to benefit. Thank you for inviting me to testify, and I welcome your 

questions. 

[The prepared statement of Ms. Fierros follows:]

PREPARED STATEMENT OF CHRISTINA FIERROS, CHIEF OPERATIONS OFFICER,

MIDWEST ASSISTANCE PROGRAM, RURAL COMMUNITY ASSISTANCE PARTNERSHIP, 

SAVANNAH, MO 

Thank you, Chairman McIntyre and Ranking Member Conaway, for the opportunity to address the Committee. USDA Rural Development programs play a vital 

role in rural America, and we applaud your efforts to ensure that they are working 

as intended and having an impact, particularly in today’s economically challenging 

times. 

My name is Christina Fierros. I am the Chief Operations Officer of the Midwest 

Assistance Program (MAP), based in Minnesota and serving the States of Iowa, 

Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, 

and Wyoming. MAP is part of the national RCAP network, whose regional service 

providers help small, typically low-income, rural communities address water, wastewater, and other community development needs. The RCAP network provides technical assistance and training that build the capacity and sustainability of small systems and assist them with the development of needed facilities. The RCAP network 

serves more than 800 communities every year with funding provided by USDA’s 

Technical Assistance and Training Grant Program under its Water and Waste Disposal Program. 

The RCAP regional partners also make use of other Rural Development programs 

to support comprehensive community development. As such, we work with Rural 

Development programs and staff on a daily basis. 

The technical assistance that RCAP provides serves as a bridge between Rural 

Development and communities. RCAP assists not only with funding applications 

and every phase of the project development process, but also provides training and 

technical assistance after construction is complete, helping communities understand 

how to properly manage and operate their system in a financially sustainable manner. 

One example is Laporte, Minnesota, a town of 150 people, where local officials discovered that septic systems were failing and contaminating individual water wells, 

and that some of their wells were also contaminated with petroleum. They faced two 

potentially expensive infrastructure projects simultaneously. The town contacted 

Midwest Assistance Program for assistance. MAP staff worked with them over a 

number of years to evaluate alternatives, find an engineer to design an affordable 

system, prepare funding applications and fulfill the related requirements, and follow 

the project to completion of new water and sewer systems. 

Rural Infrastructure Needs 

The infrastructure needs of rural America are staggering. The most recent needs 

surveys by EPA estimate small systems and rural areas need $34 billion for drinking water and $69 billion for wastewater over the next 20 years. 

Nationwide, small systems constitute over 80 percent of all public drinking water 

systems and 75 percent of public wastewater facilities, though they account for a 

much smaller share of the total population served. Small utilities face distinct challenges in operating and improving their facilities; they have fewer customers among 

whom to spread costs—including fewer large volume users—making it difficult to 

achieve economies of scale found in larger systems. As a result, customers in small 

systems pay, on average, three times more than their urban counterparts for water 

and wastewater services, according to EPA data. 

RCAP is committed to educating local officials about the importance of sustainability and asset management—maintaining infrastructure investments, encouraging local responsibility, and ensuring that residents pay their fair share for servVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00033 Fmt 6633 Sfmt 6621 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
30

ices. RCAP provides training to utility boards and staff on topics such as budgeting, 

rate-setting, and system management. However, there is a point at which an infrastructure project is simply not affordable without Federal assistance. Without 

grants and subsidized long-term loans, most projects in rural America—many of 

which are only marginally affordable even with these funds—are simply not feasible. 

Consider the case of West Odessa, Texas, an unincorporated area outside Odessa 

where individual wells have extremely limited production combined with high levels 

of contaminant from oil field by-products. With the help of Community Resource 

Group, the Southern RCAP, residents formed a legal district to tackle the problem 

and developed a plan to construct a community system and purchase water from 

a nearby system. The West Odessa Water Supply Corporation secured funding from 

USDA, but construction bids came in more than double the estimated cost, so they 

have struggled to obtain additional funding and keep the project affordable for residents. 

USDA Rural Development 

USDA Rural Development, through the Water and Waste Disposal Loan and 

Grant Program, is the ‘‘lender of last resort’’ for rural water and sewer systems. The 

program enables communities to complete infrastructure projects that are critical to 

public health, the environment, and future development. 

Rural Development staff on the ground do a tremendous job working with communities and unincorporated areas that have water or wastewater funding needs. They 

provide guidance on application and funding requirements, process applications, 

service loans, and steer communities to technical assistance providers such as 

RCAP, when needed. Together, these services provide crucial support to rural communities constrained by limited resources. 

The American Recovery and Reinvestment Act 

USDA’s ARRA funding has provided a vital boost to rural America to meet infra- structure needs. Over $3 billion is being made available under the Water and Waste 

Disposal Program alone. Rural Development staff has worked diligently to process 

applications and award loans and grants, and as we enter the 2010 construction 

year, many rural communities will see the positive impact of that investment. 

For example, Priest River, Idaho, with a population of about 2,000, was working 

to upgrade its water system, including new distribution lines, an elevated storage 

tank, and drilling a well to eventually replace a surface water source. However, the 

nearly $6 million project would result in unaffordable user rates for residents unless 

Federal assistance was provided. Rural Community Assistance Corporation, the 

Western RCAP, worked with local officials to establish water rates that would be 

reasonable, yet cover debt service for the project. As a result, USDA Rural Development awarded $4.3 million in ARRA grant and loan funds and the state committed 

$600,000 of CDBG monies to complete the project. When the new system is operational, Priest River will have adequate fire flows and water pressure, reduced operating costs (because ground water is cheaper to treat than surface water), and a distribution system that will serve them for decades. 

Recommendations 

Solving the problems facing rural communities requires a multi-pronged approach 

that includes adequate funding, along with steps to ensure that grant funding is 

available only to the neediest communities and that technical assistance is available 

to ensure that the funds are distributed where they are most needed. Specifically, 

RCAP offers the following recommendations:

(1) Increase annual appropriations for Rural Development programs.

Since 2003, funding has been reduced by 25% for the Water and Waste Disposal 

Program (excluding ARRA). While it may be unrealistic to annually fund programs at ARRA levels, funding should be restored to pre-2003 levels.

(2) Improve the grant-to-loan ratio in the Water and Waste Disposal 

Program. Grant funding for water and sewer projects, as a percentage of the 

overall allocation, declined from 39% in 2003 to 26% as of 2006. As previously 

noted, grant funds are critical to help defray the enormous infrastructure costs 

for the smallest and lowest-income communities. The 2008 Farm Bill authorized 

lower interest rates, which helps make projects more affordable for communities. However, the additional loan subsidy further reduces available grant 

funding, and many low-income communities simply cannot develop feasible 

projects without grants. If the trend of reducing the grant-to-loan ratio continues, the program will cease to be a viable option for most small communities, 

especially those serving low-income populations.

31

(3) Increase technical assistance funding to allow RCAP and other providers to keep pace with growing demand. There is far more demand for 

assistance than can be met with existing funding. These projects tend to be time 

and labor-intensive, as they are typically the smallest and, hence, the most difficult to fund, communities.

In addition, stagnant administrative budget levels in recent years have resulted 

in fewer Rural Development field staff. Though the agency has done an impressive 

job in compensating for these losses, it has done so, in part, by relying more heavily 

on technical assistance providers to work with applicants to complete the myriad 

paperwork and other funding requirements. 

Thank you for considering my testimony on Rural Development water programs 

and the ARRA and thank you for your commitment to meeting the needs of rural 

America’s communities.

The CHAIRMAN. Thank you so much. Mr. Norton. 

STATEMENT OF J. MICHAEL NORTON, EXECUTIVE DIRECTOR, 

NORTHWEST ARKANSAS ECONOMIC DEVELOPMENT

DISTRICT; PRESIDENT, NATIONAL ASSOCIATION OF

DEVELOPMENT ORGANIZATIONS, HARRISON, AR; ON

BEHALF OF NATIONAL ASSOCIATION OF COUNTIES 

Mr. NORTON. Good morning, Chairman McIntyre, Ranking Member Conaway, and Members of the Subcommittee. My name is Michael Norton. I currently serve as the President of the National Association of Development Organizations and Executive Director of 

the Northwest Arkansas Economic Development District located in 

Harrison, Arkansas. Today, I have the opportunity to represent 

NADO, as well as the National Association of Counties. I thank 

you for the opportunity to testify on the status of rural water infrastructure programs operated by the U.S. Department of Agriculture, and the status of the American Recovery and Reinvestment Act funds for these programs. This morning I will limit my 

remarks to three main points. First, Recovery Act funding coupled 

with the yearly appropriations for USDA’s vital water and sewer 

infrastructure programs through the Rural Utilities Service have 

been essential resources for rural communities as they strive to 

create economic opportunities to improve the quality of life for their 

citizens. 

One example of access to safe, reliable sources of water being an 

essential catalyst for economic development is taking place in my 

state and region. The Ozark Mountain Regional Public Water Authority in north central Arkansas will receive $55.7 million in 

grant and loan funding from USDA Recovery Act dollars to develop 

and build a long-term regional water supply in four counties in 

rural Arkansas. USDA funds will be used to build a new water 

treatment facility to deliver treated water to approximately 20 

water associations in some of the most rugged and difficult terrain 

in north central Arkansas. Ultimately, the project will provide a 

safe and reliable source of water for 22,000 local residents. The 

project will also facilitate economic growth in the region. Due to 

unsafe and limited water supply two counties have never had the 

opportunity to solicit or obtain industry or commercial development. 

This project aims to reverse that trend and attract much needed 

economic opportunity to this rural region of our state. Without 

USDA Recovery Act investments, the project would remain unrealized. Second, Mr. Chairman, the lack of adequate water and wasteVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
32

water infrastructure remains one of the most significant roadblocks 

to economic development in a small town in rural America. USDA 

Rural Development is effective at helping communities overcome 

rural water and wastewater infrastructure challenges, but additional resources will be needed in the coming years to meet the 

mounting demand for these programs. 

While state and local governments are making major contributions to public infrastructure enhancement efforts this immense job 

will never be completed without the resources of the Federal Government. Basic public infrastructure facilities are the core of sustaining existing business, nurturing new companies, and improving 

the quality of life in rural counties and communities. The private 

sector expects that counties and local communities provide and 

maintain these services and infrastructures. Businesses and industries will locate wherever these critical facilities exist be it here in 

the United States or abroad. Finally, Mr. Chairman, the Administration’s proposed Rural Innovation Initiative will make USDA’s infrastructure investment more effective and efficient by rewarding 

regional approaches to rural development. 

The Initiative will allocate funds competitively among innovative 

regional economic development projects tailored to local needs and 

opportunities. The Initiative’s new approach will lead to increased 

efficiency as rural communities’ capacity is enhanced through 

greater coordination and leveraging of regional funding. NADO and 

NACo support the goal of moving Rural Development toward a 

commitment to regional strategies designated by local leaders. We 

urge the Subcommittee to support the promising Initiative. Mr. 

Chairman, and Members of the Committee, thank you again for the 

opportunity to testify today. I will be more than happy to answer 

any questions or comments. 

[The prepared statement of Mr. Norton follows:]

PREPARED STATEMENT OF J. MICHAEL NORTON, EXECUTIVE DIRECTOR, NORTHWEST

ARKANSAS ECONOMIC DEVELOPMENT DISTRICT; PRESIDENT, NATIONAL ASSOCIATION

OF DEVELOPMENT ORGANIZATIONS, HARRISON, AR; ON BEHALF OF NATIONAL

ASSOCIATION OF COUNTIES

Thank you, Chairman McIntyre, Ranking Member Conaway and Members of the 

Subcommittee for the opportunity to testify today on the status of rural water infrastructure programs operated by the U.S. Department of Agriculture (USDA) and the 

status of American Recovery and Reinvestment Act (the Recovery Act) funds for 

these programs. Most importantly, I want to thank you, Mr. Chairman, for your 

leadership in ensuring that USDA Rural Development funding was included in the 

Recovery Act. The roundtable you held during the Recovery Act debate was instrumental in educating Members of Congress and their staff about the vital role USDA 

Rural Development programs could play and are now playing in our nation’s recovery efforts. 

My name is Michael Norton. I am Executive Director of the Northwest Arkansas 

Economic Development District, headquartered in Harrison. I also currently serve 

as President of the National Association of Development Organizations (NADO). My 

professional background includes more than 3 decades in regional and local community and economic development, including 20 years in my current position. 

Today, I have the opportunity to represent NADO as well as the National Association of Counties (NACo). 

My goal today in covering this important topic is to offer some concrete examples 

about the effectiveness of USDA’s rural water infrastructure programs and to provide suggestions as you look toward the next farm bill. As debate begins on the rewrite of the farm bill, I strongly encourage Members of this Subcommittee to make 

rural water infrastructure and rural development programs in general, a central 

theme of the proposal. These programs are critical to economic expansion in rural 

33

America and are needed more than ever as our nation struggles to recover from the 

recent economic downturn. 

About the National Association of Development Organizations 

The National Association of Development Organizations (NADO) provides 

advocacy, education, research and training for a national network of 520 

regional development organizations. NADO members—known locally as councils of governments, economic development districts, local development districts, 

planning and development districts, regional councils and regional planning commissions—are focused on strengthening local government, communities and economies through regional solutions, partnerships and strategies. 

About the National Association of Counties 

The National Association of Counties (NACo) is the only national organization that represents county governments in the United States. Founded in 

1935, NACo provides essential services to the nation’s 3,068 counties. NACo advances issues with a unified voice before the Federal Government, improves the 

public’s understanding of county government, assists counties in finding and sharing 

innovative solutions through education and research, and provides value-added services to save counties and taxpayers money. NACo’s membership totals more than 

2,000 counties, representing over 85 percent of the nation’s population. 

This morning, I would like to focus my remarks on three key points.

1. Recovery Act funding, coupled with yearly appropriations for USDA’s 

vital water and sewer infrastructure programs through the Rural Utilities Service, have been essential resources for rural communities as 

they strive to create economic opportunities and improve the quality of 

life for their citizens.

2. The lack of adequate water and wastewater infrastructure still remains one of the most significant roadblocks to economic development 

in small town and rural America. USDA Rural Development is effective at 

helping communities overcome rural water and wastewater infrastructure challenges. However, the mission area still needs additional resources, especially 

grant funding, in the coming fiscal years to meet the mounting demands for 

these programs.

3. The Administration’s newly proposed Rural Innovation Initiative will 

make USDA’s infrastructure investments more efficient and effective by 

rewarding regional strategic approaches to rural development. This reflects the reality of today’s marketplace where rural counties and communities 

are not only competing statewide and nationally, but more likely, internationally. The Rural Innovation Initiative will provide incentives and resources for 

the enrichment of rural development strategies on a regional and local basis to 

implement area wide priority projects and initiatives. NADO and NACo urge 

the Subcommittee to support this promising Initiative.

First, Mr. Chairman, Recovery Act funding, coupled with yearly appropriations for USDA’s vital water and sewer infrastructure programs 

through the Rural Utilities Service, have been an essential resource for 

rural communities as they strive to create economic opportunities and improve the quality of life for their citizens.

For many small communities with aging, substandard water supply systems that 

are expensive to maintain or communities with no or limited public water supply 

systems, USDA Rural Development is an invaluable partner. 

One example of access to safe and reliable sources of water being an essential catalyst for economic development, job creation and business development is taking 

place in my state and region. The Ozark Mountain Regional Public Water Authority (Diamond City, Arkansas) will receive $55.7 million in grant and loan 

funding from USDA Recovery Act dollars to develop and build a long-term regional 

water supply for four counties in rural Arkansas. 

Currently, the citizens of Newton, Searcy, and portions of Boone and Marion counties have limited water resources available. Lack of water is a constant concern for 

these communities. According to the Arkansas Department of Health, the water that 

is available to residents contains excessive and dangerous levels of Radium 226, Radium 228, Fluoride and Hydrogen Sulfide. The U.S. Environmental Protection Agency (EPA) has certified that many of these water sources are unsafe for human consumption. 

USDA funds will be used to build a water treatment facility, drainage basin and 

intake structure to deliver treated water via transmission lines, a booster pumping 

station and water storage tanks to approximately 20 water systems in some of the 

34

most rugged and difficult terrain in North Central Arkansas. Ultimately, the project 

will provide a safe and reliable source of water for 22,000 local residents. 

It will also provide a plentiful source of water for the region in order to facilitate 

economic growth. Due to the unsafe and limited water supply available from existing springs, these counties have never had the opportunity to solicit or obtain industrial or commercial development. A contributing factor to low income levels in state. 

This project, which has been in the making for 25 years, aims to reverse that trend 

and attract much needed economic opportunities to this very rural region of our 

state. 

Without USDA Recovery Act investments, this project would remain unrealized, 

and the citizens of the region would continue to struggle with unsafe water and little hope for future job creation and business development. 

But, my region is not the only one benefiting from USDA’s critical assistance. 

Commissioner F.D. Rivenbark of Pender County, North Carolina testified before this Subcommittee in June 2009 on behalf of NACo regarding USDA Recovery 

Act projects and has a very positive update on the success of USDA Rural Development funding in his county. The original Pender County Water Treatment Plant 

Project, mentioned in his testimony, was not going to be cost effective as the region’s 

high population growth would render the plant obsolete in just a few years. USDA 

worked with local leaders to allow the construction of a larger project, thus saving 

millions down the road for facility upgrades. 

The project cost of $32.3 million was made up of $22.5 million in low interest 

loans, $7.6 million in grant funding and $2.3 million in local funds. The plant and 

transmission facility is on target to bid in the next 90 days. This plant will provide 

water for a new industrial park, and a major industrial corridor where there is no 

development at this time. Industrial client interest is increasing significantly at this 

site due to the plant coming online soon. 

Due to the new water treatment plant, a new business is considering investing 

$80 million and creating 1,200 jobs at the new industrial park. With over 11 percent 

unemployment in Pender County, this would be a tremendous boost to the local 

economy. The project would not have been possible without the funding and excellent technical assistance from USDA field staff in North Carolina. Without the grant 

funds in particular, which represent 23 percent of the total project cost, Pender 

County and its water users would struggle to make the plant financially viable. 

As part of the regional water strategy provided by the Greenville Utilities Commission (Greenville, North Carolina) to help local water providers meet the 

mandated reduction of groundwater withdrawal, USDA Rural Development provided 

$17.4 million in combined loan and grant funding for a joint transmission line and 

internal improvements to serve the Pitt and Greene County water systems. This investment will help water systems reduce the volume of water they withdraw by a 

total of 75 percent by 2018. 

The Lower Jackson River Regional Wastewater Treatment Plant in 

Alleghany County, Virginia is an antiquated facility that overflows at several 

points in the county. USDA provided a $2.5 million loan and a $2 million grant towards construction of a new regional wastewater treatment plant that will serve 

Alleghany County and the Towns of Clifton Forge and Iron Gate. Once completed, the plant will bring the county wastewater treatment efforts back into compliance with environmental regulations and will open all of Eastern Alleghany 

County for economic development, resulting in an untold number of new jobs. 

The Sandy Township Municipal Authority (DuBois, Pennsylvania) received 

a $5.8 million Rural Development loan to extend its present water system. The extension of the system’s water lines will allow the authority to supply additional 

water and fire protection to 260 new users in the area. The funds were made available through the Recovery Act. 

The Northeastern Vermont Development Association (St. Johnsbury, 

Vermont) provided technical assistance to help several communities in its region 

access Rural Development water and sewer funding. Because of this assistance, the 

Towns of Troy and Jay were awarded more than $1.1 million in grant funds and 

$1.4 million in loan funding to expand their wastewater treatment center and install larger waste water collection lines. The funds will allow these two communities 

to meet the expansion needs of a nearby ski resort in this tourist dependent region 

and to pursue other economic development opportunities.

Second, Mr. Chairman, the lack of adequate water and wastewater infrastructure still remains one of the most significant roadblocks to economic 

development in small town and rural America.

Despite the dramatic gains made with funding provided in the Recovery Act for 

USDA rural water and wastewater infrastructure programs, the nationwide funding 

35

backlog remains significant. USDA Rural Development is effective at helping communities overcome rural water and wastewater infrastructure challenges, but additional resources will be needed in the coming years to meet the mounting demand 

for these programs. 

According to a 2009 report by the American Society of Civil Engineers (ASCE), 

of the nearly 53,000 community water systems, approximately 83 percent serve 

3,300 or fewer people. These smaller systems face huge financial, technological, and 

managerial challenges in meeting a growing number of Federal drinking-water regulations. Overall, ASCE estimates that nearly $1 trillion in critical drinking water 

and wastewater investments will be needed over the next 2 decades across the 

United States. Not meeting the investment needs of the next 20 years, risks reversing public health, environmental and economic gains of the past 3 decades. 

While state and local governments, industry and nonprofit organizations are making major contributions to our public infrastructure enhancement efforts, this immense job will never be completed without sustained aggressive leadership, participation and resources of the Federal Government. More than 98 percent of the nation’s investment in water infrastructure has been made at the local level, according 

to the American Water Works Association. Local governments stand ready to be a 

key partner in economic recovery and are willing to pay our fair share for infrastructure needs, but we will not be able to afford all the needed investments needed 

without an enhanced Federal partnership. 

In addition to the health and social benefits of this long-term and on-going process, infrastructure development is vital to the nation’s ability to maintain and sustain a world-class economy. This will be particularly critical as the nation works to 

expand the renewable fuels industry. The transport of raw and finished products is 

already placing new and growing demands on our infrastructure and transportation 

systems. 

As proven by USDA Rural Development investments over the years, the role of 

basic public infrastructure and facilities are at the core of both sustaining existing 

businesses, nurturing new companies and improving the quality of life in rural 

counties and communities. The private sector relies, expects and demands that 

counties and local communities provide and maintain these services and infrastructure. Business and industry will locate wherever these critical facilities exist. Be it 

here in the United States, or more often, abroad. 

As the Subcommittee works to evaluate USDA rural water and wastewater infrastructure programs, we encourage you to help make the application process for new 

and existing programs more user-friendly and streamlined. Navigating the extensive 

USDA program portfolio and application process can be a burdensome and time consuming endeavor. This is especially important considering that over 33,000 of the 

nation’s 39,000 units of local government have populations below 3,000 and 11,500 

employ no full-time professional employees, according to U.S. Census Bureau data. 

We support USDA Rural Development’s stated goal of implementing a community 

development component specifically geared toward smaller communities that lack 

have sufficient capacity. One way to assist localities with limited resources will be 

to increase USDA field staff’s knowledge about community development and ensure 

that regional development organizations remain eligible to help plan and implement 

projects similar to those outlined earlier in my testimony.

Finally, Mr. Chairman, the Administration’s proposed Rural Innovation 

Initiative will make USDA’s infrastructure investments more efficient and 

effective by rewarding regional approaches to rural development.

The Rural Innovation Initiative is designed to provide a new framework for USDA 

to promote economic development and job creation in rural communities. To support 

this regionally-based, locally-driven approach, USDA requested a set-aside in the FY 

2011 Budget of more than $280 million of existing program funds, roughly five percent of the funding from approximately 20 existing USDA programs, including 

USDA’s Water and Waste Program. 

The Initiative will allocate funds competitively among innovative regional economic development projects tailored to local needs and opportunities. We encourage 

Congress to adopt provisions included in the President’s FY 2011 Budget request, 

which will give USDA authority to set aside funding needed to begin this Initiative. 

The Initiative’s new approach will lead to increased efficiency as rural community 

capacity is enhanced through greater coordination and leveraging of regional funding. We strongly support the goal of moving rural development towards a commitment to regional rural development strategies designed by local leaders. The Initiative will help address one of the most important but under-funded parts of rural 

community and economic development-rural development strategies and institutional capacity to implement priorities. 

36

Most rural local governments simply lack the financial resources to hire professional economic development practitioners and few Federal programs are specifically 

designed for their needs. Our rural regions are lagging behind in economic development, job creation and growth, but not because they lack the assets or willingness 

needed to strengthen their communities. Whether through the timber, agricultural, 

natural resources, energy or manufacturing industries, rural regions truly are key 

drivers of America’s economic and national security. What they lack are the resources to successfully leverage those assets into economic growth opportunities for 

their own citizens. 

The Rural Innovation Initiative will provide these regions with resources and a 

framework to examine their strengths, move beyond current program stovepipes, 

and develop a structure leveraging those assets to addresses challenges in their 

local economies. The Initiative also recognizes the value of working regionally. No 

community will have to ‘‘go it alone’’ but by the same account, no community can 

thrive alone. In order to benefit from this new Initiative, communities will have to 

work together to address their common priorities and goals. 

Ultimately, the Initiative will provide rural regions with the resources necessary 

to build their workforce and strengthen their existing community infrastructure, 

creating prosperous rural communities where people want to live and raise families. 

We see examples of the Rural Innovation Initiative being implemented throughout 

the country. Recognizing that his state’s economic development efforts focused on 

competition for business and jobs among its own cities, towns and regions instead 

of focusing on how the state as a whole could better compete in the global economy, 

Governor John Baldacci announced the creation of a new statewide economic development effort: Mobilize Maine. The initiative changed the model for rural economic 

development in Maine by addressing a disconnected, fragmented and, often times, 

ineffective system to improve the personal income of Maine workers. 

Facilitated and coordinated by Maine’s six Economic Development Districts 

(EDDs), Mobilize Maine creates a framework to identify and develop strategies addressing Maine’s unique assets that have market-leverage in the global economy, 

but may not have been previously recognized. The plan also sets concrete actions, 

timelines and benchmarks to utilize those assets to transform Maine’s regional 

economies and business climate. In the long term, Mobilize Maine is self sustaining 

as its strategies for growth are designed to span successive state Administrations 

and be sustained by local, private, public and nonprofit sector leaders and citizen 

volunteers. 

On a nationwide scale, the Rural Innovation Initiative will provide much needed 

incentives and resources for the enrichment and implementation of regional rural 

development strategies. NADO and NACo urge the Subcommittee to support this 

promising initiative. 

In closing, I commend you for supporting USDA Rural Development programs, especially the vital water and sewer infrastructure programs of the 

Rural Utilities Service. The additional funding provided in the Recovery Act is 

spurring economic development in communities across rural America. I also urge 

you to support enhanced funding for USDA Rural Development programs in the 

next farm bill and increased emphasis on regional development strategies through 

initiatives such as the Rural Innovation Initiative. 

Thank you again, Mr. Chairman and Members of the Subcommittee for the opportunity to testify today on the views of NADO, NACo and our members. I welcome 

any questions.

The CHAIRMAN. Thank you so much. And it is the Chairman’s 

prerogative, Ms. Herseth Sandlin, would you like to introduce our 

next panelist? 

Ms. HERSETH SANDLIN. I appreciate it, Mr. Chairman. Troy 

Larson, I have known Troy for many years. Both of us were graduates in the 1980’s. I won’t go any further. That is the same high 

school in northeastern South Dakota, Groton High School. He has 

served a Member of our Congressional delegation, Senator Thune, 

when he was here in the House on the Agriculture Committee, and 

has been working with the Lewis & Clark Regional Water System 

for so many years now. We have watched the ground being broken, 

the pipes being laid, the jobs it has created, and servicing the communities across three states who have become a partner on that effort. The states that they have obligated, the communities that 

37

they have obligated, and the annual challenges and fights we have 

had regardless of Administration of making sure that the funding 

is available to move this important project for economic development in southeastern South Dakota and again Minnesota and Iowa 

as well. 

I have been pleased to work with colleagues on this Committee, 

Mr. Walz of Minnesota, Mr. King of Iowa, working closely with 

Troy Larson and his board of directors. I am very pleased that you 

included him in today’s hearing. While a project not a part of the 

RUS authority, a very important project that identifies what you 

have articulated in terms of the importance of this hearing and the 

types of water projects that serve communities and in this case 

three different states. So I appreciate the opportunity to introduce 

Troy Larson to you, Mr. Chairman, to our Ranking Member, and 

to my colleagues on the Subcommittee. 

The CHAIRMAN. Thank you. Thank you so much. Mr. Larson, you 

may proceed. 

STATEMENT OF TROY LARSON, EXECUTIVE DIRECTOR, LEWIS 

& CLARK REGIONAL WATER SYSTEM, SIOUX FALLS, SD 

Mr. LARSON. Congresswoman Herseth Sandlin, thank you very 

much for that introduction. It is always good to see a Groton Tiger 

alumnus. Mr. Chairman, Ranking Member Conaway, Members of 

the Subcommittee, my name is Troy Larson. For the last 7 years, 

I have served as Executive Director of the Lewis & Clark Regional 

Water System, and thank you very much for the opportunity to 

share with you the critical importance of rural water to sustaining 

and expanding economic development, particularly in rural America. First, some brief background on the Lewis & Clark Regional 

Water System. Lewis & Clark consists of 20 member-cities and 

rural water systems in southeastern South Dakota, northwestern 

Iowa, and southwestern Minnesota. The project represents a 

unique regional approach involving the Federal Government, three 

states, and 29 local members to address common water problems, 

common problems with area water resources in a more effective 

and cost efficient way than each member could do alone. 

Regional water problems include shallow wells and aquifers 

prone to contamination and drought, compliance with new Federal 

drinking water standards, population and economic growth stifled 

due to inadequate water supplies, and insufficient resources to replace aging facilities. When completed, Lewis & Clark will provide 

a desperately needed reliable source of quality drinking water to 

over 300,000 people in South Dakota, Iowa, and Minnesota in a 

service area the size of Connecticut. The source of water will be a 

series of wells along the banks of the Missouri River. Lewis & 

Clark was authorized by Congress in 2000 and construction began 

in earnest in 2004. The project is currently in its 7th year of construction. Roughly half of the construction is completed or under 

contract. 

The system is scheduled to begin operation in 2012, and depending on Federal funding levels all 20 members should be connected 

some time between 2017 and 2020. Having access to quality, reliable water is critically important to the tri-state region from both 

a quality of life standpoint and economic development. Water truly 

38

is the backbone of economic development. Talking about water may 

not be flashy, but it is the first factor considered when it comes to 

attracting new businesses or industries or expanding existing ones. 

Here are a few examples. The JBS Swift pork processing plant 

in Worthington, Minnesota is one of the largest pork processors in 

the nation. It is a very important value-added industry. However, 

it is also very water intensive. For several years, Swift, which currently employs over 2,000 workers, has wanted to expand production. However, their plans are always hindered because the City of 

Worthington is not able to provide them with additional water. The 

first question Worthington’s economic development director asks 

when a prospective business reaches out to him is whether they 

need any water to process their product. If the answer is yes, the 

director tells them they will unfortunately need to look elsewhere. 

In other examples, both Worthington and Lincoln-Pipestone 

Rural Water System, which is in Chairman Peterson’s district, who 

was here earlier, in southwestern Minnesota have turned away 

prospective ethanol plants because they do not have enough water. 

Rock County Rural Water District, also in southwestern Minnesota, 

has turned down requests to open dairy operations because they do 

not have enough water. The lost economic value to the farmers and 

regional economy is immeasurable. A prime example of the positive 

economic impact water can have in rural areas has happened in 

Hull, Iowa. In 2008, a cheese factory opened in the small town of 

Hull, Iowa, a town of just over 2,000 people. This was not a plant 

that relocated from somewhere else, it is a brand new venture that 

produces bulk cheese that is delivered to Wisconsin and sold 

throughout the nation. The plant uses 300,000 gallons of milk a 

day, which is purchased from dairies in the area. 

Without the water Lewis & Clark is providing to Hull in the 

short-term by buying it from another community and running it 

through our pipes, as well as the promise of a permanent water 

source from Lewis & Clark when the System is completed, city officials have indicated there is no way the plant could have located 

in Hull. The plant, which created approximately 85 jobs when it 

first opened, has recently expanded its staff and currently employs 

90 people. It plans to double its cheese production by early next 

year, which will increase the number of jobs to around 130. For the 

economy of this town of just over 2,000 people, as well as the dairy 

farmers in the area, it is not difficult to see the obvious and direct 

benefit of reliable water when it comes to rural development. The 

addition of this cheese plant has been like a direct injection of 

adrenaline into the system. 

When it comes to infrastructure, it cannot get more basic than 

water. For those trying to plan for and expand access to rural 

water throughout the nation it is hoped that the Federal Government can appreciate the necessary and regional approach played by 

water resources, of which Lewis & Clark is an example in terms 

of both need and a solution. As water becomes more and more 

scarce in both rural areas and urban areas of our country, a new 

motto has emerged, water is the new oil. Although it is often taken 

for granted, water truly is the oil that runs the engine of economic 

development. To help ensure the sustainability of rural America 

and remain competitive in the industrial market, access to quality, 

39

reliable water is job number one. Thank you again for the opportunity to reinforce to you the critical importance of rural water to 

economic development. I welcome any questions you may have. 

[The prepared statement of Mr. Larson follows:]

PREPARED STATEMENT OF TROY LARSON, EXECUTIVE DIRECTOR, LEWIS & CLARK

REGIONAL WATER SYSTEM, SIOUX FALLS, SD 

Mr. Chairman, Ranking Member Conaway and Members of the Subcommittee,

My name is Troy Larson. For the last 7 years I have served as Executive Director 

of the Lewis & Clark Regional Water System. Thank you for the opportunity to 

share with you the critical importance of rural water to sustaining and expanding 

economic development, particularly in rural America. 

First, some brief background on the Lewis & Clark Regional Water System. Lewis 

& Clark consists of 20 member-cities and rural water systems in southeastern South 

Dakota, northwestern Iowa and southwestern Minnesota. The project represents a 

unique regional approach involving the Federal Government, three states and 20 

local members to address common problems with area water resources in a more 

effective and cost-efficient way than each member could do alone. Regional water 

problems include shallow wells and aquifers prone to contamination and drought, 

compliance with new Federal drinking water standards, population and economic 

growth stifled due to inadequate water supplies, and insufficient resources to replace aging facilities. When completed, Lewis & Clark will provide a desperately 

needed reliable source of quality drinking water to over 300,000 people in South Dakota, Iowa and Minnesota, in a service area the size of Connecticut. The source of 

water will be a series of wells along the banks of the Missouri River. 

Lewis & Clark was authorized by Congress in 2000 and construction began in earnest in 2004. The project is currently in its seventh year of construction. Roughly 

half of the construction is completed or under contract. The System is scheduled to 

begin operating in 2012, and depending on Federal funding levels all 20 members 

should be connected sometime between 2017 and 2020. 

Having access to quality, reliable water is critically important to the tri-state region from both a quality of life and economic development standpoint. Water truly 

is the backbone of economic development. Talking about water may not be flashy, 

but it is the first factor considered when it comes to attracting new businesses or 

industries or expanding existing ones. 

Here are a few examples. The JBS Swift Pork Processing plant in Worthington, 

Minnesota is one of the largest pork processors in the nation. It is a very important 

value-added industry. However, it is also very water intensive. For several years, 

Swift, which employs over 2,000 workers, has wanted to expand production. However, their plans are always hindered because the City of Worthington is not able 

to provide them with additional water. The first question Worthington’s economic 

development director asks when a prospective business reaches out to him is whether they need any water to process their product. If the answer is yes, the director 

tells them they will unfortunately need to look elsewhere. 

In other examples, both Worthington and Lincoln-Pipestone Rural Water System 

in southwestern Minnesota have turned away prospective ethanol plants because 

they do not have enough water. Rock County Rural Water District, also in southwestern Minnesota, has turned down requests to open dairy operations because they 

do not have enough water. The lost economic value to the farmers and regional 

economy is immeasurable. 

A prime example of the positive economic impact water can have in rural areas 

has happened in Hull, Iowa. In 2008, a cheese factory opened in the small town of 

Hull, Iowa, a town of just over 2,000 people. This was not a plant that relocated 

from somewhere else, it is a brand new venture that produces bulk cheese that is 

delivered to Wisconsin and sold throughout the nation. The plant uses 300,000 gallons of milk a day, which is purchased from dairies in the area. 

Without the water Lewis & Clark is providing to Hull in the short-term by buying 

it from another community and running it through our pipes, as well as the promise 

of a permanent water source from Lewis & Clark when the System is operational, 

City officials have indicated there is no way the plant could have located in Hull. 

The plant, which created approximately 85 jobs when it first opened, has recently 

expanded its staff and currently employs 90 people. It plans to double its cheese production by early next year, which will increase the number of jobs to around 130. 

For the economy of this town of just over 2,000 people, as well as the dairy farmers 

in the area, it is not difficult to see the obvious and direct benefit of reliable water 

40

when it comes to rural development. The addition of this cheese plant has been like 

a direct injection of adrenaline into the system. 

When it comes to infrastructure, it cannot get more basic than water. For those 

trying to plan for and expand access to rural water throughout the nation it is 

hoped that the Federal Government can appreciate the necessary and regional role 

played by water resources, of which Lewis & Clark is an example in terms of both 

need and a solution. 

As water becomes more and more scarce in both rural and urban areas of the 

country, a new motto has emerged—‘‘water is the new oil.’’ Although it is often 

taken for granted, water truly is the oil that runs the engine of economic development. To help ensure the sustainability of rural America and remain competitive 

in the industrial market, access to quality, reliable water is job number one. 

Thank you again for the opportunity to reinforce to you the critical importance 

of rural water to economic development. I welcome any questions you may have.

The CHAIRMAN. Thank you, sir. Mr. Kahl. 

STATEMENT OF PAUL F. KAHL, P.E., DEPUTY DIRECTOR OF 

PUBLIC WORKS, ALLEGANY COUNTY, MARYLAND,

CUMBERLAND, MD 

Mr. KAHL. Thank you, Chairman McIntyre, Ranking Member 

Conaway, and Members of the Subcommittee for allowing me to 

testify today. Based on your previous comments, I feel like I am 

talking to friends that understand our problem that we have in 

rural communities, and it is refreshing to hear your comments. I 

think you foresee a lot of the problems we are facing in rural development. My name is Paul Kahl, and I am the Deputy Director of 

Public Works for Allegany County, Maryland. It is a small county 

of 75,000 people, about 21⁄2 hours from here. Similar to many rural 

areas in the United States, many of our communities have old and 

inadequate infrastructure with a limited number of people to pay 

for the improvements. 

With the assistance from USDA Rural Development, we have 

been able to provide drinking water to our communities. Providing 

safe drinking water to the communities in our area provides probably the most personal satisfaction to me besides my family. We 

have been able to improve sewage systems, improve the quality of 

streams by reducing sewer overflows, build a new high school, 

stimulate economic growth, and plan for new projects. I will provide a brief description of our problems, but first I would like to 

point out two important facts. For each of the projects we have 

done with USDA Rural Development money alone is a component 

of that project. What that means is our community is making a 

commitment towards that project. 

Usually what we see is small communities that are paying little 

or nothing for water. We are shooting for $550 to $600 a year for 

the average user. The medium household income in Allegany County is around $35,000 so you see it is a significant part of our income. Second, we have not received funding from one project that 

is not currently still in use, and I point that out. Earlier, you had 

talked about future and longevity. When we build a project, it is 

there to stay, and USDA has worked with us to make sure these 

projects are viable and sustainable. They do not allow us to build 

a project that we are not going to be able to provide. We show the 

rate structure. We are showing that that system will remain forever and the county—what has occurred with us is Allegany CounVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00044 Fmt 6633 Sfmt 6601 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
41

ty is an older community, and what has occurred, we had a lot of 

private water companies. 

Allegany County goes back to Revolutionary War days. A lot of 

these communities develop from coal towns, and what happened 

was they developed a small water system. A lot of these water systems, we still have a couple of them but they are run by private 

water companies, and when I say a private water company, I mean 

like a volunteer organization like Little League. What happens is 

with all the regulations it is impossible for them to keep up with 

what is going on. They can’t provide the proper water. They can’t 

keep up with today’s requirements. 

So what happens when we take over these water systems, Allegany County takes over these water systems, and we do not go in 

there and tell the people we are going to take them over. They 

want us because they are not getting the proper water pressure 

and water quality. So when these problems are solved, Allegany 

County takes over these systems, and we have a utilities division 

that runs water and wastewater in Allegany County, so it is an important point to realize that when we take over these communities 

with private water companies and/or wells that people have bad 

water, we are there to stay. Generally, when we solve the water 

problems we don’t have to go back into that community and hopefully we will never have to go back in that community for years to 

come. And USDA has worked with us to make sure we have 

enough money to keep that system going. That is a very important 

component when working with USDA. 

We talked earlier about what is more important than providing 

water, a basic human need, to the public, and it is one of our main 

goals in Allegany County. Another big problem we are facing is we 

have sewer systems that were built in the 1960s, and currently we 

have six of our jurisdictions working around consent orders, and 

what they require us to do is to solve the problem to prevent the 

sewer overflows, and, more importantly, what they are doing is 

they are limiting growth in those areas. Essentially, each consent 

order allows us 5,000 gallons per day for the next 10 years until 

we solve the problem. 

So what happens if we have development that occurs in that 

area, we can only pick off a small development. If we had an industry in that area, we cannot build it unless we have the problem 

solved. I will mention it is not part of USDA—it is USDA but the 

loan isn’t—we did build our first new high school in Allegany County in over 15 years with a loan from USDA. It was a low interest 

loan that allowed us to afford to be able to do that. We built an 

industrial park and within 2 months after the industrial park was 

built, we brought in an industry that hires about 200 or 300 people 

and we helped to fill the remaining part of that park. We talked 

about the preliminary planning grants, and they are a very important component because what they allow us to do, the engineers in 

my department, we run operations. I am Deputy Director of Public 

Works. We run our transit and water, sewer, roads, bridges, so 

what we do is 90 percent of our time is spent on operations, so 

these planning grants allow us to get a consultant to do some of 

the planning so we can foresee ahead. 

42

I see I am getting short on time here, but I would like to mention, you had mentioned earlier, Mr. Conaway, about the requirements. The requirements didn’t change for USDA. They require an 

environmental assessment, and they also require a preliminary engineering report. It involved a tremendous investment on the time 

of my staff to get these projects done. We worked a lot of overtime, 

a lot of evenings. But I would like to thank USDA because I know 

that they turned around in the same time. We currently have four 

applications in there, and we have been on the phone with them, 

I would say, or e-mail probably at least two or three times a week. 

So I would really like to thank them for all the support. And I 

know that every day you guys are facing decisions, facing funding 

problems, but I would like to point out we are solving basic human 

needs, and I would invite you, being 21⁄2 hours from Washington, 

to visit our communities and see exactly what your money is doing. 

Thank you very much. 

[The prepared statement of Mr. Kahl follows:]

PREPARED STATEMENT OF PAUL F. KAHL, P.E., DEPUTY DIRECTOR OF PUBLIC WORKS, ALLEGANY COUNTY, MARYLAND, CUMBERLAND, MD 

Thank you, Chairman McIntyre, Ranking Member Conaway, and Members of the 

Subcommittee for providing me the opportunity to testify today on USDA Rural Development programs. I shudder to think of the impact on our County, without the 

assistance we have received from USDA Rural Development. USDA Rural Development has been the most significant funding partner in helping us solve our basic 

infrastructure problems. 

My name is Paul Kahl, and I am the Deputy Director of Public Works for Allegany County, Maryland. Allegany County is a small, rural county in western Maryland with a population of approximately 75,000 people. Similar to many rural areas 

in the United States, many of our communities have old and inadequate infrastructure, with a limited amount of people to pay for improvements. With assistance from 

USDA Rural Development, we have been able to:

• Provide safe drinking water.

• Improve sewage systems.

• Improve the quality of streams, by reducing sewer overflows.

• Build a new high school.

• Stimulate economic growth.

• Plan for new projects.

I will provide a brief description of the problems we are attempting to solve with 

USDA Rural Development assistance, but before I do, I would like to point out two 

very important facts:

1. For each of our projects for which we have received USDA Rural Development funding, a component of the funding is a USDA loan, and sometimes the 

funding is all loan. I point this out to show that a substantial commitment is 

required from our County for every project.

2. Second, we have not received funding for one project from USDA that is not 

currently still in use.

Allegany County experiences two problem areas regarding drinking water. The 

first is, many communities are served by private water companies, who provide 

unfiltered water and experience periods without water. The second area of concern, 

is in communities that have private wells that are contaminated and/or suffer times 

without water. Providing adequate, safe drinking water to our citizens has been one 

of the main priorities of our County and with USDA Rural Development assistance, 

many of residents are now drinking safe, reliable, water. We continue the task to 

provide safe drinking water, a fundamental human need, to the remaining problem 

areas in our County. We will be unable to complete this task without USDA Rural 

Development assistance. 

Most of Allegany County’s sewage systems were built in the 1960s, and these 

aging systems are experiencing large amounts of infiltration and inflow, thereby 

43

causing these systems to overflow into our streams. Allegany County is currently 

under six (6) Consent Orders that require us to eliminate our sewer overflows, and 

limit the amount of development in these systems, until the problem is corrected. 

We are currently working with USDA Rural Development to replace/rehabilitate a 

number of these areas to eliminate sewer overflows into our streams, and to provide 

reliable sewer service to our residents. 

Recently, through a number funding sources, including USDA Rural Development, 

Allegany County was able to build the first new high school in our County in fifty 

years. The project required Allegany County to commit $10 million in local funding. 

USDA Rural Development provided a 40 year low interest loan, thereby making the 

project affordable for us. 

With a USDA Rural Development loan, Allegany County was able to construct a 

new water line to new Industrial Park. Soon after the park was built, we were able 

bring in a new industry to our County. We hope to fill the remaining areas in the 

park in the near future. 

Another important USDA Rural Development Program that our County has utilized is the Preliminary Planning Grant Program. With funding from this program, 

we have been able to determine the cost and hurdles we will encounter to solve 

some of our existing water and sewer problems and to plan for economic development. This program, which utilizes consultant services, allows us to complete planning to solve longer range problems, and allows our staff to concentrate on solving 

current problems. 

Rural Development funding has resulted in the employment of hundreds of construction workers and the facilities constructed have not only served a public need, 

but also provide permanent employment of dozens of operations personnel in the 

County. 

I can not adequately express my appreciation for the cooperation and hard work 

that USDA Rural Development personnel provide to Allegany County. Allegany 

County has a close partnership with them that enables us to work in a very productive manner. I have worked with many organizations, and I considered none equal 

to USDA Rural Development in their effectiveness. The only improvement that we 

would request, is for the funding to increase, so Allegany County, along with other 

rural communities, can continue to solve rural problems. 

I know that everyday, you face decisions regarding what funding programs, 

should be provided by the Federal Government and to one degree or another, every 

person that appears before you, has legitimate needs. However, I want to take this 

last opportunity to point out, the programs that USDA Rural Development provides 

Allegany County and others, are helping us to provide basic human needs. Thank 

you for the opportunity to testify today and being located only 21⁄2 hours from Washington, we would welcome you to our County anytime to view the positive effects 

of USDA Rural Development.

The CHAIRMAN. Thank you, sir. Ms. Locklear, thank you for your 

very direct and specific testimony. Can you talk to us about the approximate length of time it takes to put a water or waste project 

application together? 

Ms. LOCKLEAR. Yes, sir. It takes roughly about 11 months, and 

I can testify to rural communities having some difficulty in doing 

that. We have to gather the resources and Pembroke is using the 

North Carolina Rural Water Association to help build that material, and then we have to come up with the funds to do the engineering assessments. Rural communities usually don’t have inhouse engineers and we have to assume that cost until it can be 

refunded later. 

The CHAIRMAN. You mentioned the North Carolina Rural Water 

Association and the technical assistance that it provides in other 

small community rural water projects. Can you tell us exactly what 

kind of help they provide in the operation of the system? 

Ms. LOCKLEAR. Yes, sir. We recently put together an application 

in 2009, and we were not able to submit the application without 

meeting the draft bill provisions, and they assisted us with the 

working of that and the lending of equipment. That required about 

$15,000 of detection equipment that we did not have and was not 

44

budgeted for and would not use on a regular basis, so that allowed 

us to submit the application and meet the requirements for the application. 

The CHAIRMAN. Thank you, ma’am. Mr. Conaway. 

Mr. CONAWAY. Thank you, Mr. Chairman. And, panelists, thank 

you all for coming to D.C. to visit with us. Ms. Fierros, you mentioned West Odessa, which is west of my hometown of Odessa, 

Texas, and their water issues, they received a grant or I guess 

whatever the grant or combination of grant and loans, but that the 

construction costs that were estimated in the loan processing when 

they actually bid it out for construction—the construction costs 

came in at double what they had thought it was going to be. How 

did that happen and what has been the result? 

Ms. FIERROS. Mr. Conaway, I am sorry, but that is actually one 

of my sister organization’s projects with Community Resource 

Group. It is part of the national RCAP. I don’t know that I have 

the specifics on exactly what caused——

Mr. CONAWAY. Okay. Would you mind for the record asking your 

sister organization to give us a paper on that as to what happened 

and why? 

Ms. FIERROS. Yes. 

Mr. CONAWAY. And how they are struggling to make that work 

out if it has, but thank you very much. Mr. Norton, how many communities in your organization have applications pending and how 

long have they been pending, any sense of that? 

Mr. NORTON. Well, we collected for the American Recovery and 

Reinvestment Act about 14 various projects that we considered that 

were shovel-ready projects that we collected. This project and the 

one I mentioned, the Ozark Mountain Regional Public Water Authority, was of course the largest. It collected 20 different water associations together so it was the biggest one by far. 

Mr. CONAWAY. But applications still pending, any sense of applications that are still pending at USDA? 

Mr. NORTON. We have some that are still pending, yes. 

Mr. CONAWAY. How many of those? Any sense of how many? 

Mr. NORTON. About a half dozen. 

Mr. CONAWAY. And how long have they been pending? 

Mr. NORTON. Just 4 or 5 years probably in this particular case. 

Trying to get, as I think everyone on this panel has mentioned, trying to get the engineering reports where small rural communities 

can’t afford, to get those engineering reports to a position where 

those projects are ready to go is a real stumbling block for all of 

us. 

Mr. CONAWAY. All right. Mr. Larson, the regional program that 

you put in place, where is the crossover in your analysis between 

where it makes sense to continue to regionalize like that versus

Iowa building its own facility and being able to afford that? Is 

there an economic crossover where that happens? 

Mr. LARSON. That is a good question. When each member joined 

Lewis & Clark, they had to analyze both economically and politically, and other considerations, what was the best way for them to 

address their water needs. Each community has their own tipping 

point. For Hull, the wells needed to be capped. The water was so 

poor they really had no other choice but to look elsewhere. And so 

45

each member has essentially analyzed on their own what is the 

most economic way to pursue this to address their water needs. In 

the 20 members case, they chose Lewis & Clark as their cheapest 

and most efficient way to address their water needs. 

Mr. CONAWAY. Where is your source water for Lewis & Clark? 

Mr. LARSON. It is the Missouri River, a series of wells. We don’t 

actually pull out of the Missouri River directly but a series of wells 

adjacent to the Missouri River. 

Mr. CONAWAY. And were these wells contributed by the members 

or how—somebody had rights to that water. How did you get——

Mr. LARSON. The water rights are through the State of South Dakota. It actually goes back to the Oglala—the Pick-Sloan irrigation 

project way back in the 1950s that irrigation was supposed to be 

the result of damming the Missouri River. Irrigation never really 

happened and so rural water is the spin-off of the Pick-Sloan 

project. 

Mr. CONAWAY. Thank you. Mr. Kahl, you mentioned thanking us 

for the money that we spend. Actually it is the taxpayers’ money 

that we need to come to your community and see how it is being 

spent well. Those of us on this panel anyway, we never forget that 

it is not our money. It is the taxpayers’ money, and so thank you 

for that comment and the invitation. With that, Mr. Chairman, I 

yield back. 

Mr. KAHL. I can assure you when we do our projects, we are very 

cognizant of that fact and we make sure that taxpayers monies are 

put to good use. 

The CHAIRMAN. Thank you. Mr. Minnick. 

Mr. MINNICK. I come from the rural State of Idaho and it is full 

of communities like yours. I apologize for the quality of my voice, 

Mr. Chairman. The bulk of their water projects are as a result of 

EPA requirements which are by any objective analysis very marginal and extreme, but nevertheless these small communities have 

to come up with very large amounts of money in order to—if they 

don’t have tax base in order to come up with projects to meet these 

EPA standards. I am going to have a panel of community leaders 

like you from these communities who have projects pending mostly 

for RUS funding that we will be talking to the EPA about. 

I want to ask each of you, what would be the one single thing 

in the RUS’ approval process that would make it easier or cheaper 

and faster for you to get through their process to come up with 

projects which would help meet EPA or other third party water 

quality standards. What one thing could the RUS change that 

would most help you get through the kind of process my communities are having to go through as we speak? Maybe, to start 

with—maybe a few seconds from each of our five panelists. 

Ms. LOCKLEAR. Sir, I would say time. We do want to protect the 

water and the environment, so if we had time to get the plan in, 

this is our plan, we are going to need a little bit more time to budget these monies if they were not included. So, time would be a 

great effort as I have heard earlier as long as we have the plan in 

place to meet those regulations because they all come with some 

type of money attached with them whether it be a staff or analysis 

or assessments. They all do come with some funding requirements. 

Mr. MINNICK. Thank you. 

46

Ms. FIERROS. I guess the one thing that would make it easier is 

if they all—if USDA had the regulations in place to streamline the 

funding process. A lot of the communities that we work with in the 

upper Midwest, they have a tendency to have to go to two or three 

different places to put the funding package together that makes it 

affordable. They all have different requirements. Some forms don’t 

transfer over to the other ones, those kind of things. If it was just 

one application process, it would help tremendously. 

Mr. MINNICK. Mr. Norton. 

Mr. NORTON. I think the Rural Innovation Initiative would help 

because it would allow us to plan ahead of time and develop and 

get some of it out of the way. The more you can get done prior to 

the project being awarded the less time it restricts and takes away 

from the development of the project. 

Mr. MINNICK. Mr. Larson. 

Mr. LARSON. Mr. Congressman, we are a little different animal 

in that our funding is through the Bureau of Reclamation, and so 

we do not utilize the loan programs through Rural Development, 

so I cannot speak to that question. 

Mr. MINNICK. Mr. Kahl. 

Mr. KAHL. One of the biggest things, Mr. Thompson has mentioned, I think the process works very well and they work very—

the best agency we work with bar none is state or Federal agency. 

Mr. Thompson mentioned that EPA may be working with Rural 

Utilities Service. Our biggest problem right now is sewer overflows, 

and we are given deadlines that we can’t possibly meet. We have 

two jurisdictions with 1,000 people, sanitary districts, each of them 

with 1,000 people, and the estimate to repair the problem is $30 

million so you do the math. So you do the math, 1,000 people, 1,000 

users for $30 million, so if EPA would work with Rural Utilities 

Service and try to extend our deadlines, we most certainly will invest and we will try to protect the environment, but it is just too 

much too quick. But Rural Utilities Service, Rural Development is 

a great agency to work with, and the process seemed to work pretty 

well for us. 

Mr. MINNICK. Thank you. I yield back. 

The CHAIRMAN. Thank you, Mr. Minnick. Clarification, Mr. Kahl, 

you said sewer overflows? 

Mr. KAHL. Yes, sanitary sewer overflows are the biggest—I know 

Baltimore City has a problem and the City of Cumberland has a 

problem in our jurisdiction. 

The CHAIRMAN. Okay. I just wanted to understand the word 

sewer. 

Mr. KAHL. Yes, it is sanitary sewer. What happens is when we 

get a lot of rain we put sewage into streams. 

The CHAIRMAN. Okay. Thank you for clarifying. Mr. Thompson. 

Mr. THOMPSON. Thank you, Mr. Chairman. I also want to encourage my really good friend from Idaho to go see a doctor before the 

Senate finishes their work on this health care bill. We need you on 

this Committee. Actually if we can just stick with that theme a little bit and ask all the panel, those who kind of reflected on the 

need for extensions, which is kind of what I have in mind. I mean 

I would like to see repeal on some of these mandates, the unfunded 

ones, but let us just make it realistic and say extensions, more time 

47

to be able to cope and adjust. What specific current regs do you see 

that you need extensions for that would be helpful for—I made a 

list. I have sanitary overflows starting that list out. Are there other 

specific—I just open that up to any of the panel that has input. 

Ms. LOCKLEAR. There is also leakages. Trying to find those leakages requires water audits to be done. You also have to change out 

water meters and specifically the wastewater treatment plant is a 

user because we do clean the water up, but we do need fresh water 

to do analysis or clean water. So we have to put in vaults and meters, huge meters that cost like $3,000 not including the contractor, 

and the vault itself, so those type issues. 

Mr. THOMPSON. That is very helpful. Any other ones from any 

other panel member that you have identified that if we could 

achieve an extension somehow? 

Mr. KAHL. Again, I go back to my original concern. What happens is we are spending probably millions of dollars to solve the 

sanitary sewer. It is a big issue with us because we have three or 

four communities that are not drinking safe drinking water. They 

are drinking unfiltered drinking water that basically comes 

straight from the reservoir into their systems without any filter or 

anything. Basically they just get some chlorine. And we have to 

spend millions of dollars trying to solve some sanitary overflows 

that are going to the streams that we don’t consider as significant 

and we need to solve them, but we would most certainly like to 

solve our water problems first and then go to that next step. 

Mr. THOMPSON. And the order of priorities, obviously there is——

Mr. KAHL. Absolutely. What happens is sanitary overflow bad 

and most certainly they are, but we consider it a priority to serve 

drinking water to our public before we solve these other problems. 

Mr. THOMPSON. I appreciate you having that perspective on it. 

Any others before I move on to another question? 

Ms. LOCKLEAR. Mr. Thompson, I have one other comment. Just 

in the month of February due to the snow and the rainfall, we exceeded permitted flows, not exceeding any other thing other than 

permits, other pollutant parameters, and you do get fined for those 

type of things even though the pollutants are not significant. If the 

pollutants were not even there it is just overflow due to dilution, 

but they still see that as over the permitted limit. Things like that 

would be helpful if there was no monetary fines associated with 

those type things, along with the sanitary sewer overflows. 

Mr. THOMPSON. Okay. Thank you. Mr. Kahl, you highlighted development of a business park and what it means to your county. 

With economic development from the industrial park you mentioned in your statement how much additional residential load did 

that development bring to the systems that you built? I am assuming this is a situation where you build it and they will come. 

Mr. KAHL. What occurred was we actually knew we were building an industrial park so one of the industries said to get the industrial park we were on a tight time limit. We will come into it. 

It was a wood cabinet business, and they came in right away. Soon 

thereafter, a developer bought approximately 200 acres across from 

the industrial park because we had the water capacity. They have 

developed, both water and sewer and roads. They have only sold 

a couple lots. Unfortunately the economy in the last—this occurred 

48

2 years ago, so they have sold some lots, and we think it will rebound soon but the economy has kind of slowed things down. But 

you are absolutely right. Every place that we have put a water line 

and sewer line, we provided that service in our county, and in most 

cases, a very high percentage, we got development soon thereafter. 

Mr. THOMPSON. And just to follow up, in your view then how 

should communities manage future ratcheting up of demand for 

services? 

Mr. KAHL. I am not sure I understand. 

Mr. THOMPSON. In terms of demand for that type of growth of 

preparing for the water infrastructure to having the infrastructure 

in place to meet those demands for new development. 

Mr. KAHL. Unfortunately, that is not a problem—I haven’t had 

to deal with that problem. Our county has 75,000 people. We used 

to have over 100,000 people, so what has happened is we haven’t 

had to deal with that problem. Unlike Maryland, Montgomery 

County, Howard County, Anne Arundel County, they have to deal 

with that problem you are talking about. We have not had to deal 

with that problem. We welcome development into our areas that we 

have water and sewer right now. 

Mr. THOMPSON. Okay. I just want to thank the panel for all of 

your input today. And I am out of time. Thanks, Mr. Chairman. 

The CHAIRMAN. Thank you. One additional question. Ms. 

Locklear, if you can tell us how you came to work in the water and 

wastewater industry. As we know, there is an expected shortfall in 

staffing levels, and it is often hard to be able to attract younger 

folks to come into this type of career or position. How do you think 

we can attract a young, diverse workforce to the water and wastewater industry? 

Ms. LOCKLEAR. Yes, sir. I came to Pembroke in its expansion as 

their chemist, their certified laboratory chemist, so that is how I 

entered in. And most of our staff or 50 percent of our staff either 

have 30 years in, 37 years in, and they can actually retire at any 

time, so we are trying to get their knowledge; either it is mapping 

the water and sewer lines and all those problems associated with 

infrastructure through new people. We don’t have the money as 

some facilities do that are paying for engineers to kind of bridge 

that gap, and we are using rural water to help us to do that. 

The CHAIRMAN. Thank you. Any other questions from the panelists? If not, I would like to thank all of you for your attendance 

today 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 witnesses to any question posed by a Member. This hearing of the Subcommittee on Rural Development, Biotechnology, 

Specialty Crops, and Foreign Agriculture is now adjourned. God 

bless you. Thank you, and I hope you travel safely. 

[Whereupon, at 11:47 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

49

SUPPLEMENTARY MATERIAL SUBMITTED BY THE U.S. DEPARTMENT OF AGRICULTURE

Insert 1

Mr. THOMPSON. I am glad to hear that you do communicate with folks like 

EPA and any other agency that has oversight of those. Do they ever listen to 

what you have to say? Do they ever—is there any hope, that is what I am saying, I guess.

Rural Development does discuss the impact of regulatory action on rural water 

systems with its counterparts in EPA. Rural Development also works with other 

agencies on a project-specific basis to address environmental concerns and try to 

find resolutions that allow critical infrastructure projects to be constructed and the 

environment protected. 

Insert 2

Mr. CASSIDY. And, again, going back to my small communities with the limited—they don’t have engineers on staff, for example, so I kept on thinking that 

shovel-ready project criteria for the community which is most poverty-ridden is 

almost an oxymoron. They don’t have the money to come up with the project, 

and yet they are the ones who need it the most, et cetera, et cetera, et cetera.

Do you follow what I am saying?

Communities who lack the capacity to complete engineering and environmental 

components of RUS applications can get assistance in several ways. First, communities may seek assistance from RUS-funded Circuit Riders and technical assistance 

providers. These resources are available across the country and can be located by 

contacting the local Rural Development Office. In addition, the RUS Water and 

Waste Loan and Grant Program does have limited grant funding available for planning activities, such as preparation of engineering and environmental reports. The 

pre-planning grants are limited to $25,000 and can only be used to fund up to 75% 

of the proposed cost of the eligible activities. For more information, communities 

should contact their local Rural Development Office (www.rurdev.usda.gov) Finally, 

other funders, such as the Community Development Block Grant (CDBG) program, 

Economic Development Agency (EDA) and state governments may have funds available to rural communities for these activities. 

SUBMITTED QUESTIONS

Response from Hon. Jonathan Adelstein, Administrator, Rural Utilities 

Service, U.S. Department of Agriculture 

Question Submitted by Hon. David P. Roe, a Representative in Congress from Tennessee 

Question 1. Mr. Adelstein, can you describe the loan protection afforded Rural Development under 7 U.S.C. § 1926(b)? 

Answer. Seven U.S.C. § 1926(b) safeguards a loan secured through the Rural Utilities Service to an eligible rural water system by protecting the rural water system 

from the expansion of nearby cities and towns during the term of such loan. This 

protection ensures the viability and financial security of rural water systems by encouraging rural water development, expanding the number of potential users of such 

systems, and, in so doing, decreasing the per-user cost.

Question 1a. If 7 U.S.C. § 1926(b) is amended to allow municipalities to serve customers inside a rural utility district’s area during the term of a loan secured 

through USDA, what affect might this have on the district’s ability to repay the loan 

and what impact might it have on USDA’s ability to lend in the future? 

Answer. In areas where a borrower is currently providing service, a change in 

1926(b) that would allow municipalities to serve customers inside a rural utility district’s area could lead to a loss of revenue, depending on the number of users lost, 

and impact that borrower’s ability to repay its debt to USDA and operate in the 

long-term. It could also lead to increased risk of default and potentially impact the 

program’s subsidy rate and program level, potentially reducing USDA’s ability to 

provide assistance in the future to many rural communities. 

Question Submitted by Hon. Bill Cassidy, a Representative in Congress from Louisiana 

Question. Mr. Adelstein, you mentioned in your testimony that ten technical assistance grants worth $20 million has been awarded to assist communities plan and 

apply for funding for water and wastewater systems. Can you provide for the SubVerDate 0ct 09 2002 09:17 Apr 30, 2010 Jkt 041481 PO 00000 Frm 00053 Fmt 6621 Sfmt 6621 I:\DOCS\111-45\55885.TXT AGR1 PsN: BRIAN
50

committee how many applications were made under those technical assistance 

grants, and how many of those applications were ultimately funded for construction? 

Answer. Technical Assistance and Training (TAT) Grants are awarded to private, 

nonprofit organizations to assist rural communities in identifying and evaluating solutions to water and waste disposal problems in rural areas, preparing applications 

for water and waste loans and grants and improving operation and maintenance of 

existing water and waste disposal facilities in rural areas. These are 1 year grants. 

In FY 2009, the program awarded a total of $19.5 million in TAT grants to ten entities. The grants were issued for a variety of purposes. A full listing of grantees and 

the grant purposes is attached to this response. Although the grants can be used 

for the purpose of assisting with application preparation, the grants issued in 2009 

were for other purposes. 

The agency did award Recovery Act funds, separate from the TAT grants funded 

with regular appropriated funds, for the purpose of assisting applicants with application preparation and reporting compliance under the Recovery Act. In 2009, $4.1 

million in Recovery Act funds were obligated toward the Water and Waste Circuit 

Rider contract. In 2010, $10.2 million was obligated to this contract. Information on 

the number of applications submitted and funded as a result of assistance provided 

by circuit riders funded through the Recovery Act is currently being compiled and 

will be available in May. 

In March 2010, $5 million in Recovery Act funds were awarded to Rural Community Assistance Partnership, LLS in the form of a TAT grant to provide additional 

assistance to rural communities on applying for and complying with the Recovery 

Act funding. As the grant was recently awarded, no information is available at this 

time on the number of applications resulting from the assistance. 

FY 2009 Technical Assistance and Training Grant Recipients 

Alaska Forum Inc. (AK) 

$175,000

Alaska Forum Inc. will provide targeted technical assistance to reduce health 

risks in communities of extreme need; provide small equipment and supplies for Villages to implement solid waste best management practices; provide collaborative opportunities among solid waste providers; and participate in statewide environmental 

conferences. 

Missouri InuTech Foundation (MO) 

$80,000

The proposed project is to provide technical assistance and training to improve 

management, operation and maintenance of water and waste facilities. The project 

will also provide technical assistance and training to reduce the solid waste stream 

through reduction, recycling and reuse. 

National Rural Water Association (OK) 

$9,100,000

National Rural Water Association will provide training and on-site technical assistance to wastewater systems in the contiguous 48 states, Alaska, Puerto Rico, 

and Hawaii. The training provided will help to reduce exposure to waste related 

health and safety hazards and enhance the sustainability of wastewater systems in 

rural and small communities. 

National Tribal Environmental Council (NM) 

$850,000

NTEC will enhance and expand the drinking water technical assistance and training program designed to assist tribes in the safe and effective operation and maintenance of their community drinking water systems. 

Native American Water Association (NV) 

$280,000

Native American Water Association will: (1) develop and deliver instructional 

training course workshops to Tribal Drinking water and wastewater systems; (2) 

build a Tribal Water and Wastewater systems network group coalition; and (3) provide on-site Tribal Water and Wastewater training program follow-up activities. 

51

Rural Community Assistance Partnership (D.C.) 

$7,000,000

RCAP will continue to address the growing infrastructure needs and federally 

mandated security requirements for rural communities. The combination of these 

factors has resulted in a greater demand for vulnerability assessments (VAs) and 

emergency response plans (ERPs) for Rural Utility borrowers. The proposed 

Technitrain project will provide on-site technical assistance and community specific 

training to address water and waste disposal issues in eligible, rural areas in 48 

to 50 states and Puerto Rico during the 12 month period from September 1, 2009, 

through August 31, 2010. A total of approximately 800 communities or projects will 

be served under Technitrain. Within the number of projects proposed, RCAP will 

also continue to provide technical assistance to Native American communities. 

Syracuse University (NY) 

$190,000

Syracuse University will facilitate partnerships and collaborations among the 

technical assistance community; provide public outreach and education for projects 

that lead to environmental improvements; and provide training to local government 

officials, operators, engineers, and technical assistance providers. 

Tanana Chiefs Conference (AK) 

$150,000

Tanana Chiefs Conference will provide technical assistance and training project 

aimed at developing the capacity of villages in interior Alaska and rural communities throughout Alaska to operate and maintain village water treatment and 

wastewater disposal facilities. 

West Virginia University—NDWC (WV) 

$1,207,828

West Virginia University will continue the National Drinking Water Clearinghouse program. The program provides quality information for regulatory compliance; information for sustainable water services; and information for improving 

small system security and emergency response plans. 

Question Submitted by Hon. Henry Cuellar, a Representative in Congress from Texas 

Question 1. Mr. Adelstein, in your testimony, you mention the Colonia project in 

Yuma, Arizona, and your experience partnering with five different agencies and organizations to make the project possible. However, a recent GAO report on rural 

water infrastructure in this region concludes that a lack of coordination between 

agencies is a reason why border regions suffer from lack of access to clean water. 

Do you agree with this assessment? 

Answer. No. Border regions suffer from lack of access to clean water because of 

the development patterns that have occurred along the U.S. and Mexico border.

Question 2. Could you elaborate on some of your work in Colonias along the U.S.-

Mexico border, and what steps you might be taking to improve our service to these 

areas? 

Answer. USDA obligated $23,383,934 in grants in Fiscal Year 2008 and 

$24,246,968 in grants in Fiscal Year 2009 to eligible entities proposing to provide 

water or waste disposal services to the residents of rural subdivisions in the region 

along the U.S. and Mexico border. Steps to improve service in the border region 

being explored by USDA include technical assistance and training, outreach, and 

collaboration with local governments. USDA is deeply committed to addressing the 

urgent water needs of Colonias.

Question 3. Some Members have introduced a bill to implement GAO’s recommendations by creating a Southwest Border Region Water Task Force, which 

would involve USDA. What are your thoughts on this legislation? 

Answer. The legislation addresses an important issue to the Members who have 

introduced the proposed bill and represent districts that are located along the U.S. 

and Mexico border. It signals to us the priority its sponsors place on addressing the 

pressing needs in the Colonias region. 

52

Response from Rhonda Locklear, Water and Wastewater Director, Town of 

Pembroke, North Carolina, Pembroke, NC; on behalf of National Rural 

Water Association 

Question Submitted by Hon. David P. Roe, a Representative in Congress from Ten- nessee 

Question. Ms. Locklear, in your view what would be the effect of amending 7 

U.S.C. § 1926(b) to allow municipalities the ability to serve customers inside a rural 

utility district, and what impact might that have on the utility district’s ability to 

fulfill its obligations? 

Answer. I have never had any experience with 7 U.S.C. § 1926(b) in my current 

position as the Water and Wastewater Director for the Town of Pembroke and I 

don’t feel I can adequately answer the question. As a member of the North Carolina 

Rural Water Association which is a member of the National Rural Water Association, I have asked for their position on this matter which is as follows: 

To ensure that small and rural communities would be able to repay loans, Congress included a provision [7 U.S.C. § 1926(b)] in the Consolidated Farm and Rural 

Development Act. The purpose of 7 U.S.C. § 1926(b) is to protect the integrity of the 

federal government’s outstanding loans by preventing any portion of a water system 

to be ‘‘forcibly’’ annexed or ‘‘cherry picked’’ by another system or municipality. Such 

annexation would result in the remaining customers being solely responsible for repayment of the loan, with fewer customers to share the burden—resulting in a higher cost (hardship) per customer and greater risk of default. This dilemma is of special concern because USDA loans are only made available to low and moderate-income rural communities based on household per capita income that cannot obtain 

commercial credit. It is also important to remember that USDA provides both loan 

and grant to systems based on their financial situation and proposed rate structure 

at the time the application is processed. Any loss of projected revenue caused by loss 

of territory jeopardizes this carefully constructed financial arrangement. The 7 

U.S.C. § 1926(b) provision is an essential stabilizing element and is one of the reasons that the program works so well. It assures loan repayment, it protects the results of the hard work of rural communities in creating and operating rural systems, 

and it protects the national priority of providing safe drinking water to all of rural 

America—especially in our most economically vulnerable areas. These rural water 

systems provide service to areas when others will not and assume the risk associated with servicing the debt and maintaining the system. To allow others to then 

take customers from the most desirable portions of the system provides a disincentive for rural systems to continue to reach out to the most unserved areas. The 

USDA program respects all state planning laws. Every rural water system plan is 

filed with the state authority and every USDA rural water system is prohibited 

from unilaterally crossing any state’s political subdivisions. Rural water systems 

were initially built in the outlying rural areas that no public system wanted to 

serve. When municipalities and large private water systems attempt to lay water 

lines parallel or lay lines in an area already served by the USDA water system 

there is always a discussion on who should serve the area. At stake is the alignment 

of the most profitable area of the USDA system—that is generally why the larger 

system now wants to take over after many years of sustained disinterest. 7 U.S.C. 

§ 1926(b) requires the predatory system to work out an arrangement of mutual interest to both water systems as well as for the customers. The alternative would 

be to allow larger systems to unilaterally move into the low cost/high revenue portion of the USDA system and jeopardize the viability and future growth of the rural 

system. 

7 U.S.C. § 1926(b) Should Be the Solution of Last Resort 

Most systems are working constructively and cooperatively to resolve local conflicts. Some states have legislation requiring equitable payment agreements and 

methods of determining the actual value of annexed populations. Numerous neighboring water systems have worked out ‘‘good neighbor’’ relationships through cooperative agreement that provide the highest quality of service to all customers. Rural 

water systems should only utilize 7 U.S.C. § 1926(b) in extreme cases where expanding systems attempt to unilaterally, without discussion, acquire service areas. Often 

old political disagreements and local rivalries fuel these arguments. 7 U.S.C. 

§ 1926(b) has allowed these disagreements to be resolved. 

Court History 

In the mid-1980’s the City of Madison, Mississippi tried to acquire land and facilities from Bear Creek Water Association (rural water utility) through eminent domain proceedings (condemnation). Bear Creek counter-sued to restrain Madison. 

The Court in City of Madison, Miss v. Bear Creek Water Assn, Inc., 816 F.2d 1057 

53

(5th. Cir.1987) created the ‘‘bright line rule’’ that ‘‘prohibits condemnation through 

the FmHA loan term’’. Madison had hoped to defeat 1926(b) protection. The Court 

responded: ‘‘To read a loophole into this absolute prohibition, as Madison would 

have us do, and allow the city to do via condemnation what is forbidden by other 

means would render nugatory the clear purpose of 1926(b)’’. The 5th Circuit showed 

great insight into the underlying purpose in Madison’s attempt to gain territory, facilities, and money from customers. The Court of Appeals stated:

‘‘The case at bar exemplifies the evil Congress wished to avoid. Bear Creek’s 

affidavits showed that Madison desired to condemn 60% of its facilities and 40% 

of its customers, including the most densely populated (and thus most profitable) territory now served by Bear Creek. Even if fair value is paid for the lost 

facilities, such an action would inevitably have an adverse effect on the remaining customers of Bear Creek, in the form of lost economies of scale and resulting 

higher per-user costs. To allow expanding municipalities to ‘skim the cream’ by 

annexing and condemning those parts of a water association with the highest 

population density (and thus the lowest per-user cost) would undermine 

Congress’s purpose of facilitating inexpensive water supplies for farmers and 

other rural residents and protecting those associations’ ability to repay their 

FmHA debts.’’

In the 1996 decision of North Alamo Water Supply Corporation v. City of San 

Juan, Texas, 90 F.3d 910, (5th Cir.1996), the Court held ‘‘the service area of a federally indebted water association is sacrosanct’’—‘‘the law gives the Utility (water district) the exclusive right to provide water service to and within the disputed areas.’’ 

The court ordered the facilities constructed inside the water district’s territory surrendered to the water district for the reasons stated by the Court: ‘‘The infrastructures are indispensable to providing water service to the residents of the subdivision 

now that the development is complete. Thus, unless the infrastructures are transferred, the Utility (water district) would not be able to provide efficient and economical water service, and the rights of the Utility that are validated here would 

be useless.’’

In conclusion, the North Carolina Rural Water Association as a member of the 

National Rural Water Association supports the existing 1926(b) protection and believes changes to repeal or weaken this provision will create higher utility fees, reduce a rural district’s ability to serve more remote and lower-income individuals and 

jeopardize the district’s ability to operate and debt service USDA loans.

Æ