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S. HRG. 111–1025 

EMPOWERING RURAL COMMUNITIES, 

THE STATUS AND FUTURE OF THE 

FARM BILL’S ENERGY AND RURAL 

DEVELOPMENT PROGRAMS 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 21, 2010 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

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

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

BLANCHE L. LINCOLN, Arkansas, Chairman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

DEBBIE STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

SAXBY CHAMBLISS, Georgia 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

MIKE JOHANNS, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

JOHN CORNYN, Texas 

ROBERT HOLIFIELD, Majority Staff Director 

JESSICA L. WILLIAMS, Chief Clerk 

MARTHA SCOTT POINDEXTER, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Empowering Rural Communities, the Status and Future of the Farm Bill’s 

Energy and Rural Development Programs ........................................................ 1 

Wednesday, July 21, 2010 

STATEMENTS PRESENTED BY SENATORS 

Lincoln, Hon. Blanche L., U.S. Senator from the State of Arkansas, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................ 1 

Chambliss, Hon. Saxby, U.S. Senator From The State of Georgia ...................... 3 

Panel I 

Tonsager, Dallas, Undersecretary, U.S. Department of Agriculture Rural Development, Washington, DC ................................................................................ 5 

Panel II 

Clark, Gen. Wesley, Co-Chair, Growth Energy, Washington, DC ....................... 23 

Tenny, Dave, President, National Alliance of Forest Owners, Washington, 

DC .......................................................................................................................... 27

Zuber, Eric, Dairy Producer, Byron, NY ................................................................ 31 

Panel III 

Bush, JoAnne, Mayor, City of Lake Village, Arkansas ........................................ 48 

English, Hon. Glenn, Chief Executive Officer, National Rural Electric Cooperative Association, Arlington, VA ......................................................................... 46 

Sternberg, Dennis, Executive Director, Arkansas Rural Water Association, 

Lonoke, AR ........................................................................................................... 50 

APPENDIX 

PREPARED STATEMENTS: 

Bush, JoAnne ........................................................................................................... 58 

Clark, Gen. Wesley .................................................................................................. 62 

English, Hon. Glenn ................................................................................................ 69 

Sternberg, Dennis .................................................................................................... 73 

Tenny, Dave ............................................................................................................. 77 

Tonsager, Dallas ...................................................................................................... 95 

Zuber, Eric ................................................................................................................ 109

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Nelson, Hon. E. Benjamin: 

Written letter (with attachments) to Hon. Thomas J. Vilsack, Secretary, 

U.S. Department of Agriculture, Washington, DC ..................................... 114 

QUESTION AND ANSWER: 

Chambliss, Hon. Saxby: 

Written questions for General Wesley Clark ................................................. 120 

Written questions for Dallas Tonsager ........................................................... 125 

Baucus, Hon. Max: 

Written questions for Dallas Tonsager ........................................................... 123 

Page

IV 

Bennet, Hon. Michael: 

Written questions for Dallas Tonsager ........................................................... 129 

Grassley, Hon. Charles: 

Written questions for Dallas Tonsager ........................................................... 126 

Harkin, Hon. Tom: 

Written questions for Dallas Tonsager ........................................................... 124 

Thune, Hon. John: 

Written questions for Dallas Tonsager ........................................................... 132 

Nelson, Hon. Ben: 

Written questions for Hon. Thomas J. Vilsack .............................................. 125 

Clark, Gen. Wesley: 

Written response to questions from Hon. Saxby Chambliss ......................... 120 

Tonsager, Dallas: 

Written response to questions from Hon. Saxby Chambliss ......................... 125 

Written response to questions from Hon. Max Baucus ................................. 123 

Written response to questions from Hon. Michael Bennet ........................... 129 

Written response to questions from Hon. Charles Grassley ......................... 126 

Written response to questions from Hon. Tom Harkin ................................. 124 

Written response to questions from Hon. John Thune .................................. 132 

(1) 

EMPOWERING RURAL COMMUNITIES, 

THE STATUS AND FUTURE OF THE 

FARM BILL’S ENERGY AND RURAL 

DEVELOPMENT PROGRAMS 

Wednesday, July 21, 2010 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY

Washington, DC 

The Committee met, pursuant to notice, at 9:07 a.m., in Room 

SR328A, Russell Senate Office Building, Hon. Blanche Lincoln, 

Chairman of the Committee, presiding. 

Present: Senators Lincoln, Stabenow, Nelson, Klobuchar, Gillibrand, Chambliss, Roberts, Johanns, Grassley, and Thune. 

Chairman LINCOLN. Good morning. The Senate Committee on 

Agriculture, Nutrition, and Forestry will now come to order. I am 

certainly pleased to hold our second hearing as we look back at the 

provisions of the 2008 Farm Bill and look forward to writing the 

2012 Farm Bill. 

Today, we’ll be discussing two very timely and interrelated 

issues, energy and rural development. 

Welcome, Senator Roberts. 

Senator ROBERTS. Where do you want me? 

Chairman LINCOLN. Yes, wherever you’d like to sit. We’re just 

glad you’re here. 

Senator ROBERTS. Want to change places? 

[Laughter.] 

STATEMENT OF HON. BLANCHE L. LINCOLN, U.S. SENATOR 

FROM THE STATE OF ARKANSAS, CHAIRMAN, COMMITTEE 

ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman LINCOLN. Maybe not. We have done that. 

As always, I am enormously honored and grateful to be joined by 

my good friend, Senator Chambliss, who I know shares all of our 

passion and commitment for rural America and pleased that he is 

here. 

We have a number of excellent witnesses that we will hear from 

today. 

I would like to extend a very special thanks to a fellow Arkansan, General Wesley Clark, Mr. Dennis Sternberg, and Ms. JoAnne 

Bush for joining us today. And it is also, again, a special thanks 

to Undersecretary Dallas Tonsager for his attendance and input. 

As a farmer’s daughter and a product of rural Arkansas, 

2 

I am honored to Chair the Committee on Agriculture, Nutrition, 

and Forestry. 48 percent of our state’s population lives in rural 

areas. Arkansans now know firsthand that rural America is often 

the first to feel the impact of economic downturns and is often, unfortunately, the last to reap the rewards of the economic recoveries. 

The development and deployment of renewable sources of energy 

produced in rural America presents an enormous opportunity to 

change that trend. It is critical that we effectively utilize every tool 

at our disposal to create jobs, put our economy back on track, and 

reduce our dangerous dependence on foreign oil. 

It is not a coincidence that the majority of the energy programs 

that we will hear about today are implemented by the Rural Development Department at USDA. A flourishing renewable energy industry will bring good paying jobs and investment to Arkansas and 

rural communities all over our country. The Farm Bill energy programs provide a model which should be the basis of our national 

energy policy. We need to develop biofuels and biomass energy policies that work for rural America. And in May of this year, just one 

month, we sent $27.5 billion overseas to purchase oil, much of that 

to hostile foreign governments. Imagine, just imagine, if we had invested $27.5 billion in renewable and clean energy development in 

rural America every month, what we could do. 

In Arkansas, if we used only a fraction of that money to build 

just ten cellulosic ethanol facilities, we could create 2,090 long-term 

jobs, generate $216 million in economic activity, and reduce Arkansas’ need to import oil by 50 percent. I do not know about you all, 

but that sounds like a great, great, story and a good, sound investment. 

Our farmers, ranchers, and foresters are ready for the challenge. 

They are innovative and eager to expand their role, to also provide 

an inexpensive, sustainable, and safe supply of renewable fuel and 

energy. However, our producers and forest land owners need new 

markets and new opportunities to help ensure prosperity in our 

rural communities, and that is why we must ensure that the programs we have enacted in the Farm Bill are achieving this vital 

goal. We can find beneficiaries of the Farm Bill’s energy initiatives 

all across this great country, and I know there are a number of success stories in Arkansas, for example, Future Fuels Chemical Company in Batesville. It employs about 530 people and provides expanded markets for our farmers in addition to providing bio-based 

chemicals, products, and biodiesel. 

Arkansas has also greatly benefited from the Rural Energy for 

America Program, the REAP program. These grants provide funding for projects like weatherization of poultry houses, energy efficient grain dryers, and the installation of solar panels to provide 

renewable energy. 

That is the positive side. I do not want my colleagues or certainly 

Undersecretary Tonsager to think that I am looking at these programs through rose-colored glasses. We have a long way to go. 

Programs such as the Biomass Crop Assistance Program, the 

BCAP, have been mired with controversy throughout their implementation. The Biorefinery Assistance Program has also been difficult and slow to get off the ground. And I look forward to continuing my work with Secretary Vilsack and Undersecretary 

3 

Tonsager to find solutions to the problems with these programs and 

others that we might uncover at this hearing today. 

The rural development initiatives of the Farm Bill contain a 

number of opportunities that provide our rural communities with 

the tools that they need to thrive and create new jobs. 

I have seen firsthand how critical rural development initiatives 

are to the economy of my home state. Recently, I worked with 

USDA to secure 55 million in funding to help the Ozark Mountain 

Public Water Authority in Arkansas provide safe, potable water to 

22,000 residents in north central Arkansas. I know it is very hard 

for people here to believe that there are so many communities 

throughout our Nation that still do not have safe water. 

In addition to providing residents with safe drinking water, the 

construction of this project will create nearly 1,000 jobs in a part 

of our state that could desperately use them. 

USDA’s Community Facilities Program, which helps communities 

improve municipal facilities, obtain first responder equipment, and 

build hospitals. It is also a great example of a successful initiative 

that we must foster. 

I know my staff starts to cringe because I mentioned it absolutely every time I go into a community—is using that Community 

Facilities Program. 

Rural Development also offers several initiatives that are helping 

to create jobs by providing access to capital to rural small businesses. Without critical investments in infrastructure, a safe water 

supply, and affordable housing opportunities, it is absolutely impossible for rural communities to attract new industries, such as 

the type of renewable energy production opportunities that we will 

discuss today. 

Additionally, we are seeing that broadband Internet service is a 

requirement for many businesses when they consider where to locate. Rural America will not be able to compete with the rest of the 

country without. I know that there has been tremendous interest 

in broadband funding, and I plan to hold a hearing specifically on 

the Broadband Initiative Program in the near future. So, I hope my 

colleagues will know that we will definitely focus in on that specifically. 

The Farm Bill is the most important legislation that we consider 

on behalf of rural America, and the programs we will discuss here 

today are the key to creating jobs, rebuilding the rural economy, 

and putting our country on a path to ending our dependence on foreign oil. 

As Chairman, nothing is more important to me than empowering 

our rural communities and ensuring that future generations have 

the opportunity to enjoy the quality of life that rural America offers. 

Again, I want to thank all of you for being here. I would love to 

turn to my ranking member, Senator Chambliss, for his opening 

statement, and then we will move to our panel. 

STATEMENT OF HON. SAXBY CHAMBLISS, U.S. SENATOR FROM 

THE STATE OF GEORGIA 

Senator CHAMBLISS. Well, thanks, Madam Chairman, first of all, 

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4 

ership here, and we are convening this hearing to review the implementation—continue to review the implementation of the 2008 

Farm Bill. 

Last month, we discussed commodity programs in Title I of the 

Farm Bill and had a very good discussion about what is working 

well for our farmers and ranchers and where we can improve with 

the next Farm Bill. Today, we will examine energy and Rural Development Programs that we authorized in the last Farm Bill. As 

we hear the perspectives of the USDA and our witnesses who are 

on the ground everyday using these programs, I look forward to 

gaining an understanding of how these programs are working, and 

also where we have room for improvement. Our goal should be to 

ensure that the Farm Bill programs are helping deliver new opportunities to our citizens through the rural development and energy 

tools in order to keep a strong foundation for rural America. Undoubtedly, the grant and loan programs administered through the 

USDA Rural Development mission area are a crucial part of the 

support mechanism the federal government uses to complement 

private sector investments and local efforts. 

It is important we reflect on how these programs are working 

based on the 2008 Farm Bill changes before we begin to consider 

the next one. 

Beginning back in the 1930s, the Department of Agriculture has 

been aiding rural families struggling with the lack of basic services, 

such as clean water and electricity. Over time, Rural Development 

efforts at USDA have expanded to support a wide array of programs, including telephone service, broadband infrastructure deployment, small business assistance, renewable energy and advancement, as well as value added agriculture product development, just to name a few. While the conditions in rural America 

have changed a great deal over these last 80 years, these geographically large but population small rural economies are still at 

a disadvantage to urbanized ones. 

Today, we know that fewer people are farming in rural areas and 

they are seeking sources for off-farm income. Additionally, these 

areas are not keeping pace with the population growth in the rest 

of the country. During the past decade, the U.S. population has increased by a national average of 9.1 percent, but rural counties 

gained only 2.9 percent. Couple this with dire state budget shortfalls and the broader global economic conditions, and you quickly 

realize how rural areas are struggling to create jobs, provide sufficient services and avoid out-migration. As we respond to these obstacles, we must ensure that those who live and work in rural 

America, our agriculture producers are prepared to meet the continued demands of the 21st century. They deserve a vibrant rural 

community in which to raise their families and appropriately targeted Rural Development Programs are essential to community development. Whether lowering input costs through increased energy 

efficiency or providing unique marketing opportunities for the commodities they produce, Rural Development Programs should benefit 

those who nurture our rural communities, namely farmers and 

ranchers. 

I believe that the future success of rural America is dependent 

on maintaining a strong agriculture sector in conjunction with viVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
5 

brant rural economic development efforts. Chairman Lincoln. 

Thank you, Senator Chambliss. We do have three panels that we 

are anxious to hear from today. In the interest of time, if our Senators have any opening statements, we would certainly like to request them to be submitted for the record, or if you would like to 

make a brief one, we are more than welcome to hear from you. 

Senator ROBERTS. I will do it later. 

Chairman LINCOLN. Thank you, sir. 

We would like to now welcome Undersecretary Tonsager to the 

Committee today. 

Prior to rejoining USDA, Mr. Tonsager served on the Board of 

Directors for the Farm Credit System Insurance Corporation and 

the Farm Credit Administration. In 1993, then-President Bill Clinton selected Mr. Tonsager to serve as USDA South Dakota State 

Director for Rural Development. 

Welcome back to the Committee. We are glad to have you. Mr. 

Undersecretary, your written testimony will be submitted for the 

record, and we certainly would like to ask that you keep your remarks to five minutes. So, welcome to the Committee. 

STATEMENT OF DALLAS TONSAGER, UNDERSECRETARY, U.S. 

DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT 

Mr. TONSAGER. Thank you, Madam Chairman, member Chambliss—Senator Chambliss. We appreciate this opportunity to be 

here today. 

We also want to express our appreciation for the close collaboration we have had in working together on rural development issues 

with you all in this last year-and-a-half since our beginning of 

many of us coming on board with the new Administration. 

We share a deep commitment to rural America and an understanding of its unique challenges and opportunities, and we look 

forward to a continued partnership with you to bring those opportunities to fruition. 

We are committed to the future of rural communities. Rural 

America includes some of the Nation’s most dynamic, rapidly growing areas, but the aggregate statistics tell another story. Rural 

America, on average, is older, less educated, lower income than the 

Nation as a whole, with an average per capita income of $11,000 

below the urban and suburban averages. The unemployment and 

poverty rates are higher. Nine out of ten of the Nation’s persistent 

poverty counties are rural. Assisting these communities in building 

a better future is a high priority. 

A second priority is renewable energy for environmental, economic, and national security reasons alike, we, too, wish to diversify our supply of fuel, reduce our dependence on foreign oils, reduce our carbon footprint, and develop our abundant renewable energy resources. This is an urgent national need, and because renewable energy is largely rural energy, it is also an historic opportunity for investment, jobs, and wealth creation in rural communities. 

We are committed to these objectives, and we are grateful to the 

Congress for its vision in the 2002 and 2008 Farm Bills which gave 

USDA tools to support this vital national effort. 

6 

USDA’s strategic plan published earlier this summer by Secretary Vilsack focuses squarely on these challenges. The Secretary 

has identified five pillars to support a new foundation for growth 

and opportunity in rural communities. 

First, the development of new markets to provide additional income opportunities for farmers and ranchers by promoting exports 

abroad, and supporting domestic, local, regional food systems that 

keep wealth in rural communities. 

Second, to provide new opportunities for prosperity and small 

business growth by investing in rural broadband access. 

Third, creating green jobs that cannot be exported by promoting 

the production of renewable energy in communities across the 

country. 

Stimulate economic—rural economies by promoting outdoor 

recreation like hunting, fishing, and other activities that create 

jobs, as well as conserving the national resources we cherish, and 

creating income opportunities for rural landowners by facilitating 

the creation of ecosystem markets that reward them for their taking care of the environment. 

It is a challenging agenda. In the short-term, the implementation 

of the last Farm Bill has coincided with the most severe economic 

crisis since the 1930s, and the response—the Congress provided an 

additional $4.3 billion in our budget authority to support an estimated $21 billion in investments in broadband, single family housing, community facilities, water and waste services, and business 

development. 

As of July 2, 2010, Rural Development has committed over $17.4 

billion of this total. My written testimony details the numbers. We 

are on track to fully obligate our Recovery Act dollars by September 30th. 

In the longer term, however, I am convinced that rural America 

is an entering an era of remarkable opportunity. Rural Development’s job, whether it is broadband or renewable energy or local 

food systems or a provision of a central infrastructure and community services is to ensure that rural communities continue to receive the help they need to compete and thrive. 

So, in closing, as we look forward to the 2012 Farm Bill, let me 

briefly note some key areas for further discussion. 

First, our ability under our—to provide a flexible mix of loans 

and grants to broadband applicants have been extremely important. The Farm Bill Loan Program does not have this flexibility. 

That was an issue that was discussed at length during the consideration of the last Farm Bill, and it is a question that we would 

surely like to be revisited. 

Secondly, we would like to encourage—to be eager—we would be 

eager to discuss with you options for streamlining and rationalizing 

our program delivery. Rural Development administers over 40 programs, many of them are small and overlapping. This is a complex 

issue. We understand that members often have very targeted objectives in mind in crafting program authorities, but there may well 

be significant administration efficiencies to be gained through consolidation, provided that there is no negative impact on services, 

and we are open to this discussion. 

7 

Another important initiative for the Obama Administration is regionalism. We are encouraged that the President has chosen to 

seek a pilot funding for regional initiatives in his 2011 budget, and 

we look forward to continuing this discussion as we move towards 

the 2012 Farm Bill. 

Finally, we expect the definition of rural will be as contentious 

in the next Farm Bill as it was in the last. We have, in draft, a 

report to Congress on this question, and we will submit it to you 

later this summer. 

It is easy to describe the difficulties with the existing definitions 

of rural; the challenge is to identify a different definitional scheme 

that does not create as many problems as it solves. It is a difficult 

question, as the Committee fully appreciates, and I know that we 

will have extended discussions with you as we move forward. 

These are the sensitive questions on which we work collaboratively with stakeholders and Congress before proposing significant changes. I am glad that the Committee is beginning this discussion now in order to provide time for thoughtful consideration. 

I know that you share our commitment to improving our service for 

rural America, and I welcome your thoughts, comments, and questions as we begin this discussion. 

Thank you, Madam Chairman. 

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

95 in the appendix.] 

Chairman LINCOLN. Thank you, Undersecretary Tonsager, for 

your testimony. I will just begin on my questions. 

But first, we would just like to, again, reiterate, as I mentioned 

to you earlier this morning, there is an unbelievable enthusiasm 

and excitement in rural America about the role that they have to 

ply in both lessening our dependence on foreign oil and being able 

to reach their potential in adding both to the revitalization of our 

economy, and really solving some of the challenges that we face in 

this country, and I hope that we will not waste that enthusiasm 

or excitement or potential, but really work hard to make sure that 

we make available to them an environment through their government that will allow them to really play a strong role. 

First, I would just touch on the fact that Congress has authorized two renewable fuel standards: The first focused on corn-based 

ethanol, while the second aimed to increase production of advanced 

biofuels from non-food sources. I believe we have got to move forward on advanced biofuels, and doing so will avoid our fuel needs 

competing with our food supply, which is obviously an issue. 

Unfortunately, we are falling short, far short, of meeting our advanced biofuel targets. The advanced biofuel industry faces many 

hurdles, including an inability to acquire debt to finance projects. 

With this problem in mind, we authorized the Biorefinery Loan 

Guarantee Program in the 2008 Farm Bill. I have been very disappointed that, two years later, only two loan guarantees have 

been issued under the loan guarantee program. I was hoping you 

could share with the Committee what measures you are taking to 

increase the participation in that program, and also would be interested in hearing about additional measures that you are taking 

through other Farm Bill programs to help us achieve renewable 

fuel standards. 

8 

Mr. TONSAGER. Yes—— 

Chairman LINCOLN. Those targets, particularly. 

Mr. TONSAGER. I agree with you regarding the enthusiasm. I 

think it is a very exciting time for all of us. 

I think, if I could, for—just briefly talk about the advanced 

biofuels in general, I think we are focusing on a number of fronts, 

because what we believe is the private sector will be the ones that 

build that biofuels industry. Everything we can do to build confidence in that new industry across the board will increase our opportunity to get people to invest and to lend towards the creation 

of that industry. And I think we are trying to learn from some of 

the things we learned from in the ethanol industry when that was 

successfully grown earlier in this decade and the last decade. 

As we look at the challenges we are faced with right now, there 

is a belief—there is not the level of belief in technology and some 

of the other components associated with the industry. So, we see 

our goal across the board is to build confidence and build confidence in opportunity. Part of that, of course, is the 9003 program 

and the loan guarantees associated with it. 

We have had 17 applications for the program. Of those, 10 had 

to be rejected because they did not have lenders associated with 

them. So, at this point, we are seeing a holding back, I think, on 

the part of the lending community that is significant, and I think 

it has a lot to do with the recession and the difficulties of the recession. 

So, as we move forward, our strategy is to look for the technologies, help prove those technologies, demonstrate the usableness 

of those technologies, make the case for the viability in regions 

across the country about the economics of the situation. We were 

excited to have in our door the other day the airline industry who 

has a 20-billion gallon demand for jet fuel and wants to get it from 

all green sources. 

The Department of the Navy wants to get 50 percent of their energy from green sources in the next ten years. 

So, I think the more we can project to the community, to the investors, to the lenders, to farmers, producers that this is not just 

a small opportunity, it is a very large one the more excitement we 

can get. 

So, we are disappointed, too, in the response to the 9003 program. We have taken for public comment, we are considering those 

comments, and considering adjustments to the program that could 

help us attract lenders. 

Chairman LINCOLN. Great. Well, I think confidence is built by 

certainty, and I know certainly the idea of the tax extenders that 

we are working on right now for biofuels is a critical part of making sure those investors are feeling confident of the certainly of 

where we are going to be going and what we are going to do with 

that. 

So, and I know we can make jet fuel out of chicken litter, and 

I know we have a lot of poultry litter, so—just briefly, the American Recovery and Reinvestment Act provided Environmental Protection Agency the authority to use a significant portion of its funding for water projects in the form of loan forgiveness without regard to income or population of the area to be served by those 

9 

projects. This authority was not provided to the rural development 

programs. USDA’s current system requires a community to be 

within 81 percent to 99 percent of the state’s non-metropolitan median income to qualify for the immediate interest rate or to be able 

to receive that grant money. 

I am certainly not proposing a widespread change to Rural Development water and wastewater programs, but it does seem to me 

that this structure we have today creates barriers for some real 

rural communities. I know I have seen it in my state, and I am 

sure others have, too. They are having a very difficult time in the 

debt servicing large loan payments without any grant to reduce 

that cost, and just would certainly ask that, if you think that the 

Committee should provide you with additional statutory authority 

to be able to serve these communities like those in my state that 

really do need some assistance but are not being able to find it because of that lack of authority. 

Mr. TONSAGER. We would be happy to explore it with you, of 

course. We have, in spite of the RF funds, we still have a $3 billion 

backlog on funding for water and waste systems that of course we 

are wanting to address. 

So, I think this subject, as well as the rural definition subjects, 

are going to merit a lot of our discussion time on how we serve 

some of those communities that sit on the edge, so to speak, of our 

program service area. So, we would be happy to discuss that with 

you. We would be interested in those authorities, but of course we 

would want to strike the balance necessary to make sure that the 

communities—low-income—have their opportunities to get the 

grant level they need for affordability. 

Chairman LINCOLN. That is great. Well, I will look forward to 

that discussion and certainly want to seek it out in a balanced way. 

I just had a little bit of concern that EPA was having that authority and you were not. 

Mr. TONSAGER. I appreciate that. 

Chairman LINCOLN. So, we want to make sure we look to it. 

Thank you. 

Senator CHAMBLISS. 

Senator CHAMBLISS. Thanks, Madam Chairman. 

Mr. Undersecretary, I was visiting with one of my rural electric 

co-ops not too long ago, and the comment was made by the manager of that co-op that they are in a fast growing area of our state 

and they are a participant with some other co-ops in the construction a new coal-fired power generating plant that was having some 

problems getting off the ground because of environmental challenges and whatnot but now, thank goodness, they are underway. 

But his comment that was important to me was that, if we do not 

get this plant up and running, then we have got a problem and we 

are going to be limited in the short term, before the new nuclear 

facilities that are under construction that will not be coming on 

line for several years—and if we do not get this coal-fired plant 

going, then we are not going to be able to serve our community. 

We are simply going to have to turn— particularly commercial— 

customers away. So, that is beginning to be more and more of a 

concern, I think, around the country. 

10 

The 2008 Farm Bill directed the Secretary to conduct a study on 

electric power generation needs in rural America, and that study 

explains that the demand for new generation capacity in rural 

areas is increasing just as it is in rural areas, and that rural cooperatives will need to double generation capacity by 2020 to meet 

the projected growth. 

How do you envision this demand being met to ensure that rural 

America continues to have a reliable source of electric power, and 

can you describe how you expect the RUS Loan Program to function in helping to meet this demand, given the current limitations 

on that program? 

Mr. TONSAGER. We, of course, are anxious to make sure, in our 

work, that every time that somebody throws a light switch on, the 

lights come on, and I think that is a measurement for all of us. 

We are also anxious in our work to make sure affordability continues to exist for everybody who uses rural electric power. We 

want to explore all areas. 

We do have limitations on the things we can do at this point. We 

have been working closely with the National Rural Electric System 

and appreciate very much their skill sets relative to this. 

I think the nearest-term subject is efficiencies, and I know I have 

had several discussions on this subject, and there are opportunities 

within our programs regarding helping with the efficiencies, and 

the National Rural Electric System has done a fabulous job in the 

past working with their customers to make that happen. 

We want to use our resources, the authorities given to us by Congress, to the fullest extent we possibly can to make sure there is 

adequate generation capacity. The targets regarding environmental 

and carbon discharge, of course, are part of the dialogue we have 

to have going forward. 

Renewable energies, which we are doing quite—a little of—are 

proven technologies that are funded through the RUS Program. So, 

we typically work with wind, solar, and some of the technologies 

that are clearly proven and they are the only ones we can finance 

through the direct loan program, and we hope to build on those as 

part of the supply chain for rural America. 

Senator CHAMBLISS. I know you are working next year’s budget, 

and I certainly hope that we are going to see rural America given 

its due consideration from the standpoint of electric generation and 

distribution. 

The American Recovery and Reinvestment Act provided over $7 

billion to help bring broadband to parts of the country, rural and 

otherwise, that are still underserved. Once the Recovery Act money 

is obligated, how do you plan to ensure that our U.S. broadband 

loans made through the Farm Bill are not overlapping with stimulus awards, and when do you intend to fulfill your obligation to 

implement the Farm Bill Program? 

Mr. TONSAGER. The—we have a network of employees that directly go out and check out the applications provided to us on the 

broadband stimulus package. They are to test and look for the 

overlap potential in each geographic area where we have proposed 

projects. We believe that will help minimize the overlap risks that 

we may have in those areas. 

11 

We anticipate on the broadband Farm Bill Program having rules 

out by this fall, and that is the goal that we have on that area. We 

want to keep moving forward and provide the services that the 

broadband program has in the Farm Bill, and continue to seek applicants that might find that program useful. 

During the course of the last 18 months, of course, people have 

focused their attention on the ARRA package broadband program 

that has been—has lots of grant in it. 

Senator CHAMBLISS. We have a constant problem of competition 

between those broadband companies that are funded by RUS and 

other private sector companies that are not, that do not have access, and what kind of focus are you giving to that particular issue 

as we move forward? 

Mr. TONSAGER. Well, again, we are seeking to verify the applicants’ claims regarding the availability under the requirements of 

the Act to make sure that their overlap is minimized. And since we 

do a field operation of Rural Electric employees, particularly, and 

RD staff, we are trying to verify the claims before approving any 

particular grant that it does meet the requirements. 

Senator CHAMBLISS. Well, as you go through that, you are going 

to have a lot of applicants that, frankly, meet the requirements, 

but you have a rural county, a metro county, a rural county, and 

in order to get from rural county to the other a provider goes 

through that more urbanized county, and that is where the conflict 

comes in, and you need to get real focused to that and direct some 

attention on how we are going to deal with that. We need to make 

sure that we get the broadband provided to truly rural areas, but 

when it has a negative impact on the private sector and their capital investment, then it becomes a major problem. So, I urge you 

to take a close look at that as we move ahead. 

Mr. TONSAGER. Yes, sir. 

Senator CHAMBLISS. Thank you, Madam Chairman. 

Chairman LINCOLN. Thank you, Senator Chambliss. 

Senator THUNE. 

Senator THUNE. Thank you, Madam Chair. 

And I want to thank Senator Chambliss, too, for putting together 

this hearing and focusing on the 2012 Farm Bill. The last Farm 

Bill, I think, was really good in terms of looking at energy issues, 

and the energy title in there has helped us advance in a lot of respects. 

And I appreciate the discussion about the loan guarantee program, because that is something that is critically important in my 

state, too. 

And I would say to Undersecretary Tonsager that I have heard 

from a lot of cellulosic ethanol companies that one of the difficulties 

in participating in the federal loan guarantee program, either at 

USDA or Department of Energy is because many lenders require 

the applicant to have this off-take agreement which is a contract 

to sell fuel in the future. 

And I guess my question would be, how can we help potential applicants overcome that particular barrier to participation in the 

loan guarantee program. 

Mr. TONSAGER. The off-take agreements, of course, have proven 

themselves generally in the ethanol industry in making sure that 

12 

the credibility—or the credit became available for the creation of 

the projects. I think we do need to look at the term of the off-take 

agreements, because quite often we are looking at a very long term 

for the off-take agreements, and consider that. 

It is our hope that, as we continue to see interest by parties such 

as the airline industry, that those longer-term agreements could 

potentially be provided. 

I do think we need to look at the market part of the ethanol industry, as I am reminded quite often, if we do not grow the opportunity for consumers to access biofuels, we are going to be very limited in what we can do going forward in the industry. So, I think 

part of the off-take agreement discussion would be, as the market 

side, and making sure that access can exist where we can substantially grow the industry, will give a chance for those off-take agreements to be possible. 

Senator THUNE. And which leads me to my next question, but do 

you believe that the EPA, if the EPA were to approve E15 that 

lenders would be more likely to participate in the program to provide financing to some of these cellulosic ethanol plants? 

Mr. TONSAGER. I would hope so. I think it would be a general 

sense of growth has to be provided. They will look for trends, having regulated the farm credit folks and being involved with other 

lenders, they are going to look for that sense of growth that exists 

in being a decision that would enlarge the percentage of Blend is 

going to be important, but also the mechanical part of making sure 

we can offer that to consumers. 

Senator THUNE. From your perspective, what impact is the E10 

Blend having on the renewable fuel industry and in agriculture in 

general? I mean, how important is it that we get to E15 and get 

there soon? 

Mr. TONSAGER. I think it is very important that we grow that 

market, and I think that mix, that blend mix, is going to be critical 

to that, yes. 

Senator THUNE. As you know, the EPA is delaying that decision—I mentioned this to Secretary Vilsack when he was in a couple of weeks back, and what is USDA’s role in that decision and 

how actively are you all advocating for getting the higher blends 

approved and trying to bring EPA around to what many of us 

agree is the right conclusion with regard to higher blends? 

Mr. TONSAGER. Certainly, the Secretary has been one of the 

prime advocates, and I agree with him in that advocacy. 

Senator THUNE. Do you believe that our federal forest lands have 

the potential to provide a source of biomass for energy production 

in the U.S.? 

Mr. TONSAGER. I do. I think there is opportunity and I hope that 

there becomes flexibility available for us in using particularly the 

waste material associated in the forest lands. 

We are—we do have projects, particularly one project, that is 

looking at wood base—or is developing for wood base to ethanol 

production, and I think there is also an opportunity in electrical 

generation in some areas of the country where we can have that 

capacity for generation to be used for that material. 

Senator THUNE. Do you believe that the definition of renewable 

biomass in the 2008 Farm Bill strikes the right balance between 

13 

meeting our energy needs and also ensuring that we are managing 

our forests in a responsible manner? 

Mr. TONSAGER. Yes. 

Senator THUNE. Does that existing definition of biomass—would 

it be helpful, too, if that were applied to the renewable fuel standard? 

Mr. TONSAGER. I am sorry, I have not contemplated that, exactly, 

but it would seem to make sense to me, yes. 

Senator THUNE. Good. We have had a concern for some time that 

the definition be consistent in federal law so that some of these 

projects that might be able to use biomass that is located in our 

federal lands would be useful in terms of generating biofuels in this 

country. 

And there has been an, as you know, I think, ongoing debate 

about that up here, various Committees of jurisdiction warring 

with each other about how best to define that. We thought the 

Farm Bill struck the balance and would like to see that applied 

more generally and obviously applied to the RFS. 

Let me ask you one last question. There has been a lot of interest 

in the Biomass Crop Assistance Program or the BCAP program. 

Can you provide the Committee a general sense of what types of 

projects have been approved to participate in BCAP, how many of 

those are related to transportation fuel, and what would be the 

budget implications if the program were more narrowly tailored to 

biofuels? 

Mr. TONSAGER. I am sorry; it is not my program area—— 

Senator THUNE. I understand that. I know it is an FSA program, 

but—— 

MR. Tonsager. From our perspective, I would just generally say 

we are interested in every opportunity to get the biomass—get biomass as an energy source off the ground, and the BCAP program 

is a real opportunity to assist with that, but unfortunately I do not 

have enough information to give you a good answer. We could certainly, as part of our response to you all, get some information from 

the FSA. 

Senator THUNE. Okay. I appreciate that. Thank you. 

Thank you, Madam Chair. 

Chairman LINCOLN. Thank you, Senator Thune. 

Senator ROBERTS. 

Senator ROBERTS. Thank you, Madam Chairman, and the Ranking Member Chambliss, who just returned, for calling this hearing 

to focus on our rural communities. And I would say anybody interested in rural development, including the Undersecretary, should 

be very thankful that we have your leadership, along with Saxby. 

You not only championed the production of agriculture, all of agriculture, but also rural development, and I thank you for that. 

I want to thank especially the witnesses. Dallas, thank you very 

much for coming up. I know you are a busy man. 

And General Clark, who is over there, holding up the bookcase, 

and Glenn English, who is protecting our flank over here in the audience. 

General Clark, also in the Armed Service and Intelligence, I was 

very privileged to meet with him, work with him, when he was the 

14 

SAC here of Europe and protecting our national security in fine 

fashion with forceful leadership. 

Thank you, sir. 

And Glenn, I am sorry you left the Congress. We had a lot of 

English-Roberts amendments in the Farm Bills at that time that 

were past. Then you left before we could have any Roberts-English 

amendments. But anyway, thank you for being here. 

Now, with all of that, I hope that does not count against me. 

Before I ask my question of the Undersecretary, I just want to 

spend a moment painting a picture of the challenges that we face 

in Kansas, and that many of our rural communities face, and it is 

along the lines of the excellent report and summary that the Chairman did in regards to Arkansas. 

I might just say, starting off, that the best rural development 

program we have—and this is a quote from former Congressman 

English on the floor of the House at one time— he said, the best 

rural development program we can have is farm income, and I 

think that is something that we ought to always remember. 

But at any rate, of candidates, 627 cities, only a half a dozen, 

half a dozen, six, have a population of 50,000 or more residents, 

and less than twenty reach the 20,000 mark. That means 600 candidate cities and towns meet some definition of rural with regard 

to federal programs. So, when you say rural, obviously you are 

talking about candidates. 

I think I have been to all of these communities for listening 

tours. We not only go to the grassroots, we go to the grass weeds, 

and we have enjoyed some of the best coffee, biscuits, gravy, and 

chicken-fried steak that you cannot get in this town that you will 

ever taste. 

I appropriate the Undersecretary’s testimony, as he points out 

our rural Americans are struggling. While urban areas fret over opportunities for growth, rural communities desperately seek relief 

from out-migration of our most precious resource, and that is our 

young people, and the loss of businesses. 

And I also appreciate the Undersecretary’s comments about rural 

communities working together. Your testimony states, ‘‘A holistic 

multi-community and multi-county approach will help address 

these challenges.’’ 

I am going to go a little bit further, and Madam Chair, I think 

we need a multi-agency coordination, if that has to be an acronym, 

it would be a MAC, and we need a big MAC—and I do not know 

if we need to have an acronym for that; everything else does, so 

we might as well do that. 

But multi-agency coordination in regards to rural development 

and the preservation of our rural communities, Mr. Undersecretary, over the course of the last year, we have had every community, every grower organization, every farm organization, anybody 

interested in lending, anybody interested in rural development 

comes through my door, and I know that is the case with every 

member here, and they always bring forward the same concern. 

They are very positive in regards to rural development programs, 

but they are very concerned if not very frustrated over burdensome 

and over-reaching government regulations. 

15 

Senator Chambliss touched on this in regards to the clean energy 

coal plant they are trying to get started down in Georgia. Your testimony points out that 95 percent of rural income is earned off the 

farm, yet recently proposed government actions threaten, in my 

view, the viability of these off-farm opportunities. 

Now, let me just name a few: non-science based standards over 

particulate matter or what some call rural fugitive dust. Rural fugitive dust is back. In the 1970s— actually, in the 1980s, when I 

was a member—I finally tracked down the person in charge of 

rural fugitive dust. She was from Massachusetts—where else?— 

and so, at any rate, I finally, out of exasperation, said, what do you 

want us to do? She said, well, you have all these gravel roads. Why 

don’t you get water trucks to go out at 10:00 in the morning and 

2:00 in the afternoon and spray the gravel roads? I indicated I was 

very favorable to this program if she would just supply the trucks 

and the water. But it is back: spray drift, atropine, EPA’s potential 

carbon rural— KFO, the definition of navigable waters—here we 

go, again— playa lakes and very small farm ponds in Nebraska, 

Kansas, and—I mean, these are ponds where no self-respecting 

duck would ever land, and yet they are navigable waters; that is 

just ridiculous. And then we have levy certifications and I could go 

on and on and on and on. 

So, Mr. Undersecretary, your agency in charge with helping improve the economy and quality of life in rural America, with so 

many rural communities concerned that your sister agency’s actions—and I am talking about the Department of Labor and EPA 

primarily—also the White House, for that matter, result in the direct opposite of your goal. There are cross-purposes there, and that 

does not make much sense to me. 

How does the Rural Development Agency work in a multi-agency 

fashion to address these concerns? You could sit down with Lise 

over at Labor at Carol at the White House and have a cup of coffee. 

I know the Chairman would love to come, the Ranking Member 

would love to come, I would love to come, if you let me in the door. 

And we are at cross-purposes here. Is there some kind of a meeting 

process that we could have a multi-agency coordination where you 

are for rural development over here but you are not stopping it 

over here with all these regulations that do not take into account 

a cost-benefit yardstick? There is a benefit yardstick, I know that; 

there is an agenda yardstick, I know that, but the cost part of it 

is the thing that really worries me. 

Now, please forgive me for my rant. If you would like to comment, have at it. 

Mr. TONSAGER. I guess the only thing I would say is the position 

I want to do with my agency is that it is our job at all times to 

advocate for rural citizens and do the best we can to put projects 

together for them. We want to be a problem-solving agency and address every problem we can and try and deal with it. 

Now, that is maybe a simplistic response to your very complex 

challenges you described, but I think for our agency, most of us 

come from the rural development community. We have worked in 

non-profits, we have worked in lending institutions, we want to— 

and every day—— 

16 

Senator ROBERTS. Yes, but what about the other agencies? I am 

talking about the Department of Labor and EPA with some of 

these regulations coming down that drive our farmers and ranchers 

and farm organizations about half nuts, not to mention people on 

the county commissions and everything else? 

Mr. TONSAGER. We do have—— 

Senator ROBERTS. Are you meeting with them at all or—— 

Mr. TONSAGER. Yes. 

Senator ROBERTS. Yes. 

Mr. TONSAGER. We do meet with them. We do advocate for rural 

development, and we do look—typically, we are looking at programs they have that we think can be helpful to the mission. And 

HUD—others have resources that are available, so we try to tie together with those in a way that helps us move forward. 

Senator ROBERTS. Well, I thank you for that, and just say that 

I know the Chairman and the Ranking Member, all of us here, will 

back you up in any kind of forceful leadership that you want, anywhere that you think you can have better coordination and maybe 

say, whoa, on some of this stuff so that we can stop and say, maybe 

we can do this another way, but so many things just pop out of the 

woodwork it does not even come in the Federal Register. All of a 

sudden, they wake up one morning and they have another mandate 

or another regulation to deal with. 

Thank you for mentioning the President’s initiative on exports. 

I hope, in his meetings with David Cameron, that that really comes 

to fruition. I would only remind everybody here that we have a Colombian, South Korea, and Panama trade agreement that had been 

languishing for several years. If we want to have an initiative, that 

would be a darn good place to start. 

Thank you, Madam Chairman. 

Chairman LINCOLN. Thank you, Senator Roberts. And as usual, 

I find myself agreeing with most everything you have said. 

Senator NELSON. Senator NELSON. Thank you, Madam Chair. 

And I would like to associate myself with 98 percent of what Senator Roberts said. 

Senator ROBERTS. By the way, how are things in the Big Ten? 

[Laughter.] 

Senator NELSON. Listen, you have never gotten over the—— 

Chairman LINCOLN. They are terrific. 

Senator NELSON. You have never gotten over the Big Eight, so 

what is this deal about the Big Twelve—Big Six—— 

Senator ROBERTS. I never got over the Big Six, but never mind. 

But I mean, are things better in the Big Ten? I know they were 

interested in Nebraska culture, and I just wondered how you incorporated that culture—— 

[Laughter.] 

Senator NELSON. Our culture is very close to Michigan’s culture. 

[Laughter.] 

Senator ROBERTS. I see. 

Senator NELSON. They are big in agriculture. 

Chairman LINCOLN. That is right. 

Senator NELSON. What do you have? No, I’m just kidding—— 

[Laughter.] 

17 

Senator ROBERTS. Are you still going to speak to us in Iowa and 

Kansas and Kansas State? 

Senator NELSON. Well, Iowa is in the Big Ten. I am sorry 

about—— 

Senator ROBERTS. Iowa State, pardon me. 

Senator NELSON. Iowa State. Well, sure, we will still speak—— 

Senator ROBERTS. What you call the little sisters of the poor. Yes. 

Senator NELSON. I have never really made any disparaging comments about Iowa—— 

[Laughter.] 

Senator NELSON. It is Kansas—— 

Senator ROBERTS. In public conversation, that is true. Private, I 

do not know. 

Senator NELSON. Well, first of all, Mr. Undersecretary, I am 

pleased to see in your opening remarks that you made mention of 

the Rural Micro-Enterprise Assistance Program. As you know, I 

worked with others to get that into the 2008 Farm Bill, with the 

assistance of Senator Lincoln and the support of Senator Stabenow. 

But programs like RMAP are crucial to rural America and small 

businesses which make up 90 percent of all rural business, as more 

than one million rural businesses have 20 or fewer employees. And 

small firms in the rural areas need capital to finance startup costs 

as well as expansion. The continued success of these entrepreneurs 

is essential to ensuring that rural communities survive. And I 

know that you share my frustration and the frustration of others 

around the table who—and how long it has taken to get the program implemented, and I appreciate the time and energy that you 

have personally dedicated towards that end, and I am glad to read 

that you anticipate announcing the initial awards for loans, grants, 

and technical assistance later this summer. 

But despite the positive steps, I still do have some concerns 

about the Department’s interim rule to implement RMAP, which I 

raised in a letter to Secretary Vilsack on June 22nd of this year. 

I am sure that has been shared with you, yes. 

I believe that the interim final rule contains a number of requirements and limitations that are nowhere to be found in the authorizing statute which, taken together, could increase the cost of the 

program to end users, and would limit the availability of RMAP to 

smaller organizations, especially the interim final rule’s higher interest rates, lower grant levels, and unauthorized limitations and 

matching requirements. 

In the interest of time, I am going to skip some of the specifics 

and submit my letter that I sent to Secretary Vilsack for the 

record. But I would like to know if the Department is addressing 

the concerns that I have raised in implementing the final rule, formulating the final rule. Do you anticipate any challenges in resolving the issues with higher interest rates, lower grant levels, and 

unauthorized limitations and matching requirements? Do you believe it will have an impact on those who will be awarded by RMAP 

later this summer? 

And I guess maybe the ultimate question is, when can we anticipate the final rule being published? 

Mr. TONSAGER. Of course, we are in the comment period and we 

have received—or excuse me, we have closed the comment period, 

18 

I believe, and received significant comment from many parties, and 

yes, we will be addressing several of those comments that have 

been provided to us in looking for ways to make the program work 

as well as possible. 

The date, I am not sure we have a timeframe on the exact publication date of the rule, so I am sorry I cannot be more concise—— 

Senator NELSON. Could we anticipate before the end of the summer? 

Mr. TONSAGER. Do you have any idea? 

Senator NELSON. Before the end of autumn? Before the end of 

winter? 

Mr. TONSAGER. Before the end of the calendar year. 

Senator NELSON. Before the end of the year. Well, I appreciate 

you working on it, and taking into consideration what we have 

raised, but it is so frustrating to enact laws and have the bureaucracy continue to take a longer period of time than I think any of 

us would have ever anticipated. I know when I was Governor we 

got the legislature to enact similar legislation in Nebraska and I 

know it did not take anywhere near as long to get it done then, 

back in those days, with the administration. 

And I know people have seen my frustration with alphabet agencies. In the kindest way possible, I would like to say this: We have 

to make sure that the legislation is followed more to the letter than 

to the like of an agency. While I am not naive about the Executive 

Branch, having run an executive branch, I am very concerned when 

the alphabet agencies know better and know best and take that approach. No agency is the fourth branch of government, and consequently, adding these requirements, which were never intended 

in the legislation, is more than implementation. To me, it is less 

in the field of regulating than quasi-legislating. So, I hope that you 

will keep that in mind and not make this legislation that was 

passed in good faith something that begins to work against the 

very groups that we are trying to support. 

I want to associate myself with the remarks of my colleague from 

Kansas when he said about having a coordinating agency as it relates to some of the environmental and the other limiting requirements that come along to help us. But in this case, there are no 

outside entities that we have to worry about, it is on the inside. 

So, in the kindest way possible, please do not try to improve this 

legislation by adding all kinds of requirements that take away from 

the intent. And I hope that the bureaucracy does not develop what 

I consider the ‘‘we be’’ attitude: we be here when you come, we be 

here when you go. So, please, please, in the kindest way possible, 

find a way to move this forward and not change it dramatically 

from what we intended to have it be. 

Mr. TONSAGER. Thank you, sir. 

Senator LINCOLN. Thank you, Senator Nelson. 

Senator STABENOW. 

Senator STABENOW. Thank you, Madam Chair. 

And first, thank you for holding the hearings, and we look forward to your leadership as we move forward into putting together 

the next Farm Bill. So, we have many challenges and many issues 

that we all share in common. I want to associate myself with Senator Thune’s comments regarding biomass. I realize that is not all 

19 

under your jurisdiction, but it is very, very important that we have 

definitions—I know the Chair shares that, as well—that we have 

definitions that allow us to move forward and benefit from biomass 

energy opportunities. 

I know, as well, that the Chair has spoken about the Biorefinery 

Assistance Program and the loan guarantee program. I want to expand on that by asking you some questions about a demonstration 

grant program, which was also put into the Farm Bills, and many 

of our biofuel companies believe that the demonstration grants 

would have a significant impact on the loan guarantee program 

itself, and on the economy as a whole as we pursue energy and oil 

independence, which we realize is so critical. 

The demonstration grants would help startup companies, as well 

as maturing biofuels companies, get the funding they need to prove 

their technologies beyond the pilot scale, and then help them get 

ready for commercial scale opportunities through the loan guarantee program. 

So, it is my understanding that the demonstration grant program 

has not been funded yet, and there have been concerns about the 

number of loan guarantees. And so, I am wondering if you would 

see the need for the demonstration grants, and how funding the 

demonstration grants might ultimately help the loan guarantee 

program and increase the number of applicants. 

Mr. TONSAGER. We do have a clear understanding as we have 

talked to the numerous groups that have developed projects, and 

I guess the term is ‘‘Valley of Death,’’ quite often, where they get 

to the point where they need some more money to continue to move 

forward on projects where we are limited currently to financing 

proven technologies that are ready to commercialize. So, we do 

have a gap in the period involved. 

The funds we have, significant of course, but the scale of these 

plants are very large in a capital investment factor. So, we have 

thus far focused on the loan guarantee program for the financing 

part of this. Many of these plants could be hundreds of millions of 

dollars that we are dealing with in the capital costs and the financing side. 

We do believe that the grant program has merit. I mean, it certainly—if we are to address that gap, there is some sense to that. 

So, it is a challenge for us on the resources in trying to use them 

to the extent we possibly can. 

Senator STABENOW. But it is my understanding there have only 

been a few loan guarantees; is that correct? 

Mr. TONSAGER. Yes, we have received 17 applications for loan 

guarantees; 10 of those, however, did not have lenders, which is the 

critical element in them. So, there were only 7 potential ones. We 

have done 2 and we have some more in the works. 

Senator STABENOW. Okay. Let me talk about energy for a second, 

because the Rural Energy for America Program, the REAP program, I think is a very important step in the Farm Bill to focus 

on energy efficiency with farms and rural businesses, and I understand there have been some delays in issuing the funding notices, 

which can sometimes get in the way of producers’ and small businesses’ ability to apply for funding, and I know in Michigan we 

have been working hard to get the word out so that people would 

20 

be aware of deadlines and so on. But the feedback that I am getting is that deadlines are too short for some of the applicants who 

need lead time to prepare applications, and I am wondering, looking ahead to next year, what we can do to accelerate REAP’s funding cycle and give producers more time to be able to plan and apply 

for the funding. 

Mr. TONSAGER. There are challenges with timeframes, and there 

have been challenges with the implementation of the program. We 

believe strongly in the program; it certainly is an important tool, 

and we are pressing the staff to move forward as quickly as we can 

to get in place the final rules as well as to get a funding cycle that 

works for everybody. 

Well, I would just encourage you to continue to press on that, because when we look at our national goals and needs in energy efficiency when we look at what we can do to support farmers, to support small businesses in rural areas, this is a very positive program 

put in place, and we need to make sure that it is working as it 

should and providing the kind of timelines and assistance that will 

allow people to really benefit from this. 

Mr. TONSAGER. I would agree. Thank you. 

Senator STABENOW. Thank you. 

Chairman LINCOLN. Senator Gillibrand. 

Senator GILLIBRAND. Thank you, Madam Chairwoman, for 

hosting this hearing. I really appreciate it. It is a very important 

issue for the State of New York, and I am very grateful for your 

leadership. 

Thank you, Mr. Undersecretary, for your testimony. 

What I would like to focus a little bit of time on is the biomass 

definition contained in the Energy Investment and Security Act of 

2007 and the amount of confusion that it is creating because it does 

not really comport with the definition in the 2008 Farm Bill, and 

it is also creating— there is also confusion being created with regard to the EPA’s definitions, as well. 

And what I have heard from businesses all across New York is 

that there is real opportunity in my state to make the stewardship 

of our forests a very important component of energy independence, 

and because of these poorly thought out definitions, we are unable 

to really capture the full benefit of those investments. 

I really want to associate my comments with some of those of 

Senator Thune, who also talked a little bit about this issue. So, I 

would like your thoughts on how we can clarify these definitions 

to ensure that we are getting the full benefit. I mean, some reports 

say that up to 90 percent of private forest lands in the U.S. are 

being foreclosed by these current definitions and we have national 

forests in our state, we have protected lands, and all of this forest 

needs to be stewarded, and we really need to make sure that we 

clear out dead wood. We need to make sure that wood that is not 

used in papermaking and other byproducts can also be used. There 

are so many opportunities for that woody biomass to be part of energy independence agenda. 

Mr. TONSAGER. I would just say that we certainly are looking for 

the flexibility components. We want to go there—we believe, as you 

do, that there is opportunity, not just with bioenergy but with all 

kinds of things and we, in every circumstances, seek highest and 

21 

best use. If there is a highest and best use for the product, we want 

to go there to make sure the opportunity is the highest and best, 

and biofuels is certainly one of those. 

My skill set on the definitional issues is limited, other than to 

say that I do believe in seeking the flexibility. We can be more responsive by going back and giving some written clarification on the 

subject, I think would be the best—— 

Senator GILLIBRAND. Well, I would be grateful to have the opportunity to work with you on that, because we really want to make 

sure this definition really does provide the opportunity for rural 

America to take advantage of these biomass opportunities that are 

real and really can make a huge difference in creating energy independence in this country. 

And the second issue I want to address is, I do not know if the 

USDA is working with the Department of Energy, but I would urge 

you to do so, particularly because we have so many opportunities 

for energy production in New York State, but there is no way to 

be ready for backwards energy. So, for example, if we have methane digesters at dairy farms in New York, there is very little opportunity to put that energy back into the grid, and that is an opportunity that would make a revenue stream for our farmers, but it 

would also make our country far more energy independent. And so, 

what we need is a much more focused, collaborative effort between 

USDA and rural America and the Department of Energy to work 

on this electric grid and to really make those investments, and I 

would like your thoughts on that. 

Mr. TONSAGER. I have the opportunity to serve as Co-Chair with 

Steven Koonin and the Undersecretary at the Department of Energy to co-chair the National Biomass Research and Development 

Board. We are meeting quarterly and we are developing and agenda to coordinate efforts on that subject and others, and I agree 

with, relative to the rural electric grid and how we continue to develop access for all kinds of sources relative to that. 

So, yes, we are working with DOE. We are continuing to develop 

relationship with our—and we have a very proactive Biomass Research and Development Board, which is government-wide, includes several agencies. 

Senator GILLIBRAND. Thank you, and thank you for your testimony. 

Mr. TONSAGER. Thank you. 

Senator GILLIBRAND. Thank you, Madam Chairman. 

Chairman LINCOLN. Thank you, Senator Gillibrand. 

Senator JOHANNS. 

Senator JOHANNS. Thank you, Madam Chairman. 

Thank you for being here. 

Let me, if I might, focus on the baseline, if I could, relative to 

the Farm Bill, and maybe I better lay the focus on that just simply 

because there is a ways to go and a baseline, I am sure, is being 

developed, but as I look at the next Farm Bill and think about the 

funding that will be available, it seems to me that the baseline is 

going to be very, very constricted. In fact, the budget baseline for 

USDA, if I have my numbers right—for USDA energy program— 

suggests a decline from $1.9 billion for this Farm Bill to $500 million in the next Farm Bill. 

22 

On the House side, Chairman Peterson has indicated that he 

wants to at least work in an effort to have a no new funding baseline. In other words, I think what he is thinking about is corralling 

the baseline, figuring out what that is, and living within that baseline. 

So, how do you have a biomass program, or any program relating 

to renewable energy, with a baseline that is going to be—at least 

projected to be a third of what it is today? 

Mr. TONSAGER. I do not have the baseline information, so I cannot debate the relative amount of the baseline amount or discuss, 

excuse me, with you on that matter. One of the things that I am 

attempting to do as we go forward is to look how we work with capital markets in general to try and bring assurance to them, because 

we recognize that resources are going to be limited, and we recognize that bioenergy will be developed by the private sector. So, we 

are going to look for every opportunity we can as your program— 

at our programs, and look at how capital markets function and find 

the best way we possibly can to help access those markets with the 

resources that we are given with them when the time comes. 

And so, but yes, you are right, it is going to be a very narrow 

amount of resources given to us. 

Senator JOHANNS. Yes. Well, if you are trying to send a signal 

to capital markets that the world is going to be okay and their dollars should be invested here versus invested in some other area of 

the economy, would you not want to give them the certainty, then, 

of E15, for example? And now, we have had two delays on that. 

So, how do you send a signal to the capital markets that gives 

them more security? 

Mr. TONSAGER. We need to, on every front, look to try and build 

confidence in the potential of the market. 

We had the airline industry in this past week who talked 

about—they need 20 billion gallons of jet fuel, and they want to get 

that from biological sources in the future. 

The Department of the Navy is committed to getting to 50 percent usage of biologically related sources in the future. I believe we 

have to look closely at the access of the biofuels into the markets 

available directly to consumers, be it blender pumps, infrastructure, and so forth. We have to show that there is a growing effort 

to expand that market, to try and help build the belief with the investors and lenders that there is opportunity. 

And so, I think we want to try and address every front that we 

can that sends a signal to the private sector that this is happening, 

that it is important, that there is economic opportunity. We will 

look at modeling different regions of the country. We are taking a 

regional approach on the biomass sources, because we think that 

some predominate and just look like the best opportunity in some 

regions, and we are going to continue to analyze to see if we can 

make the case with the private sector that that is the case. 

Senator JOHANNS. Let me, if I might, focus on the Biomass Crop 

Assistance Program. It was added to the last Farm Bill. I think the 

CBO score for the entire program was $70 million over five years. 

USDA—again, if I have my numbers correctly—has already spent 

$500 million to implement it. 

23 

Tell us what is going on with that program, and why $70 million 

all of a sudden has morphed into $500 million to try to implement 

it. 

Mr. TONSAGER. I cannot address it well. It is not part of my particular mission. I am aware of the program, understand how it is 

being used, and so forth, but I do not have information relative to 

the cost. If you like, we can certainly, as part of our response to 

the Committee, address that to you, but I cannot knowledgeably 

speak to it today. 

Senator JOHANNS. That would be appreciated. 

Mr. TONSAGER. Yes, sir. 

Senator JOHANNS. Thank you. 

Thank you, Madam Chairman. 

Chairman LINCOLN. Thank you. And thank you, Undersecretary 

Tonsager. We appreciate your hard work and dedication and are 

grateful to you for that, and I do think that, under rural development, we hold the key of really jumpstarting the issue of renewable 

energies and getting our Nation off of our dependence on foreign 

oil. 

So, we look forward to working with you. 

Mr. TONSAGER. Thank you, ma’am, and thank you, Committee. 

We appreciate the chance to be here. 

Chairman LINCOLN. Absolutely. We look forward to working with 

you. 

I would like to ask the witnesses on the second panel to come forward and be seated. 

The panel includes General Wesley Clark, Co-Chair of Growth 

Energy, Dave Tenny, President of the National Association of Forest Owners, and Eric Zuber, co-owner of Zuber Farms in New York. 

Gentlemen, your written testimonies will be submitted for the 

record, so we definitely want to ask that you keep your remarks 

to five minutes. 

In the interest of time, I am going to go ahead and introduce our 

witnesses as they are taking their seats. 

It is my pleasure to introduce our next witnesses. A fellow Arkansan and a good friend of mine, General Wesley Clark. General 

Clark serves as Co-Chairman for Growth Energy, which is a coalition that represents a broad range of energy producers. General 

Clark graduated first in his class at West Point and retired as a 

four-star general after 38 years in the U.S. Army. 

General Clark commanded at the battalion, brigade, and division 

levels, and served in a number of significant staff positions. He finished his career as NATO Commander and Supreme Allied Commander in Europe where he led NATO forces to victory in Operation Allied Force. 

At the conclusion—General Clark, I think—do we want to go 

ahead—we will let you make your opening statements, and then I 

will introduce the others. 

STATEMENT OF GENERAL WESLEY CLARK, CO-CHAIR, 

GROWTH ENERGY 

General CLARK. Madam Chair and members of the Committee, 

thank you very much for—[off microphone]—and I did not come 

24 

from a farm sate—from a farm family, and I did not understand, 

really, the Midwest farming culture. 

I signed onto this effort to represent Growth Energy not only 

though because I believe in America’s agricultural community and 

rural development, but because energy independence is just an absolutely critical issue for America at this time. 

Now, we have been talking about it for 35 years since I was a Captain teaching economics at West Point, but with oil at $75 a 

barrel, as you mentioned, it is about—it is over $300 billion a year 

leaking out of this economy; it is a huge amount of money. It is 

more than we are paying for Iraq and Afghanistan. It is almost as 

much as we are paying in interest on our national debt. If we could 

keep that money in the American economy, we would be creating 

jobs and building education and homes and communities with that 

money, and instead, it is flowing out of the country, and particularly at a time when we have a high unemployment rate and we 

are desperate for job creation, I think we have to take urgent action on this issue of energy independence. 

And the truth is that we are not going to solve it with a hydrogen economy in the near-term. As much as I love electric automobiles and wind and solar, we are not going to get there with 

electric automobiles. There are 250 million automobiles on the 

road, and almost none of them are electric today, and Americans 

cannot afford to rush out and buy electric automobiles in a year or 

two, even if they were available, which they are not. 

The real way we address this issue is with liquid fuels, and today 

we do have a liquid fuel alternative to imported oil, and that alternative is ethanol, and I am here representing Growth Energy, and 

we would like to just mention a couple of things about where we 

are going, because we think this is a critical opportunity for us that 

we must establish. 

This $300 billion a year, if the American people just understood, it is $1,000 per man, woman, and child in America every year, just 

so we can fill up our tanks with imported oil. If a country said to 

us we had to pay that as tribute to maintain our freedom, we 

would go to war with them, yet we willingly pay this at the pump 

every time we fill up our gas, and we have a choice. We do not 

have to do this. 

The only thing that is really standing between us and keeping 

this $300 billion in the American economy is the resolve to fix the 

problem. So, at Growth Energy, we hope 

the United States Congress will establish a national energy policy that creates jobs in the United States, improves the environment, strengthens our national security, and we hope this Committee will take the lead, because this Committee is at the heart 

of one of the great technological innovations of the 21st century, 

and that is biofuels. That is America’s own innovation and we are 

leading it with corn-based ethanol. We created it here in America. 

The feedstocks are grown on our Nation’s farms, the biorefineries 

are located in rural America. They are creating jobs that cannot be 

outsourced. 

I was in Copenhagen for the Climate Summit in December and 

people are coming up to me from all over the world, saying, how 

can we have ethanol. The Ambassador from Pakistan here in 

25 

Washington said, General Clark, we want you to bring corn-based 

ethanol to Pakistan. I said, but tell me why, he said, because it creates value in our land and it saves us foreign exchange that we 

need for economic development. 

We have this incredible jewel of innovation in America’s agricultural community and we have to take advantage of it and use it 

and we are calling on this Committee to take the lead in doing so. 

Now, right, ethanol is about 10 percent of Nation’s gasoline consumption, but we could do a whole lot more, and I am not even 

talking cellulosic, here. Cellulosic is down the road, we will get 

there, but just with corn-based ethanol, every year our farmers are 

producing 2–3 percent more corn on the same acreage, and every 

year our ethanol refineries are getting more efficient. They are reducing cost, they are raising the net energy in ethanol, and what 

stands in the way is not supply. What is standing in our way is 

basically barriers to consumption. 

We are currently facing the so-called ‘‘blend wall,’’ which is the 

amount of ethanol that federal regulations say can be blended with 

gasoline, and as you know this is capped at 10 percent; it is the 

amount that was set in 1978. So, at Growth Energy, we filed a 

waiver with EPA in March of 2009 to raise the blend wall to allow 

up to 15 percent ethanol in a gallon of gasoline, and the waiver has 

yet to be acted on. EPA is awaiting tests from DOE. They were 

first promised they would be complete and we would have a decision in June, then they were delayed until August. Now, we are 

waiting until the end of the year. 

And I understand the need for testing. I sure understand the 

need for automobile makers to be concerned about liabilities and so 

forth, but look, if we can get this waiver approved, we will create 

136,000 new permanent jobs, maybe a quarter of a million construction jobs. We will reduce our dependence on foreign oil by 7 

billion gallons a year, and not only that, we will spark a wave of 

development and investment in rural America. It is a big step forward, and we need to take it and raise this blend wall. We hope 

there will be no more delays. 

As the Senate prepares to debate energy legislation, we believe 

it is important to address a couple of other barriers to ethanol. The 

biggest challenge we face is having access to open market. Actually, 

the cost of production of ethanol is less than the cost of production 

of a gallon of gasoline right now, and we believe that ethanol can 

compete in a free market without government assistance if, but 

only if, the infrastructure barriers are removed. 

Last week, at Growth Energy, we rolled out the Fueling Freedom 

Plan that urges Congress to redirect some of the government assistance into building out the infrastructure, mandating flex-fuel 

vehicles’ production and creating incentives to install blender 

pumps. If we had 120 million flex-fuel vehicles on the road and a 

couple hundred thousand blender pumps nationwide so consumers 

could decide how much ethanol they want to put in their vehicle, 

ethanol would compete with oil, and we would save a substantial 

amount of that $300 billion. We are not advocating the elimination 

of government assistance right now; what we are saying is to redirect some of it to the infrastructure so that we can have access to 

26 

the market where we can compete, once that infrastructure is in 

place, without the government assistance. 

I know there are vested interests out there continuing to call for 

the elimination of any assistance to ethanol, but I think we have 

to bear in mind—I know this Committee will—that the amount invested by U.S. taxpayers has been a great investment, $5-, $6 billion a year has been invested. It has reduced government farm program costs by an equivalent amount. It has created almost 500,000 

jobs. It has reduced our dependence on foreign oil and improved 

our environment and helped create a $66 billion industry and lead 

a technological innovation that will spread worldwide and change 

global dynamics if we move through this. So, but we have to move 

forward in America. 

Now, President Eisenhower, he proposed an interstate highway 

system to give Americans freedom to travel our great Nation. I 

think this Committee should take the lead in giving Americans the 

freedom to choose the fuel to travel on those highways. 

With fossil fuels getting dirtier and costlier and riskier to extract, now is the time to expand the production and consumption 

of clean, renewable fuels like ethanol that are getting increasingly 

efficient and easier to produce. 

Congress set an aggressive goal when it passed the 2007 Energy 

Bill, but unfortunately that energy bill contained two destructive 

policies against agriculture and ethanol, and the first was a reference to indirect land use change which has now been interpreted 

to be international indirect land use change. It is a controversial 

theory. It uses speculative models and incorrect assumptions and 

is basically an attempt to blame American farmers for deforestation in foreign countries such as Brazil. It is a dangerous theory, 

it is incorrect, and if it is allowed to stand in statute, it will ultimately take down every sector of the American economy. 

If you can apply this theory to agriculture, then there is nothing 

to prevent the same theory from being applied to construction, residential homes, hospitals, highways, high-speed transit, virtually 

anything that uses land and impacts on our economy. So, I think 

that we need to ask and seek the removal of this language from 

the legislation. 

And the second flawed policy within this legislation is the definition of an advanced biofuel. An advanced biofuel ought to be, one 

would think, something that gives you a substantial measure of reduction in greenhouse gas emissions from conventional fuel like 

gasoline, but the definition specifically excluded corn starch ethanol, despite the ability of corn starch ethanol to meet and exceed 

these greenhouse gas thresholds, and the continuous improvements 

in the production processes. We refer to the exclusions in the legislation as the corn discrimination clause, because it has absolutely 

nothing to do with the efficiency of production of ethanol or the environmental improvement, it is simply the discrimination against a 

particular feedstock. 

So, Growth energy strongly supports the implementation and full 

funding of the energy title of the Farm Bill. The Committee should 

be commended for its work in establishing a title that recognized 

the ability of the agricultural community to contribute and be part 

of our Nation’s energy solution. 

27 

So, Madam Chairman, if I could just have a second to summarize, we are on the verge of a technological breakthrough that could 

change international dynamics in the 21st century. The 20th century has been all about petroleum: We fuel our militaries with it; 

we fight for it; we deploy our forces to protect; it is all about the 

20th century. This century could be about biofuels, if we take the 

lead and use the technological edge that we have right now. And 

the leading biofuel that is available right now and that we should 

use without further delay is ethanol. Increased uses of ethanol reduces our dependence on foreign oil, strengthens national security, 

creates jobs, revitalizes communities, improves our environment. It 

is our innovation and gift to the world. Other nations want it, we 

should take full advantage of what we have here at home. 

Again, Madam Chairman, members of the Committee, I appreciate the invitation to come before your Committee this morning. 

Thank you. 

[The prepared statement of General Clark can be found on page 

62 in the appendix.] 

Chairman LINCOLN. Thank you, General Clark. And you are 

right, the American people are looking for immediacy in terms of 

finding renewable fuel. So, we thank you for being here. 

We will hold our questions until the panel has finished all opening remarks. 

Dave Tenny is President and CEO of the National Alliance of 

Forest Owners, which represents private forest owners, managers, 

and organizations dedicated to protecting and enhancing the economic and environmental values of privately owned forests across 

the country. NAFO members manage more than 75 million acres 

of forest land in 47 states. Prior to entering the private forestry 

arena, Dave served as Deputy Undersecretary for Natural Resources and Environment at USDA, and is a senior staff of the 

House Agriculture Committee. 

Thank you, Mr. Tenny. 

STATEMENT OF DAVE TENNY, PRESIDENT, NATIONAL 

ALLIANCE OF FOREST OWNERS 

Mr. TENNY. As you pointed out, NAFO does represent a lot of forest land across the country, including three million acres or so in 

Arkansas and three million acres or so in Georgia, and we play no 

favorites. 

Our forests are part of the economic backbone of the forested 

states in our country, the 29 most forested states in our country. 

Our private forest lands are supporting 2.5 million jobs and $87 

billion in payroll, and contribute $102 billion to the gross domestic 

product in these states. It is a very significant contributor to rural 

economies. 

Our members are forest leaders. We recognize the fundamental 

role that sustainably managed forests play in development of renewable domestic sources of energy’, and we are positioned to help 

provide the energy resources we need as we move forward in this 

century. 

As General Clark pointed out, we reached a point of decision in 

our country. We are trying to decide whether we are going to fully 

embrace our renewable energy potential or not. If we are going to 

28 

fully embrace our renewable energy potential, then it has to be reflected in our policy. That means that our policy is going to try to 

reach the potential of all the various renewable energy resources, 

and the potential of the various regions of the country that are dependent upon those resources and they can provide them. 

Working for us, the forests that NAFO represents are positioned 

to help. We can provide up to one-third of the renewable energy 

that is being contemplated in the proposals that are currently 

pending before Congress in the Energy Bill, and they are pending 

before this body, and we can also make a significant contribution 

to meeting the objectives of the renewable fuel standard and the 

Energy Independence and Security Act of 2007. But in order to 

make the right decisions, working forests need the right signals 

from policymakers in the federal government. 

Now, the energy title to the Farm Bill has sent generally positive 

signals to forest owners, research and development on breakthrough technologies, the effort to provide loan guarantees for 

project development, investments in the supply chain that help 

support renewable energy are all positive signals. These programs 

are not administered perfectly, and there is room for improvement, 

and we all know that, too, but they have sent a very positive signal 

and are moving us in a positive direction. 

Just as importantly, the Farm Bill has helped establish a level 

playing field among the various sources of renewable energy. It 

provides an inclusive definition of qualifying biomass, for example, 

that does not discriminate among the various sources of biomass 

energy, and this sends a clear signal as well to forest owners that 

their contributions and their investments are both welcome and encouraged in the policy. But notwithstanding these positive signals 

that this Committee has helped provide through the Farm Bill, 

other policies are sending a very different signal, a chilling signal 

that is undoing the forward momentum that we have hoped to experience. I think it has been mentioned that the biomass definition 

in the Energy Independence and Security Act, the RFS definition, 

constrains biomass utilization on up to 90 percent of the private 

forests owned and managed in the United States. This has softened 

investments in biofuels from forests at a time when those investments are needed in order to commercialize breakthrough technologies. It has also sent a very strong message to forest owners 

that the policy of the renewable fuel standard seems to be more 

about land use regulation than it is about renewable energy production. 

Unless Congress acts to replace this definition, and others like 

it that are currently pending in policies being considered by Congress with a more inclusive definition such as we have seen in the 

Farm Bill, forest biomass will be left behind. Our national policy 

will not achieve its goals because we need our forests to do that. 

Similarly, there is another signal that is being sent to forest owners by the EPA presently. The EPA’s sudden shift in the treatment 

of carbon emissions from biomass energy and the PSD tailoring 

role is a significant contributor to the confusion that is existing in 

the marketplace today because it is now treating carbon emissions 

from biomass energy like it does carbon emissions from fossil fuels. 

EPA seems to have some ambivalence about how to account for carVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
29 

bon from biomass energy that conflicts with some of the more well 

established international conventions, the Greenhouse Inventory 

Data and EPA’s own statements that recognize that biomass energy in countries like the U.S. where our forests are a net carbon 

sink do not contribute to the net amount of carbon in the atmosphere, when those forests are used for whatever purpose, including 

energy. 

Now, NAFO plans to work with this Committee. Chairman and 

Ranking Member, we appreciate the work that you have done in 

opposing the position that the EPA has taken in the tailoring role. 

We very much appreciate the work of all of you here on the Committee. Because of your intervention, the EPA is now seeking public comment on how to account for carbon emissions from biomass 

combustion, but this is really just a modest first step, and it may 

not clarify the question before that rule becomes effective in 2011. 

And as a result, the investment in biomass energy is stagnating. 

Current biomass energy producers, forest owners, manufacturing, 

and others who have been involved in this business for a very long 

time are left wondering, are we part of the solution—are we part 

of our renewable energy future—or are we going to be cast as part 

of the perceived problem—are we going to be treated as fossil fuels? 

We appreciate the commitment that Secretary Vilsack has made 

concerning the role that USDA will play in the review of the tailoring role, and we look forward to full USDA participation in engagement in that effort so that we can establish in the record once 

and for all that biomass energy from forests is carbon-neutral. It 

does not have a net carbon positive effect on the atmosphere under 

the Clean Air Act so long as our carbon stocks, our forests, continue to grow and increase the carbon in our country. 

In conclusion, I will end where I started. I thank General Clark 

for his service and agree with him that we are at a precipice. We 

are at a point where we are trying to decide, are we going to embrace our future in renewable energy or are we not? NAFO urges 

this Committee to take the initiative, re-take it—you have got the 

policy of the Farm Bill to do that—and to help correct some of the 

policies that are chilling investment and putting forest biomass on 

the backburner. We need your help, we look forward to working 

with you, and we think that we can come up with a policy that 

works for our forests and that works for our Nation, as well. 

Thank you very much. 

[The prepared statement of Mr. Tenny can be found on page 77 

in the appendix.] 

Chairman LINCOLN. Thank you, Mr. Tenny, and thank you so 

much for NAFO’s work with the Committee. We appreciate working with you and look forward to continuing that relationship. 

As a point of personal privilege, I am going to take a few minutes 

before I introduce Mr. Zuber and apologize to the Committee. I 

have got to excuse myself. Before, there was a—the scheduling of 

the bill signing with the President came after we scheduled this 

hearing, and in order to make sure that the Ag Committee is well 

represented for the good work that we did in that Wall Street reform bill, I am going to be over there, and I have to say, a special 

thanks to Mayor JoAnne Bush as well as Dennis Sternberg, beVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
30 

cause the only thing that would encourage me to miss their testimony is actually the request of the President that I be over there. 

So, I am grateful to them, both great Arkansans in terms of their 

leadership and what they have taught me. Mayor has done a tremendous job in Lake Village and Dennis has been a longtime 

friend and someone I have learned an awful lot from. 

Glenn English, as well, I apologize that I will miss your testimony. Glenn and I served together in the House and we are grateful for all of that. 

And again, want to add a special thanks to General Clark for 

being here. I do not think we have ever had a four-star general before the Ag Committee, Senator Chambliss, and we are very proud 

to have you here today and, again, grateful for your service to the 

country. 

But please, now that your endeavors here are accentuating the 

things that we in Agriculture want to see happen in this country, 

we look forward to working with you. 

So, I thank all of you all and I appreciate my colleague, Senator 

Klobuchar who will continue the hearing on behalf of the Committee. But again, thanks to everybody that has participated. 

And now, we will turn to our last witness, Mr. Zuber. He and his 

brother, Kim own and run Zuber Farms in Byron, New York, near 

Rochester. This dairy farm has been in their family since 1937, and 

includes 1,750 cows and 3,000 acres of crops. Mr. Zuber has served 

on the Upstate Niagara Board for 11 years and is currently serving 

as Vice President of that Board. 

He also serves on the Board of OATKA; is that correct? 

Mr. ZUBER. I believe that is Northeast Council of Cooperatives is 

what it should say. 

Chairman LINCOLN. Oh, that is what it is. Okay—of the Milk 

Products Cooperative. 

Mr. ZUBER. [Off microphone.] 

Chairman LINCOLN. Okay. 

Mr. ZUBER. Another board of directors which processes 60 million 

pounds of milk a month. 

Chairman LINCOLN. There you go. We just want to make sure we 

get all of those—— 

Mr. ZUBER. Yes. 

Chairman LINCOLN. All that CV on there. 

Mr. ZUBER. Also, if I may add, is been—in the last ten years— 

been voted five times as making the world’s best better. 

Chairman LINCOLN. Well, there you go, that is good to know. 

He is also President of the—— 

Senator KLOBUCHAR. Better than Minnesota? 

Mr. ZUBER. Better than Minnesota. 

[Laughter.] 

Mr. ZUBER. I do not mean to hurt—I do not want to offend anybody here. 

Chairman LINCOLN. Watch out, she is getting ready to take over 

the Chair. 

He is also the President of the Northeast Cooperative Council, 

and we are grateful for his input today—Mr. Zuber, for your testimony. 

31 

STATEMENT OF ERIC ZUBER, DAIRY PRODUCER 

Mr. ZUBER. Thank you. 

It is an honor and a privilege to be here today to discuss the opportunities that USDA energy programs have given my family farm 

in the development and the operation of a methane digester. 

I would like to thank Senator Gillibrand for her efforts in addressing the milk price crisis that all dairy farmers have endured 

in the last 18 months. 

I was present in a hearing in Batavia in August of 2009 that 

Senator Gillibrand put together to discuss the milk price crisis. The 

milk price is rebounding slowly; it has been a long road. When it 

first started, we thought this was going to last six months, and we 

are just starting now, maybe, to crawl back so that we can cash 

flow our businesses. 

The value of New York agriculture products in 2009 was about 

4.4 billion. The dairy industry is the single largest sector. Even 

with the depressed prices, milk sales were over 2.3 billion, New 

York remains the third largest dairy state in the United States. 

The quick history of our farm really began in 1937 when my dad 

was 13 years old and his father passed away. He had nine cows 

in an old barn 12 miles from what is now the Epicenter of Rochester, New York. 

Since then, we have moved the milking facility twice to a more 

appropriate location. Today, we have 1,750 milking cows, 1,500 

head of young stock, and a crop of about 3,000 acres. We have 26 

employees that produce 36 million pounds of milk a year, and inject almost $6 million into our local town’s economy. 

We became interested in building a methane digester because of 

the need for animal bedding. We had been buying sawdust for our 

sawdust needs and that have been growing at over $200,000 a 

year. 

When heating prices would go up, the sawdust supplies would 

put their sawdust to fire logs, and the sawdust became expensive, 

scarce, or even unavailable. 

In 2007, Mark Moser, of RCM International, a methane digester 

designer contacted me about the possibility of building a digester. 

NYSERDA, New York State Energy Agency had come up with a 

grant program that made digesters attractive for New York State. 

Mark Moser’s people at RCM started running some proposals and 

I ran some proformas on what would make a viable project. 

It became apparent that there was not enough return on investment without added funding. When USDA announced their REAP, 

Rural Energy of America Program, Farm Bill Section 907, which 

provides competitive grants for up to 25 percent of the total cost 

of a renewable energy product, we realized the additional grant 

funding could make a viable project. 

Angela McEliece of RCM did most of the grant writing, and we 

supplied the necessary information and necessary funds of 

$413,000 was secured. 

The NYSERDA grant was mostly a production base, and we had 

to acquire a bridge loan through farm credit to cover the first 3 

years of production. By the time the grants were secured and approval of farm credit came through in early 2009, milk prices had 

hit us pretty hard. It became questionable whether to do the 

32 

project under these financial circumstances. After months of consultation and our long-term commitment to dairy business in early 

spring 2009, we decided to go ahead with the project. There were 

contractors looking for work and we thought there might be some 

low-cost opportunities in this construction environment. 

Tom Hauryski and Titus Falkenburg of USDA Rural Development came out and we signed the paperwork. Titus Falkenburg, 

Rural Development’s state engineer, was our point person, and we 

consulted and sent monthly reports and expense statements. We 

broke ground in April 2009 and reimbursement of 25 percent of the 

project went extremely well. After monthly expenses were submitted, we would get reimbursed in two to three weeks. 

When we started pouring concrete, Titus would come out and 

make visual inspections in a timely manner. As the rest of the 

project itself felt—we felt—crucial to keep it on schedule. Our goal 

was to start generating methane before the weather got extremely 

cold. It would be necessary to heat 1.5 million gallons of cow manure to 100 degrees Fahrenheit, we felt we had to get it there before the winter months, because if we did not get it done, we would 

have to delay until spring. 

The most challenging part of the project by far was the approval 

of the interconnect agreement with National Grid, our local electric 

company. There was a conflict in the interpretation of net metering 

law with New York that National Grid—the electricity—RCM, the 

subcontractor that was building the engine, machinery, and generator—the company who supplied the electric generator. New York’s 

net metering law, until very recently, was capped at 500 kilowatts. 

They recently raised that to a 1000 kilowatts, but I think that is 

besides the point, because the infrastructure is not capable of taking that much power back through it, anyway. 

The machinery originally was supplied—Martin Machinery originally supplied the gas engine that was only capable of putting out 

450 kilowatts, but putting a bigger generator on with heavier 

windings would add longevity and more stable— make the generator more stable. 

This generator was capable of putting out 570 kilowatts, which 

was above the net metering law, even though it did not have the 

horsepower to do so, NYSEG, another utility in New York State 

was allowing this generator to be used in this configuration, but 

National Grids was insistent that we downsize the generator, 

which we eventually did, to 380 kilowatts. We picked this size because it was the next lower size available to put on. As long as we 

were within that metering law, the utility company would have to 

foot the bill for the upgrades on the line to producing the power 

and upgrades were roughly half-a-million dollars. We began producing power 12/27/09. At the same time, we began separating our 

solids and making our animal bedding. 

We had one screw separator and we soon learned that we had 

to put another one; so, now, today, we are running two. 

Now that the digester is operating at a steady state, we have applied for funding from another 2008 Farm Bill Title IX program, 

Section 9005, payments for the producers of advanced biofuels. Any 

payments we receive in this program will help us in the capital and 

operating costs of the generator and the digester. 

33 

Looking back on the project, where we are now, I would like to 

make the final summations. First, there seems to be a lot of gas 

in the cow manure. There is enough gas to generate twice the 

power to run our farm. One of the biggest obstacles is scrubbing 

the gas. The process makes hydrogen sulfide which needs to be 

taken out to extend the life of the engine and reduce the operating 

cost. Technology for doing so is in its infancy and needs to be further developed. There is a definite odor reduction in the manure. 

A few weeks ago we harvested a field—a 90-acre field right behind 

the campgrounds and we were able to spread three-quarters of a 

million gallons on that and my phone never rang once. Without it, 

it would not have worked. 

We are getting enough heat off the engine to supply all the heat 

for the milk house and energy. And also, in the wintertime, we can 

heat two houses. 

Lastly, we still to have some issues with the National Grid. At 

certain times, when we get over 320 kilowatts we produce and the 

demand is low on the line it appears we are driving up voltage too 

high on the grid. Although we are well below the 500-kilowatt 

level, the line upgrades apparently are not yet sufficient. I see a 

real problem is that the grid never was designed to take the power 

backwards. The systems in rural America are basically old. There 

needs to be infrastructure investment of this type if this technology 

is to become commonplace. 

I think, in the long run, if it is possible to purify the gas, it 

would be more efficient to put the gas in the pipeline rather than 

generate power right at the farm. There needs to be some studies 

done to determine where the biomass is, and the most efficient way 

to get it back to the end user. If on-farm electric generators are 

going to be successful, you will need to find a way to get incentives 

to the utility companies to make improvements to accept this 

power. In all, we need to continue to learn about anaerobic digesters. We are doing the things that we set out to do, and the deciding 

factor of how successful it will be is what our operating and maintenance costs will be going forward. 

With that, I would like to thank you again for this opportunity. 

One other point I would like to make real quickly is, in Wyoming 

County, the county just south of me, the cows outnumber the people three-to-one, and we can make the power—we got the gas 

there, but we need to get it to where you can use it, and I think 

that is the most important thing I would like to set forth and what 

I had to say today. 

Thank you. 

[The prepared statement of Mr. Zuber can be found on page 109 

in the appendix.] 

Senator KLOBUCHAR. [Presiding.] Well, very good, and thank you 

for that real world example of what is going on so that we can 

make some good decisions here. 

I am going to start with Senator Chambliss. 

Senator CHAMBLISS. Thank you, there, Madam Chair. You handle that gavel well. You are a natural. 

Senator KLOBUCHAR. Oh, thank you. I appreciate that. 

Senator CHAMBLISS. General Clark—— 

Senator KLOBUCHAR. But we do have the best butter. 

34 

[Laughter.] 

Senator CHAMBLISS. General Clark, you talked about the proposal that our group rolled out recently to phase out the blenders 

credit, and I assume you are addressing in some way the tariff on 

ethanol coming into the country—you may or may not. I will ask 

you to comment on that in your answer, though. 

But the ethanol manufacturers in my state are just adamant 

that they need to have this blenders credit. I hear what you are 

saying about, the phase-out has got to be coupled with, I assume, 

other tax credits or something for manufacturing and insulation of 

infrastructure. So, I would like for you to elaborate on it a little bit, 

because either way we go, this is going to expensive. CBO has said 

that an extension of the blenders credit will have a cost of about 

$70 billion, almost that number, over 10 years. So, that is a lot of 

money to have to come up with, obviously, and it is going to be a 

real fight, whichever direction we go in. 

But I want you to expand on your proposal a little bit more. 

What timeframe are you talking about? What specific kinds of credits are you looking at recommending? 

General CLARK. Well, thanks, Senator, and I want to say—I 

think you were out of the room when I made my opening statement, but I wanted to thank you also for the advice and friendship 

you gave me when I was in uniform. I am very grateful for that. 

As far as the proposal is concerned, we believe that we should 

have the ethanol tax—the blenders tax credit—but it needs to be 

redirected over time so it does not just go to the blenders; it should 

be going to round out the infrastructure so that Americans can buy 

the ethanol that we are producing. 

In other words, what we have done over 30 years is we have 

incentivized people to blend ethanol into gasoline, and that tax 

credit actually is—right now, a lot of it is going to the consumers 

in the form of reduced price of gasoline. It is not going to the ethanol producer and, in some cases, not even staying with the blender—but it actually goes to the blender. What we are saying is, ethanol is increasingly efficient, it is more competitive with gasoline, 

its lower cost and production. Now, it is time to think about, as you 

look at that 10-year RAMP out there, taking some of that billion 

dollars—$7 billion a year and putting it into building out the infrastructure. The pace of doing that is really up to the Administration 

and to the United States Congress. We are just saying that, in all 

of the struggle over, where do you come up with the $70 billion. 

And it is going to be a fight, and we have heard many other proposals. 

What our proposal is that we think about the end state we want 

to reach. Ethanol is increasingly competitive. It is going to—it 

needs to be increasingly widely used. We need to be offering E85. 

We need to be telling manufacturers to produce flex-fuel vehicles 

so that we can save some of that $300 billion a year we are spending on foreign oil. But to do that, we have got to get the infrastructure in place to be able to use the ethanol we produce. So, it is a 

concept, not a rigid proposal with respect to timing. We just wanted to enter the dialogue and 

35 

offer that concept to the United States Congress and ask you to 

consider feeding that infrastructure investment in as part of the 

revenue stream. 

As far as the tariff on imported ethanol, we are strongly in favor 

of keeping that tariff in place. It is very important to do so. There 

is absolutely no reason for the United States to trade dependence 

on foreign oil in place of dependence on foreign-produced ethanol. 

This is about what we can do for our own country and our own 

economy and we should be proud of it and should not be embarrassed by it or apologetic about it. So, we are in favor of keeping 

that tariff in place, Senator. 

Senator CHAMBLISS. Okay. 

Mr. Tenny, some have argued that wood should not be used as 

a feedstock for energy, as the trees would be harvested instead of 

remaining in the ground for absorption of carbon or that the biomass boom might result in the wholesale conversion of working forests into plantations of short-rotation woody crops, the exclusive 

purpose of energy production. 

Dave, what is your reaction to that kind of statement. 

Mr. TENNY. Well, if I recall, we had a housing boom in our country, and that housing boom helped support probably more than 

two-and-a-half times the population today than we had when that 

boom started in the 1950s, and as a result of that boom, we have 

more trees in the ground today than we have ever had—50 percent 

more, in fact. 

I think that the important point is that there is a fundamental 

relationship between markets and forests that cannot be lost in the 

debate. Markets are good for forests. If we are concerned about our 

forests—and we should be concerned about maintaining the markets so that we can maintain the forests over the long-term, and 

it is important to note that creating a plantation of intensively 

managed forests is not a cheap proposition. It requires a great deal 

of investment and that investment is probably not going to return 

for 40 to 80 years down the road. Biomass is a low-value product. 

It does not figure that an investment of the magnitude that you 

need to make to produce an intensively managed forest is going to 

pencil out if what you are going to get in return is the lowest value 

product in the value stream. 

So, what more likely would occur is that we would see an opportunity to take some of the marginal land that is currently not in 

forest, put it in forest, or we will become more productive in the 

way we manage our forests today. We can grow more trees. We can 

grow more trees in all the forests if the market signals are there. 

And what we have learned, if anything, from our marketing experience in the past 100 years is that, if there is a market, the supply 

will respond. And at the end of the day, there is plenty of material. 

There is plenty of feedstock, there is plenty of raw material to go 

around. That has been our experience up to this point and we do 

not expect that to change. 

Senator CHAMBLISS. Great. Thank you. 

Senator KLOBUCHAR. Thank you very much, Senator Chambliss. 

Senator Thune from the South Dakota, which is very devoted to 

biofuels, like my state. 

36 

Senator THUNE. Yes, indeed, Madam Chair, and we look forward 

to working with you to promote even greater use of biofuels, and 

I appreciate the testimony of our panelists this morning and some 

of your thoughts about how we do that. 

Mr. Tenny, you mentioned in your testimony, but I want you to, 

if you could restate for this Committee, how much of our Nation’s 

private forest lands are off-limits for energy production under the 

current definition of renewable biomass. 

Mr. TENNY. Yes. In the Energy Independence and Security Act, 

the effort was attempted to address a concern, the concern that 

Senator Chambliss described that we would somehow convert a 

great deal of our forests from a more natural state, or a more naturally regenerative, to a more intensively managed. And what happened in that definition was, in the attempt to regulate the management of the land, we ended up foreclosing the use of the land, 

and federal forests, as you know, were virtually excluded from the 

definition, which takes a very important piece of the entire value 

chain off the table, and then, with respect to private lands, there 

was a very constrained definition that focused on the most intensively managed forests to the exclusion of the forests that are not 

as intensively managed, which are also a vast resource that can be 

used in bioenergy. And because of the complexities and the costs 

of all the challenge that EPA is now working with to implement 

that policy, much of the material that would be available on those 

naturally regenerating forests would not be available for the program. 

Senator THUNE. Would replacing that definition with the definition of the 2008 Farm Bill result in increased renewable energy 

production? 

Mr. TENNY. I think, without question, it would. We are talking 

about a resource that is plentiful, that, in regions of the country 

where wind, solar, and other types of renewable energy resources 

are not as plentiful, it will be the baseload for producing renewable 

energy. 

And if given the opportunity, as I mentioned before, it will respond to the market signals. We will have more forests and we will 

continue to manage them sustainably as we have for the last 100 

years if we have the right signals, and we will be in a position to 

really make the contribution that I think Congress and the public 

is looking for. 

Senator THUNE. And you do not think that would have any adverse impact on forest health? 

Mr. TENNY. It would help forest health. If you consider what happens when we manage our forests today, the return on investment 

goes into good productive forest health management. Without that 

return on investment, then there is no opportunity to reinvest in 

the land, and that is what we are facing today in the down marketplace. 

Senator THUNE. Do you think that we can get to the numbers 

that the RFS calls for without an RFS that does not include woody 

biomass? 

Mr. TENNY. I think it would be difficult. The technology for converting woody biomass to the next generation biofuels is still working through the process of moving from bench scale to production 

37 

scale. Those investments are looking for the signals. If the signal 

in the policy is, we are not really sure whether we want to use this 

resource to produce biofuels, then the markets are going to respond. 

If the signal is the opposite, that we do think that this a fundamental part of the policy, then the markets will respond, and we 

want the markets to respond, and we think they will if given the 

right signal. 

Senator THUNE. General Clark, what impact is the blend wall 

having on the ethanol industry today? 

General CLARK. Well, basically, we are at the blend wall today. 

So, what we are doing is we are forcing the marginal cost producers out of the market, we have ended the opportunity to invest 

in the market, and we are stifling forward momentum in the industry. 

So, it is an urgent matter for taking the industry forward to remove that blend wall. 

Senator THUNE. And so—but I mean, your view is that it is having a chilling impact on investment. 

General CLARK. And has had, because this started about two 

years ago when investors on Wall Street—I am also an investment 

banker, so we were looking at investments in our firm and bringing 

money into the ethanol industry, and it was an early—late in 2007 

when we realized that there was enough investment in the ethanol 

industry to meet the E10 opportunity that was present, and that 

is when American money started flowing to Brazilian ethanol, and 

they thought, well, if we cannot invest in the United States, let’s 

invest it in Brazil and then try to bring it back in to the United 

States through the backdoor and undercut the American investments. 

So, we have actually—for two years, we have deflected investments in the American ethanol industry because of that blend wall. 

We have to have a five-year horizon out there, and that is why it 

is important that it be E15, not something less, and it would be accompanied by a far—more far-reaching commitment to ethanol as 

a fuel. 

Senator THUNE. And my guess is that, with—we have talked a 

lot about advanced biofuels and cellulosic ethanol, it becomes that 

much more difficult to get investment in those types of technologies 

if we do not have this blend wall increased today. I mean, obviously, the—those we are developing—— 

General CLARK. That is exactly right, Senator, because it is going 

to be up to corn-based ethanol to open the way for the rest of the 

cellulosic ethanol to come in. It is partly a matter of scale and it 

is partly a matter of infrastructure, and I was just—we were just 

mentioning the blenders tax credit and the importance of putting 

some of that money into flex-fuel vehicles, requirements in blender 

pumps. 

And Senator Klobuchar has introduced a bill that would help us 

with a lot of this infrastructure investment, including a loan guarantee for an ethanol pipeline, but all of this is required if we are 

going to move into cellulosic. So, rather than simply capping off 

corn and saying, that is enough of corn, let the marketplace—let 

38 

innovation take place, but we have to work on the demand side. 

The supply side will take care of itself if there is demand there. 

Senator THUNE. How many blender pumps do you think are necessary to create a true market for ethanol? 

General CLARK. Somewhere between 50-and 200,000—50,000 and 

200,000. 

Senator THUNE. Okay. 

My time is up. Thank you, Madam Chair. 

Senator KLOBUCHAR. All right. 

Thank you very much. Thank you, all of you. I think we need to 

do a lot more work in this area. We had a good, strong start. And 

today, nearly 500,000 people, as you know, are working in the 

biofuels industry, and countless more are building and installing 

and maintaining wind turbines and solar panels across rural America, and America’s farmers, including those in our three states of 

Minnesota and Georgia and South Dakota are literally growing and 

harvesting their own energy from the sun, the water, and the soil, 

and they are helping to reduce our dependence on foreign oil, which 

I really appreciate your involvement in this, General Clark, to 

make that point so succinctly that this is a national security as 

well. 

And I think it is incredibly important that we get this blend wall 

increased, and I thank my colleagues for their leadership on this. 

We just cannot keep going like this when we know that there is 

this opportunity out there for our country. It was not a biofuel 

plant that exploded in the middle of a corn field, and it was not 

a biofuel plant that is involved in a bunch of jobs that are going 

overseas. The biofuel plants are actually employing people right in 

our country. 

And I just wanted to note that, as we look at some of these subsidy issues, General Clark, that I know you were asked about earlier, over the last few decades, more than $360 billion worth of subsidies and loopholes have gone to oil companies. And we can debate 

if that is good or bad, but it is nearly ten times more what the 

biofuels companies have received, and if things proceed where we 

do not renew the biodiesel tax credit or we do nothing on ethanol, 

literally, the oil companies, as we look at how we can go to more 

clean energy, we have the oil companies who will continue to receive more than six billion in subsidies each year with nothing for 

this new burgeoning industry that is so important to our country. 

So, I think it is very important that we look at it in that light, and 

it is one of the reasons that Senator Johnson and I—and we are 

getting other people on the bill, introduced this SAFEST Act that 

you referred to, to focus more on this combination of looking at renewable clean energy, electricity, with a definition we hope, Mr. 

Tenny, that will work for some of the biomass issues and then also 

include these biofuels incentives that are so important to continue 

to look at this. 

I just look at both sides of the aisle. People keep talking about 

these clean energy jobs, and to me this is the way we can get there 

very quickly in addition to some of the other work that is going on 

right now in the Senate. 

So, my first question was actually related to that, General Clark, 

and that was about something that you just mentioned with SenVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
39 

ator Thune, and that is the importance of the feasibility and the 

importance of the dedicated biofuels pipeline, and this idea that we 

need infrastructure to do this right. Could you comment on that. 

General CLARK. Certainly. I mean, we need an ethanol pipeline 

to take Midwest ethanol to the Northeast. We have done the study 

on it. It is certainly technically feasible. It is just a question of really making it financially feasible. 

And it is like one of my friends in investment banking business 

said. He said, I do not like to invest in anything that depends on 

government decisions. Well, he is a little bit overstated, but that 

is really part of our problem, here. The ethanol industry is very 

healthy, and an ethanol pipeline makes perfect sense, but what we 

need is the policy leadership so that the country and Wall Street 

can see that we are committed to moving in this direction. The 

funds will be there. We would like to have the loan guarantee behind it just to make it more competitive—or equally competitive 

with natural gas and oil pipelines. But the most important thing 

is the blend wall which opens up those markets for us. 

Senator KLOBUCHAR. Right. And I think we have all mentioned 

that we thought that this was going to be completed in June. It has 

been pushed back. I am very disappointed in that. I have complained to people in the White House. I know we are going to try 

to get a meeting with Secretary Chu and Secretary Jackson to talk 

about this, because they have assured that they are moving ahead, 

but this has got to get done. 

Mr. Tenny, Senator Shaheen and I—or Senator Shaheen has authored a bill called the Forest Carbon Incentives Program Act, 

which I support, that would compensate forest owners for the ecological benefits that their forest provides, such as carbon pollution 

storage. 

How can we incentivize sustainable forestry practices in the next 

Farm Bill to make sure that we are maximizing reductions in carbon from biomass-based energy? 

Mr. TENNY. I think that probably most the important thing that 

the Farm Bill can do is what the previous Farm Bill did, and more 

of it, and that is, send the signal to the forest owner community, 

to the biomass community, that the contribution that they can 

make will in fact be welcome by the policy. 

We will not have trouble continuing to realize the carbon benefits 

of our forests if the markets are there. It is when we start losing 

those markets that we get into trouble. If there is anything that 

is perilous to the future of our forests, it is the forest owner who 

is faced with difficult economic choices because the value of that 

forest land cannot compete with other land use values around it. 

And when that reaches a tipping point, then we start losing our 

forest resources, and then we start to have— diminishing the full 

potential that they can contribute to our carbon economy. 

And so, I think that as we look forward in the Farm Bill, if we 

are looking at energy programs, we need to make sure that we 

send that signal that biomass energy is going to be a fundamental 

part of the program. 

The other thing that needs to happen is we need a clear signal 

from EPA. The tailoring role—I do not want to understate the 

change in position that has occurred as a result of the tailoring 

40 

role. The international community has recognized that in countries 

like the U.S. where our carbon stocks are increasing in our forests 

year in and year out, we are net contributors to the solution. We 

are net sequesterers of the carbon; yet, if a policy comes out from 

the EPA that questions that or that changes the position of the 

United States and starts to wonder whether carbon emitted from 

renewable energy from forests is the same as fossil fuels and is not 

quite sure what the answer might be, that sends a very chilling 

message, and that needs to be corrected very quickly. Otherwise, 

the entire biomass community is going to be at a standstill wondering if they are going to be regulated or if they are going to be 

allowed to go forward to make their contribution. 

Senator KLOBUCHAR. And I think that is frustration across the 

board when I look at General Clark with some of the biofuels 

issues that we need to set these standards and move ahead, because—and maybe General Clark—and then I have a quick question for Mr. Zuber—want to comment. I know you have mentioned 

this, but this investment is going to go overseas, if we do not 

start—and it is already happening, because they get it in Brazil, 

and everything in Brazil, doing biofuels, to China producing solar 

panels, to other countries using our technology and now manufacturing wind turbines. 

Do you want to comment on that, General Clark, and then I will 

have a quick question to Mr. Zuber? 

General CLARK. Senator, I do want o comment on it, but first I 

want to say very clearly how grateful we are for the legislation that 

you and Senator Johnson put forward on SAFEST. It is a—across 

the board for renewables, it addresses and corrects many of the inconsistencies and problems that have been there. We thank you for 

that. 

But it is a competitive investment, environment, right now. We 

had the lead in this country in solar. We have the lead right now 

in biofuels. We lost our lead in solar, that has gone to China. Wind 

has always had a European lead to it, even though we have the 

greatest wind resources in the world, in the United States of America, and somehow we have to capture wind, solar, and biofuels in 

the United States. 

I would say, Senator, one of the things that has been most distressing to me is that if you look at the Stimulus Bill, that this 

great resource for investment in America is our pension funds, and 

because of the way that the Stimulus Bill was structured, our pension funds were not able to invest and take advantage of the Stimulus Bill. So, driven by rate of return considerations, they are looking for investments in the BRIC countries rather than in the 

United States in this renewable energy field. 

And in the case of biofuels, that money is just standing by on 

Wall Street waiting for a decision. It will pour into the Midwest of 

the United States if we have a strong decision that says, we are 

moving forward, E15 and beyond, in biofuels. There is plenty of investment capital; there are plenty of smart people who want to invest in this country. They just have to see the opportunity for return. 

41 

Senator KLOBUCHAR. And they need to get something like a renewable electricity and biofuel standards in place to get that return. 

General CLARK. Yes. 

Senator KLOBUCHAR. Okay. 

Quick question, Mr. Zuber, because then I want to turn it over 

the Senator Grassley, because in Minnesota, we never mess with 

Iowa, because they are our neighbor. 

In your experience and from talking with other producers, you 

clearly have that hands-on experience with the digester, are cogeneration and digester technologies getting cheaper and more efficient, or what have you seen in terms of progress? 

Mr. ZUBER. I think they have got a ways to go. 

This gas scrubbing is crucial. I think if we can get the quality 

of gas—right now, the way we are scrubbing it, gasses with bacteria—the gas goes through a bacteria substance that filters it. If 

we can scrub that gas and get it pure enough so it is as pure as 

what can go in a natural gas line, I think it is unlimited. 

I think the biggest thing—I think more of these would have went 

in in this last round, but what got us was the milk price crisis. I 

mean, I had three or four other dairymen that were really interested—— 

Senator KLOBUCHAR. Right. 

Mr. ZUBER. —and we all stood in a room and looked at each 

other, and I mean, when you are losing $700 a cow—and that is 

what we lost in 2009—I mean, it takes an awful lot of guts to do 

something—— 

Senator KLOBUCHAR. Right. And I think that is why you know 

we have done some improvements funding the Milk Act. Senator 

Sanders and others have worked on this. I know my friend, Collin 

Peterson is working on it as well, looking into the next Farm Bill 

with the milk program, as well as Senator Lincoln, as well as what 

we can do with the export market, which I think could really help 

with dairy, because the decrease in the export market has also 

gone hand-in-hand, as you know, with the decrease in prices. 

Mr. ZUBER. Exports are crucial. 

Senator KLOBUCHAR. Okay. Very good. 

I am now going to have Senator Grassley ask his questions. 

I said, as I noted, with South Dakota, Iowa is another great state 

for not just biofuels but also renewable energy. They lead—one of 

the leading in wind manufacturing and very interested—I know 

Iowa and other states—in how we can get some of that manufacturing to stay in the United States of America and build in the 

United States of America. 

Senator Chambliss, in keeping with the bipartisan nature of the 

Ag Committee, is going to take over for me because I am going to 

the Mall to give a speech to the Council on Independent Living, if 

all the audience has not yet wilted in the heat and sun. 

So, I want to thank our witnesses. You have been great, and 

thank you, Senator Chambliss, for taking over. 

Senator GRASSLEY. 

Senator GRASSLEY. General Clark, I support what your organization has put forward on infrastructure components. The plan does, 

as we know, include some reduction in the existing tax credit, and 

42 

of course none of us can really predict whether Congress is going 

to pass a comprehensive energy bill that might provide opportunities to consider some of these infrastructure incentives. 

So, my question is, in the absence—and I want to emphasize the 

word ‘‘absence’’—in the absence of enacting these robust infrastructure policies, does Growth Energy supporting maintaining the existing tax credit for blending ethanol? 

General CLARK. Senator, thank you, and we appreciate your support for Growth Energy and for the industry as a whole. 

And if we cannot pass comprehensive energy legislation, absolutely, we fully support the extension of current tax policies and 

the extension of the secondary tariff on foreign ethanol. 

Of course, our preference would be to extend and redirect some 

of this assistance into the building out of the infrastructure because ethanol is so competitive right now that really it is a matter 

of working the demand side so consumers can buy it as much as 

it is work on the supply side. But if we cannot get these issues addressed in the energy legislation, we certainly support the straight 

extension for five years at the current rate. 

And Senator, if I could, the critics, they often want to focus on 

the costs of these government programs, and they totally ignore or 

misinform the public about the benefits. The relatively small 

amount invested by our government in the development of biofuels 

has yielded tremendous benefits to the Nation, and I just think we 

can never forget what the ethanol community is doing for this 

country. We are replacing about 13 billion gallons of foreign oil 

each year. We have created about 500,000 jobs related to ethanol, 

we have improved the environment, we have reduced the cost of 

government farm programs, we have added $66 billion to the Nation’s GDP. And if all government programs had this kind of return, our economy would be in great shape. 

Senator GRASSLEY. Well, I think you just answered my second 

question, and you do not have to answer it, but I want to put it 

on the record—and if you did not answer it, then fill in, but I think 

that what you said is very, very important, that the cost to our 

economy of dependence upon foreign countries for 60 percent of our 

oil needs is great, and you just said that you believe the true cost 

of our foreign oil dependence is very great. 

Maybe one thing that you did not touch on that you could is the 

benefits for national security of not being dependent upon foreign 

sources of energy. And being in the military, as you are, you know 

more about that than anybody else. 

General CLARK. Well, Senator, I appreciate the chance to talk 

about that. 

I was a Captain in 1973 and came down here in December. I was 

teaching economics and political philosophy at West Point. I came 

down here and worked at the Pentagon and wrote the first DOD 

papers on the impact of the energy crisis on the Defense Department, and it was a far-fetched vision in 1973, as we were coming 

out of Vietnam, that someday we might have to actually put U.S. 

troops into the Persian Gulf. 

I remember when I wrote that in a paper, there was outrage 

among these other colonels I was working with down there in the 

Pentagon. They said, you are going to get us in trouble. We are 

43 

going to be called up on the Hill, the Senate—your Senator Fulbright from Arkansas is going to make you testify on this, and it 

seemed outrageous that an armed forces that was dedicated to protecting America from Soviet expansionism and safeguarding our allies was going to be worried about oil. And yet, if you look back 

over 35 years, our dependence on imported energy has distorted 

our foreign policy, it has fed billions of dollars into governments 

that do not agree with us, our values, that work against our interests, and it has led to basically three conflicts and an ongoing terrible conflict going on in the Middle East today as a secondary impact of the money that we have put out there and the consequences 

of this. 

And now, the dangers are even more substantial. It was bad enough when oil was $12 a barrel, but when it is $70, $75, and $80 

a barrel, the $300 billion plus a year that we are spend—if we 

could keep that money in the United States economy and use it 

and multiply it and get it into education and technology and business development, we would solve many of the economic issues facing this country, and we could do it right—we could start doing it 

right now. We do not have to wait for a hydrogen economy, we just 

need to turn America’s farmers loose. 

Senator GRASSLEY. Would you have a rough figure, if all these 

factors were quantified in the cost of a gallon of gasoline—and they 

are not today—if they were, what would be the cost of a gallon of 

gasoline? 

General CLARK. The best figures I have seen show it to be around $7 or $8 a gallon when you count the subsidy and the expenses of the military commitments and so forth that are going in 

there for the cost of gasoline. 

Senator GRASSLEY. And one last question. I missed your testimony, but I know from reading it that you stated Growth Energy 

filed a waiver with a lot of other people on the U.S. EPA to approve 

ethanol blends of 15 percent. EPA and the Department of Energy 

have been dragging their feet for a year-and-a-half on this. It is 

anyone’s guess as to when a decision will be finally be made. And 

quite frankly, in Iowa, I get asked this question an awful lot, when 

are they going to do it and can we do anything to make them do 

it, and it is pretty difficult, except it is their decision. 

So, a question that may be difficult for you to answer, but if you 

can answer it, I would appreciate it, do you believe that there is 

any anti-corn and ethanol bias at the Department of Energy or the 

Environmental Protection Agency? 

General CLARK. Senator, I would just be way over my head in 

answering a question like that. I just do not know. 

But I do know this, that we always have a propensity in this 

country to look for the very, very best solution. I remember when 

we were talking about the hydrogen economy being the next big 

thing, and a lot of us were saying at the time—we were saying, a 

hydrogen economy, sure, 30 years out. So, it means that we will 

just keep business as usual. And there is a lot of interest in these 

advanced biofuels and I am all in favor of these advanced biofuels. 

But what I look at is—I travel around America and I see people 

without work, I see families in trouble. And I look at the opportunity cost of continued delay—we could add jobs tomorrow if we 

44 

went to E15. And honestly, if we did it legislatively rather than by 

regulation, it would be even better, in my view. I would like to see 

us just move on into the biofuels revolution. 

One of the things I said in my testimony that I strongly believe 

is that this is one of the great technology breakthroughs, potentially, in the 21st century, and it is Americas. We developed it, developed—in Iowa, in the Midwest—with ethanol, and it has gotten 

increasingly effective and efficient and people overseas are asking 

for it, because it is not just America that suffers from the cost and 

hazards of importing oil, it is many other countries in the world. 

Somehow, we have got to help our own citizens understand this 

tremendous jewel that we have created in our biofuels capacity in 

America. We should really be proud of it. There are people in the 

Midwest who are as innovative and far-thinking as people in Seattle with Microsoft or people in Silicon Valley. They are just as 

good, and if you roped up the stories, their business profiles would 

be just as glorious, they are just working in a different medium. 

We need to recognize those people and promote them. That is our 

future in this country. 

Senator GRASSLEY. Let me finish, Mr. Chairman, but just adding 

to what he said. 

He could not answer my question, and maybe I cannot answer 

it in an intellectually honest way because you do not really know 

what the institutional biases are, but even in the previous administration, four or five years ago, there would be people like Senator 

Thune and me and people from the U.S. Department of Agriculture 

and the EPA and the Department of Energy sitting across discussing when can we move forward with this. Maybe it was even 

before the petition was filed, I do not know, but we got all sorts 

of— now, this is in the previous administration, so there is nothing 

political about this; I am speaking institutionally. It seemed like 

USDA and Department of Energy were giving us reasons why you 

could move ahead, but I got the feeling that the EPA wanted to 

drag their feet and drag their feet and drag their feet in those initial discussions. And here we are, four years later, still dragging 

their feet on this issue. 

General CLARK. Well, Senator, if I could just have a word in response. 

Our EPA Administrator has been very up front and cordial with 

us in saying she wants to move this forward. The Secretary of Energy apologized to me personally at a White House meeting several 

months ago for the delays in testing. So, I know there is goodwill 

and an intent to do this in this Administration, but I do think that, 

across America, we have a real communications problem with 

members of the public. This is somebody else’s rice bowl. 

When we started the Internet Age and started personal computing, there was no opposition because there were no alternatives 

to personal computing. The slide rule manufacturers did not have 

enough of a say in the country to really put up any opposition to 

personal computing, and the trouble is, in this field, in energy, 

there are huge forces out there that we are challenging. Some of 

them have come to me personally and said, Wes, you are killing us 

with what you are doing because this ethanol, at the margin, it is 

cheaper, it is driving down the price of gasoline, it is making our 

45 

refineries less valuable and so forth. And I hear those comments 

all the time. I know what we are up against, and those comments 

are reflected in political forces, they are reflected in advertisements, but I just think you cannot beat America’s agricultural community. Year in and year out, America’s farmers are increasingly 

productive, increasingly efficient, increasingly innovative. And Mr. 

Zuber here is an example of that in what he is doing with methanol. So, I think that is winning side to be on, and that is why we 

are at Growth Energy trying to do these communications with the 

public so they understand that this is America’s strength, its tremendous agricultural community. We have to use it in the 21st 

century. 

Senator GRASSLEY. When corn was $7 a bushel, ethanol was 

scapegoated to increase the price of food by—when corn was $7, increase the price of food by 20 percent. The price of food has not 

gone down when corn is down to $3.50. 

General CLARK. It was a $100 million scapegoating campaign. 

We know it; we know who was behind it; and we are working out 

there every day to address it. 

And Senator, I just want to say, we sincerely appreciate your 

support in this effort; it is very, very important. 

Senator CHAMBLISS. [Presiding.] Thank you, Senator Grassley. 

And I have a feeling if there is any bias against soy beans or corn 

at the Department of Energy or USDA, we will hear about it again 

as we go into the debate this fall on this tax credit. 

Well, gentlemen, thank you all very much for being here. Thanks 

for your testimony. You have been hugely informative this morning 

and we appreciate it and look forward to working with you. 

Our next panel is the Honorable Glenn English, Chief Executive 

Officer of the National Rural Electric Cooperative Association, Ms. 

JoAnne Bush, Mayor, City of Lake Village, Arkansas, and Mr. Dennis Sternberg, Executive Director of the Arkansas Rural Water Association. 

Let me thank all three of you for being here this morning. Your 

testimony is critically important to us and we look forward to hearing it. 

I would ask that you limit your statement to five minutes or less, 

and that way we will take your written statement for as long as 

you want it to be and insert it in the record. 

Our first witness today is my long-time good friend, Glenn 

English. Mr. English has served as CEO of the National Rural 

Electric Cooperative Association since 1994, and before that he 

served for ten terms in the U.S. House as representing the 6th District of Oklahoma, and he represented it well, a member of the 

House Agriculture Committee and Chairman of the House Agriculture Subcommittee on Conservation, Credit, and Rural Development while he was in the House. And he has worked directly on 

legislation affecting rural development programs, including REA 

and telecommunications issues. 

So, Glenn, thanks for being here, and we look forward to your 

testimony. 

46 

STATEMENT OF HON. GLENN ENGLISH, CHIEF EXECUTIVE OFFICER, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION 

Mr. ENGLISH. Well, thank you very much. I appreciate that, Senator Chambliss, and we appreciate the committee having this hearing and giving us an opportunity to talk about this a bit. 

As you mentioned, since the written testimony is going to be 

made part of the record, I would like to talk about, perhaps, a little 

broader picture that includes all the elements of this testimony. I 

think many people are focused with regard to the importation of 

oil, and that is understandable. We want to cut back on the 

amount of oil that is imported in this country. That has been an 

objective for some years and certainly a worthwhile goal. 

What is not, I think, as well understood and well known is the 

fact that, while we expect, every time we flip the light switch the 

lights are going to come on, that the country is very quickly reaching the point of where the available capacity to generate electric 

power in this country is pretty much used up. Much of the generation was built in the 1970s, the 1980s. There has been some generation since then but not near enough to keep up with growth. 

And certainly, when you compound that, then, with the objectives 

of trying to reduce carbon emissions in this country to meet objectives of climate change and then move the ball even further and 

say, not only that, but we want to tell you how to do that, and you 

compound that, then, with the growth of the Nation itself, keeping 

in mind, particularly or electric cooperatives that we are growing 

twice as fast as the investor-owned utilities, the big power companies, in this Nation, you begin to think, I believe, to see some of 

the challenges that we face. And as certainly you know, electric cooperatives are not-for-profit. They are actually owned by their 

members, and we have an objective of making sure that our members have enough electric power to meet their needs, but to try at 

the same time that those electric bills they receive are affordable. 

And so, this is coming around to be quite a difficult effort on our 

part, and particularly when we keep in mind that much of what 

has been discussed here this morning are future goals and objectives and future technologies and future methods in which we could 

achieve those particular objectives, and that is fine and good, but 

the real problem we have is over the next ten years. How are we 

going to make certain that we have enough power at the right time 

and be able to meet the objectives laid out by government and to 

be able to keep those electric bills affordable for all those folks out 

in rural America and, as I think many of you know, rural development is very heavily dependent upon energy. If the energy sources 

are not there, it is not like you are going to have rural development, and that in itself is a stopper. And so, that is part of the 

challenge that we face. 

Electric cooperatives basically cover 75 percent of the land mass 

of the United States, and as such, that is probably where most of 

the renewable energy is going to be produced in this Nation. I am 

a member of a group known as 25x25. Our overall goal is 25 percent renewable energy by the year 2025. We hope that we will be 

able to move in that direction, but when you look at the amount 

of new power that is going to be needed in this Nation which is baVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
47 

sically two-and-a-half times the amount of power being produced in 

the State of California today, that is what we are going to need 

over the next few years. And whenever you consider the growth of 

electric cooperatives, certainly that is a tall order. 

We have certainly very ambitious objectives of trying to establish 

that, within the next ten years, we have to have a certain percentage of that electric power being produced for—through renewable 

energy, for instance. 

And we all believe that, and that would be helpful in rural development, but many people focus on the fact that, if as was pointed 

out to us in a recent study that was done through Navigant Consulting, a very reputable group, that if we are even going to hit 5 

percent renewable energy in this country, that in the eastern interconnect alone—eastern part of the country, alone. It is going to require some 10,000 miles of high voltage transmission. 

If we, in fact, are going to go to 15 percent, that in itself would 

require 10,000 miles. And on top of that, the cost has got to be 

somewhere in the neighborhood of $150 billion. Well, obviously, if 

we are going to move to 5 percent to 10 percent to 15 percent, that 

transmission has to be in place before we can achieve those objectives. If we are going to have those kinds of numbers producing 

that amount of power, it is going to take a tremendous amount of 

concentration in rural America to generate that much power and 

to do it as cost-effectively as we possibly can. So, that pretty much 

dictates where that power is going to be produced, whether it is 

solar, whether it is wind, whether it is biomass, and then the question is going to come, what kind of transmission exists there. 

And the problem is not, believe it or not, cost. Cost is not the bottom-line problem. The bottom-line problem of what we are facing 

is deciding across state lines, their political objections, political difficulties, political challenges. Those are some of the hills that the 

Congress is going to have to address before we are going to be in 

position to be able to produce that much renewable energy, be able 

to achieve the particular objectives that I know the Congress is 

thinking about and learning about today. 

So, what I would encourage, Mr. Chairman, is for this Committee, particularly as applies to electric cooperatives, power for 

rural America, and particularly as it focuses on the objectives of 

trying to get as much of that power generated in rural communities 

to get the economic benefit of that, that we also focus on what can 

we do and when can we achieve it. How much power can we 

produce in what year that the electric cooperatives and others in 

the electric utility industry can rely on, and also the question of 

what is it going to take in the way of infrastructure to make sure 

that that power is delivered where it needs to be delivered. 

So, thank you very much. I appreciate that, Senator Chambliss, 

and the opportunity to testify here today. 

[The prepared statement of Mr. English can be found on page 69 

in the appendix.] 

Senator CHAMBLISS. And thank you, Mr. English. 

Next witness is JoAnne Bush, the Mayor of Lake Village, Arkansas. Mayor Bush is now in her 20th year in elected office. She 

served as President of the Arkansas Municipal League in 2009, and 

she currently serves on the Finance Administration and IntergovVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
48 

ernmental Relations Steering Committee for the National League 

of Cities. 

Mayor Bush, welcome. We look forward to your testimony. 

STATEMENT OF JOANNE BUSH, MAYOR, CITY OF LAKE 

VILLAGE, ARKANSAS 

Mayor BUSH . Thank you. In the absence of Chairman Lincoln, 

Ranking Member Chambliss and members of this distinguished 

Committee, I want to thank you for having me here to testify before you today. 

As you said, my name is JoAnne Bush and I am Mayor of Lake 

Village, Arkansas. I am pleased to present this testimony to the 

Senate Committee of Agriculture, Nutrition, and Forestry, not only 

because this Committee oversees so many important issues for Arkansas, but also because Arkansas senior Senator Blanche Lincoln, 

is Chairman of this important Committee. 

Chairman Lincoln has proven time and time again to be a tried 

and true advocate for rural Arkansas. 

Lake Village is a rural community of 2,823 people. We are located in extreme southeastern Arkansas. I am pleased to be here 

today to discuss the USDA Rural Development Programs and the 

benefits they provide to rural communities. 

I am here today not as an expert on the technicalities of the 

Rural Development Programs but as someone who can provide a 

perspective on what it is like for a mayor of a rural community to 

utilize these programs and explain the positive impact that they 

have on rural America. 

I have worked for the City of Lake Village for 38 years. I served 

as City Clerk for 18 years and now I am in my 20th year as Mayor, 

and I am a current member of the Arkansas Municipal League and 

served as its President in 2009. 

Arkansas is primarily a rural state. Approximately 500 cities 

make up Arkansas, and 70 percent of those are considered rural. 

Therefore, communities like these and Lake Village rely on USDA 

Rural Development Programs, from water and wastewater systems 

to housing and low-income housing. Rural Development Programs 

have changed the face of rural Arkansas and have allowed our 

small cities to thrive. 

In Lake Village, we have benefited from Rural Development Programs over the years, and currently have a number of developing 

projects. 

The program that Lake Village has found most helpful is the 

Community Facilities Program. This is one of the most versatile 

programs available to rural communities such as Lake Village. The 

program assists communities in a number of areas from helping a 

city provide a childcare center to helping police and fire departments obtain much-needed equipment. 

In recent years, Lake Village has utilized the community facilities to obtain new police cars for our police department and is currently working with USDA to obtain funding to construct a new 

farmers’ market which will create employment opportunities and 

increase access to healthy, local foods. 

Right now I am working with Rural Development to fund the 

renovation of an historic building located on Main Street to house 

49 

our new city hall. A newly renovated city hall means that downtown development can begin in earnest. 

Like many small communities, Lake Village downtown was once 

a thriving social center, and the City of Lake Village expects that 

renovation of this historic structure will bring new businesses to 

our downtown area and help people rediscover the social fabric that 

is so ingrained in small town living. In fact, the domino effect of 

economic development has already started. 

As a result of the investment to renovate a new city hall, local 

investors have already been approached about renovating other 

downtown buildings. I have learned through this experience it is 

very difficult to find federal funding for a project such as this. For 

a small community like mine with a limited budget, we work diligently to pull together several funding sources to begin construction on the new city hall. This type of innovative thinking is imperative for rural communities to survive, and Rural Development 

knows and understands that partnerships are what makes projects 

work. 

For a small town mayor with infrastructure and community 

needs, I have to lean on my local Rural Development area office in 

Monticello, Arkansas for support and assistance. I have to say that 

they have been tremendous with their help, and I would like to acknowledge their work over the years that I have been working with 

them. 

I cannot tell you how important it is for rural communities to 

have access to USDA staff who understand the unique issues facing our towns. Mayors of small towns like Lake Village do not have 

grant writers, and often do not have the ability to seek outside resources to help support grant and loan packaging; however, USDA 

staff understands that small town mayors are working their hardest to increase the quality of life for their citizens and support us 

through this process. I am thrilled to have access to personnel as 

dedicated as those in Monticello, as well as the USDA State Office 

in Little Rock. 

It is no secret that small rural communities have limited resources across the board. One particular challenge for rural communities, particularly in Arkansas, is the lack of broadband for 

rural services. Without this basic public infrastructure, rural communities are unable to compete in this ever-growing global economy, and we are left at a disadvantage for increased educational 

opportunities. USDA Rural Development sees and understands this 

challenge, and must continue to assist communities such as Lake 

Village, build this critical infrastructure. 

My experience as a small town mayor and as past President of 

the Municipal League, Rural Development Programs work, and 

they work at the local, state, and federal level. While public infrastructure is important, equally important is technical assistance to 

rural communities. 

Lake Village has been fortunate to participate in Winrock International’s nonprofit improvement program, which is funded by the 

USDA Rural Community Development Initiative. This program has 

proven extremely helpful to local leaders like me. This program allows Winrock to provide capacity building technical assistance to 

small communities and nonprofits. Winrock’s assistance and continVerDate Nov 24 2008 04:26 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 C:\DOCS\66273.TXT MICHA
50 

ued partnership has given our community access to grant reviewers 

and classroom instruction, and most importantly have led to introductions with individuals with the ability to assist us in all areas 

of economic and community development. This type of technical assistance program is effective, and we are thrilled USDA Rural Development funds this important program in Arkansas. 

Ranking Member Chambliss, I appreciate the opportunity to 

speak to you today, and I look forward to answering any questions 

you may have. Thank you. 

[The prepared statement of Mayor Bush can be found on page 58 

in the appendix.] 

Senator CHAMBLISS. Thank you very much. 

And our next witness will be Dennis Sternberg. Mr. Sternberg 

has served as Executive Director of Arkansas Rural Water Association since 1993. In 2006, Mr. Sternberg received the Executive Director of the Year Award from the National Rural Water Association. And in 2009, the United States Department of Agriculture 

and National Rural Water Association recognized Dennis for leadership in emergency response preparation. 

So, Mr. Sternberg, you have a distinguished career. We are 

pleased to have you here and look forward to your testimony. 

STATEMENT OF DENNIS STERNBERG, EXECUTIVE DIRECTOR, 

ARKANSAS RURAL WATER ASSOCIATION 

Mr. STERNBERG. Thank you, Mr. Chairman. 

Senator Chambliss, I am honored to be here representing Arkansas Rural Water Association and National Rural Water. 

I would like to make an addition to our written submittal on our 

testimony before I begin. One omission in the testimony on page 

two, the fourth paragraph, when I reference the historical low delinquency rates, I omitted the point, the decimal point. So, it 

should read ‘‘.67 and .21 of 1 percent,’’ and I apologize for that confusion, but I would like to have that inserted. 

Senator CHAMBLISS. That will be inserted in the record without 

objection. 

Mr. STERNBERG. Again, I am honored to speak to this Committee, 

to testify to you and on the Department of Agriculture’s rural 

water and wastewater funding programs and associated technical 

assistance initiatives that directly benefit small and rural communities with safe drinking water and adequate sanitation. 

I look at these USDA investments in water, infrastructure, and 

their impact from a holistic view. This is not just putting pipes in 

the ground; these investments have many direct additional benefits 

that provide a catalyst for economic and community growth while, 

at the same time, enhancing and maintaining community health. 

A small community’s ability to provide adequate drinking water 

and sanitation often determines their ability to thrive and remain 

viable in the future. 

Many small communities in Arkansas and other states are paralyzed due to the inadequate drinking and wastewater treatment 

and capacity limitations. Many cannot attract economic development, meet federal environmental standards, or maintain and grow 

their population base. With the limited federal resources, it is my 

hope that this Committee will look at a creative solution in the 

51 

next Farm Bill to provide rural development, alternative, affordable financing options for our communities. Rural Water stands 

willing and able to work with you to accomplish this goal. 

As you are aware, the economic downturn has also disproportionately impacted many of these small and rural communities more 

than our urban counterparts. 

Small rural communities are also faced with the additional burden of reduced tax revenues that impact their ability to provide essential services like water and wastewater. 

Rural Development also has the unique advantage over the federal agencies because of their field structure that includes experienced staff with community development, expertise scattered 

throughout small town Arkansas and throughout rural America. 

This structure allows them to serve communities that are both 

small and remote. 

Mr. Chair, I would like to specifically address three sections of 

the Farm Bill that enable us to carry out our mission at Arkansas 

Rural Water Association. 

First, the Rural Development Circuit Rider Program— since 

1980, circuit riders have produced onsite technical assistance to 

small communities in all states for water infrastructure, development, compliance, training, certification, operations, managements, 

rates, disaster relief response, public health protection, all necessary to encourage local responsibility and local solutions for protecting and enhancing water resources. The mission is to provide 

grassroots assistance to communities in need of providing safe, affordable, and sustainable water and wastewater service. 

Second is the Farm Service Agency’s grassroots Source Water 

Protection Initiative. This is the only statewide initiative ensuring 

environmentally progressive local land use decisions for local elected officials, land owners, agricultural producers, and other interested parties. 

Third is the Wastewater Technical Assistance Program. This initiative provides on-the-ground technical assistance directly to communities for wastewater treatment facilities. Assistance includes 

design, upgrade recommendations, daily operations, maintenance, 

assisting with permit renewals and helping these systems meet 

compliance requirements from state and federal regulations. 

From the local community perspective, these initiatives are the 

most effective environmental protection efforts for drinking water 

and wastewater quality, groundwater protection, source water protection, compliance with federal mandates from the Safe Drinking 

Water Act and the Clean Drinking Water Act, and other federal 

laws. 

Rural and small communities want to ensure quality drinking 

water and wastewater. After all, local water supplies are operated 

by people who are locally elected, whose families drink the water 

every day; however, the need for common sense assistance in the 

form that they can understand. Many small communities rely on 

volunteers or part-time administration to operate their local water 

supplies. Rural Water uses funding from Congress to provide every 

small community in all states the technical resources to provide 

safe and affordable water. 

52 

In closing, Mr. Chairman, I would urge the Committee to address 

the current underlying statutory authority for water programs that 

presently do not provide the Secretary the needed flexibility or 

waiver authority in administering these funds to local communities. I have heard numerous situations in Arkansas where a 

small community is not eligible because they slightly exceed the 

population or meeting income limit or needed to have a grant-toloan ratio for affordability purposes. The ability to use grant dollars for the very low-income communities is critical. In some instances, communities cannot afford the debt to service large loans, 

especially in the economic climate. We would like to ask the Committee to explore providing the Secretary with this authority. 

All communities have leaders, some are elected and others are 

just concerned citizens, that want to improve the quality of life in 

their community. Arkansas Rural Water with USDA as our partner 

stand on the front line working daily with these leaders on a local 

level to ensure our rural communities are not left behind. No community can grow or improve without sustaining resources of water 

and wastewater services. With your continued support and leadership, we will continue to prosper. 

Thank you, Mr. Chair, for you allowing me to testify before you 

today, and I would be glad to take any questions. 

Thank you. 

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

73 in the appendix.] 

Senator CHAMBLISS. Thank you very much, Mr. Sternberg. 

And Glenn, let me start with you. You stated in your testimony 

that your number one objective of NRECA and your member cooperatives is to keep the cost of electric power low for your consumer owners in rural America. 

We are in a regulatory environment like I have never seen before 

in my 16 years. There is a lot of over-reaching, particularly by 

agencies like EPA into your realm, as well as DOE. We are now 

looking at whether we have an energy bill or not that may restructure or seek to restructure the entire power production industry in 

this country, or it may even be that we are looking at a utilitiesonly energy bill right now that would have a significant impact on 

you and your membership and thus their customers. 

How does this type of atmosphere play into the ability of your 

membership to look forward and anticipate that they are going to 

be able to keep utility bills at the residential and commercial level 

reasonable and affordable? 

Mr. ENGLISH. Well, I think it has a huge impact. We have got, 

obviously, tremendous uncertainty. You cannot plan; you do not 

where to go; you do not know what direction and what road to go 

down. We all see different ideas proposed, different pieces of legislation, the Congress thinking about this or that. 

We have, as you pointed out, a large number of regulations that 

are coming forward on existing law, and taking new directions, and 

that, too, influences the decisions. So, it crowds our member ship, 

and as it does, the industry at large, but particularly I think it 

crowds our membership into just a very few options, and those options are generally going to be more expensive. And as you add 

53 

more requirements onto that, then that obviously adds more expense, there is more cost. 

So, all of that compounds the problem, makes it more difficult to 

keep those electric bills affordable. And as you know, percentagewise, you have more low-income people living in rural America 

than you do in urban America. So, there is a disproportionate aspect to this. And certainly, as you look at regulations dealing with 

carbon, that, too, will disproportionately hit certain regions of the 

country as opposed to others. So, there is nothing even about it. 

There is no distributing the burden for these increased costs, and 

that is the reason I am hopeful that we will begin to see some people looking at the realities of this thing, particularly for the next 

ten years, of what can you do and when can you do it. The Electric 

Power Research Institute probably has done more in this area than 

anyone else. They have laid it out and they continue to adjust their 

projections as to what can be done. I think everyone recognizes 

right now efficiency is probably the way that you avoid building 

generation. And any generation that is built now is going to be the 

most expensive generation in history, adds to the electric bill. So, 

anything that we can do to avoid building additional generation is 

beneficial, and the so-called Rural Star legislation is one way in 

which we think we can make a contribution and help avoid building that additional generation to help keep electric bills down. 

Second, right now, most of our folks, if they have to have additional generation, they are going to turn to natural gas. That is 

more expensive, but you can build a natural gas plant fast; you can 

get it within two to two-and-a-half years, but you are also recognizing the fact, if you have looked at this industry for any period 

of time, that gas has a history of being very volatile. And so, gas 

prices may be very affordable now, that is not to say where they 

will be down five to ten years from now, and that may have a huge 

impact. 

Nuclear, I know in your home State of Georgia, our members are 

interested in participating—have committed to participate in building a nuclear plant. It takes ten years to build a nuclear plant and 

a lot of money and then we still have the waste issues. Those have 

to be addressed in some way. 

So, as you begin to look at this, if you are looking at it from the 

standpoint, say, of an electric cooperative who is trying to meet the 

power needs of the future, the question is, okay, what do I do the 

first year, the second year, third year, fourth year, fifth year. What 

can I count being delivered when? And we have a lot of ideas, a 

lot of technology that is being viewed and looked at, but what can 

you rely on, and many people I do not think have a very good understanding of that. We have a lot of folks—and I know in this 

Committee—and my goodness knows we have a national renewable 

cooperative already set up—that national renewable cooperative 

cannot do much. To be honest about it, they cannot generate much 

in the way of renewable energy. Why? There is no place to go. No 

place to go. 

We can build huge wind generation farms in the Great Plains, 

that is where the wind is. Most of us recognize and understand 

that. We do not have it in Georgia, but you can do that in the 

Great Plains, but there are not that many people living in the 

54 

Great Plains. It does not take long to saturate the Great Plains 

with electric power. And so, if we cannot move that power out of 

the Great Plains, it does not do us any good to build it. We are not 

going to go out there and invest the money in a wind generator 

that does nothing except turn and does not really benefit anyone. 

Second point is you have certain realities with regard to renewable energy, such as—as I think we all understand and know—it 

is intermittent. The wind does not blow the same every day, and 

the wind has a tendency to blow at night more than it does during 

the day time. How do we offset that? So, we have to have some 

kind of baseload generation that you can count on and find some 

way to integrate renewable energy in with the rest of our energy 

plan, and that has to be laid out. 

Certainly, nuclear power—can we speed up the building of a nuclear power plant? I understand in China they can build them in 

five years. It takes us ten years, and at what cost? And what do 

we do with regard to that spent fuel, and can we, in fact, do as 

other countries do, reprocessing it? And I was involved, my goodness, years and years ago, the late 1970s, when we said, oh, we 

cannot do any reprocessing of fuel because it has the tendency to 

produce weapons-grade plutonium. Is there a more sensible way of 

going about that? 

So, I guess what I am saying, Senator, and you kind of pulled 

my chain on this one and did a pretty good job of it and excuse me 

for rambling on, but basically what it comes down to, wouldn’t it 

be nice to look at the next ten years and have government be a 

partner saying, okay, this is what we can do during this period of 

time. You can count on it; you can rely on it; you can go out and 

depend on it as far as an energy industry, and you can build the 

generation and you can accomplish it in this fashion. 

But as you pointed out earlier, and as several Senators have— 

goodness, we cannot even get this straightened out between government agencies, and certainly this is happening in the State of 

Georgia with regard to trying to use biomass. We have got—you 

have the Farm Bill and the regulations came out in the Farm Bill 

and what USDA is doing, which we thought we all understood and 

that is what we can count on and depend on and we were going 

to be able to, in fact, use biomass and building generation, but out 

of EPA, we have a more narrow definition, and now you cannot 

build all the generation down there. So, we say we want biomass 

involved, we want renewable energy, but then, whenever we have 

one agency that comes out with a definition completely contrary to 

what this Committee produces, how in the world do you depend on 

that? And where do you go with that? 

So, that is the reason we are just shifting one foot to the next 

trying to figure out what the heck do we do now, and we do not 

know. 

Senator CHAMBLISS. And we sympathize with you. 

Mayor Bush, in your current position and as past President of 

the Arkansas Municipal League, do you see advantages to regional 

approaches to rural economic development, such as those through 

the Delta Regional Authority, which includes numerous Arkansas 

counties, and are there any disadvantages to that type of activity? 

55 

Mayor BUSH . Senator Chambliss, I would say that you can no 

longer exist unless you develop regionally in all aspects, whether 

it is community development or economic development, you must 

take a regional approach. 

The DRA has been very helpful. We also have an organization in 

our region called the Southeast Arkansas Cornerstone Coalition, 

and we do depend on one another regionally to promote one another and move forward, and I think that that is the only way that 

we will survive. 

Senator CHAMBLISS. Mr. Sternberg, I am sure you know my good 

friend Jimmy Mathews, the longtime head of the Georgia Rural Development and Water Authority, and as I talk to Jimmy from time 

to time about the same thing—I just visited with Glenn about the 

massive regulations coming out of Washington that are affecting 

rural water projects, how do you see small towns in Arkansas coping with these massive regulations, expensive regulations, that are 

coming out, and what thoughts can you give us as to how we ought 

to approach the lessening of those regulations from a practical perspective? 

Mr. STERNBERG. Well, it is interesting—and when you mentioned 

Jimmy Mathews, Executive Director, from Georgia, I looked to see 

if he had his logo on these Georgia peanuts, but they are not there, 

but—— 

Senator CHAMBLISS. His name is probably on there somewhere. 

Mr. STERNBERG. Somewhere. But no, Senator, rural and small 

communities are challenged, especially with the federal regulations 

continually coming down. Under the RUS, the Rural Development 

Programs, loan and grant programs, I do think that we need to 

take another look at the low to moderate income formula on how 

that is done for loan-to-grant ratios so some of these communities 

can access more grant funding. 

Some of them—Mayor Bush and I were talking—one of her 

projects is just exceeding that limit on the percentages to be able 

to afford the grant. So, there are issues, and it is throughout Arkansas and it is throughout the Nation, but especially in Arkansas, 

we have seen several of those issues. 

EPA regulations are continually going to be bothersome for all 

water and wastewater system in the future. I am not saying they 

are not needed, but there is a tremendous cost that these systems 

are going to have to comply with to get up and running, and that 

is one of the things, with the funding that this agency allows is 

through USDA to provide the funding through wastewater and 

source water to help those small systems comply with those regulations. They cannot afford to hire engineers every time a new regulation comes down. They need assistance and they need quick assistance a lot of times, and that is what the success of our programs have been throughout Arkansas and throughout this Nation 

with rural water and continued funding to them is definitely something—I would add that regionalization is something we are going 

to have to look at in the water industry. We are seeing it in Arkansas where you have regional suppliers supplying to the smaller 

communities because of the new federal regulations coming from 

EPA on compliance issues. There are several of the EPA regulations it is going to affect—Arkansas and throughout this Nation. 

56 

Senator CHAMBLISS. Well, thank you very much, and thank all 

of you for being here. And let me assure you that the lack of attendance in no way is reflective of the value of your testimony. We 

are all busy and have conflicts. In fact, I am late right now to another hearing that I have to get to. But we appreciate very much 

you being here. Thanks for the great work you do in your respective areas, and we look forward to dialoguing with you as we move 

towards the reauthorization of the Farm Bill in 2012. 

The record will remain open for five business days for members 

who could not attend to submit questions in writing. And with 

that, the Committee is adjourned. 

[Whereupon, at 12:03 p.m., the Committee was adjourned.] 

(57) 

A P P E N D I X 

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DOCUMENTS SUBMITTED FOR THE RECORD 

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QUESTIONS AND ANSWERS 

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