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67–581 PDF 2011

THE ECONOMIC DEVELOPMENT ADMINISTRATION: 

HOW TO IMPROVE EFFECTIVENESS THROUGH 

REFORMS AND CONSOLIDATIONS 

(112–50) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JULY 27, 2011 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

(II) 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

JEFF DENHAM, California, Chairman 

TIMOTHY V. JOHNSON, Illinois 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas, 

Vice Chair 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

JOHN L. MICA, Florida (Ex Officio) 

ELEANOR HOLMES NORTON, District of 

Columbia 

HEATH SHULER, North Carolina 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

TIMOTHY J. WALZ, Minnesota 

DONNA F. EDWARDS, Maryland 

BOB FILNER, California 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

PANEL ONE

John R. Fernandez, Assistant Secretary of Commerce for Economic Development, U.S. Department of Commerce ................................................................. 4 

William B. Shear, Director, Financial Markets and Community Investment, 

U.S. Government Accountability Office .............................................................. 4 

PANEL TWO

David Baker, Senior Vice President, FutureFuel Chemical Company ................ 13 

Steve Etcher, Executive Director, Boonslick Regional Planning Commission, 

and Executive Committee Member, National Association of Development 

Organizations ....................................................................................................... 13 

David Spaur, President and CEO, Merced County Economic Development 

Corporation ........................................................................................................... 13 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Carnahan, Hon. Russ, of Missouri ......................................................................... 24 

Michaud, Hon. Michael H., of Maine ..................................................................... 27 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

David Baker ............................................................................................................. 28 

Steve Etcher ............................................................................................................. 31 

John R. Fernandez ................................................................................................... 41 

William B. Shear ..................................................................................................... 49 

David Spaur ............................................................................................................. 64 

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Insert offset folio 3 here 67581.003
ix 


Insert offset folio 4 here 67581.004
(1) 

THE ECONOMIC DEVELOPMENT 

ADMINISTRATION: HOW TO IMPROVE 

EFFECTIVENESS THROUGH REFORMS 

AND CONSOLIDATIONS 

WEDNESDAY, JULY 27, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, 

PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:43 a.m. in Room 

2253, Rayburn House Office Building, Hon. Jeff Denham (Chairman of the subcommittee) presiding. 

Mr. DENHAM. The subcommittee will come to order. Today’s hearing is on the Economic Development Administration, and how we 

can improve its effectiveness and maximize job creation. I appreciate Assistant Secretary Fernandez and Mr. Shear for being here 

today. I would also like to welcome our local and private sector witnesses who will testify later on this important topic. 

In particular, I am thankful for the participation of Mr. Spaur, 

who is president of Merced County Economic Development Corporation, which serves many of my constituents and the interest of 

the Central Valley. Mr. Spaur and the other witnesses have firsthand knowledge of the impact that this economy has had on many 

communities around our Nation. 

With high unemployment rates, large deficits, and an out-of-control debt that we are trying to get a handle on, we must ensure 

Federal economic development programs that are targeted, streamlined, and effective. My home State of California has an unemployment rate over 11 percent, and parts of my district have rates exceeding 17 percent. Finding real ways to generate job growth, support the expansion of private industry into distressed areas, and 

ensure long-term economic development is critical in this economy. 

We hear talk about creating jobs through Federal spending. But 

all too often, these jobs never materialize, or they are short-lived. 

When EDA was created in 1965, its fundamental mission was to 

create jobs and generate economic growth in distressed areas of our 

Nation. Today EDA carries out that mission through a number of 

different grant programs. These programs leverage non-Federal 

and private sector dollars, recognizing that it is the private sector 

and, in particular, small businesses that are the engine of our economy. Studies have shown EDA’s programs create jobs. For example, 

2 

a study completed in 2008 by Grant Thornton indicates that EDA 

programs create jobs at an average cost of $4,000 per job. 

However, even given these studies, the GAO has raised key questions for consideration. In its March 2011 report, the GAO identified 80 programs and 4 different departments that did some form 

of economic development, including 8 EDA programs. The GAO 

found that these programs could be working better together to improve their service to their customers. The GAO also questioned 

EDA’s process of auditing and accounting for the number of jobs 

created under its programs. 

It is critical, particularly in this economy, that we ensure Federal 

programs are as efficient as possible. It is also critical in programs 

like EDA’s to ensure processes are streamlined. With many Federal 

programs focusing on economic development, Congress must look at 

each program and find ways to streamline reform and, where necessary, consolidate. 

With that said, EDA is the only Federal agency whose sole mission is to create jobs and spur economic growth nationally. While 

other agencies may have similar goals, those goals are typically 

tied to other policy objectives. And EDA tends to have the greatest 

flexibility in ensuring its dollars are spent to maximize job growth. 

That’s why I am pleased to know EDA has been taking steps to 

enter into agreements with other agencies to improve coordination 

among some of the programs. 

However, these partnerships take significant time and effort, because of inconsistencies in regulations and policies. We must find 

a way to either consolidate programs or cut the bureaucratic hurdles to better and efficient coordination. 

I look forward to hearing from our witnesses today on these important issues. I would now like to recognize Ranking Member Norton from the District of Columbia for 5 minutes to make any opening statements she may have. 

Ms. NORTON. Thank you very much, Chairman Denham. I particularly appreciate this hearing that you have called on the reauthorization of the Economic Development Administration, and I 

welcome today’s witnesses. 

Created over 45 years ago to alleviate substantial and persistent 

unemployment in economically distressed areas, EDA has helped 

retain and create jobs, reduce poverty, increase personal income, 

and improve the livelihoods of local communities, mostly from 

funds from private and other non-Federal sources. From funding 

research to business incubators, to workforce development, to small 

business development, and basic infrastructure, EDA assists local 

communities in developing the skills and infrastructure necessary 

to compete in today’s global economy. 

The EDA is the only Federal agency focused exclusively on economic development. Its proven track record was verified by an 

independent consultant, who concluded that the Federal Government receives a high return for the dollars invested in EDA. Specifically, it was confirmed that EDA’s construction grant program 

generates 2.2 to 5 jobs per $10,000, resulting in a cost per job of 

$2,001 to $4,611. 

In fiscal year 2010, EDA saw a return on investment of $6.90 in 

private-public investment for every Federal dollar invested. Of the 

3 

$285 million EDA awarded in fiscal year 2010, approximately 

$191.5 million funded construction projects that are expected to 

help create or retain approximately 48,500 jobs and generate nearly $6 billion in private investment. 

EDA’s effectiveness stems from its use of a bottom-up approach, 

by partnering with communities that can determine their own 

needs to develop long-term sustainable economies. 

Last Congress this subcommittee held hearings on the need to 

reauthorize EDA. And in July 2010, the full committee reported by 

voice vote a bill to reauthorize EDA. It is clear that a bill to reauthorize EDA is a bill to create jobs at little cost to the Federal Government. And we know that EDA is vital to reducing unemployment in areas that would otherwise wait much longer than other 

areas for recovery. 

Last month the national unemployment rate was 9.2 percent, 

while the District of Columbia unemployment rate was 10.4 percent, while some areas of the District are experiencing an unemployment rate of over 20 percent. 

In a time of high unemployment, and with the economy struggling to recover from the recession, Congress cannot afford to let 

another opportunity to reauthorize EDA go by. Even though EDA 

is valuable to our Nation’s economy—I would say invaluable, and 

singularly so, because there is no agency like it—there is, of course, 

room for improvement. 

The General Accounting Office has identified EDA as an agency 

providing economic development programs similar to those of other 

Federal agencies, and believes that more collaboration among agencies is necessary. It is, however, important to note that even GAO 

agrees that its own conclusions are tentative, and that more work 

would need to be done before it could conclude that there is actual 

duplication and related waste or inefficiencies when it comes to 

EDA. Our own work over the years has found just the opposite, I 

must say. 

I look forward to learning more about EDA’s collaboration with 

other agencies to develop regional innovation clusters and any preliminary outcomes from this initiative, or from the work it has been 

doing and not reported thus far. 

Once again, I would like to thank the witnesses for appearing 

today; the chairman, for calling this hearing. And I look forward 

to today’s testimony. Thank you, Mr. Chairman. 

Mr. DENHAM. Our witnesses here today on our first panel, we 

have the Honorable John R. Fernandez, Assistant Secretary for 

Economic Development, U.S. Department of Commerce, and Mr. 

William Shear, director of financial markets and community investment, U.S. Government Accountability Office. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. Without objection, so ordered. Since your 

written testimony has been made part of the record, the subcommittee would request that you limit your oral testimony to 5 

minutes. 

Assistant Secretary Fernandez, you may proceed. 

4 

TESTIMONY OF JOHN R. FERNANDEZ, ASSISTANT SECRETARY 

OF COMMERCE FOR ECONOMIC DEVELOPMENT, U.S. DEPARTMENT OF COMMERCE; AND WILLIAM B. SHEAR, DIRECTOR, FINANCIAL MARKETS AND COMMUNITY INVESTMENT, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. FERNANDEZ. Thank you very much, Chairman Denham and 

Ranking Member Norton and members of the subcommittee. I certainly want to thank you for the opportunity to testify today on behalf of the Economic Development Administration. 

Now, there is no denying that this is a tough economy. The country is recovering from the deepest recession since the Great Depression. And while there has been progress, economic and job growth 

has not been strong enough nor fast enough. We clearly have more 

work to do. 

And while we acknowledge the work at hand, we must also operate in a constrained fiscal environment. One of the most important 

urgent things that we can do for the economy is to get our fiscal 

house in order, and reduce our Nation’s deficit. In this context, the 

focus of today’s hearing is particularly timely and very important. 

When we look closely at thriving economies, we see at their core 

a business climate that supports innovation, industry clusters, the 

development and growth of entrepreneurs and small businesses. 

EDA’s investments—public-private partnerships to create jobs and 

encourage business expansion. Importantly, the investments that 

we make support bottom-up strategies developed by the local and 

regional leaders. This orientation, that the best ideas bubble out 

from the regional and small business leaders, is a critical element 

of EDA’s success. 

Rather than pursuing a one-size-fits-all approach, EDA’s funds 

customize solutions. EDA’s unique portfolio of flexible programs allows us to respond to the changing regional conditions. We are able 

to do this, because EDA is the only Federal agency with economic 

development as its sole purpose. 

I recently visited Fresno, California, an area particularly hard 

hit during the economic downturn. EDA funds helped construct the 

Claude Laval Water and Energy Technology Incubator. At WET, as 

they call it, start-up companies and entrepreneurs are doing cutting-edge research in the use of water, supporting the agricultural 

sector while helping small new businesses grow. WET reports that, 

since opening their doors in 2007, it has launched 15 businesses, 

leveraged $17 million in private capital, and created 95 jobs. 

This incubator is also a good example of how EDA has been successful linking programmatic support across Federal agencies in a 

highly complementary way. At WET, the USDA, Rural Development, and the SBA provide programmatic support in a facility constructed with EDA funds. There are other examples in my written 

testimony of this kind of collaboration. 

EDA is also using its knowledge of best practices to further advance regional economic growth strategies through coordinated 

Federal investments. For example, we recently announced the Jobs 

and Innovation Accelerator Challenge. The Jobs Accelerator, 

through a single competitive process, offers $33 million in funding 

from 3 different Federal agencies, as well as technical assistance 

5 

from another 13, so that we can support 20 competitively selected 

industry clusters with high-growth potential. 

This initiative represents the Administration’s policy priority to 

accelerate bottom-up innovation, while bringing together siloed 

Federal programs and promoting more coordinated Federal investment opportunities. 

Now, every region across the country has unique economic challenges, opportunities, and assets. The diversity of these regional 

economies also reflects the complexity that often makes up an economic development ecosystem. Working with the regions to develop 

local economic development strategies, we can leverage these opportunities for the central purpose of increasing productivity and 

job growth. 

EDA’s bottom-up approach to economic development is the ability 

to customize our solutions that address what the communities 

want. And the distinct authority and focus we have with this mix 

of flexible tools really allows us to customize our activities. Our 

tools include planning, we have economic development technical assistance, we support innovation infrastructure. While all of these 

programs may have a distinct focus and authority together, they 

bring flexible tools that address the critical economic needs of distressed communities. 

I want to also make a point that, you know, we are constantly 

looking for opportunities to improve how we operate. When I joined 

EDA it took, on average, 128 business days to get a decision on a 

grant. Today it is less than 20. We recently completed a public 

comment period on our regulations. Later this summer, we expect 

to publish streamlined regulations that are even more flexible, responsive, and improve accountability for the agency. 

Mr. Chairman and Ranking Member Norton and other members 

of the committee, EDA is proud of our performance, and firmly believes that the agency will continue to be a catalyst for job growth 

throughout the country. 

And I certainly look forward to answering any questions you may 

have today. 

Mr. DENHAM. Thank you, Mr. Fernandez. 

Mr. Shear, you may proceed. 

Mr. SHEAR. Thank you. Chairman Denham, Ranking Member 

Norton, and members of the subcommittee. I am pleased to be here 

this morning to discuss the potential for overlap, duplication, and 

fragmentation in economic development programs. In March, and 

then more recently in May, we reported on this issue. My statement is based on this work. 

Absent a common definition for economic development, we had 

previously developed a list of nine activities most often associated 

with economic development. Our recent work includes information 

on economic development programs at four agencies: Agriculture, 

Commerce, HUD, and SBA. Commerce administers 11 of the 80 

programs we have included, with EDA representing 8 of the 11. According to the agencies, funding provided for these 80 programs in 

fiscal year 2010 amounted to $6.2 billion, of which about $2.9 billion was for economic development efforts. 

Here I want to stress that our focus to date has been on the design of these programs. In other words, we have evaluated the perVerDate Aug 31 2005 10:33 Oct 25, 2011 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\7-27-1~1\67581.TXT JEAN
6 

mitted uses of funds and have not, as of yet, drilled down to see 

how each program’s funds are actually distributed among various 

uses. 

In summary, based on our work to date, we have found that the 

design of each of these economic development programs appears to 

overlap with that of at least one other program, in terms of the economic development activities that they are authorized to fund. 

Commerce, HUD, SBA, and USDA appear to have taken actions 

to implement some collaborative practices, but have offered little 

evidence to us so far that they have taken steps to develop compatible policies or procedures with other Federal agencies, or to search 

for opportunities to leverage physical and administrative resources 

with their Federal partners. And the agencies—and here I mean 

the four agencies across the board—appear to collect only limited 

information on program outcomes, information that is necessary to 

determine whether this potential for overlap and fragmentation is 

resulting in ineffective or inefficient programs. 

Building on our past work, we are in the planning phase of a 

more indepth review that will focus on a subset of these 80 programs. Just last week we met with EDA to discuss the current engagement. At this time we think that we may have a focus on the 

programs that fund entrepreneurial efforts. 

Based on the classification scheme we have used to date, six of 

the eight EDA programs can fund entrepreneurial efforts. Excluding community trade adjustment assistance, a program that did not 

receive any appropriation in fiscal year 2010, the remaining five 

programs are: grants for public works and economic development 

facilities; economic adjustment assistance; global climate change 

mitigation incentive fund; economic development technical assistance; and research and evaluation. The two remaining EDA programs, economic development support for planning organization 

and trade adjustment assistance, are classified as supporting one 

activity: plans and strategies. 

In our May 2011 report, we compared the 80 programs by identifying the primary targeted recipient for each program. And in our 

work going forward we plan to further differentiate the programs. 

In this work we plan to: identify the services that each program 

provides; explore alternative definitions for economic development 

and update, if necessary, the economic activities that are generally 

accepted as being directly related to economic development; evaluate the efficacy of collaborative relationships that have been established by the agencies and identify additional opportunities for collaboration; determine and apply criteria for program consolidation; 

and assess how program performance is measured. 

Chairman Denham and Ranking Member Norton, this concludes 

my prepared statement. I would be happy to answer any questions. 

Mr. DENHAM. Thank you for your testimony. Mr. Fernandez, you 

highlighted the WET incubator program on the campus of Cal 

State Fresno. Can you elaborate on how the EDA funds were used 

to create this incubator, and what was EDA’s investment, and 

what are some of the key outcomes that you have seen already? 

Mr. FERNANDEZ. Thank you, Mr. Chairman. Yes. The WET 

project came—you know, you have to back up. Before there was a 

proposal to fund WET, EDA was engaged with some of our partVerDate Aug 31 2005 10:33 Oct 25, 2011 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\7-27-1~1\67581.TXT JEAN
7 

ners there to develop strategies. And WET was an investment that 

was built on the strategies that they developed on how to diversify 

the economy and how to build on the assets they had. 

So it was tied to that initial strategy, which is an important distinction about how we make our investments. All of our competitive 

applications have to be tied to a clear economic development strategy that is sustainable. And that is why I think you see the sustained impact of these investments. 

WET itself was in—we invested $1.8 million to help with the construction. Those funds were matched by local sources. And as I 

noted in my testimony, since 2007 we have seen the results of the 

15 new companies, $17 million—there is several companies that 

are already becoming market leaders in their industry sector, 95 

new jobs. 

But, most importantly, it has been a catalyst to bring together 

private and public support for this industry sector that they are 

trying to grow. So you see companies like Amazon and Microsoft 

providing programmatic support to the tenant companies. You see 

not just USDA’s Rural Development and SBA providing program 

support, but also the city of Fresno, other cities in the area, and 

the workforce investment board. 

So, together, you know, we funded to help fund the facility, but 

other agencies, public and private, are bringing the programmatic 

support to support those entrepreneurs and help them grow their 

businesses. 

Mr. DENHAM. And the GAO has raised concerns about the selfreported nature of EDA’s job creation figures. Can you talk about 

how EDA arrives at some of the job creation numbers, and what 

steps you are taking to ensure that those numbers are correct? 

Mr. FERNANDEZ. Yes. I think this is a very important question 

that GAO has reported and brought up. And you know, as they 

note, our applications require that the various applicants submit 

estimates, estimates on projected job growth, as well as potential 

private sector leverage. They are self-reported, and that has been 

one of the areas that folks have brought up from time to time, in 

terms of the accuracy. 

But it is important to note that, you know, in addition to the 

Grant Thornton study that essentially validated the methodology 

that EDA uses to generate the projected impact of these investments, that our GPR reports, which include the job numbers and 

the private sector leverage, have been consistently, you know, on 

target. And I think there is only 1 year in recent reporting where 

the projected estimates were less—or the actual job creation numbers were less than projected, and that was from the 6-year count 

off of investments made in 2001. 

But what we do is that, in addition to the self reporting, there 

is a vigorous process at the front end, where people on the ground 

with the agency do due diligence. And they understand what is 

happening in the community and the regions, they know who the 

players are, and there is a little bit of art that goes along with the 

science of evaluating projects. 

We also do annual reporting from the recipients. They report 

back on the outcomes. We do these what we call—— 

8 

Mr. DENHAM. Does that annual reporting also include a 6-month, 

a 1-year, 2-year, 5-year review on—— 

Mr. FERNANDEZ. It is the—— 

Mr. DENHAM [continuing]. The sustainablity of those jobs? 

Mr. FERNANDEZ. Yes, it’s 3-, 6-, and 9-year increments. 

Mr. DENHAM. Three, six, nine. 

Mr. FERNANDEZ. Because, I mean, most of economic development 

is really—in our work, it’s really about building assets that communities can use to leverage production activity and growth of businesses. And they tend to have a long-term or medium-term impact. 

So we use a 3-, 6-, 9-year reporting. 

But we do—we call them A123 audits, where we look at the reporting, look for anomalies, look if it’s consistent with our own 

studies and analysis over the years. We do a sampling of site visits. 

We can only do a limited number, based on resources we have. But 

that’s another mechanism that we use to go validate the numbers. 

But again, I mean, the Grant Thornton study essentially said 

that, while there are limitations to self-reporting, in the main the 

numbers that we are using to estimate impacts are pretty consistent with their findings. 

Mr. DENHAM. Thank you. My time has expired. Ms. Norton? 

Ms. NORTON. Thank you, Mr. Chairman. I wish you would discuss the stimulus funds that the EDA got, how they were used, and 

what the results thus far are. 

Mr. FERNANDEZ. Well, the—thank you. The Stimulus Act allo- cated about $150 million to EDA for our programs. $147 million of 

that went directly into our projects. We were able to obligate 100 

percent of those funds within the first year of the program. And to 

date we have dispersed about 63 percent of the funds. So all but 

one of the projects are actually in progress. 

You know, it was a limited amount of money, but the vast majority of our dollars went into construction projects, infrastructure 

projects. So, you know, we have not been to the—we are not to the 

point where we are getting the 3-year reporting on outcomes, but 

we anticipate that the lift from those dollars are going to be significant, and consistent with our other programs. 

Ms. NORTON. I wonder if both of you could comment on the real 

effects—the effects on the ground—if there is no reauthorization 

this year. Does it matter that there is no reauthorization? What is 

the effect? 

Mr. FERNANDEZ. Well, I mean, you know, there is real effects and 

perceived effects. I think that as long as the budget includes funding for EDA, it certainly enables us to continue—— 

Ms. NORTON. Well, what does the budget include now? What— 

how much cut in 2011 was proposed? I suppose you don’t know yet 

for 2012. How much down or up, or whatever it turns out to be in 

2012? 

Mr. FERNANDEZ. The continuing resolution for fiscal year 2011 

maintained our program support at the same level as the previous 

fiscal year. We did have a cap on our salary and expenses, which 

has created some challenges for us. We don’t know what is going 

to happen in 2012. The proposal the President made actually increased funding for EDA in a modest way, but that was in the context of a discretionary, non-defense spending freeze. And I think 

9 

the statement of the prioritization of economic development—you 

know, we look forward to seeing the outcome of the budget process. 

Ms. NORTON. Yes, do you have a comment on that? 

Mr. SHEAR. Our focus tends to be on the programs that are in 

place, the expenditures that are made, and we don’t focus on reauthorization. But one of the things that we’ll be looking for with reauthorization, as well as the appropriations process in EDA’s plans, 

is what resources EDA has in place to evaluate the investments 

that they are deciding to make, and how they evaluate those investments after they are made. 

Ms. NORTON. Yes. Indeed I have a question on that. I must say 

that the leveraging effect of EDA argues very strongly for funding 

it. It’s not as if this agency gets any money. What this agency does 

is to give the functional equivalent of the seal of approval that 

work that the community wants to do, and then they come in. They 

see the government thinks this is worthwhile, and then the private 

sector—if you will forgive me—piles on, and sometimes the State 

and local governments, as well. 

I don’t think there is anything else like it, so it would be pretty 

penny unwise and pound foolish to cut this leveraging effect. 

Finally, this notion of what the impact is that both Mr. Shear 

and Mr. Fernandez comment on, I noted that there was something 

I find very interesting used, because it’s very difficult, I understand, to estimate impacts and to discuss them intelligently. The— 

one of your consultants, Grant Thornton, apparently installed 

something called an ‘‘impact estimation tool’’ on the EDA computer 

system. 

So, one, I would like to know how this works, whether you are 

using it, and I would like to ask Mr. Shear, in light of the GAO 

report that says that estimate impacts are sometimes unreliable, 

whether you think this kind of a tool will be effective. 

So first let’s hear from Mr. Fernandez. 

Mr. FERNANDEZ. Yes, I think your question—— 

Mr. DENHAM. Very quick response, please. 

Mr. FERNANDEZ. We use a version of the tool that uses the same 

methodologies. But I can’t say with certainty we actually use the 

specific computer program—or at least the algorithms—that they 

created. Ours are very conservative, I would note. 

But I would note, if I could, Mr. Chairman, quickly, another 

thing that Grant Thornton noted is that while we have focused on 

job creation and private sector leverage, arguably we underestimate and under-report the full economic benefit and community 

benefit of the investments we make, because we are not looking at 

induced impacts, we are not looking at the broader community impacts. 

Many agencies at the State and local level use things like implant that have input-output models that can really tell much more 

robust economic impact from investments we make. 

We are taking a very narrow sliver here. But for us, the jobs and 

the leverage are really important, but we got to get back to what 

are our investments really designed to do. And they are to create 

assets, economic development assets in communities that they can 

use to help advance their economic development strategy. And it is 

10 

hard to completely evaluate the full economic benefit of increasing 

the asset base in the community. 

Mr. DENHAM. Thank you, Mr. Shear. Anything to add very briefly? 

Mr. SHEAR. Yes. I will start out by saying we think the Grant 

Thornton study is useful. The tool itself I can’t speak to, and so I 

defer to Mr. Fernandez. 

But the point you made—which is an excellent one—this is difficult to estimate. It is a very difficult exercise. And, to some degree, we are going to be looking not just at what Grant Thornton 

addressed, but where and how EDA has implemented Grant Thornton recommendations for improvement. We are also going to look 

more generally at the metrics that are used to evaluate EDA investments. 

Mr. DENHAM. Thank you. Mr. Crawford? 

Mr. CRAWFORD. Thank you, Mr. Chairman. I have just a real 

quick question for Mr. Shear. Thank you for your time today. 

Do you believe more jobs will be created with less cost, if some 

programs were consolidated? And if so, talk about some of those 

programs, what they would be. 

Mr. SHEAR. Many times, outside of the committee setting, I have 

gotten that question. And I really have to revert back to the idea 

that we have identified areas of potential overlap. We will look for 

areas where consolidation could be helpful and where collaboration 

could be helpful. But it is difficult to put our finger on it at this 

point. 

I will just mention some of the programs. There are some programs that address counseling and training for entrepreneurs. 

Some of those programs have been a focus of the small business 

committees. There is also some focus as far as some programs, such 

as community development block grants, which are many times 

used for economic development purposes, is a way to provide funding where the locality has more control, in contrast to EDA. 

So, there are different approaches for economic development, but 

we really can’t yet identify any where consolidation or different 

types of coordination and collaboration could really improve. We 

are trying to get to that point. 

Mr. CRAWFORD. I yield back. 

Mr. DENHAM. Thank you. Ms. Edwards? 

Ms. EDWARDS. Thank you, Mr. Chairman, and thank you very 

much, gentlemen, for your testimony. 

I have a couple of questions for you, Secretary Fernandez. You 

mentioned in your testimony that the grant cycle had been significantly reduced. And it does strike me that that is one of those 

areas where, if you look at the comparable—the agencies that were 

compared in the GAO report, where there have been significant 

issues raised about the length of time that it takes to proceed 

through a grant cycle, and then that distance in time creating some 

differences in terms of what was originally planned versus what 

can be accomplished, and I guess I wonder, in a coordination role, 

whether there are some things that you have learned, in terms of 

tightening up that process, that actually could be useful to some of 

the other agencies that are also doing similar economic development activity. 

11 

Mr. FERNANDEZ. Well, thank you. I guess I would put this in context. I mean I spent nearly 20 years doing economic development, 

primarily at a local level. I was a mayor for 8 years, worked in real 

estate and investment. And, you know, that experience kind of colors my perspective. 

And when you’re the customer, the bottom line is you need a decision. Even if it’s a decision that says no, if I can’t get my deal 

financed I need to know so I can move on to Plan B. So that was 

kind of the perspective that I bring to EDA. And when you look at 

a process that was taking, on average, over 128 days, that is very 

difficult for folks to make informed decisions, particularly in these 

economic times, and where money is tight. 

So, I guess what—the lesson learned would be that we did a 

pretty deep dive into every step of the process. We did, like, a 

fishbone analysis and said, ‘‘Here is all the different things that 

happen. Where are their opportunities to consolidate activities? 

Where are their activities that aren’t really value-added into the 

decisionmaking process,’’ and got rid of them. 

But most importantly—and this was a substantial change for 

EDA—we went to a quarterly tranche system with firm deadlines. 

Prior to this new process, we didn’t have a firm deadline. So we 

would have rolling applications, which—you know, there is an upside to that, as well. But when you’re competing for limited money, 

you never know where you’re at in the cycle, and you never know 

who you’re competing with. And, as an agency, it is hard for us to 

tell the story from an accountability and transparency perspective. 

So, we were able to come—you know, do this new process. We 

had a lot of stakeholder input. And we did this in a way that hasn’t 

diminished the consultive role that EDA plays. 

So, when you submit an application today, within 15 business 

days we will do a quick merit review and tell you where there are 

strengths and weaknesses in your application, and give you an opportunity to fine-tune it, make it stronger. And then, when we go 

into the competition, we know that we are getting projects that 

have been really well put together, and it is highly competitive. 

And, you know, when we look at how we measure impacts, and 

whether or not it is a good program or not, I mean, one of the 

things we have to bake into our thinking is that there is a lot of 

due diligence that goes in at the front end for EDA selecting 

projects, because we are so oversubscribed that we can’t justify not 

selecting highly competitive projects. 

The other thing I would just note, though, is that—really, based 

on my own experience—is that in many instances it is not a matter 

of whether you consolidate programs. But are you coordinating 

them? And so you have different kinds of Federal resources that 

are really more complementary than duplicative. But the trick is 

that if you are trying to do a multidisciplinary solution to a problem on the ground, you still got to have a streamlined, synchronized decisionmaking process. 

The way it is today is that you may have to go to three different 

Federal agencies that have three different grantmaking processes, 

three different timelines, and when you add it all up together you 

really have increased my transaction costs, and the decision cycle 

is unpredictable, and usually way too long. 

12 

So, what we have tried to do is take the lead in these coordinated 

efforts, where we bring multiple agencies together to complement 

our investments, do it in a seamless system that has a set deadline, where all of the decisions are made. And that is something 

that our customers desperately want, and I think that is where 

there is a tremendous opportunity to enhance the performance of 

all these programs, not necessarily by consolidating, but enhancing 

the collaboration and coordination. 

Ms. EDWARDS. Thank you. And just as my time closes, I wonder 

if Mr. Shear could comment on this. Because I think when you look 

at the other programs that you evaluated, this is a huge complaint 

that we get, both from the local level—about the process of getting 

those grants. And is that something that you actually looked at? 

Mr. SHEAR. In our work over the years—which has taken us to 

EDA a number of times—we are aware of the problem. It has been 

a while since we did audit work to focus in on them. But we are 

certainly aware of the problem. And when there are different ways 

that localities can make use of Federal funds to try to affect economic development, different types of community development, or 

to build up its small businesses, it does become a problem when it 

is hard to get decisions from any one agency, or when you find 

yourself having to meet the requirements of agencies that don’t 

have compatible policies. 

Ms. EDWARDS. I strongly suggest a really deep look at the grant 

cycle process, and where that crosses over these agencies, because 

I think that there are some real lessons to be learned there. 

Anyway, my time has run out. Thank you. 

Mr. SHEAR. Thank you. 

Mr. DENHAM. Thank you. And thank you for your testimony. 

Your comments have been very helpful today. I know that there 

are a number of other questions that we have; we will submit those 

to you in writing. 

I will now call our second panel of witnesses: Mr. Steve Etcher, 

executive director of Boonslick Regional Planning Commission; Mr. 

David Spaur, president, Merced County Economic Development 

Corporation; and Mr. David Baker, senior vice president, 

FutureFuel Corporation. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. Without objection, so ordered. 

Since your written testimony has been made part of the record, 

the subcommittee would request that you limit your oral testimony 

to less than 5 minutes. 

And at this time I would like to recognize first Mr. Crawford for 

a short statement. 

Mr. CRAWFORD. Thank you, Mr. Chairman. I am privileged to introduce one of our witnesses today, Mr. David Baker, the senior 

vice president of operations support for FutureFuel Chemical Company located near Batesville, Arkansas, in the district that I am 

privileged to represent. FutureFuel has a 30-year history in developing and manufacturing complex specialty chemicals. Today 

FutureFuel is an active participant in the U.S. biodiesel industry. 

Additionally, FutureFuel is engaged in the evaluation of technologies used to manufacture cellulose-derived fuels and other bioVerDate Aug 31 2005 10:33 Oct 25, 2011 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\7-27-1~1\67581.TXT JEAN
13 

based products that have the potential to reduce our dependence on 

foreign oil. 

Shortly after the November election I had the privilege to visit 

with David and the leadership at FutureFuel. I was extremely impressed by their team and their facilities, located on the banks of 

the White River. They are a leader in Arkansas, as well as the Nation, by investing in research and development that is led by wellqualified doctorate-level researchers. Their company is a prime example of the manufacturing process being driven by high-tech research and development. 

It is my honor and privilege to introduce before the committee 

Mr. David Baker. Thank you for being here. 

Mr. DENHAM. Thank you. And Mr. Etcher, you may proceed. 

TESTIMONY OF STEVE ETCHER, EXECUTIVE DIRECTOR, 

BOONSLICK REGIONAL PLANNING COMMISSION, AND EXECUTIVE COMMITTEE MEMBER, NATIONAL ASSOCIATION OF 

DEVELOPMENT ORGANIZATIONS; DAVID SPAUR, PRESIDENT 

AND CEO, MERCED COUNTY ECONOMIC DEVELOPMENT 

CORPORATION; AND DAVID BAKER, SENIOR VICE PRESIDENT, FUTUREFUEL CHEMICAL COMPANY 

Mr. ETCHER. Thank you, Chairman Denham, Ranking Member 

Norton, and members of the subcommittee, for the opportunity to 

testify today about Federal economic development programs, including the U.S. Economic Development Administration, or EDA. 

My name is Steve Etcher. I am the executive director of the 

Boonslick Regional Planning Commission, located in Warrenton, 

Missouri. I also currently serve on the executive committee of 

NADO, which is a national membership organization for the Nation’s 540 regional planning and development organizations, including the EDA’s 380-plus economic development districts. 

I would like to respectfully make three core points this morning. 

First, Mr. Chairman, I would like to stress that EDA is unique 

among the portfolio of Federal economic development programs. 

The agency’s program flexibility, partnership structure, and performance results are exceptional within the Federal system. As 

GAO noted earlier, there are currently more than 80 Federal programs related to domestic, community, and economic development. 

While many of these line item programs are housed within larger 

departments and agencies, EDA is the only Federal agency with 

the sole mission of creating high-quality jobs in the United States. 

Our second main point, Mr. Chairman, is that many of the programs outlined in the recent GAO reports support broader community development activities, rather than focusing strictly on job creation and economic growth, like EDA. While both of these related 

activities are necessary, especially for distressed communities, it is 

important to note how EDA supports regional and local economic 

development partners. 

By Federal law, EDA typically requires a 50 percent local cost 

share, and significant private sector investment. This helps to ensure local officials are committed to a project’s success. EDA’s investments are focused on high-quality, long-term jobs. And, by Federal law, EDA’s investments must be tied into a regional, comVerDate Aug 31 2005 10:33 Oct 25, 2011 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\7-27-1~1\67581.TXT JEAN
14 

prehensive economic development strategy developed and vetted by 

local officials, including the economic development districts. 

EDA is uniquely designed to address almost any economic development activity, both from areas suffering from chronic distress, as 

well as more sudden and severe dislocation, such as plant closures 

and natural disasters. 

Our third main point, Mr. Chairman, is that there are many opportunities for reform within Federal community and economic development programs. This includes elevating EDA’s role as the lead 

Federal economic development agency. This is important for better 

coordination and consistency. Rather than focus solely on opportunities across the four major Departments of Commerce, HUD, 

USDA, and SBA, as outlined in GAO’s May 2011 report, we see 

greater opportunities for agencies and programs within each of 

these departments to be streamlined, better coordinated, and reformed. 

Another option is to focus on coordinating and prioritizing Federal community and economic development investments based upon 

regionally based, locally driven, comprehensive development strategies, known as the CEDS. While an area must have a CEDS to 

qualify for EDA funds, these regional strategies should be used 

more aggressively to inform, coordinate, and prioritize investments 

by other related Federal agencies. 

Finally, today’s modern economy requires that distressed and underserved regions be prepared for the innovation and knowledge 

economy. Therefore, it is essential that EDA, as the lead Federal 

economic development agency, be more closely aligned with programs for workforce development, research and development, and 

science and technology, not just the traditional infrastructure partners. 

Mr. Chairman, please allow me to close by giving you a specific 

example of how our EDD, which is part of EDA’s network of economic development districts, has helped prepare our region for the 

future. Our region was drastically impacted by major flooding in 

1993, 1995, and again in 2008. Entire communities were destroyed. 

Businesses, infrastructure, homes, and jobs were completely 

washed away. EDA provided matching resources for our organizations to assist these flood-ravished communities. 

Our efforts were not focused on the immediate emergency response, like those efforts of our local responders and FEMA. Instead, our role is to work with our local communities and develop 

long-term economic recovery strategies, and to take strategic actions that will make our region more resilient during future natural or economic crisis. With support from EDA, we decided to 

tackle these challenges differently. We innovated, we collaborated, 

and we helped our local communities envision a life without the 

constant threat of flooding. 

In three separate communities during the past 20 years we physically relocated these flood-ravaged communities out of the flood 

plain, obtaining local buy-in, planning the logistics, and leveraging 

this change into new economic opportunities. 

We agree that Federal development programs can be better integrated, streamlined, and updated. We also feel that EDA and its 

15 

EDD partnership network should serve as the backbone for these 

efforts at the regional level. 

Thank you again, Mr. Chairman, and members of the subcommittee for the opportunity to appear before you today. We appreciate your interest in this timely and important issue, and we 

look forward to continuing this dialogue. 

Mr. DENHAM. Thank you, Mr. Etcher. 

Mr. Spaur? 

Mr. SPAUR. Thank you, Chairman, members of the committee. 

Congresswoman Edwards, I heard your comments, take those to 

heart, and Mr. Crawford. 

I am Dave Spaur, president, Economic Development Corporation, 

Merced County, located in the Central Valley of California. It is an 

eight-county region, I am one of eight counties. I served on that 

committee several years as its chair, been in the Central Valley 

over 10 years, and I have served on the board of directors of the 

International Economic Development Council. I do partner with 

NADO, and appreciate the assistance that these organizations provide to us, particularly in rural communities. 

I have about 25 years of economic development experience, mostly in California, a little bit in Arizona. I have worked in rural communities, I have worked in urban communities. Started working 

with Sierra Economic Development District. Kind of straddles Lake 

Tahoe, so it gives you a little bit of perspective of where it’s at. 

They’re a planning organization and an economic development organization, not an easy task. 

I wanted to state to this committee some of the important things, 

and focus my comments on some of the projects that we have been 

working on in the Central Valley. 

As you have heard from the chairman’s opening comments, our 

unemployment rate is 17 to 22 percent. Some of our cities are 23, 

24, and 25 percent. And they have been that way for the past decade, or for the last 30 years. I am sure some of your communities 

are the same way. Chronic unemployment is an issues. 

Strategies is what reduces that. Infrastructure investment is 

what reduces that. We were on the Forbes list as the worst community for foreclosures in the entire United States. We were rated 

number one. I am proud to announce today we are rated number 

four. We haven’t moved up the list much, but programs like EDA 

help us do that, and they are extremely important. There is just 

not enough funds to go around, so you have competing communities 

and competing counties. And I think, Congresswoman Edwards, 

some of the complaints you hear about EDA is, because there is not 

enough money to go around, we tend to compete with one another. 

EDA is a very stringent and conservative program under the Department of Commerce. And I think when they were first formed 

there might have been scrutiny. Are we really going to create jobs? 

And as a result, they have deed restrictions on properties when you 

enter into an agreement to build an incubator, or bricks and mortar for a building to help a company. On water and sewer—I have 

done airports, I have done water and sewer. And very stringent 

numbers on you have to create jobs. Because they are all about creating jobs. 

16 

But the job reporting really doesn’t get reported right. Because 

of their conservative approach, even the Grant Thornton report is 

counting direct jobs related to that project. There is hundreds of 

other jobs created after that project happens. 

EDA, what it is not, it is not an earmark. We all know earmarks 

have funded many infrastructure projects. Earmarks are very important in our district, as well as your district. 

Our experience is the bid process has been streamlined, but that 

is where a lot of complaints do come from. It is not a complaint to 

get rid of EDA, it is a complaint that we wish it were faster, we 

wish we got the money sooner. 

EDA is extremely cost effective. It forces private sector to come 

to the table. It forces me to provide a dollar-for-dollar match, 

which—really, no other program does that out there. And it does 

bring the private sector and the public sectors together. 

The EDA leverage you have heard is really seven-to-one. For every dollar they put in, it leverages another $7. I think that that 

is extremely important. 

It’s got a heck of a portfolio of projects. But accessing those portfolio of projects would be best practices. And I was fortunate to 

learn about one in Pomona, Cal Poly Pomona, on leveraging dollars 

for a hospital, for a blood bank, and for a biotech life science center. 

That came from Will Marshall, who handles southern California 

and the Central Valley. And I was trying to do the same thing in 

Sacramento, and he shared with me how that could be done. If we 

had more access to EDA and their other programs, we could look 

at best practices and we could look at better strategies on solving 

solutions across the United States. It’s just not enough funds and 

not enough staff to go around. 

You have a list of the projects here. In Merced we have an Air 

Force base that closed, Castle. It has been difficult to get jobs 

there. But UC Merced came along, and UC Merced partnered, and 

we got a $4 million grant to bring in infrastructure, critical infrastructure. That has created the Solar Institute. And the Solar Institute is the world’s foremost authority on energy efficiency, not just 

solar, but energy efficiency. And that center is now spurring off 

new company startups, and we assist those company startups. We 

don’t get to count those jobs after those initial dollars went in; we 

wish we could. 

Also, Fresno, the $1.8 million that went into the WET lab, the 

WET lab started as a Central Valley business incubator. They design nozzles, drip irrigation to meter water, fertilizer, and the 

spray of pesticides. This technology is used in Israel. They have 

over 400 members. Most of their members are international. We 

don’t get to count those jobs, the innovations that come out of that 

lab, not just for California, but across the world. We don’t get to 

count those hundreds of jobs and hundreds of businesses that are 

created from that one important lab and partnership. 

Kings County, another county next to us, has benefitted, as well 

as the city of Stockton. And I wanted to point out the city of Stockton did an intermodal facility with the dollars that they received 

from EDA. A competitor to me in Fresno. And it relocated our 

intermodal facility when I worked in Fresno up to Stockton. It has 

created 27 companies as a result. It has become a logistics hub for 

17 

the Central Valley. And each one of those eight counties in the 

Central Valley has benefitted from the jobs. Now, I am mad, I am 

angry I lost that intermodal facility to Stockton. But I am relieved, 

for the Central Valley, that it is creating jobs up and down the valley, and overall, it is helping the goods movement in California and 

reducing poor air quality. 

Mr. DENHAM. Mr. Spaur, if you could, wrap it up. 

Mr. SPAUR. Certainly. The rest of the projects I think you can see 

in my testimony that is written and provided to you. I think what 

is most important is you need to realize EDA, as a program for economic developers, really needs to be thoroughly vetted, so you understand the benefits, so you understand there is not overlap there. 

There may be overlap in other programs. 

And if you wanted a strategy that could cut across the various 

programs, I think the Economic Development Administration, 

along with its partners, could deliver that for you. Thank you very 

much. 

Mr. DENHAM. Thank you, Mr. Spaur. 

Mr. Baker? 

Mr. BAKER. Thank you, Chairman Denham, Congressman 

Crawford, and Congresswoman Edwards, and other members of the 

subcommittee, for this opportunity to testify today about our experience with the U.S. Economic Development Administration, our region’s economic development district, and the impact that it has 

had on our company. 

My professional background includes four decades of chemical industry, both domestic and international, with Eastman Chemical 

Company. I worked in Asia and Europe, and while domiciled there, 

worked with economic development agencies in those countries. 

FutureFuel Chemical Company is a subsidiary of FutureFuel 

Corporation. We are traded on the New York Stock Exchange now 

with symbol FF. We currently own 2,200 acres of land southeast 

of Batesville in north central Arkansas. We occupy about 500 acres 

of that site with continuous manufacturing facilities, laboratories, 

and other infrastructure. In perspective, Batesville’s population is 

10,000; the county’s population is 37,000. 

Before we acquired the site, Eastman Kodak and Eastman 

Chemical constructed the site for production of photographic and 

imaging chemicals. Over the years they added other specialty 

chemicals. The site did quite well in some years. Unfortunately, it 

became non-core to Eastman Chemical Company. Employment declined from 750 in 1998 to approximately 400 when we bought the 

site. 

After the acquisition in 2006, we had an objective to become a 

world leader in the U.S. biofuels industry, which we had just begun 

at the site, while maintaining a facility status as a world-class specialty chemical manufacturer. The new ownership quickly realized 

that in order to facilitate growth, we needed infrastructure 

changes, additions in rail, truck, and storage. So we knew we could 

generate projects that could achieve those goals, but not without 

the infrastructure. 

By 2008, FutureFuel had developed a portfolio of time-sensitive 

business opportunities. We shared those with White River Planning and Development, a district designated an economic developVerDate Aug 31 2005 10:33 Oct 25, 2011 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\7-27-1~1\67581.TXT JEAN
18 

ment district by EDA. We also had shared our vision of the future 

with county leadership and Arkansas Economic Development Commission. 

White River Planning arranged a meeting for us with EDA in 

Austin, to share our vision, goals, and needs. And we were able to 

work with them and secure a grant that was granted in late 2009 

to Independence County. The grant was $3.4 million. The State of 

Arkansas gave us a grant of $2.4 million. Independence County 

provided some early site work for the project. We provided capital. 

And that total project was $7 million. 

The rail project should be complete late this year. Parts of it are 

usable. The results thus far, we have moved from an annual capacity for biodiesel from about 12 million gallons when we bought the 

site to more than 30 million gallons. We are completing projects 

that will give us 59 million annual rate using feed stocks that are 

not in the food chain. So we’re a chemical company with technology, as Congressman Crawford indicated, that move into those 

areas. 

We also have increased or doubled our truck traffic in that time 

period. We doubled our rail traffic. We are adding many new products, including an anode material that goes into electric drive vehicles. 

Our region had experienced a lot of job losses, GDX almost 600 

jobs lost, White-Rodgers 125. We believe we are a success. We believe that all agencies believe that we have created what we said, 

the grants were funded. We have reacted to those. We continue to 

grow. We believe those resources will continue to grow our region. 

So we will add to the 100 jobs that we have already created at the 

job site. 

So, in closing, FCC is proud of our accomplishments as a new 

company. With the help and guidance of our economic development 

district on how to identify and leverage resources through a small 

investment from EDA, combined with local and State assistance, 

we have been able to experience tremendous growth at our site in 

rural Arkansas during an extremely turbulent and challenging 

business climate. 

Thank you, Mr. Chairman and members of the committee, for 

the opportunity to share with you today. Pleased to answer any 

questions. 

Mr. DENHAM. Thank you, Mr. Baker. Thank you to all of our 

panel for your testimony. I will now recognize each Member for 5 

minutes, starting with Mr. Crawford. 

Mr. CRAWFORD. Thank you, Mr. Chairman. I just want to ask my 

constituent a couple of questions here. 

You highlighted in your testimony that your county in Arkansas 

in predominantly rural and agriculture in nature. How important 

are infrastructure projects such as the one you highlighted to spurring economic growth in rural areas? 

Mr. BAKER. Yes, I think it is very important for a county and a 

State that has experienced, like the rest of the country, unemployment problems. We add jobs to the region. It attracts other industries to support the industries already there, and it grows the infrastructure for the county, in order to have goods and services 

that aren’t available in the area come in and locate there. 

19 

Mr. CRAWFORD. Excellent. As you may know, the GAO has identified 80 programs in 4 different departments that fund economic 

development programs. Did your company explore any other Federal programs? And, if so, was there any particular reason—or, if 

not, were there any particular reasons they were not pursued? 

Mr. BAKER. We have looked at those programs that are a fit for 

our company. So we were a recipient of a U.S. rural grant for biodiesel. That has helped us expand. We are constantly looking to see 

how we can leverage our dollars, which have been significant at the 

site, with Federal to grow and provide jobs. 

Mr. CRAWFORD. OK. And finally, given your experience with EDA 

on this project, are there areas of improvement you would recommend? 

Mr. BAKER. We have had a very good experience. I am sure there 

are things that could be helped. The time cycles, obviously, are 

slow. But they are to make sure that the projects are worthy of 

funding. So, in order to get the good projects, obviously that part 

of the program needs to be intact and working well. 

Mr. CRAWFORD. Thank you, Mr. Baker. I yield back, Mr. Chairman. 

Mr. DENHAM. Thank you. Ms. Edwards? 

Ms. EDWARDS. Thank you, Mr. Chairman. And again, thank you 

to the witnesses. 

Mr. Etcher, I am really intrigued by your testimony, and by the 

experience of your members. And I wonder. In the GAO report one 

of the things that was pointed out was this idea of multiple programs, potentially some duplication of activities. But it does seem 

to me that duplication, in and of itself, is not a reason not to fund 

in these areas. 

I mean I was a grantmaker at one point, and one of the ways 

that we use duplicative funding was to try to experiment with some 

things, to see, in some places where, you know, something could 

work, and maybe something else would work someplace else. 

And so, I wonder if you could comment about that, because I 

worry about going down a track of saying, ‘‘Well, this is duplicate, 

and so therefore, stop doing one thing,’’ as opposed to looking at 

this more holistically, and looking at the idea of collaboration. 

Mr. ETCHER. Thank you. That is an excellent question. I guess 

my initial response is when I hear the word ‘‘duplicate,’’ I am 

thinking of something that is exactly identical. And I think within 

that Federal program, or 80 Federal programs, you are not going 

to find exact replication of each and every one of those programs. 

They may have a broad mission of economic development or community development, but they are each individually uniquely designed to address a specific need or clientele or eligibility. So, you 

are not having two programs offering the exact same service, the 

exact same benefits. They are all unique. 

The beauty of that, from a practitioner’s standpoint, though, is 

you can take your local and regional needs and apply them to those 

specific programs that respond specifically to those needs that are 

local and regional. 

So, while we can streamline it, and I think we can do more integration, more coordination, to just blanketly call them duplicative—they are not exact. 

20 

Ms. EDWARDS. Thank you. And I wonder if you could speak to 

this idea of what it takes to coordinate and collaborate. 

One of the things that I have learned is that coordination and 

collaboration require funding. You cannot just expect agencies to do 

it on their own. Or local governments to do that on their own in 

a region, because people are strapped for resources, they have their 

own mission and activity. 

And I wonder if you could speak to the role that the EDA can 

play in encouraging and underwriting the kind of collaboration and 

coordination that is actually necessary to achieve success. 

Mr. ETCHER. Excellent question. And EDA already plays a role 

in that. They fund, through their planning partnership program, 

the economic development districts. What that does is it provides 

expertise, at the practitioner level, to help encourage coordination 

among local, State, and the various Federal programs. Obviously, 

that investment is critical to our organization. That is what gives 

us the staff resources to bring the various funding agencies together, whether it be SBA and EDA, or whether it be CDBG and 

the EDA. 

Without that local expertise—and some of that expertise is not 

cheap. I mean it takes more and more and more to sustain these 

organizations. But without that, I think what you would have is a 

very siloed approach to every specific problem, versus looking at 

what is good for the community and the region, the State, and the 

Nation, as a whole. So, EDA’s investment allows that holistic address. 

Ms. EDWARDS. And then, of course, the worry is that once you get 

those silos, you actually end up spending way more money than 

you needed to on a given project or strategy, or community. 

I want to turn to Mr. Spaur for a minute, because I just have 

a bit of time left. And it is to ask about this—I mean I think EDA 

does a great job in terms of what they do for smaller and rural 

communities. I come from this large, metropolitan region. But buried within that large county are 20-some-odd municipalities that 

struggle with their own economic activity. 

And I wonder if you could speak to the role that EDA can or 

should play in those kind of areas, where you see pockets of disinvestment, but they get buried en masse beneath, you know, a 

larger urban area. 

Mr. SPAUR. Absolutely, Congresswoman. I think Mr. Etcher hit 

the nail on the head, that comprehensive economic development 

strategy, the planning process that the EDA funds in their districts, really requires or forces collaboration. It is asking each community—so we have 6 communities in Merced County, I had 15 

communities in Fresno County. Each one of those communities has 

to outline its priority projects. When they do that, you look at 

where there is leverage and where there is not. Are any of these 

compatible? If we fund one, could it help the other in the other 

city? And many times it can. Cal Poly Pomona was a good example. 

For UC San Francisco in San Francisco and Sacramento with UC 

Davis and Shriners Hospital. 

But these strategies force the collaborations. So we are trying to 

combine an eight-county economic development district. The first 2 

years were competition among counties. They didn’t want one disVerDate Aug 31 2005 10:33 Oct 25, 2011 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\7-27-1~1\67581.TXT JEAN
21 

trict to control the submittal of grants. What it did do is it looked 

at all the projects in each of those counties and said, ‘‘Hey, we have 

clusters. We’ve got logistics, we’ve got agriculture, we have biofuels, 

we have different—these life sciences that are going on,’’ and of 

course the WET lab that binds them all together. 

Once we put all those together, the competition started dropping. 

Once EDA streamlined its submittal process—it’s still not really 

fast, but it’s quicker—once that happened, now we are able to pull 

the district and say, ‘‘We don’t control the submittals, you can submit them electronically. But if you want technical assistance, if you 

want alignment or help on your strategy, we will help you do that.’’ 

So now, those small cities or rural cities get big-city help. 

Ms. EDWARDS. And I am way out of time. Thank you, Mr. Chairman. 

Mr. DENHAM. Thank you. And thank you, Mr. Spaur. Actually, 

my final question is on that exact example that you gave on this 

California Central Valley coalition that you are putting together, 

forming. How far along are you in that process of forming the coalition between all the eight counties? 

Mr. SPAUR. We are at the completion stage. The last step is for 

each board of supervisors to pass a resolution and make an appointment to the board. We have the governor’s letter. We probably 

have to refresh it, because we have a new governor. But we have 

the last step. 

Our comprehensive economic development strategy is out of date, 

so it is time to update it. So now is a good time to do it, when we 

submit the resolution to each of the counties. The only thing that 

is left is to seat the board. Now that we have eliminated the competition among the counties, and they are actually coming together 

to collaborate—these are very difficult times, so it is much easier 

to get people to collaborate. 

We just wish there were more funds for these economic development districts. We just wish there were more funds for the individual projects. They are oversubscribed. And the forming of the 

district will help us prioritize or lower the competition, so we can 

fund the most needed projects first. 

Mr. DENHAM. We also want to work with the State governments 

in leveraging dollars that may be available there. I know that the 

California partnership has been defunded. Is there anything that 

can be done with the California partnership and working with the 

formation of EDD, or are they just two completely separate issues? 

Mr. SPAUR. Yes, sir, there is. The California Partnership for the 

San Joaquin Valley was an Executive order by the governor, and 

it formed these eight counties. We already had an eight-county 

group called the Central Valley Economic Development Corporation. Each economic development corporation, or EDC, pulls 

$11,000 together. And in that we do the business retention and 

business recruitment. 

We have been coming to Washington and talking to USDA and 

HUD and all the agencies. And all the agencies have said, ‘‘Partner 

regionally, work on innovation, and produce jobs, or no funding. 

Earmarks are gone. You need to collaborate.’’ So this California 

partnership is the collaboration. This new economic development 

district is part of that collaboration. If we are going to get any more 

22 

funds, it will be because we are regional, we are innovative, and 

we create jobs, and we work together. 

Mr. DENHAM. Thank you. And finally, I would just ask a quick 

response from each of you before we close. 

The common theme I heard from each of you is that it is too 

slow, we need to create more efficiencies. Can you give me specific 

examples of how we could better facilitate getting money moved 

quickly and into the hands of locals to be able to create jobs? Mr. 

Etcher? 

Mr. ETCHER. Thank you, Mr. Chairman. I think EDA has taken 

some very progressive steps to streamline their process. I think 

other agencies can look at that process and say, ‘‘We need to be 

more responsive, we need to be timely in the marketplace.’’ 

We are in a very competitive environment. And if the agencies 

continue to take lengthy processes, not only just in the evaluation 

and approval of the grants, businesses are going to go elsewhere, 

where they can be accommodated in a timely fashion. 

But moreover than that is there is a lot of process, once an application is funded, until construction can begin. And we need to continue to look at how can we reform and streamline that process so 

we are not an obstacle to business expansion and job creation in 

our regions. 

Mr. SPAUR. Congressman, I think that EDA has done a great job 

in streamlining the process, and it has helped us greatly. They 

just—they don’t have enough reps. If they had more reps to help 

you, coach you through the process, then you would get the projects 

done a lot faster and get them submitted faster, and eliminate 

some of the duplication. If there were more funding there, they 

wouldn’t be oversubscribed, and they wouldn’t overscrutinize. They 

are very stringent, and very conservative. It is because they just 

don’t have the dollars to go around. 

Mr. DENHAM. Thank you. Mr. Baker? 

Mr. BAKER. Yes. In our experience, our economic development 

district has been very helpful. They had a lot of experience in dealing with these programs before, have guided us through that. They 

were very efficient and effective. EDA was responsive. But again, 

there is a time lag there. 

So, I think experience with people in the program itself with the 

economic development district working with EPA helps. But also it 

continues to be an immense amount of paperwork that needs to be 

completed in certain sequences, in order to bring those projects to 

fruition. And if companies like ours have very time-sensitive business opportunities, they could lose those before they really developed. 

Mr. DENHAM. Thank you. I would like to thank each of you for 

your testimony today. It has been helpful in today’s discussion. 

If there are no further questions I would ask unanimous consent 

that the record of today’s hearing remain open until such time as 

our witnesses have provided answers to any questions that may be 

submitted to them in writing, and unanimous consent that the 

record remain open for 15 days for any additional comments and 

information submitted by Members or witnesses to be included in 

the record of today’s hearing. 

[No response.] 

23 

Mr. DENHAM. Without objection, so ordered. 

I would like to thank our witnesses again for their testimony 

today. And if no Members have anything to add, the subcommittee 

stands adjourned. Thank you. 

[Whereupon, at 11:55 a.m., the subcommittee was adjourned.] 

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