U.S. GOVERNMENT PUBLISHING OFFICE

28–921 WASHINGTON : 2018

AMERICAN INFRASTRUCTURE AND THE SMALL 

BUSINESS PERSPECTIVE 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

APRIL 25, 2018 

Small Business Committee Document Number 115–064 

Available via the GPO Website: www.govinfo.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RALPH NORMAN, South Carolina 

JOHN CURTIS, Utah 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Alma Adams .................................................................................................... 2 

WITNESSES 

Ms. Marsia Geldert-Murphey, Chief Operating Officer, W. James Taylor, Inc., 

Belleville, IL, testifying on behalf of the American Society of Civil Engineers ...................................................................................................................... 4 

Mr. Bill Schmitz, Vice President, Sales and Quality Control, Gernatt Asphalt 

Company, Collins, NY, testifying on behalf of the National Stone, Sand, 

and Gravel Association ........................................................................................ 6 

Mr. Kevin Beyer, General Manager, Farmers Mutual Telephone Company 

and Federated Telephone Cooperative, Chokio, MN, testifying on behalf 

of NTCA-The Rural Broadband Association ...................................................... 7 

Mr. Bob Dagostino, President and CEO, Dagostino Electronic Services, Inc., 

Pittsburgh, PA, testifying on behalf of the National Electrical Contractors 

Association ............................................................................................................ 9 

APPENDIX 

Prepared Statements: 

Ms. Marsia Geldert-Murphey, Chief Operating Officer, W. James Taylor, 

Inc., Belleville, IL, testifying on behalf of the American Society of 

Civil Engineers .............................................................................................. 21 

Mr. Bill Schmitz, Vice President, Sales and Quality Control, Gernatt 

Asphalt Company, Collins, NY, testifying on behalf of the National 

Stone, Sand, and Gravel Association .......................................................... 24 

Mr. Kevin Beyer, General Manager, Farmers Mutual Telephone Company 

and Federated Telephone Cooperative, Chokio, MN, testifying on behalf 

of NTCA-The Rural Broadband Association ............................................... 31 

Mr. Bob Dagostino, President and CEO, Dagostino Electronic Services, 

Inc., Pittsburgh, PA, testifying on behalf of the National Electrical 

Contractors Association ................................................................................ 43 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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AMERICAN INFRASTRUCTURE AND THE 

SMALL BUSINESS PERSPECTIVE 

WEDNESDAY, APRIL 25, 2018 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Committee met, pursuant to call, at 11:58 a.m., in Room 

2360, Rayburn House Office Building, Hon. Steve Chabot [chairman of the Committee] presiding. 

Present: Representatives Chabot, King, Brat, Blum, Fitzpatrick, 

Evans, Adams, and Schneider. 

Chairman CHABOT. Good morning. The Committee will come to 

order. 

I first of all want to apologize for us having a little late start 

here. We, of course, had the President of France addressing a joint 

session of Congress, and that is why we were running a little bit 

late. So for that, we apologize. 

Our nation is on the cusp of many major changes in its transportation system. We have seen the development of GPS, companies 

such as Uber and Lyft, and electric vehicles. These innovations are 

transforming the movement of people, goods, and services. 

But our current transportation infrastructure system is, simply 

put, stuck in a different generation. And, unfortunately, our nation’s small business owners often feel these effects the most. On 

average, the typical American commuter loses 42 hours of valuable 

productivity time each year to traffic. Some of us who travel 

around D.C. might agree that we lose more. 

Currently, an estimated 20 percent of Federal roads provide poor 

ride quality and 25 percent of bridges are fundamentally obsolete— 

excuse me, functionally obsolete, as well as fundamentally obsolete. 

I am willing to bet that every member in this room can think of 

at least one urgent infrastructure project in their district that they 

would like to see fixed today. 

While there are many that come to mind in my district, one that 

is very important to small businesses alike is the Brent Spence 

Bridge. This is a bridge that connects Ohio to Kentucky and carries 

an estimated 172,000 vehicles on Interstates 71 and 75 each day, 

more than double its intended capacity. 

To put this bridge’s age in perspective, it was slated to be dedicated—it ultimately was delayed for a short period of time—during 

the week of President John F. Kennedy’s assassination. Because of 

that assassination the dedication was delayed for a couple of days. 

Today it is labeled functionally obsolete by the U.S. Department of 

Transportation. 

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As this Committee has learned in past hearings, broadband deployment is also a crucial part of our nation’s infrastructure, particularly for entrepreneurs in rural areas. As business owners continue to move to a more global marketplace, access to broadband 

is crucial to keeping small businesses competitive. 

Unfortunately, about 39 percent of the rural population, or 23 

million people, still lack access to broadband internet service considered fast by the Federal Communications Commission. 

As with any major project, it is critical that small businesses are 

not left out of the conversation. Small businesses both create and 

rely upon our nation’s infrastructure system. And as they create 

two out of three new jobs, they will likely be a driving force in repairing our broken system. 

I look forward to hearing from small business owners today and 

their ideas for moving our nation’s infrastructure into the 21st century. 

And I would now like to yield to the acting Ranking Member, Ms. 

Adams, for her opening statement. 

Ms. ADAMS. Thank you, Mr. Chairman. 

And thank you all very much for being here. 

Infrastructure is a critical component to our economy and central 

to the nation’s competitiveness. Port facilities help in the distribution of goods and people across the world. Utility systems provide 

the energy necessary to run factories, allowing for the production 

of goods. 

Telecommunications and broadband systems enable access to 

critical information and affordable communication. The nation’s 

highways, bridges, and transit networks make possible the flow of 

goods and services. 

These systems form the economy’s framework and are what 

makes the country competitive by allowing us to work more efficiently. 

Investment in infrastructure promotes future economic opportunities. In fact, 61 percent of the jobs directly created by infrastructure spending would be in the construction sector, 12 percent in the 

manufacturing sector, and 7 percent in retail trade. That is 80 percent in these three sectors alone. 

Most importantly, 90 percent of these jobs are good paying middle-class jobs, many of which are supported by our nation’s small 

businesses. Small companies dominate many of the sectors that 

maintain, strengthen, and upgrade our infrastructure and transportation networks. From construction to engineering to architecture, small businesses are critical to maintaining our infrastructure 

systems. 

Accordingly, a robust and well-planned investment in our infrastructure would benefit small businesses, both as users of these 

networks and by creating business opportunities for them. 

Unfortunately, the President’s infrastructure plan unveiled earlier this year would fall woefully short of this goal. His plan slashes 

real Federal investments and shifts the burden to cash-strapped 

States and local governments. It cuts more than $168 billion from 

existing transportation and infrastructure programs, and it allows 

large companies and foreign investors to toll our roads and bridges. 

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This privatized approach would mean that many small companies will be paying Wall Street companies to access transportation 

arteries. Moreover, the Trump plan would largely circumvent environmental safeguards, gutting clean water, clean air protections, 

under the excuse of speeding up projects. 

Although large Wall Street companies may benefit from this radical new infrastructure approach, there is nothing in the President’s proposal that would guarantee small companies receive their 

fair share of Federal contracts for the new infrastructure upgrades. 

I find it telling that in the 53-page document, the phrase ‘‘small 

business’’ does not even appear once. Absent an assurance that 

small firms will receive their fair share of this work, the small 

business sector should be very skeptical of this plan. 

All of us have an obligation to ensure that there is adequate Federal infrastructure investment to stimulate the economy and to ensure our nation’s long-term competitiveness. Doing so will ensure 

small businesses benefit both as contractors and as those who use 

our infrastructure while creating good jobs along the way. And it 

is my hope that today’s discussion can help identify strategies for 

accomplishing that goal. 

On that note, I want to thank the witnesses for being here, and 

I look forward to your testimony. 

I yield back, Mr. Chair. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

And if members have opening statements prepared, I would ask 

that they be submitted for the record. 

And I will take just a moment before I introduce the panel this 

morning to explain our rules. We operate under the 5-minute rule. 

There is a lighting system to help you to stay within that. The 

green light will be on for 4 minutes; the yellow light will come on 

and let you know you have got a minute to wrap up; and then the 

red light will come on and that means stop. But if you go on a little 

bit, that will be okay, but try to stay within those parameters if 

at all possible. 

And I would now like to introduce our panel. 

Our first witness is Marsia Geldert-Murphey, Chief Operating 

Officer with W. James Taylor, Inc., located in Belleville, Illinois. 

She received both her master’s and bachelor’s degree in civil engineering and her 25 years of professional experience spans the public and private sectors. 

Ms. Geldert-Murphey is testifying today on behalf of the American Society of Civil Engineers. 

And we welcome you this morning. 

Our next witness will be Bill Schmitz, who is the Vice President 

for Sales and Quality Control at Gernatt Asphalt Company in Collins, New York. Gernatt Asphalt has 11 locations across western 

New York that produce and supply sand and gravel products. 

Mr. Schmitz testified before our Committee in June of 2015 and 

will testify again today on behalf of the National Sand, Stone, and 

Gravel Association. 

We welcome you back to the Committee. 

Our third witness will be Kevin Beyer, General Manager of both 

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phone Company in Chokio, Minnesota. These two cooperatives provide telecommunication services for over 2,700 square miles in 

rural Minnesota. 

Mr. Beyer will be testifying today on behalf of NTCA - The Rural 

Broadband Association. 

And we thank you for being here. 

And I would now like to ask Ms. Adams if she would like to introduce our fourth and final witness. 

Ms. ADAMS. Thank you, Mr. Chairman. 

It is my pleasure to introduce Mr. Bob Dagostino, President and 

CEO of Dagostino Electronic Services, Inc., or DES, founded in 

1973. Mr. Dagostino has more than 45 years of experience designing and installing innovative and comprehensive communication 

solutions and related infrastructure for voice, data, wireless security, and building automation. 

He holds the credential of a building industry consulting service 

international registered communications distribution designer. He 

currently serves on the board of directors for the Western Pennsylvania Chapter of the National Electrical Contractors Association. 

Mr. Dagostino, welcome. Thank you for testifying today. 

Chairman CHABOT. Thank you very much. 

And Ms. Geldert-Murphey is recognized for 5 minutes. 

STATEMENTS OF MS. MARSIA GELDERT-MURPHEY, CHIEF OPERATING OFFICER, W. JAMES TAYLOR, INC., BELLEVILLE, IL, 

TESTIFYING ON BEHALF OF THE AMERICAN SOCIETY OF 

CIVIL ENGINEERS; MR. BILL SCHMITZ, VICE PRESIDENT, 

SALES AND QUALITY CONTROL, GERNATT ASPHALT COMPANY, COLLINS, NY, TESTIFYING ON BEHALF OF THE NATIONAL STONE, SAND, AND GRAVEL ASSOCIATION; MR. 

KEVIN BEYER, GENERAL MANAGER, FARMERS MUTUAL 

TELEPHONE COMPANY AND FEDERATED TELEPHONE COOPERATIVE, CHOKIO, MN, TESTIFYING ON BEHALF OF NTCA - 

THE RURAL BROADBAND ASSOCIATION; AND MR. BOB 

DAGOSTINO, PRESIDENT AND CEO, DAGOSTINO ELECTRONIC SERVICES, INC., PITTSBURGH, PA, TESTIFYING ON 

BEHALF OF THE NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION 

STATEMENT OF MARSIA GELDERT-MURPHEY 

Ms. GELDERT-MURPHEY. Thank you, Chairman Chabot and 

Acting Ranking Member Ms. Adams and members. I appreciate the 

opportunity to speak to you here today. 

I am a licensed professional engineer and the Chief Operating 

Officer for W. James Taylor, Inc., a woman-owned small business. 

I have over 25 years of experience in civil engineering, design, and 

construction, 18 of those years with small businesses. 

I serve on the Board of Direction of the American Society of Civil 

Engineers, a professional engineering society with more than 

150,000 members representing 50 States. Over half of ASCE’s 

members work for private engineering firms and a majority of engineering firms are small businesses. 

Every 4 years, since 1998, ASCE has prepared a rating of the nation’s infrastructure in our Infrastructure Report Card. In the 2017 

Report Card, our nation’s cumulative grade was a D-plus. 

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Poor grades reflect the underinvestment in our infrastructure. 

Our nation faces an infrastructure investment deficit of $2 trillion 

over the next 10 years. The investment gap has led to deficient 

roads and bridges, water main breaks, inadequate ports and inland 

waterways, late flights, and so much more. 

Failing to close this infrastructure investment gap brings serious 

economic uncertainty for small business. Businesses of all sizes are 

directly impacted through this lack of investment in our nation’s 

infrastructure. 

As ASCE highlighted in its 2016 economic study ‘‘Failure to Act,’’ 

failing to close this infrastructure investment gap brings significant 

economic consequences. If not addressed throughout the nation’s 

infrastructure sectors, the economy is projected to lose almost $4 

trillion in GDP, $7 trillion in lost business sales, and a loss of 2.5 

million jobs in 2025. On top of those costs, each hardworking American family loses approximately $3,400 in disposable income each 

year from the underperforming infrastructure. 

Our nation is at a crossroads. Languishing infrastructure impedes our ability to compete in the global economy, which provides 

meaningful opportunity for small business. We need to increase our 

Federal investment to address the national infrastructure deficit to 

achieve the economic conditions needed for the 21st century. 

To close the $2 trillion 10-year investment gap we must increase 

investment from all levels of government and the private sector 

from 2.5 percent GDP to 3.5 percent GDP by 2025. We should 

begin with the following steps. 

One, protect the competitive procurement of A/E services. In 

1972, the Brooks Act established the use of Quality Based Selection, QBS, which bolsters small business interest by providing services not solely based on cost but on qualifications, increasing small 

business’ competitive edge, allowing small firms to compete with 

large firms. 

Two, fix the highway trust fund by adding 25 cents to the Federal motor fuel tax. The current user fee should be raised and tied 

to inflation to restore its original purchasing power. This idea has 

been led by the U.S. Chamber of Commerce and would provide a 

necessary infusion of $375 billion over 10 years and address the 

$1.1 trillion backlog of surface transportation capital needs. This 

investment would undoubtedly benefit small business. 

Three, authorize programs to improve deficient infrastructure by 

fully funding them in an expedited, prioritized manner. 

Four, recognize that some elements of transportation policy, such 

as freight corridors and ports, require a more strategic focus from 

the Federal Government. 

And, finally, small businesses will benefit from streamlining the 

project decisionmaking process. ASCE favors the idea of ‘‘One 

Agency, One Decision’’ to reduce the time to reach decisions on 

projects. 

We must take these steps to ensure all businesses, and especially 

small businesses, can thrive in the competitive global marketplace. 

When Congress is successful in crafting legislation to increase investment in infrastructure, it will not only benefit engineering 

firms, but any small business that relies on infrastructure for its 

livelihood. 

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That concludes my formal statement. Thank you for your time. 

Chairman CHABOT. Thank you very much. The gentlelady’s 

time has expired. 

The next gentleman, Mr. Schmitz, you are recognized for 5 minutes. 

STATEMENT OF BILL SCHMITZ 

Mr. SCHMITZ. Chairman Chabot, Ranking Member Adams, and 

the members of the Committee, thank you for inviting me to testify 

on behalf of the National Stone, Sand, and Gravel Association. I 

am Bill Schmitz, Vice President of Dan Gernatt Gravel Products. 

NSSGA advances public policies that protect and expand the safe 

and environmentally responsible use of aggregates that build 

America’s infrastructure and economy. Our industry directly employs over 100,000 people and supports an additional 450,000 jobs 

throughout the economy. Aggregates are used in all construction 

and public works projects. 

Since 1946, the Gernatt family and their companies have been 

proud to provide sand, gravel, stone, landscape aggregate, hot mix 

asphalt, and trucking to western New York, Buffalo, and northwestern Pennsylvania. Our locations are spread over three rural 

counties where people struggle to find good paying jobs. 

We applaud the administration for focusing on increased infrastructure investment. However, we need the funding from the Federal Government to be more robust, routine, and reliable if we are 

to truly fix our nation’s infrastructure woes. 

Infrastructure projects help create jobs and allow the movement 

of goods that are essential to the American way of life. Our system 

must be modernized to meet current demands, but it takes a longterm commitment. The highway trust fund must be permanently 

fixed. 

NSSGA also supports the administration’s focus on infrastructure improvements to rural areas where the investment is desperately needed. 

Rural areas lack a critical component of today’s technology infrastructure. In our case, the absence of broadband has cost us hundreds of thousands of dollars to work around this lack of 

connectivity. 

I work with State and local governments on infrastructure 

projects and permitting daily. These are important conversations 

for my company. But decisions made at the Federal level impact us 

more deeply. 

When Congress delays the enactment of a highway bill or puts 

off fixing the highway trust fund yet again, the impact on small 

business is greater, especially in our industry. Since we provide the 

material and we use the system, we need consistent and steady direction from our Federal partners. 

At Gernatt, we think of infrastructure in four ways. First, the 

means to get our material to our customers. Second, the way we 

communicate with our facility suppliers and customers. Third, the 

materials that we provide that are used in infrastructure projects. 

And lastly, the projects themselves. 

We believe that streamlining the permitting for a road so that 

it can be built in 2 years instead of 10 is a great stride forward. 

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However, if the material needed to build it takes 5 or 10 years to 

permit due to overregulation, then the cost of the project is doubled 

or tripled and we are failing to fix the root of the problem. 

Like 70 percent of the NSSGA members that are small businesses, at Gernatt we do not have the resources that larger companies use to comply with confusing, overlapping, and unnecessary 

regulations. 

In 2006, the Corps of Engineers shut down our South Dayton 

plant, suddenly designated part of our water treatment system as 

wetlands, even though these same conditions had not changed for 

40 years. This decision reversed our decades-long dialogue with the 

agency on this operation. 

Even though we disagreed, we worked with the Corps to fix this 

alleged disturbance. Unfortunately, the Corps had no clear idea of 

what appropriate mitigation might be and forced us to constantly 

change course in order to stay in business. 

This lack of clarity was devastating and took hundreds of thousands of dollars and 12 years to resolve, 12 years that could have 

been spent with other projects and supporting our workers and 

local community. 

I would encourage this Committee to look at ways of reforming 

our regulatory system so Gernatt does not have to experience another unnecessary 12-year quest for answers. 

As my personal experience shows, small businesses in all sectors 

depend on clear and certain Federal rules and regulations as well 

as robust investment in infrastructure. 

Gernatt supplied material to the Ohio Street Harbor Connector 

project in Buffalo, which cleaned up environmental problems, created water side parkland and recreational ship canal access, built 

a beautiful parkway. This project spurred millions in residential 

and commercial development. When regulators and small businesses work together great things can and do happen. 

Throughout America, thousands of small businesses like ours 

partner with the government to improve the communities we live 

and work in. In addition to streamlining 

regulations, we must have predictable and steady infrastructure 

funding that small businesses can depend on. 

Thank you for my opportunity to speak today. 

Chairman CHABOT. Thank you very much. It is good to have 

you back. 

Mr. Beyer, you are recognized for 5 minutes. 

STATEMENT OF KEVIN BEYER 

Mr. BEYER. Chairman Chabot, Acting Ranking Member Adams, 

thank you for the honor to testify before the Committee today. My 

name is Kevin Beyer, and I am the General Manager of Farmers 

Mutual Telephone Company and Federated Telephone Cooperative, 

which provide broadband, voice, and cable TV service in rural Minnesota. I am also a board member of NTCA - The Rural Broadband 

Association, which represents about 850 small rural telecom providers in 46 States. 

There appears to be widespread consensus that high-speed 

broadband is now essential infrastructure and necessary to modern 

life in America. The public policy questions that remain are how 

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to best ensure that the service is available, affordable, sufficient, 

and sustainable in high-cost rural areas that don’t attract private 

investment on their own without an underlying support mechanism. 

It is important in the first instance to understand that investment in many rural areas does not offer a practical business case 

for broadband deployment. What rural consumers can realistically 

afford to pay would not even cover the cost of operating the network, much less the enormous capital expenditures necessary to 

deploy broadband over vast and often rugged terrain. 

Additional resources are needed in such situations to help make 

the business case for broadband investment in ongoing operations. 

In addition, considerations should be given to existing programs 

that would help to ensure such resources are directed to the right 

places to promote and sustain such investment. 

For example, the Federal High-Cost Universal Service Fund, or 

USF, provides direct support to keep broadband rates affordable for 

small businesses and residential consumers. This support provides 

the business case needed to justify spending or borrowing the upfront capital needed to deploy scalable, advanced broadband networks. 

It is important to note that the High-Cost USF program has undergone extensive reforms in recent years to reorient the USF program towards broadband, ensure funding is targeted to where it is 

needed, and define what the FCC considers an efficient level of 

support in each area. 

In addition, high-cost support recipients must meet specified deployment obligations and geocode every new location to which they 

deploy broadband utilizing USF support. 

Leveraging the existing USF program in many infrastructure initiatives would allow for quick and effective implementation and 

help avoid the costly and time-consuming exercise of building a 

program from scratch. 

The USDA Rural Utility Service has long been an important 

source of financing for many rural providers as they seek to deploy 

advanced broadband networks. Congress directed RUS to create a 

new $600 million rural broadband loan and grant pilot program in 

its recent omnibus spending bill and included language to direct 

the funding to areas with the worst service. 

While this is a good start, even more resources will be needed to 

spur broadband deployment, and we would encourage Congress in 

future infrastructure initiatives to include the same protections 

and also explicitly ensure that these efforts complement ongoing 

USF and RUS programs rather than competing with one another 

in a way that undermines the cause of rural broadband and effective use of those resources. 

Other key principles that should be considered as well: Regardless of what mechanism is used to provide support, funding recipients should have proven track records and demonstrate the ability 

to deploy and sustain high-speed broadband networks. Small businesses and others depend on reliable service providers to locate and 

stay in rural America. 

As consumers demand more from their broadband connections, 

networks should be reliably upgradeable to even higher speeds. 

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Precious resources will be wasted if we aim only for the capabilities 

needed today and miss out on the network investments that should 

last for decades. 

While the business case for broadband is the essential first step, 

it is also important to address barriers to deployments of networks. 

Congress should streamline permitting processes to ensure small 

businesses with limited staff don’t expend scarce resources or suffer 

from significant delays to secure costly and potentially duplicative 

approvals for network construction. 

We recognize that gathering more granular data on broadband 

availability is important, but please take care to ensure that such 

data is not collected in different ways by multiple agencies. We 

should aim for only one set of reports to one agency with consistent 

granular data that can be used to help guide policy. 

Again, it is my pleasure to be here today, and I look forward to 

your questions and working with you on these issues. 

Chairman CHABOT. Thank you very much. 

Mr. Dagostino, you are recognized for 5 minutes. 

STATEMENT OF BOB DAGOSTINO 

Mr. DAGOSTINO. Thank you, Chairman Chabot, Ranking Member Adams, members of the Committee, for inviting me to testify 

today. On behalf of the National Electrical Contractors Association, 

NECA, I greatly appreciate the opportunity to submit a statement 

for the record. The Committee is to be commended for holding this 

important hearing. 

My name is Bob Dagostino, and I am the Owner of Dagostino 

Electronic Services. We are a Pittsburgh, Pennsylvania, based company founded in 1973 with over 100 employees that design, install, 

maintain technology solutions for voice, data, video, security, and 

control systems. 

We at Dagostino Electronics are proud members of the National 

Electrical Contractors Association where I have had the honor to 

serve on the board of directors for the Western Pennsylvania Chapter since 2015. 

NECA’s 4,000 contractors play a crucial role in the construction 

and maintenance of our nation’s power, infrastructure, building, 

data centers, hospitals, schools, and so much more, all with safety 

as our number one priority. 

When natural disasters occur our linemen work long hours in inclement weather conditions to restore power to our homes and businesses. We have a track record of installing and maintaining complex electrical and communication systems in places like airports 

and rail systems. And we are working every day to build the next 

generation of reliable power and communication networks and infrastructure that will advance this nation into the next digital revolution. 

We at NECA are committed to empowering lives and communities across this great nation. 

After decades of underfunding our nation’s infrastructure, we are 

beginning to see the signs of reinvigorating growth. While the recent proposal from the White House was encouraging, NECA holds 

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eral spending is critical to ensure the safety, security, and efficiency of our transportation, power, and communication networks. 

As this Committee searches to understand the relationship between infrastructure development and small business, they should 

keep in mind that work done well the first time by qualified contractors and highly skilled tradespeople is the very best return on 

investment that can be made. Therefore, Congress should continue 

the application of the prevailing wage laws on Federal infrastructure projects. 

The next topic I hope to address is a paramount issue for thousands of small businesses we represent, and that is prompt payment. Even with deadlines imposed by prompt payment laws, small 

business contractors continue to tell horror stories of not receiving 

payment for months beyond their due date, if not years on end. 

Small businesses knowingly assume risk by agreeing to complete 

work, but they do so under the assumption they will be paid within 

a reasonable period of time. 

To begin the process of fixing these issues, we at NECA encourage members of the Committee to continue their support for the 

Representatives Fitzpatrick, Knight, and Murphy bill, the Small 

Business Payment for Performance Act. Legislation such as this is 

needed to address the burden placed on small businesses by improper pay practices of the construction industry. 

The next matter concerning my company and many others 

around the country is that no matter how much infrastructure 

work comes down the pike there is no way to complete it without 

an adequate workforce. That said, this Committee is well aware of 

the workforce shortage we face in the trades. If our nation is to address its infrastructure needs, it must first address this problem. 

In response to the challenge, NECA has turned to its 70-year-old 

partnership with the International Brotherhood of Electrical Workers that has produced the best electricians, linemen, and communication craftspeople in our nation’s history. Our joint apprenticeship program with the IBW receives no Federal money and educates students through as many as 10,000 hours of on-the-job and 

classroom education. 

NECA believes that through these three simple objectives we can 

responsibly address the skilled labor shortage, and they are to further encourage our young people to recognize the opportunities that 

a job in the construction and maintenance trades presents; secondly, to financially incentivize young people who choose this route 

and the employers who hire these new workers; and third, to remove any regulatory roadblocks for potential entry into the trades. 

With all that said, as a small business contractor, I am extremely 

encouraged by this Committee’s efforts to understand the role that 

small businesses play with infrastructure projects. The overarching 

themes of funding, contract reform, and workforce shortages can be 

found nationwide. 

Thank you for the opportunity to testify, and we are optimistic 

that this Committee remains committed to addressing the challenges that face our nation’s small 

businesses and the need for the infrastructure investments so 

this country can compete in a global economy. 

Chairman CHABOT. Thank you very much. 

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Mr. DAGOSTINO. You are quite welcome. 

Chairman CHABOT. I will now recognize myself to begin the 

questioning for 5 minutes. 

And I will begin with you, Ms. Geldert-Murphey. 

In your testimony you mentioned the ‘‘One Agency, One Decision’’ policy for Federal permitting. Could you explain the impact 

that that would have on small businesses and the American economy? 

Ms. GELDERT-MURPHEY. Absolutely. ‘‘One Decision, One 

Agency’’ will reduce the time of delays on projects. And small businesses in particular can’t absorb the risk that goes along with long 

delays on projects. 

Large firms can absorb, they have the ability to absorb the risks 

in delays. And so it is very, very important for small businesses 

that we get a decision, we come to an answer. The answer may be 

that the project can’t be constructed, that it is not appropriate, and 

that is fine. 

Let’s come to the answer so that we can move on and use our 

resources on projects that are good for our economy and good for 

our businesses. And small businesses can’t tolerate some of those 

delays in the way that large businesses can. 

Chairman CHABOT. Thank you very much. 

And, Mr. Schmitz, I will turn to you. 

Could you talk about the importance of strong infrastructure in 

the rural areas and small towns? It seems like we talk about it a 

lot in terms of our cities, but I think sometimes the more rural 

areas get kind of short shrift. And if you could talk about that, I 

would like to hear what you have to say. 

Mr. SCHMITZ. Oh, thank you very much. It is a great question. 

Our infrastructure, we are rural, farm-to-market communities 

that we live and work in, and we have got firearms, we have got 

other businesses. When the infrastructure is bad and there is a detour on a road it is not oftentimes there is another State highway 

available for 10 to 15 miles. Detours are a killer to many small 

businesses. 

Bridges are restricted, roadways are restricted. It costs the businesses money. And in today’s competitive marketplace, those costs 

are borne by the small businesses. Employees cannot get to work. 

Projects take much longer than they should when a bridge is identified or a failing road is identified. 

Oftentimes the length of time it takes to get permits to reconstruct it is a huge burden. It is several years, 2 to 3, 5 years at 

times to reconstruct a bridge that had an unknown structural defect. 

Chairman CHABOT. Very good. Thank you very much. 

Mr. Beyer, I will turn to you now. 

This Committee held a hearing earlier this month on the disappearing business case for investing in rural broadband markets. 

What can Congress do to incentivize carriers, large and small, to 

invest in deploying broadband services to rural communities? 

Mr. BEYER. Thank you for the question, Chairman. 

The RUS program that they provided funding for will certainly 

help in that case, but we need coordination and funding through 

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both the USF program and the RUS program and make sure that 

they are not competing with each other to serve the same areas. 

Once the broadband is built and has provided the services required by the program, we should make sure that those scarce resources are not building duplicate networks over the top. 

So coordination is one of the big concerns we would have. And 

then, of course, the USF fund has been underfunded and has continuing underfunding needs, so we would hope that additional 

funds could be supplied to the USF program. 

Chairman CHABOT. Thank you very much. 

And I have got about a minute left, Mr. Dagostino, so I am going 

to conclude with you. 

What would you say is the number one challenge that small businesses experience due to lack of certainty from the Federal Government when it comes to infrastructure or any of the groups that you 

mentioned? What do you think is one of the most significant challenges with respect to infrastructure? 

Mr. DAGOSTINO. Well, one reality is that many of the software 

programs that we as contractors use today are becoming to be 

cloud-based solutions, which the connectivity of broadband is critical so that our on-site people can have collaboration on the project 

and efficiency, accuracies of performing the work. 

And we, as small businesses, are able to actually compete against 

larger companies because of the fact that the software that is 

cloud-based today gives us the same kind of competitive advantage 

that they would of having such a large software program. There is 

just one. 

Chairman CHABOT. Okay. Thank you very much. I appreciate 

it. My time has expired. 

The acting Ranking Member, Ms. Adams, is recognized for 5 

minutes. 

Ms. ADAMS. Thank you, Mr. Chairman. 

Mr. Schmitz, what types of Federal highway projects will be or 

currently are impacted by the highway trust fund and how can we 

improve upon this resource? 

Mr. SCHMITZ. The issue we have with the instability of the 

highway trust fund is the States’ abilities to properly plan longterm transportation projects and transportation plans. Without a 

steady source of funding, the planning and the actual completion 

of projects is often impacted by delayed funding. 

And especially in the Northeast where we operate, we are a seasonal business. You all hear Buffalo, there is two seasons, construction and winter, and this year the construction season is going to 

be very short. So we have to be ready to go when summer comes. 

And it is not a 12-month program; it is 6 months. And we need 

to know, we need that certainty, and stable Federal funding translates to State programs that work, which translates to local programs that work. So it is a trickle-down effect. 

Ms. ADAMS. Okay. Is private financing for construction projects 

linked to the availability of resources in the trust fund? 

Mr. SCHMITZ. We have tried in New York to do some private 

financing, but that is difficult with the uncertainty of the Federal 

funding and matching funds. Again, the certainty of the program 

is paramount. A fixed highway trust fund equals steady funding, 

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and people can plan 5 and 10 years out, and businesses are willing 

to invest when they have the certainty of what is going to happen 

in a few years. 

Ms. ADAMS. Right. 

Mr. Dagostino, rural areas can be hit hard by economic instability given they are in isolation and in some communities limited 

diversity of industries. What investments would be most useful to 

spur growth in these regions? 

Mr. DAGOSTINO. Well, coming from Pittsburgh, Pennsylvania, 

one of the industries that we had in there for many years was the 

steel industry. And what brought the steel industry to Pittsburgh 

was the natural resources of infrastructure of rivers and railroad. 

Today’s digital era that we begin to live in today requires 

connectivity, be it broadband, internet. So the rural area needs to 

be served because it is no longer location, location, location; it is 

connectivity, connectivity, connectivity. 

Without that connectivity, the small business doesn’t have a 

chance. The farmers, agriculture, every facet is affected by the lack 

of that infrastructure in place. And I am speaking strictly on the 

technology component of that. 

Ms. ADAMS. Okay. What Federal efforts do you suggest to target 

infrastructure to these areas in order to facilitate growth and attract small businesses to locate and remain in rural communities? 

Mr. DAGOSTINO. I would say that there are a few things. One 

is, of course, the funding necessary to get some of these projects off 

the ground to give certainty. Two, the application, even if they go 

into a private partnership type of environment. That, and to understand that the projects should have more of a master plan, if you 

will. 

Infrastructure consists of a combination of highways, high-voltage tires, wireless connectivity, fiber optics, smart cities. I think if 

we sit back more and create more of a master plan that we can leverage the moneys that are spent across all of these infrastructure 

efforts. 

Ms. ADAMS. Okay. 

Construction and manufacturing, which are both dominated by 

small businesses, are sensitive to the business cycle. How can infrastructure help firms mitigate the effect of these instabilities? 

And anyone may take that question. You have got about 45 seconds. 

Ms. GELDERT-MURPHEY. I would be happy to answer that 

question. 

Ms. ADAMS. Yes, ma’am. 

Ms. GELDERT-MURPHEY. Thank you. 

You know, I think the important thing is that it goes back to 

what we have all been saying, is that there needs to be consistency, 

stability, reliability. We need to know that there is strong Federal 

leadership in the infrastructure. 

And so as long as there is strong Federal leadership in the infrastructure, the States, the locals, the businesses, private enterprise 

can follow along and do what they are designed to do. But we need 

strong Federal leadership to progress our infrastructure and have 

a strong economy, increase the GDP, increase income, increase 

jobs. 

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14 

Ms. ADAMS. Thank you. 

Mr. Chairman, I am going to yield back. 

Chairman CHABOT. The gentlelady yields back. 

The gentleman from Iowa, Mr. King, is recognized for 5 minutes. 

Mr. KING. Thank you, Mr. Chairman. 

I want to thank all the witnesses for your testimony. 

I am sitting here listening to each piece of this testimony. And, 

first, as background, I started a construction company in 1975, and 

so I have got something in common with everybody here along the 

way. 

The engineering component that you have testified to, Ms. 

Geldert-Murphey, and the sand and gravel and the surfacing, we 

have done a lot of the support work for that and worked around 

that a lot. 

And then with the broadband piece, I was the first customer of 

DSL service on two different telephone networks when they connected. 

And they said, ‘‘Well, the reason we haven’t really deployed this 

yet is because we don’t know how to price it.’’ 

And I said, ‘‘Wire it up to my place, because I am the guy that 

doesn’t care how much it costs. I have got to have it.’’ 

And then with the electrical side of this thing, too. 

So here is my reflection as I am listening. Last Sunday after 

church I went over to look at my son’s new shop for a construction 

company, and I had watched it come together here over the last 

few months. And it is almost close to done. It is out in the country, 

a couple miles from the nearest town and a mile from their house. 

Works out really great. 

But what I am seeing in there—first, no, I have to reflect a little 

bit. I built a shop in the country in 1979. I ended up moving the 

office to town because we needed to be closer to the post office 

when we put a bid in and to get that in by a postmark time. And 

we drove to engineering firms to pick up a set of plans and leave 

a $50 or $100 deposit for that roll of plans. 

That is how it was then. And today we download the plans off 

high-speed internet and we bid electronically. And that shop is set 

up now to where he can control the locks on it from anywhere in 

the world, and he can watch the monitoring cameras on what is 

going on inside and outside from anywhere in the world, whether 

it is high-speed service, which is what you were thinking, Mr. 

Beyer. You have to have the service on the other end, too. 

But it is fantastic the changes that have taken place. So he has 

rural water there, he has all the electrical he needs. That was built 

by the co-op back in the day. And then the fiber optics coming in. 

And I said, ‘‘What kind of speed do you have?’’ 

And he said, ‘‘It is fiber optic. Anything I want to pay for I can 

have here.’’ 

So all of those utilities that you see in the center of the city is 

out in rural Iowa, and there is nothing that can slow him down 

that I can see in being competitive in his—except the logistics—in 

anyplace in the world. 

So I am thrilled by the progress we have made, but I am also 

very well aware that that progress hasn’t been made everywhere. 

This is an exception as far as I view it. 

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So as I listened to the testimony, a couple of things came to 

mind. One is, I want to let you know how much I support highspeed services everywhere. We are controlling tractors with them 

and managing farms with them, and it goes on and on. And the 

imagination that we had 10 years ago doesn’t begin to look into 

what we are actually doing today. 

But a couple of things that came up that I was concerned about 

that I wanted to ask on is this, that I would think everybody here 

as witnesses are interested in getting the most out of the dollars 

we have to build the maximum amount of infrastructure. 

And so when the highway trust fund came up, I started to think 

about when I came into this town I had the formula, and I am not 

sure it is exactly the same today but it is close. They announced 

that 28 percent of that trust fund was being used to satisfy environmental and archeological requirements. 

And I would say about 20 percent went to Davis-Bacon. That is 

the standard number that I have used for a long time, Davis-Bacon 

wage scales. Three percent went to trail. Seventeen percent went 

to mass transit. That left about 32 percent for roads and bridges, 

which is my shorthand version for trust fund dollars. 

Is that a concern to any of you, about actually building more 

roads and bridges out of the trust fund dollar and getting more out 

of the dollars we have, or is the ask ‘‘let’s add more to the pie’’ 

rather than redirect the spending within it? 

I would start with you, Ms. Geldert-Murphey. 

Ms. GELDERT-MURPHEY. Thank you. And I appreciate that 

question. 

You know, it is a twofold answer. Number one, we are dealing 

with dollars on the Federal highway trust fund that started in 

1993 and haven’t been increased or indexed since then. So they 

don’t have the buying power even in the percentages that we were 

looking at before. 

However, we do believe that we need to protect the health, safety, and welfare of—that is in our ethics canon for civil engineers— 

to protect the health, safety, and welfare. We believe strongly in 

that. 

However, we do believe, as we said, with the ‘‘One Agency, One 

Decision’’ suggestion, that that would help expedite matters and 

take time towards working towards projects and funding working 

towards projects. 

Mr. KING. I am going to run out of time here, so please. 

Ms. GELDERT-MURPHEY. Okay. 

Chairman CHABOT. Thank you. 

Mr. Schmitz, if the chair would allow me to let the witnesses answer. 

Yeah. If you could keep your answers relatively brief, but we will 

go right down. 

Mr. SCHMITZ. Okay. Thank you. 

I would concur with what was just said. But if we can build 

projects quicker, streamline coordination between agencies, Federal 

and State, these projects that need to be addressed could be built 

more timely and efficiently. And the key is a standard plan, a longterm plan to do this so that we can move forward. 

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16 

Mr. BEYER. So in our case the USF fund is the underpinning 

for us to be able to get loans and be able to keep a network in place 

and operate that network at a rate that a consumer can afford. 

And, yes, it would be very good for agencies to have a single reporting system that we could use, and instead of reporting to every 

agency separately, report to one separate form that would be 

shared across agencies. 

But we do need additional funds in USF. The FCC has recognized that and so has Congress. 

Chairman CHABOT. Mr. Dagostino. 

Mr. DAGOSTINO. In reference to the application of any infrastructure in that nature, I would say that that creates a pathway 

for us, a pathway to either lay fiber optics, a pathway perhaps to 

connect an electric grid. 

So, again, getting back to my earlier point of looking at this on 

a master plan schedule would be the very most beneficial that the 

government can do is to try to do it in that fashion, keeping in 

mind that we want to get the work performed by the most qualified 

individuals so that we get the longest life cycle out of something. 

It is not just the initial investment of cash, but let’s look at it in 

more of a life cycle than just the initial cost. 

Mr. KING. Thank you. 

Yield back, Mr. Chairman. 

Chairman CHABOT. The gentleman’s time has expired. 

The gentleman from Pennsylvania, Mr. Evans, who is the Ranking Member of the Subcommittee on Economic Growth, Tax, and 

Capital Access, is recognized for 5 minutes. 

Mr. EVANS. Thank you, Mr. Chairman. 

Mr. Dagostino, the Governor of Pennsylvania announced investments of $60 million for 12 drinking water, wastewater, nonpoint 

source projects across 12 counties to PENNVEST. Can you put that 

in context a little bit when you talk about connectivity versus location as a model of what you are referring to in terms of this conversation? 

Mr. DAGOSTINO. In reference to wastewater? 

Mr. EVANS. Well, just in reference to—waste water is one example. But the fact that here is a State making investment in infrastructure. Can you just speak to—because you used the word 

‘‘connectivity.’’ 

Mr. DAGOSTINO. Connectivity, right. 

Mr. EVANS. Yes. 

Mr. DAGOSTINO. Right. And I think, well, in that case there 

that what we are looking at also is maybe not so much a centralized location but more of a distributive type of topology, if you will, 

of these types of infrastructures so that they can lend themselves 

to be either primary or secondary path connectivity, support needs 

that we have today. 

Mr. EVANS. Right. And the reason I probably ask you that is 

this is the first time I have heard that term used in terms of 

connectivity versus. Usually most people say location, location. And 

what I am hearing you say is sort of like a new world we are operating in. 

Mr. DAGOSTINO. Most definitely. We are in a digital era. 

Mr. EVANS. Right. 

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Mr. DAGOSTINO. The Internet of Things, the industrial Internet of Things, the blockchain environment. There are so many new 

things that are coming into that we need to prepare ahead of time 

to address them, and to leverage these new technologies to do one 

thing, and that is to make our lives that much better. 

Mr. EVANS. You sort of saw the direction I was going in the 

questioning about the aspect of connectivity, as the gentleman has 

just expressed, about local government, State government, local 

government, and better use of the dollars. 

Can you speak a little bit to that? 

Mr. BEYER. I can speak a little bit. 

So in our case, in Minnesota, we have a border-to-border program that helps fund broadband build-outs. And that program 

works in conjunction with Federal programs, such as the USF program or RUS lending programs, that allow us to build fiber optics 

to provide that connectivity that they are talking about. 

But the topography, as he speaks of, is more of a distributed network, and we do need to get fiber connectivity for the bandwidth 

that continues to grow that our small businesses need to operate. 

Mr. SCHMITZ. That is a very good question. In our case, where 

we do business is where the natural resources are deposited. So the 

most logical areas are where the natural resources are good, which 

are often rural areas, and for us to competitively compete in business and to do business we need the connectivity of broadband. 

And currently, as I said in my testimony, that we had to invest 

in a private microwave network just so we were able to do business 

in today’s world. So it is very important for this to be available not 

only to us, but to our customers, our suppliers, our employees, so 

that we can communicate in today’s world. 

Ms. GELDERT-MURPHEY. Thank you. 

With regard to State and local agencies, particularly from our 

perspective, we have seen a lot of them step up over the last 4 

years; 26 States have added a gas tax. But they need a strong Federal partner. And that is what we have had in a long time, and 

that is the way the system has been set up, to have that strong 

Federal partner. 

You know, as the Constitution has in the Commerce Clause, that 

is to look at the farm-to-port cost. That helps the rural areas, but 

understanding we need to have strong urban areas as well. 

Mr. EVANS. Thank you, Mr. Chairman. I yield back the balance 

of my time. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back. 

The gentleman from Iowa, Mr. Blum, who is the Chairman of the 

Subcommittee on Agriculture, Energy, and Trade, is recognized for 

5 minutes. 

Mr. BLUM. Thank you, Chairman Chabot. 

Thank you to our panelists for being here today. 

Congressman King is from western Iowa; I am from northeastern 

Iowa. As I tour my district of 20 counties, the number one economic 

issue in my district is lack of workers, workforce development. 

Highway and heavy contractors in particular, we cannot find people to go out and do the work. And these are good-paying jobs, with 

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good benefits, that can’t be exported to China or to Mexico, one of 

the reasons I love infrastructure. 

So I would like to hear from each of you, if you would, on what 

can we do, what can your industry do, what can we do at the Federal Government level, to ensure a more reliable stream of workers. 

I have talked to Treasury Secretary Mnuchin, I have talked to 

Speaker Paul Ryan, I have talked to the administration, and I have 

said the Tax Cuts and Jobs Act bill is a good thing for business 

in our economy, get us growing at maybe 3 percent GDP a year. 

But I think we can grow 4 percent. But we need a couple things 

to happen. One is we need welfare reform. You know, if you are 

physically and mentally able to work, you should be working, to 

put it simply. It is not a simple issue, but that would summarize 

my thoughts on it. And secondly, we need tons in Iowa of legal immigration to help supply the workforce. 

So I would love to hear your thoughts on what your industries 

are doing and what role can the Federal Government, could we be 

playing or should we be playing, in finding you all workers. 

Ms. GELDERT-MURPHEY. I would love to tackle that one. 

Thank you very much. 

Mr. BLUM. I would love to have the answers. 

Ms. GELDERT-MURPHEY. I think that it goes back to what all 

of us on this panel have been saying, is consistency, consistency, 

consistency, reliability. So the business cycle is strong if there is 

strong funding and consistent funding in place. Then we know that 

the work is available. 

So the workforce that is out there is not attracted to a business 

where you don’t know as the ups and downs will come and go for 

the business cycle. So that is number one. 

Number two, we do need to have strong apprenticeship programs. We do with our company as well, and that helps us. We 

have got a lot of young people who come into the apprenticeship 

program for our company, and they are grateful to see that they 

can earn a good wage. 

But once again, we have to have consistent funding to keep the 

business strong, the business cycle strong. 

Mr. BLUM. Mr. Schmitz. 

Mr. SCHMITZ. I believe we really need to focus on education. 

And one thing that our company has done is started doing outreach 

to children in elementary school and explaining to them about our 

industry, the construction industry, and the fact that our great 

paying jobs and careers and working with your hands and with machinery and building America is a good, great way to make a living, 

and they should not feel ashamed that they are not getting a 4- 

year degree. 

There are great tradespeople. You can make a great living as an 

electrician, as a plumber. These are good ways to do that, being a 

bricklayer, a truck driver. These are jobs that build America and 

they should be proud of it. And I think it really starts as young 

with education in the schools. 

Mr. BLUM. Is there anything the Federal Government should be 

doing? I don’t typically ask that type of question. 

Mr. SCHMITZ. Well, I am not sure exactly—— 

Mr. BLUM. Because we do way too many things. 

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19 

Mr. SCHMITZ. Right. And that is the key, but that is something 

that I personally pushed. I was president of my local school board 

and we pushed vocations. Being rural areas, we need people. As 

you said, the farmers need people. I grew up on a farm. There are 

not enough people in the rural areas to work, and it is even worse 

in the city. 

One of the things that could help is the Federal Government’s 

push for quotas, minority and women’s business. Sometimes those 

quotas misalign availability of people to work on the jobs, especially in rural areas. Certainly urban areas it is a great program, 

but we are so far removed from the city that sometimes it creates 

an issue with quotas. 

Mr. BLUM. Thank you. 

Mr. Beyer. 

Mr. BEYER. Thank you for the question. 

We find that healthy communities are the biggest issue for us because we do have people that are interested in our industry, our 

technology. It is exciting, to some extent, as to the broadband world 

grows. 

But what we often lack is the additional job for that spouse to 

come out to our area. And what needs to happen is we need telehealth, telework, in order for that spouse to have employment, and 

that takes those broadband networks for them to be able to work 

from home and be connected to society and their families when 

they move that way. 

And all of that underpinned for us, as we look at it, is that USF 

program needs to be sufficiently funded in order for those networks 

to continue to be there, to be sustainable and affordable to consumers. 

Mr. BLUM. That is a good point. 

And I hope I don’t mispronounce your name, Mr. Dagostino. 

Mr. DAGOSTINO. Dagostino. It is not a problem. 

A few things that we are trying to do, and that is, in our office 

we are bringing the children to our office to see what work is all 

about. It is just good to get them involved as early on. Helmets to 

hard hats is another thing that we encourage to do. 

And any of the acts that are presently in play right now, for example, the 529 savings act, to be able to leverage that towards ancillary costs that an apprentice may get going through their process. 

And that is some tax incentive for us as employers to hire apprentice, that over the years it has gone from the counselors in 

school directing all the students to head towards college. And we 

did not really get a very good cut of the people that are going 

through high school to move into the trades. 

So I would encourage if somehow we could get plugged into those 

counselors a lot better to give the students options. 

Mr. BLUM. Great. Thank you very much. My time has expired. 

It is a real issue, though, so thank you for your insight into that. 

I yield back the time I don’t have, Mr. Chairman. 

Chairman CHABOT. Thank you very much. The gentleman’s 

time has expired. 

After consultation with the acting Ranking Member, we decided 

that since we started late and in the interest of respecting 

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20 

everybody’s time, we won’t go into a second round here. I think the 

answers that we were given were very comprehensive and very 

helpful. 

And we are talking about a very important issue, infrastructure, 

and the importance of it to the American economy and especially 

the importance of including small business in this effort. 

So we want to thank you all for helping us to have more insight 

than we did before we started this meeting. 

And I would also ask unanimous consent that members have 5 

legislative days to submit statements and supporting materials for 

the record. Without objection, so ordered. 

and if there is no further business to come before the committee, 

we are adjourned. Thank you very much. 

[Whereupon, at 12:57 p.m., the committee was adjourned.] 

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A P P E N D I X 

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Insert offset folio 21 here 28921.001

ASCE 

.Aiv'rlliCA~ ~OC!EfY Of I?JIL ENGINff.llS 

American Infrastmcture and the Small Business Perspective 

Hearing 

Wednesday, April25, 2018 

Committee on Small Business 

U.S. House of Representatives 

Ms. Marsia Geldert-Murphey, P.E., F. ASCE 

Chief Operating Officer 

W. James Taylor, Inc. 

Belleville, IL 

*On behalf of the American Society of Civil Engineers 

Ms. Marsia Geldert-Murphey is the Chief Operating Officer for W. James Taylor, Inc. as well as an 

engineering executive with over 25 years of experience of directing and supervising civil engineering and 

constmction projects related to transportation, utility capital improvements, rail, site development, federal 

installations, cmmnercial and industrial development. After graduating from college, Ms. GeldcrtMurphcy started her career at the Illinois Department of Transportation as the assistant resident engineer 

for a cable-stay bridge construction project over the Mississippi River. In 2006, Ms. Geldert-Murphey 

founded and built an entrepreneurial venture from start-up to $8 million in revenue in five years. In 2013, 

Ms. Geldert-Murphey founded Sequoia Engineering & Environmental, which was acquired by Gonzalez 

Companies. In 2018, Ms. Geldcrt-Murphey joined W. James Taylor, Inc. a women-owned industrial and 

commercial roofing contractor and a small business, as its chief operating officer where she is responsible 

for development, design and operation of their management systems. 

Ms. Gcldcrt-Murphcy holds a Bachelor of Science in Civil Engineering from South Dakota State 

University and a Master of Science in Civil Engineering from Missouri University of Science and 

Technology. She is also a licensed Professional Engineer in six states. 

Ms. Geldert-Murphey has the honor of serving as a member of the Board of Direction of the American 

Society of Civil Engineers (ASCE). Founded in 1852, ASCE is the nation's oldest national engineering 

society and represents 150,000 civil engineering professionals who serve as stewards of infrastructure 

here in the U.S. and around the globe. Over half of ASCE's members work for private engineering firms, 

a majority of which are small businesses. 

ASCE appreciates the opportunity to educate the Small Business Committee on the state of our nation's 

infrastructure, how the lack of action adversely impacts the business community, and the need to invest in 

our infrastmcture in order to make us competitive in the global marketplace. We know that investing in 

infrastructure is essential to support healthy, vibrant communities. lnfrastmcture is also critical for longterm economic growth, increasing U.S. Gross Domestic Product (GDP), employment, household income, 

and exports. The reverse is also true- without prioritizing our nation's infrastructure needs, deteriorating 

conditions are a drag on the economy. 
22 

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For the last 20 years, ASCE has been a leading voice in educating the public and policy makers on the 

condition of the nation's infrastmcture. Every four years since 1998, ASCE has prepared a 

comprehensive assessment of the nation's 16 major infrastructure categories in its Infrastructure Report 

Card (www.infrastructurereportcard.org). Using a simple, familiar A to F school report card fonnat, the 

Report Card examines current infrastructure conditions and needs, assigning grades and making policy 

recommendations to raise the grades. 

In ASCE's 2017 !nji-astructure Report Card, our nation's cumulative infrastructure grade was a "D-'-". 

Poor grades reflect the underinvestment and underperformance in our infrastmcture. Our nation faces an 

infrastructure investment deficit of $2 trillion over the next 10 years and the total investment needed is 

nearly $4.6 trillion. The investment gap has led to deficient roads and bridges, water main breaks, 

inadequate ports and inland waterways, late flights, and so much more. Failing to close this infrastructure 

investment gap brings serious economic consequences. 

Businesses of all sizes arc directly impacted through this lack of investment in our nation's infrastructure. 

Increased costs of production are often due to electricity, water/wastewater and surface transportation 

inefficiencies. This increased cost of production leads to declining exports and declining consumer 

spending. 

Households will feel this impact as fewer jobs are available; resulting in lower disposable income, which 

directly affects small business. This results in a less productive economy as more money is needed to 

address problems caused by poor infrastructure. As more income is diverted to transportation, electricity, 

and water/wastewater, less discretionary income is available for "lifestyle" purposes (entertainment 

spending and retail-including high-end consumer products). 

As ASCE highlighted in its 2016 economic study, Failure to Act: Closing the Infrastructure Investment 

Gap for America's Economic Future, if this investment gap is not addressed throughout the nation's 

infrastructure sectors by 2025, the economy is expected to lose almost $4 trillion in GDP, resulting in $7 

trillion in lost business sales and a loss of2.5 million jobs in 2025. On top of those costs, hardworking 

American families lose upwards of $3,400 in disposable income each year-about $9 each day due to the 

underperfonning infrastructure. 

Our nation is at a crossroads. Deteriorating infrastructure impedes our ability to compete in the thriving 

global economy, and improvements are necessary to ensure our country is built for the future. While we 

have made some progress, reversing the trajectory after decades of underinvestment in our infrastructure 

requires transfonnative action from Congress, states, infrastructure owners, and the American people. 

However, there are solutions to fixing our national infrastmcture deficit. 

If the United States is serious about achieving an economy fit for the 21" century, some specific steps 

must be taken, beginning with increased, long-term, consistent infrastmeture investment. To continue to 

delay such investment only escalates the costs and risks of our economy, To close the $2 trillion 1 0-year 

investment gap and compete against growing economies such as China and Brazil, we must increase 

investment from all levels of government and the private sector from 2.5 percent to 3.5 percent ofGDP by 

2025. We must begin with the following steps: 

• Protect the competitive procurement of AlE services. In 1972, the Brooks Act established the use 

of Quality Based Selection (QBS) which bolters small business interests by providing services 

not solely based on cost but on qualifications, increasing small business' competitive edge, 

allowing small firms to compete with large firn1s. 

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Fix the Highway Trust Fund by adding 25 cents to the federal motor fuels tax. The current user 

fee must be raised and tied to inflation to restore its purchasing power. This idea has been led by 

the U.S. Chamber of Commerce and would provide a much-needed infusion of$375 billion over 

ten years and combat the $1.1 trillion investment gap of surface transportation capital needs. 

Authorize and fund programs to improve specific categories of deficient infrastructure and 

support that commitment by fully funding them in an expedient, prioritized manner. 

Infrastructure owners and operators must charge, and Americans must be willing to pay, rates and 

fees that reflect the true cost of using, maintaining, and improving infrastructure. 

Recognize that some elements of transportation policy (e.g., fi·eight corridors and pm1s) will 

require a more strategic focus from the federal government. 

Finally, small businesses will benefit from streamlining the project permitting process. ASCE 

favors the idea of "One Agency, One Decision" removing duplicative permitting efforts among 

agencies, and working to reduce the time to reach decisions on projects. However, in many cases, 

the lack of funding is a primary reason a project is delayed. That should not be lost during these 

conversations. 

W c must take these steps to ensure all businesses, and especially small businesses can thrive in the 

competitive global marketplace. When Congress is successful in crafting legislation to increase 

investment in infrastructure, that increased investment will not only benefit engineering firms, but any 

small business that relies on infrastmeture for its livelihood. 

For the U.S. economy to be the most competitive in the world, we need a first-class infrastructure 

system-transport systems that move people and goods efficiently and at reasonable cost by land, water, 

and air; power transmission systems that deliver reliable, low-cost power from a sustainable range of 

energy sources; and water systems that protect public health. 

Small business is an engine of economic growth and job creation, that count on a reliable and consistent 

demand for their products and services. The capacity and resiliency of our infrastructure system, whether 

it is our electric grid, telecommunications network, water, wastewater, inland waterways, roads, aviation 

or rail is the fuel that feeds that economic engine. 

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TESTIMONY OF 

WILLIAM SCHMITZ 

VICE PRESIDENT, QC AND SALES 

GERNATT ASPHALT PRODUCTS, INC. 

ON BEHALF OF 

THE NATIONAL STONE, SAND & GRAVEL 

ASSOCIATION 

\NW\'i,nssga.org 

BEFORE THE HOUSE SMALL BUSINESS COMMITTEE 

HEARING ON 

"American Infrastructure and the Small Business Perspective" 

MARCH 21,2018 
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Chairman Chabot, Ranking Member Velazquez, and members of the committee, thank you for 

inviting me to testify at this hearing on behalf of the National Stone, Sand & Gravel Association, 

(NSSGA), on "American Infrastructure and the Small Business Perspective." I am Bill Schmitz, 

Vice President of Dan Gernatt Gravel Products, Inc. I spoke before the committee in 2015 about 

the impacts infrastructure has on the successes of small businesses and I am honored to once 

again represent my industry before Congress. We are encouraged by the President's 

commitment to infrastructure and urge Congress to work to implement a fully-funded 

infrastructure package. 

NSSGA is the world's largest trade association representing the mining industry by product 

volume. There are I 0,000 construction aggregates businesses across the United States, located in 

every slate and nearly every congressional district. More than 70% ofNSSGA members are 

small businesses. It is an industry that directly employs over I 00,000 people, and each of those 

100,000 jobs indirectly supports an additional4.87 jobs throughout the economy. Overall, 

NSSGA member companies represent more than 90% of the crushed stone and 70% of the sand 

and gravel produced and consumed annually in the United States. NSSGA's primary concern is a 

fully-funded, robust Highway Trust Fund to insure adequate infrastructure investment. We are 

also concerned that regulatory over-reach can and does cause costly project delays, so on the 

whole, we support regulatory reform efforts. 

The United States consumes approximately 2.8 billion tons of aggregates annually. Crushed 

stone, sand and gravel typically make up over 80% of ready mixed concrete and over 90% of hot 

mixed asphalt. For example, one lane of a road requires an average of 38,000 tons of 

construction aggregates for every mile. Aggregates are used in nearly all residential, commercial, 

and industrial building construction and in most public works projects, including parks, roads, 

highways, bridges, dams, and airports. A new school or hospital typically requires 15,000 tons of 

aggregates in its construction. Aggregates arc used for many environmental purposes including: 

treating drinking water and in sewage treatment plants, for erosion control and in cleaning air 

emissions from power plants. While Americans take for granted this essential natural material, it 

is imperative for construction and daily life. 

Through its economic, social and environmental contributions, aggregates production helps to 

create sustainable communities and is essential to the quality oflife Americans enjoy. 

Aggregates are a high-volume, low-cost product. According to the most current data from the 

Bureau of Labor Statistics, it may be said that it is safer to work in a quarry than a retail store. 

When aggregates producers are finished using the stone, sand or gravel in an area, they pay to 

return the land to other productive uses, such as water reservoirs, residential developments, fmm 

land, parks, or nature preserves a critical fact often overlooked by communities and lawmakers. 

Small Businesses and Infrastructure 

The Administration's Infrastructure Principles unveiled on February 12'11 allocate $200 billion of 

federal funds over a decade as seed money for states, local governments and private sectors to 

leverage a total investment of $1.5 trillion. NSSGA president and CEO Michael W. Johnson, 

said "It's a welcomed and necessary way to start a very overdue conversation on infrastructure 

investment. We look forward to more in-depth conversations with Congress as they create a 

bill." To meet the administration's goal, NSSGA supports a wide variety of funding options, 

especially shoring up the Highway Trust Fund. 

According to the American Society of Civil Engineers' 2017 Report Card, the United States has 

a $2 trillion investment gap for infrastructure over the next ten years. Combined with a yearly 

deficit of a trillion dollars, the Federal Government has strained resources to address this 

disparity. Currently, the United States is ranked behind many of its biggest global competitors at 

11th in infrastructure quality. By some estimates, without significant and timely upgrading of our 

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infrastructure, the United States will lose more than 2.5 million jobs by 2025 and more than 5.8 

million by 2040. 

The HTF, which funds the vast majority of federal aid highway projects across the United States, 

is funded mainly with motor fuels taxes that have been static since 1993. As such, the HTF faces 

a $121 billion shortfall over the next decade. The Fixing America's Surface Transportation 

(FAST) Act [P.L. 114-94], authorizing $305.5 billion for federal highway and other 

transportation programs through 2020, unfortunately does nothing to address the structural 

problems with the HTF. In order to address this, both financing solutions and a comprehensive 

modernization of the HTF are needed to sufficiently bolster the funding mechanism and grow 

much-needed investments in transportation infrastructure. 

The HTF has provided stable, reliable, and substantial highway funding for decades since its 

inception in 1956, but this is no longer the case. Since 2008, the HTF has been sustained through 

a series of General Fund transfers now amounting to $140 billion. According to the January 2017 

baseline of the Congressional Budget Office, HTF spending is estimated to exceed receipts by 

roughly$ I 7 billion in FY 2021, growing to about $24 billion by FY 2027. 

The outdated tax on motor fuels cover an ever-shrinking portion of America's yearly 

infrastructure costs due to a confluence of factors, including increased fuel efficiency of cars and 

trucks, eroded purchasing power, and an increase in alternative fuel vehicles that do not pay their 

share in highway user fees. As established through numerous studies and commissions over the 

last decade (most notably the National Surface transportation Policy and Revenue Study 

Commission, 2007) the simplest and most efficient means to address the HTF funding deficit and 

ensure a robust and reliable funding source moving forward, is to raise the motor fuels tax rates 

last raised in 1993 (18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel), and 

index it to inflation. 

The United States needs to move beyond simply maintaining existing infrastructure and toward 

becoming a world leader again. We need a 21 ''century infrastructure system that delivers 

economic vitality and the ability to compete in the global marketplace on an integrated national, 

intermodal surface transportation network that reliably moves goods and people to maximize the 

quality of life, and economic prosperity for all Americans. 

I work at the state and local level on infrastmcture funding and pennitting on a daily basis. These 

are important conversations for my company, but the federal level is where decisions are made 

that impact us for years in the future. When Congress delays the enactment of a highway bill or 

puts off fixing the HTF yet again, it has a huge impact on small businesses, especially in our 

industry, since we arc both a material provider as well as a user of the system. 

Multi-year surface transportation investments are particularly vital for the funding confidence 

they instill in state departments of transportation. When states know that the Federal Highway 

Administration will apportion their tl.mding year after year, they have confidence that their state 

expenditures will be reimbursed and the process of building and maintaining our infrastructure 

can proceed smoothly. Confidence in the stability of the program is a critical factor in ensuring 

success, particularly for small businesses. 

As a small business, we need consistency and a steady direction from our federal partners. 

Congressional action or inaction can have huge downstream impacts for years in the future, 

which is why I am here today. 

Small businesses need the certainty of a fully-funded long-term infrastructure program to make 

vital business decisions. This includes land acquisition, technology updates, purchase of 

equipment (often produced by other small businesses) and the hiring and training of employees. 

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At Gernatt, we think of infrastructure in four ways: 

l) the physical means to get our material to where it is needed, and have our suppliers 

and employees reach our facility, 

2) the way we communicate with our suppliers and customers, 

3) the material that creates an infrastructure project that we provide, 

4) and the actual project itself. 

Regulatory Reform 

Unlike other businesses, we cannot simply choose where we operate. We are limited to where 

natural forces have deposited the materials we mine. Not every aggregates deposit meets the 

stringent standards set by the Federal Highway Administration (FHWA) and state Departments 

of Transportation (DOTs) for use in federal or state projects. Generally, when aggregates are 

transported outside a 25-mile limit, the cost of the material on a project can increase 30% to 

100% in addition to creating environmental and transportation concerns. Because our product is 

so heavy, over 90% of aggregates are used within 50 miles of their original location, making our 

industries' businesses uniquely tied to their community. So, our operations are limited to 

locations that are geologically sound and arc ncar where cities and roads are needed. 

The aggregates business can be described as making small rocks out oflarger ones. We extract 

material for processing into crushed, sized, and washed product. For safety and efficiency 

purposes, our operations tend to utilize large parcels of! and that must be located where quality 

rock naturally occurs. Our operations are heavily regulated before, during and after extraction. 

Our primary waste is finer crushed rock or dust from processing. For this we must perform a 

number of "one size fits all" controls required under air and water pcnnits. Our facilities are 

routinely monitored to ensure we arc operating in a safe and environmentally responsible 

manner. Some of the requirements make sense and others do not, particularly for small 

businesses. 

It gets even more complicated when we need to expand our operations, open a new or temporary 

operation, or merely do minor construction work at a site to upgrade our facilities to provide 

needed material for crucial infrastructure projects. A host of federal requirements come into play, 

among them the Clean Water Act, Clean Air Act, the Endangered Species Act, and the Historic 

Preservation Act. These statutes often require businesses to prove that we should not fall under 

their jurisdiction. A "regulated until proven otherwise" approach is very costly and difficult for 

any business, particularly a small company like mine, without the resources for dedicated 

compliance staff that larger corporations employ. Agencies arc not accountable to respond in a 

timely fashion, and interagency disputes are common, so to obtain approval for even small 

projects can take years. This is not an efficient use of resources for either the company or the 

pennitting agencies and punishes the businesses like ours who are trying to comply and care 

deeply about safety and the environment. 

On the federal level, we must comply with regulations set forth by the Department of Labor, 

Environmental Protection Agency, Fish and Wildlife Service and the Army Corps of Engineers. 

The Department of Homeland Security and the United States Treasury Department also regulate 

us because we engage in blasting. At the state level, we obtain approvals from state agencies for 

air and water quality permits and mining and blasting permits. At the local level, multiple layers 

of land use approval are required before we can open a new facility or even expand an existing 

one. 

Gernatt and NSSGA support reasonahle regulation that preserves our natural resources, protects 

our environment and ensures the safety of our employees and neighbors. We are opposed, 

however, to overreaching regulation that hurts our businesses and by extension, infrastructure. 

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Our operations devote substantial resources to safety. Last year, the industry finished with an 

injury incidence rate of less than 2 injuries per 200,000 hours worked; the 17'hconsecutivc year 

in which our sector achieved a lower rate than in the prior year. Despite the use of heavy 

equipment and natural hazards our injury rate is lower than that of retail employees. 

The Small Business Administration estimates that regulations cost 36% more for small 

businesses per employee than for larger companies. We support efforts by the President and 

Congress to ease the regulatory burden that small businesses disproportionately bear. 

At Gernatt, we simply do not have the resources that larger corporations use to comply with 

confusing, overlapping and unnecessary regulations. Since 1946, the Gernatt family and their 

companies have been proud to serve all of western New York. Comprised ofGematt Asphalt 

Products; Dan Gernatt Gravel Products, Inc.; and Country Side Sand and Gravel, Inc., our 

companies provide sand, gravel, stone, landscape aggregate, hot mix asphalt products and 

trucking to Buffalo, N.Y., western New York and northwestern Pennsylvania. 

Our locations are spread over three rural western N.Y. counties where people struggle to find 

good paying jobs. The Gernatt organization considers its 210 loyal employees as family and we 

want to provide them the well-paying, stable employment they deserve. The business has grown 

because of the hard work by the Gematts and their employees who work together for the 

common goal of making the company successful. The Gematts are strong supporters of both 

local businesses and community efforts where we operate. It is important to us that these benefit 

from our success. We are an integral part of the western New York community and we do this 

because it is the right thing to do. 

We applaud the Administration for focusing on creating roads, bridges, airports, schools, and 

expanding access to broadband. This broad idea of what infrastructure is benefits our company 

and our community. We operate in rural areas where increased investment is necessary, and 

infrastructure projects help create jobs and move goods that are essential to the American way of 

life. These rural areas also lack a critical component of today's technology infrastructure; the lack 

of broadband cost us hundreds of thousands of dollars as we have had to work around the lack of 

connectivity to our business network. 

However, we need to focus on both the project and the supply of materials. Streamlining 

permitting for a road so that it can be built in two years instead of ten is a great stride forward, 

but if the material needed to create it takes 5 or I 0 years to permit and is so expensive due to 

over regulation that it doubles or triples the cost of the project, then we arc failing to fix the root 

problem. 

For example, the application of the Endangered Species Act (ESA) and the definition of"Waters 

of the United States" have been expanded far beyond what Congress intended, and often these 

act as impediments to any development. Both involve open-ended processes that have become a 

true roadblock to any sort of development because of the lack of clearly defined requirements 

and timely response by federal regulators, both of which can delay projects significantly. 

NSSGA supports the administration's withdrawal of the 2015 Waters ofthe United States Rule, 

which would have radically expanded jurisdiction under the CW A to include areas suspected of 

only tenuous connections to navigable waters. While the agencies' decision to return to the "prerule" status quo once the 2015 rule is rescinded is not an ideal long-te1m solution, the action at 

least restores the guidance that aggregate operators are familiar with while the agencies work to 

develop a rule that provides clarity and certainty. While the 2015 rule would have cost 

aggregates operations millions of additional dollars in mitigation to expand or open new 

facilities, the current system is cumbersome and lengthy. Even without the expansive 2015 rule, 

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determining applicability under the CW A can create confusion and delays which are particularly 

burdensome for small businesses. 

My company has firsthand experience with unreasonable delays and mitigation requirements at 

our Countryside Sand and Gravel Dredging operation in South Dayton, NY. The dredge in this 

location acts as a virtual vacuum cleaner picking up aggregate from the bottom of our lake. As 

we wash our material, fine sand and silts are removed from the usable sand and gravel resulting 

in a slurry mixed with the water. We use created ponds to settle this material out before 

discharging or reusing the water at our site. While these are water treatment systems and should 

not be considered a federally regulated water, the lack of clarity in this program causes the Corps 

to sometimes consider them so. 

We operated this way from the late 1960s, consulting with the Corps to confirm compliance. 

This changed significantly in 2006 when a pair of bald eagles built a nest in a tree adjacent to the 

lake we were dredging in at the time. The New York Department of Environmental Conservation 

contacted US Fish & Wildlife who then brought in the Army Corps of Engineers. The Corps 

promptly showed up and shut our operation down, claiming that our settling basins were "Waters 

of the U.S.", despite extensive correspondence we had over the years with their office. 

The Corps decided our settling basins that were located 25' higher in elevation than the 

surrounding grounds were also "affected wetlands." We explained the settling basins were wet 

because of introduced hydrology and if we stopped pumping, the water would not remain. 

However, Corps personnel insisted that we had disturbed 1.164 acres of wetlands. When we 

tried to work with the Corps to mitigate or fix this alleged disturbance, the amount and method of 

repair was a moving target. This lack of clarity is devastating to a small business; we need to 

know what a problem is and how to fix it. 

The mitigation ended up being so convoluted and expensive. The Corps accepted leaving an area 

to cede back into wetland growth, plant 500 bare root trees and shoot topsoil into a portion of the 

lake, and plant 5 acres of wetland species planting. We also had to install 10 miles of string to 

create a goose fence, as well as a six- foot plastic fence in the water to keep the muskrats away 

from the plantings, only to have fish and a swan get stuck in the fence and drown. At that point 

we said "no more" to the Corps but were still required to mitigate for the bare root trees that 

failed and the water plants that were eaten. Finally, the Corps agreed to let us build a hemi-marsh 

which included placing over 300,000 cubic yards of material back into a portion of the lake to 

build the marsh. Unfortunately for us we had already excavated and moved this material as part 

of our reclamation process, necessitating an additional $750,000 to move it again so that we 

could operate. 

In an effort to prevent a repeat of this debacle, we have revised our reclamation plans to include 

building more marsh area concun-ent with stripping, allowing us to only handle the materials 

once. When completed, our Company will have created 40 acres of individual submerging 

marshes. But that is hardly a silver lining in a cloud of uncertainty that covered this project; 

moving targets and unclear expectations dragged a process much longer and made it much 

more expensive than it needed to be. This took 12 years; we operated but spent hundreds of 

thousands of dollars on attorney and consultant fees, employee time and effort, and equipment all 

in the quest to hit that moving target. 12 years that could have been better spent on other projects 

and supporting our workers and our community. 12 years where state and federal standards 

caught us in the crosshairs. 12 years for a small business means something, and I would 

encourage this committee to look at ways to reform our regulatory system so that Gematt does 

not have to constantly worry if by following the rules, we will find ourselves in another 

expensive years-long battle. 

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As my personal experience shows, small businesses in all sectors depend on clear and certain 

federal rules and regulations, as well as consistent investment in infrastructure. 

When Federal, State and City Regulators work together great things can and do happen. An 

excellent example is the Ohio St. Inner and Outer Harbor Connector project in Buffalo, NY for 

which we were the materials supplier to another small business - CatCo Construction. This 

infrastructure project has revitalized the old first ward neighborhood in the City while providing 

access between the downtown and the progressive outer harbor. Bridges were rehabilitated, 

abandoned buildings tom down, water, sewer and electrical utilities replaced, and a barely 

industrial road was replaced by a beautiful new highway including bike and walking paths. 

This project cleaned up environmental problems, created water side parkland and recreational 

ship canal access and has spurred millions in residential and commercial development. 

Projects like Ohio St. arc examples of how a small business like Gematt can improve a 

community. 

There are thousands of small businesses in my industry alone that in partnership with the federal 

government can help improve the communities we live and work in. To do that, we need an open 

discussion of how to streamline regulations, and how to ensure that federal funding is a 

consistent and uninterrupted stream that states - and small businesses can depend on. 

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N TilE RCRAL 

lllWADBAND 

:\SSOC lATl0:-1 

Statement by 

Kevin Beyer 

General Manager 

Farmers Mutual Telephone Company of Bellingham, MN 

and Federated Telephone Cooperative of Chokio, MN 

On behalf of 

NTCA-The Rural Broadband Association 

Before the 

United States House of Representatives 

Committee on Small Business 

American lnf'rastructure and the Small Business Perspective 

April25, 2018 
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NTCA - Kevin Beyer 

April25, 2018 

Page 1 of 11 

I~TRODUCTION 

Chaimum Chabot, Ranking Member Veh\zquez, and members of the Committee, thank you for this 

opportunity to testify about the importance of broadband infrastructure to rural areas and how rural 

broadband networks are deployed and sustained. I am Kevin Beyer, the General Manager of 

Farmers Mutual Telephone Company, which is headquartered in Bellingham, MN, and Federated 

Telephone Cooperative, which is headquartered in Chokio, MN. My remarks today are on behalf of 

Farmers and Federated, as well as NTCA-The Rural Broadband Association, which represents 

approximately 850 rural community-based carriers that offer advanced communications services 

throughout the most sparsely-populated areas of the nation. 

NTCA members and companies like them serve just under five percent of the U.S. population 

spread across approximately 35 percent of the U.S. landmass; in most of this vast expanse, they are 

the only fixed full-service networks available. Small telccom providers connect rural Americans 

with the world- making every effort to deploy advanced networks that respond to consumer and 

business demands for cutting-edge, innovative services that help rural communities overcome the 

challenges of distance and density. Fixed and mobile broadband, video, and voice are among the 

services that millions of rural Americans can access thanks to our industry's networks and 

commitment to serving sparsely populated areas. 

Farmers and Federated are local, community-based telecommunications providers with 26 

employees serving a combined area of2,736 square miles with an average of two customers per 

square mile. The total connections or homes/businesses passed- are 6,166 with the capability of 

delivering voice and Gigabit broadband services. We employ fiber-to-the-home technology to 

provide both voice and broadband services to our customers. 

Our networks allow rural small businesses to communicate with suppliers and sell to new markets, 

they enable education of our children on par with opportunities in urban areas, and they make our 

communities attractive destinations for people and businesses to relocate. In rural America, that 

translates into economic development that produces jobs, not only in agriculture, energy, 

manufacturing, and other industries with a strong rural presence, but in the healthcare sector, and 

just about any other retail industry that requires broadband to operate. 

BROADBAND IS ESSENTIAL RURAL INFRASTRUCTURE 

Rural Broadband Benefits the Entire US. Economy 

Rural broadband has far-reaching effects for both urban and rural America, creating efficiencies in 

healthcare, education, agriculture, energy, and commerce, and enhancing the quality of life for 

citizens across the country. A report released in 2016 by the Hudson Institute in conjunction with 
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NTCA Kevin Beyer 

Apri125, 2018 

Page 2 of 11 

the Foundation for Rural Service (FRS) found that iuvestmenls by mral broadband companies 

contributed $24.1 billion to the economies of the states in which they operated. 1 While $8.2 billion 

(or 34 percent of this sum) accmed to mral areas, the remaining 66 percent- $15.9 billion of 

economic activity accrued to the benefit of urban areas. Additionally, the report found that the 

mral broadband industry directly and indirectly supported nearly 70,000 jobs nationwide in 2015, 

with 46 percent of those being in mral areas and 54 percent located in urban areas. 

In addition, iGillotResearch and FRS released a paper in March 2018 that underscores the value of 

Internet transactions and further reveals how mral broadband benefits the entire economy: 

Rural consumers are responsible for more than 15% of all internet-driven transactions 

approximately 10.8 billion internet-driven transactions. 

Internet-driven transactions drive a substantial portion of U.S. gross domestic product 

(GOP)- approximately $9.6 trillion annually. 

The estimated value of rural online transactions is nearly $1.4 trillion- or 7% of the U.S. 

nominal GDP2 

The economic impacts of broadband can be seen close to home for Farn1ers and Federated. We 

have deployed fiber-to-the-home networks in 28 exchanges enabling 1 Gbps for more than 6,000 

homes and businesses over 2,736 square miles. Our fiber deployment has enabled many local 

success stories, including Superior Industries, Inc. -an American manufacturing company 

headquartered in Morris, MN. Superior employs approximately 1,600 people across multiple 

divisions that engineer, manufacture, service, and sell dry bulk processing and handling equipment, 

fuel delivery and storage equipment, and precast concrete products. More than half of Superior's 

work force is employed at one of its three campuses in Stevens County, with the remaining 

employees spread throughout 25 other manufacturing, engineering, or repair center facilities in the 

United States, Canada, and Brazil. Federated provides Superior with a broadband connection that 

not only allows the customer to efficiently connect its three Stevens County locations together with 

a WAN, but also allows Superior to communicate with its additional locations throughout the 

United States, Canada, and Brazil, as well as its numerous customers around the globe. 

Broader Benefitsfor Consumers and Communities 

Beyond these economic impacts of broadband network investment and operations, the broader 

socioeconomic benefits of broadband services for users and communities cannot be ignored. A 

Cornell University study, for example, found that rural counties with the highest levels of 

Hanns Kuttner, Hudson Institute (April20!6). 

iGR (March 2018). 
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NTCA - Kevin Beyer 

April25, 2018 

Page 3 of 11 

broadband adoption have the highest levels of income and education, and lower levels of 

unemployment and poverty. 3 

Access to healthcare is a critical issue for rural areas, where the lack of physicians, specialists, and 

diagnostic tools nonnally found in urban medical centers creates challenges for both patients and 

medical staff. Telemedicine applications help bridge the divide in rural America, enabling real-time 

patient consultations and remote monitoring, as well as specialized services such as tele-psychiatry. 

One study found that doctors in rural emergency rooms are more likely to alter their diagnosis and 

their patient's course of treatment after consulting with a specialist via a live, interactive 

videoconference. A rural Wisconsin community experienced the broadband difference when a rural 

telco deployed a fiber network to a 25-bed critical access hospital and its satellite clinics to enable 

patients to obtain broadband-supported healthcare closer to home. Telehealth services enabled by 

high-speed broadband also facilitate "aging in place," as seen in rural North Dakota where a small, 

rural broadband provider developed a telemedicine link with a local pham1acist that enabled a 

neighboring community pharmacy to remain open upon the retirement of its pharmacist. 

The unique "hometown focus" of smaller providers, as captured in NTCA's Smart Rural 

Community initiative, helps in promoting innovative uses of these networks for the benefit of rural 

America. For example, in wcstem Oklahoma, high-speed broadband supports a community-based 

charitable organization that assists clients with mental health therapy and foster child placement; the 

broadband connection enables rapid transfer of data across great distances to speed the settlement of 

children in new homes. A Wisconsin rural tel co serves as technology partner to local children's 

charities that rely on electronic auctions for fundraising revenue. 

Other benefits accrue in the fonn of distance leaming. A shortage of teachers in parts of rural 

America means public school districts rely on high-speed connectivity to deliver interactive video 

instmction for foreign language, science, and music classes. For example, high school students in a 

rural Nebraska community can now receive college credits for courses taken online thanks to fiber 

connectivity to area school systems and community colleges, and students at a small private college 

in rural South Carolina use high-speed broadband to engage courscwork in programming, advanced 

mathematics, engineering, research, and design preparing them to enter a tech-centric job market. 

Consumer Demand, Fiber, and Future-Proof Networks 

Despite unique rural challenges of high deployment costs due to distance, density, and terrain with 

too few customers gained to even cover the costs of operating a network, small rural tclcos have 

made remarkable progress in deploying advanced communications networks. A survey ofNTCA 

1 Broadband's Contribution to Economic Health in Rural Areas, Community & Regional Development Institute, Cornell 

University (February 20 !5). 
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NTCA - Kevin Beyer 

April25, 2018 

Page 4 of 11 

members conducted in 2016 found that 41 percent of respondents' customers arc served via fiberto-the-home (FTTH), up 12 percent from 2013. Forty-five percent of customers are served via DSL 

service, 12 percent cable modem, I percent fixed wireless, and 0.2 percent satellite. Due in no 

small part to increased fiber deployment, rural customers have access to faster broadband speeds. 

Per the 2017 survey, 87 percent ofNTCA members' customers can purchase broadband at speeds of 

I 0 Mbps or higher. Sixty-seven percent can now access speeds above 25 Mbps. 4 

Farmers and Federated serve many important community anchor institutions, including four rural 

hospitals and related EMS services, eight school districts, a public liberal arts college, and 

numerous public libraries and public safety entities including police and rural volunteer fire 

departments. 

Farmers and Federated's tag line is "Future. Communications. Today." This concept means we will 

look beyond the next year or two as we attempt to forecast the future needs of our customers and 

our communities. Not unlike many of our rural counterparts, we have seen our average data usage 

increase over 1 ,000 percent over the last five years. This number will continue to grow 

exponentially as we move to continued growth in all forms of data services including precision 

agriculture, distance leaming, telemedicine, 4k video, virtual reality, and autonomous vehicles. 

We have responded to this demand by taking aggressive steps for our customers. Over the past 15 

years, Farmers and Federated have invested $60 million in their networks, primarily with fiber and 

fiber-related electronics. It is clear that the speed and sustainability of fiber deployment will depend 

on both reasonable access to capital to finance construction and the availability of USF support to 

make sure user rates on these rural networks, once upgraded, are not astronomical and unaffordable. 

Much Progress, but Much More Work to Do 

Despite this great progress, many parts of rural America still need better connectivity. Thirteen 

percent ofNTCA member customers don't have access to even !Oil broadband. And while the 

Federal Communications Commission (FCC) has indicated that 90 percent of Americans already 

have aiTordable access to 25/3 Mbps service and many urban consumers and businesses benefit 

from 100 Mbps or Gigabit speeds, broadband access in rural America lags behind urban areas 

despite the best efforts, innovation, and entrepreneurial spirit ofNTCA's members. Thirty-three 

percent ofNTCA member customers still cannot obtain 25/3 speeds given the very rural nature of 

the areas in which they live. And even where broadband has been deployed, sustaining it in areas 

where consumers are scattered across great distances is itself a substantial and often 

underappreciated challenge. 

4 NTC'A 2016 Broadband/fntcmct Availability Survcv Report (20 17), NTCA-The Rural Broadband Association, Arlington, VA. 
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The rural broadband industry and our nation as a whole has a great story of success but we also 

have much more work to do- and this is where public policy plays such an important role in 

helping to build and sustain broadband in mral markets that would not otherwise justify such 

investments and ongoing operations. 

KEY PRINCIPLES FOR BROADBAND INFRASTRUCTURE POLICY 

As policymakers consider potential initiatives to promote broadband infrastructure deployment, we 

believe it is essential to build upon what has worked to date, leveraging successes and taking 

account of lessons learned from prior efforts. In doing so, there are several key principles that 

should guide next steps on infrastmcturc policy. 

1. Nothing Else Matters Without a Business Case for Investment and Operation 

Because of the distances and population densities involved, and in some cases the terrain as well, it 

is difficult, if not impossible, to make the business case for investing in broadband in many rural 

markets. Moreover, even if the up front capital expenditures can be justified, the markets are so 

rural that the high ongoing costs of operation undennine the business case for deployment. 

Therefore, ongoing support from the High-Cost Universal Service Fund (USF) initiatives overseen 

by the FCC has been central to promoting rural broadband. USF programs help providers offer 

rural Americans more affordable rates, consistent with the Communications Act mandate for 

reasonably comparable rates and services in urban and rural areas alike. Without USF, mral 

consumers in many areas could not cover the costs of building and operating the network and 

delivering services that go far beyond what was once imaginable in a legacy "telephone" business. 

It is the availability of a predictable and snfficient universal service mechanism that justifies use of 

a provider's own cash or financing from the few lenders that tend to serve rural Internet service 

providers- the Department of Agriculture's Rural Utilities Service (RUS), Co Bank, the Rural 

Telephone Finance Cooperative, or community banks. For these reasons, it is critical that any 

infrastructure initiatives include resources dedicated to making the business case for deploying and 

sustaining broadband in mral America. Without such resources, any effort is likely to be effective 

only on the margins or in very limited respects, leaving behind many areas that still lack broadband 

access and/or putting at risk investments already made to deploy advanced broadband networks in 

deeply rural areas. 

2. Leverage Existing Experience and Expertise 

The know-how that an operator needs to constmct a network in a downtown business district in a 

large metropolitan area- where there could be more people in a single building than in an entire 

mral town and surrounding areas -does not necessarily translate into success in mral broadband. 
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With finite resources available for supporting deployment, it is necessary to leverage the real 

experience and technical expertise of those providers that have in fact previously deployed and 

operated networks over many miles of rural terrain. It is particularly important to "screen" the 

technical claims of those promising a solution for rural broadband to ensure that their networks are 

engineered to deliver on that promise to reach all consumers within the proposed rural service 

area and provide them with a consistent, reliable service that will not fail over time as more users 

adopt and greater demands are placed on the network. 

3. Rural Broadband Is Not a Short-Term Business Proposition 

Rural broadband depends upon long-term capital investments that last for (and must be recovered 

over) decades. Putting resources toward inferior infrastructure that might seem cheaper up front but 

needs to be substantially rebuilt in only a few years' time could tum out to be resources wastedand risks leaving rural America behind. To get the best return for the users of a given network and 

for America as a whole, rural broadband networks must be scalable and still capable of delivering 

value a decade or more after being built. 

4. Targeting Resources for New Construction Is Critical 

It is important to target any resources made available to the areas where they are needed most. 

Unfortunately, today's broadband maps are incomplete and imprecise, depending upon selfpromoted claims of coverage that represent an entire census block as served even if only one 

customer in that block can actually get service. While not perfect and still in need of improvement, 

the FCC employs a variety of processes in its USF programs aimed at validating where service is or 

is not already available in order to direct funding to where it is needed most. Regardless of which 

agency ultimately administers these programs, such efforts to target support should be part and 

parcel of any infrastructure initiative moving forward to ensure both that funding remains in place 

where it is needed and, conversely, funding is not put to work in areas where another provider can 

already deliver service. 

5. Coordination of Efforts Among Governmental Programs Is Key 

Rather than creating new programs from scratch, we believe it makes sense to leverage existing 

programs that have time-tested processes and procedures to direct funds to the right places and 

already have experience in vetting proposals to deploy and sustain rural broadband. If, however, 

new programs are to be created or existing programs expanded, these programs must complement 

and not compete with the existing efforts already underway. It will be a waste of finite 

government resources if one agency finances the deployment of a network in an area where another 

agency is already supporting the deployment and operation of a network by another provider. 
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6, Streamlining Construction Processes Will Be Helpful 

While making the business case for deployment and operation of a network in the first place is vital, 

steps can and should be taken to mitigate permitting delays, complicated application procedures, 

and high costs of access once that business case is made. Such efforts are especially impmiant so 

that any federal resources made available as part of an infrastructure plan can help consumers as 

soon as possible. 

7. Accountability Must Be Expected 

Any infrastmcturc plan must hold recipients of any resources accountable for their use. One 

framework to consider is what the FCC has done in the USF programs, where it will require 

recipients of support to: (1) report on the latitude and longitude of every location to which they 

deploy broadband going forward using such support; and (2) comply with performance testing 

measurement standards still under development. Similar measures should be considered in 

connection with disbursement of any resources through an infrastructure plan. 

RECOMMENDED NEXT STEPS 

With these principles in mind, policymakers should consider several steps moving forward. 

1. Leverage Er:isting Programs 

a. Universal Sen•ice Fund 

Given its track record and the many efforts made in recent years to recalibrate the program toward 

promoting broadband availability and affordability, strong consideration should be given to 

leveraging and supplementing the existing High-Cost USF program as a means of implementing 

a broadband infrastructure initiative. 

The High-Cost USF /Connect America Fund (CAF) initiatives are essential both in justifying the 

business case for broadband infrastructure investment in the first instance, and then in sustaining 

such investments by keeping consumer rates for services more affordable atop the networks once 

they are built. While the FCC recently adopted a much-needed and welcomed reprieve from USF 

funding shortfalls, this reprieve is temporary and partial in nature, and these initiatives remain 

underfunded. 

For example, more than $60 million per year is still needed to fund an alternative USF model that 

the FCC created to promote broadband deployment- and that level of funding is needed for I 0 

years, making the shortfall for the model more than $600 million in total. In addition, under a 
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budget control mechanism that is applied only to some carriers, many small rural tclecom operators 

were seeing their support slashed by an unpredictably escalating budget control that reached 12.3 

percent on average, translating into denied recovery of more than $170 million in actual costs for 

private broadband network investments already made. The recent FCC action patched this shortfall 

through June of this year. But if the agency does not act by then to provide more sufficient and 

predictable High-Cost funding over the long term, such cuts in USF support will resume in July, 

and will likely grow in coming years. 

These shortfalls make it difficult, if not impossible, to justify effective use of available capital for 

rural broadband, and they translate into real hann for rural Americans in the form of! ower speeds 

or no broadband at all, or higher rates where broadband is available. Budget shortfalls force carriers 

to recover costs by increasing prices for rural Americans (if possible) well above what urban 

Americans pay- and, if rates cannot be increased, these shortfalls may lead to defaults on loans 

used to finance the construction of those broadband networks. 

If sufficiently funded, the FCC's High-Cost USF efforts could have a meaningful near-term impact 

on our nation's broadband goals. By contrast, creating new programs from scratch requires much 

more administrative effort than leveraging existing programs, and the rules for any such new 

programs must still be informed by the principles articulated above in terms of administration and 

accountability while also making sure not to undennine the important work that the FCC's 

USF/CAF efforts and other existing programs (such as some described below) are already achieving 

despite being underfi.mded. 

b. Rural Utilities Service 

Another alternative to tackle our nation's rural broadband infrastructure challenges would be to 

direct additional resources for mral broadband to the Department of Agriculture's RUS programs 

that have been and remain critical for so many small rural operators in stimulating infrastructure 

deployment. If any infrastructure resources are directed toRUS rather than to the FCC's USF/CAF 

efforts, it will be essential to ensure that those programs are coordinated effectively and 

complement, rather than compete with, the ongoing etTorts of the federal USF programs. 

Although some people may confuse the roles of RUS programs and the USF, these initiatives play 

unique and distinct roles. USF does not finance networks; private banks and other lenders 

(including RUS programs) provide up front financing necessary to constmct networks (although few 

banks lend to construct broadband infrastructure in rural America where the return on investment is 

typically measured in decades). On the other hand, RUS programs and other banks and financing 

programs do not sustain networks or aim to make services atop them affordable for consumers; 

again, these efforts focus upon upfront deployment financing, with the USF then helping to sustain 
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networks by ensuring that consumers can obtain reasonably comparable services at reasonably 

comparable rates atop the networks once financed and built. 

This long-standing complementary relationship between RUS and the USF initiatives must continue 

by ensuring that each program continues to focus upon its core mission, and that they help to 

provide complementary, rather than competitive, support for rural broadband efforts. Congress 

acknowledged the important role that RUS can play when it appropriated $600 million recently for 

a new rural broadband loan and grant pilot program in the FY 18 Omnibus bill. Congress also 

rightly recognized the importance of targeting funds and coordinating broadband initiatives in this 

bill by requiring that 90% of locations in project areas be without I 0/1 Mbps and barred awardees 

from duplicating existing networks financed by RUS. 

Congress should include similar provisions in any future legislative initiatives. Indeed, if new 

resources are provided (as they should be) to spur broadband deployment, there should be an 

explicit prohibition against one entity obtaining financing or funding from any such new federal 

program to overbuild or duplicate another entity's network that has itself been built and operated 

leveraging other federal programs. We must ensure that the nation's broadband efforts work in 

concert rather than conflict, and that they continue to complement one another so that resources go 

as far as possible in addressing rural broadband challenges. 

2. Collect Better Data on Service Availability 

More accurate data on service availability is essential to ensure that government efforts to support 

broadband target resources as efficiently as possible. We need to ensure both that any such support 

goes to where it is needed and ensure that support is not eliminated based upon a false impression 

of where providers claim to serve. 

Since the National Broadband Map has not been updated for years, the FCC's Form 477 data 

represents the best current source for information on broadband coverage. But even the Form 477 

data suffers from imprecision and an inherent lack of granularity. Although the Form 477 is 

certified by the provider, there is no means of validating the data submitted. Moreover, the Fonn 

477 data is submitted by census block- this unit of measure means that in a rural area, just one 

consumer with service can result in unserved consumers miles away looking "served." To help 

address this issue in the Universal Service Fund context, the FCC has engaged in periodic data 

collections and "challenge processes" to try to develop a record of better evidence to validate where 

service truly does and does not exist notwithstanding the claims of Forms 477 received. But even 

these efforts have been incomplete, and some have questioned whether some of the processes work 

well enough to achieve the desired result. 
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Better mapping and more robust challenge processes are ultimately going to be essential to drive 

broadband policy. The FCC's High-Cost USF program has attempted to get better data by requiring 

recipients of support to geocode individual locations where new broadband is installed (and, in 

some cases, for prior deployments too, which is a rather burdensome task). The geocoding of new 

installations and upgrades going forward on a wider scale could help bring us closer to identifying 

where broadband exists with much greater precision, which would allow better identification of 

where resources are needed to fill gaps. 

The FY 18 Omnibus bill included $7.5 million for NTIA 10 "update the national broadband 

availability map in coordination with" the FCC, even as the FCC recently updated the map with 

Form 477 data from 2016. More guidance from Congress will probably be necessary for an 

accurate map that can be readily updated. Regardless of the means that might ultimately be chosen 

to obtain more accurate and granular data, it will be important to: (1) avoid unreasonable burdens in 

the data-gathering process; and (2) reconcile and coordinate data-gathering and mapping efforts so 

that we do not end up with duplicative, burdensome reports at different agencies or, even worse, 

inconsistent data among agencies. 

3. Streamline Permitti11g 

Where the business case for deploying rural broadband can be made, removing barriers to 

deployment through streamlining of governmental permitting procedures can then promote quicker 

rural broadband deployment at relatively lower cost. We are pleased that so many in Congress, at 

the FCC, and elsewhere in the Administration arc considering these questions and taking a fresh 

look at how to remove unnecessary or inefficient barriers to deployment. For example, 

standardization of application fonns and fees to the extent possible across various federal agencies 

could offer great help for small businesses trying to navigate approval processes, and the steps taken 

in this direction by including RAY BAUM'S Act in the recent Omnibus bill arc welcome. Reliance 

upon prior environmental and historical preservation approvals in areas where a network has 

already been built would also aid in upgrading services for conswners while continuing to achieve 

appropriate levels of protection. 

Finally, ensuring that application processes consider the need not only for wireless facility 

installations, but also fixed network (e.g., fiber) deployments, is essential too. Any changes and 

coordination with respect to permitting should be made on a "technology neutral" basis. Although 

much of the discussion with respect to streamlining of permitting processes appears to focus on the 

promise of 50 wireless services and small cell deployment, the ultimate success of these servicesespecially over vast rural areas- will depend upon massive fiber investment to connect all those 

small cells. The fact is that "wireless needs wires," and thus any efforts to streamline permitting 

must factor in both vvired and wireless networks if these efforts will pay oft: 
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CONCLUSION 

Robust broadband infrastructure is crucial to the current and future success of rural America. 

Small, rural tclecom providers like Farmers and Federated are deploying faster broadband 

throughout their service areas, but no carrier- regardless of size- can deliver high-speed, highcapacity broadband in rural America without the business case to justify and then recover the initial 

and ongoing costs of sustaining such infrastructure investment in high-cost areas. 

A national infrastructure initiative offers a unique opportunity to help promote these broadband 

investments, and mechanisms that ensure efficiency and accountability in the expenditure of 

resources toward this mission are already in place. Our industry is excited to participate in this 

conversation regarding broadband infrastructure initiatives, and we look forward to working with 

policymakers and other stakeholders on a comprehensive infrastmcture strategy to ensure that all 

Americans will experience the numerous agricultural, economic, health, and public safety benefits 

of broadband. 

Thank you for the opportunity to testify, and for the Committee's commitment to creating an 

environment conducive to broadband infrastructure investment in rural America. 
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Statement of Mr. Bob Dagostino 

President and Owner of 

Dagostino Electronic Services 

on behalf of the 

NAl'IONIIL ELfCT~ICII\ (ONTi!AcrOR$ A~$0(11\liON 

National Electrical Contractors Association 

to the Committee on Small Business 

U.S. House of Representatives 

for a hearing on: 

"American Infrastructure and the Small Business 

Perspective" 

March21,2018 

NECA is the voice of the $160 billion electricol construction industry that brings power, light and 

communication technology to buildings and communities across the U.S. NECA's national office, 

its 4.000 members. and 119 local chapters advance the industry through advocacy, education, 

research and standards development. 

NATIONAL ELECTICAL CONTRACTORS ASSOCATION 

412 First Street. SE Suite 110 

Washington, D.C. 20003 

Phone: (301) 657-3110 

FAX: (301)215-4500 

@NECAGovtAffairs 

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Statement of Mr. Bob Dagostino 

President and CEO of Dagostino Electric Services 

On behalf of the National Electrical Contractors Association (NECA) 

Committee on Small Business 

March 21,2018 

Thank you, Chairman Chabot, Ranking Member Velazquez, and members of the 

committee for inviting me to testify today at this very important hearing. On behalf of 

the National Electrical Contractors Association (NECA), we greatly appreciate the 

opportunity to submit a statement for the record to the House Small Business Committee 

on "American Infrastructure and the Small Business Perspective." The committee is to 

be commended for holding this important hearing to better understand how small 

businesses view the increased conversation around rebuilding America's infrastructure. 

My name is Bob Dagostino and I am the owner and president of Dagostino 

Electronic Services, Inc. (DES). Since founding DES in 1973 in Pittsburgh, Pennsylvania we 

have grown to more than 100 employees some of which are members of our signatory 

union partner, the International Brotherhood of Electrical Workers (IBEW). My more than 

45 years of service in the electrical industry have given me experiences in a vast array 

of systems, infrastructure, and federal procurement. 

We at DES are proud members of the National Electrical Contractors Association 

(NECA), where I have had the honor to serve as a board member for the Western 

Pennsylvania chapter since 2015. NECA is the nationally recognized voice of the $160 

billion electrical construction industry, that brings power, light, and communication 

technology to buildings and communities across the United States. NECA's nearly 4,000 

member contractors continue to build on a legacy of protecting the public and 

making innovation possible. 

Small Business and America's Infrastructure 

Our Work and What We Do: 

Our work at DES is as varied as the people who participate in our company. Over 

the years our family owned business completed projects on everything from installing 

systems for the National Air and Space Administration to providing electronic solutions 

for the six-time Super Bowl Champion Pittsburgh Steelers. Our well-trained employees 

pride themselves on the fact that they are skilled enough to handle anything and 

everything with a wire running to it. NECA's contractors and their employees hold the 

some degree of variability in their work, especially as it relates to infrastructure. With 85 

percent of NECA's members being small businesses our companies must remain agile 

and in doing so we touch so much more than just the streetlights that line our way 

home. We are truly the men and women who work our infrastructure all while 

empowering lives and communities across our nation. 

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Infrastructure · Surface Transportation and Broadband: 

NECA contractors play a crucial role in the building and maintenance of our 

transportation system. Our members power our nation's buildings, hospitals, and 

schools; light our highways and streets; connect transit and rail switches; install complex 

electrical systems at airports; operate and maintain the plants that keep our water 

clean, and much more. Unfortunately, a systemic failure to adequately invest in our 

infrastructure is taking its toll on the system. We must reverse course and properly fund 

investments in our transportation infrastructure. 

We must address the coming insolvency of the Highway Trust fund in 2020. The 

series of short-term surface transportation extensions and insufficient funding has made 

it impossible to address the current and future needs of our transportation system. Years 

of uncertainty have taken its toll and the funding crisis facing the Highway Trust Fund, 

which is no longer generating sufficient revenue to maintain the needs of the system, 

compounding the problem. Congress must enact a long-term sustainable revenue 

source for the Highway Trust Fund that makes the fund whole, and significantly 

increases our investment in transportation infrastructure. This issue truly affects every 

sector of our economy and is the construction industry's number one priority. 

A growing populace, traffic jams, and high gas prices have lead many 

commuters to increasingly rely and utilize mass transit. The nation's public transportation 

systems are owned and operated by state and local governments or governmental 

agencies, in partnership with the federal government. Currently, there are over 7,700 

transit providers operating in the U.S. NECA contractors nationwide provide design 

support. construction engineering, project management, installation, testing. startup 

and maintenance for transit systems in heavy rail. light rail. and automated people 

mover systems. Railroads are experiencing a competitive resurgence as both an 

energy-efficient freight transportation option and a viable city-to-city passenger 

service. Since 1980 over $500 billion in private funding has been invested in our railroad 

lines without any federal assistance. The U.S. rail network is made up of more than 

160.000 miles of track, 76.000 rail bridges, and 800 tunnels across the nation that are 

shared by all operators moving freight and passengers. NECA contractors perform a 

variety of work for rail carriers nationwide. including: installing fiber optic 

communication systems. trolley poles & contact systems. overhead catenaries. rail 

switches. and switch yard and rail diamond reconstruction. 

In addition to these infrastructure types, NECA has long supported the expansion 

of broadband infrastructure especially in rural areas. While private sector investment in 

wireline and wireless broadband networks has been laudable, regulatory and 

permitting restrictions have inhibited further deployment. Nearly 40 percent of 

Americans living in rural areas lack sufficient access as a result. underserved areas that 

offer very limited educational and employment opportunities in their communities. 

Government at every level should promote incentives for additional private investment 

in digital infrastructure. Broadband technologies enable technological innovation and 

as we find ourselves in modern information age, broadband technology is key part of 

infrastructure investment. 

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Preparing Small Businesses for Infrastructure Work: Concerns gnd Contracts 

While each and every member of NECA and our staff at DES welcome the 

opportunity to participate in more infrastructure work, the members of this committee 

must be made aware of the current challenges and concerns we as industry members 

face. While the challenges of under-funding, lack of prompt payment. and workforce 

shortages are daunting, we at NECA feel the solutions to each of these problems are 

within this committee's grasp. 

lack of Direct Federal Funding: 

Finding a NECA contractor that is not excited in one form or another with the 

proposed increase in infrastructure construction would be a challenging task. As 

businessmen our members welcome the opportunity to rebuild this nation but as citizens 

we realize that the "D+" rating which the American Council of Engineering Companies 

(ACEC) gave our nation's infrastructure is justified. As a contractor who has completed 

work all over this country, I have seen it firsthand. 

After decades of underfunding and systematically degrading the structures that 

have enabled our nations commerce to prosper, we are beginning to see positive signs 

of reversal. While the recent proposal from the White House is encouraging, NECA 

continues to have concerns over the lack of direct federal funding for an infrastructure 

initiative of this magnitude. We must provide more robust funding to address the state 

of the repair backlog across the transportation network and upgrade the system to 

expand capacity. This is critical to ensuring the safety and efficiency of the network and 

will help the flow of goods and people around the country. 

An increase in this direct federal spending has clear benefits. Most economic 

studies show that every $1 billion in infrastructure investment creates 28,500 direct and 

indirect jobs, providing our economy and the American taxpayers with a high return on 

investment. As a contractor that has worked on numerous port authority and water way 

projects, it is worthwhile to add that investments in this area, particularly in flood 

reduction can result in an eight-to-one return on federal investment. 

The solution to the lack of direct federal spending is clear, Congress should 

appropriate additional funds for all sectors of infrastructure work. Whether it is through 

efforts like the passing of a six-year FAA reauthorization or by fully funding the Fixing 

America's Surface Transportation (FAST) Act of 2015, Congress. and the members of this 

committee are in a unique position to rebuild our nation. 

Limited Guidance on Davis Bacon: 

As the conversation regarding infrastructure comes into perspective. there 

continues to be a distinct lack of direction regarding prevailing wage rates. The DavisBacon Act was enacted to establish local wage rates for construction projects 

receiving federal funding. The Act requires public works contractors to pay trades 

people no less than the wages that prevail on similar projects within the same region. 

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Comparable prevailing wage rate legislation has also been adopted by most states for 

bidding on state and local government projects. Their intent is to reasonably limit the 

possibility of actors outside of the region from drastically undercutting wages. 

There is no denying the competitive nature of the construction industry. With 

limited opportunities to trim costs on project design or materials, many in the industry 

are inclined to underbid competitors by cutting wages. Prevailing wage laws ensure 

workers are fairly compensated for the work they perform. 

This oct allows the federal government to protect its investment in the 

infrastructure of our country in a twofold manner. ( 1 ) While the Act does not set specific 

wage rates, it allows the workers of this country to anticipate a rate of pay from which 

they con provide for their families and prosper. To invest in our nation's infrastructure 

and portray it as a boon for our economy and workers, and to then short-change the 

very workers it was lauded to benefit would be a travesty. (2) Secondly, as with any 

service industry role a well-compensated and well-trained worker consistently outperformers its antithesis. low-wage, low-skilled workers who have not been trained as 

well as higher-paid workers, often toke longer to complete work, are more vulnerable to 

job-site accidents, and often need additional government assistance because they 

cannot adequately provide for their families. Conversely, higher wage earners receive 

a superior level of training, offer greater productivity, a better end product, and 

ultimately contribute more to the economy. 

As this committee searches to understand the relationship between infrastructure 

development and small businesses, they should keep in mind that work done welL the 

first time, by higher skilled tradesmen is the best investment they could make. Congress 

should ensure the application of Davis Bacon for all federally procured infrastructure 

projects. In doing so, Congress should deny any efforts to modify, suspend or repeal the 

Davis-Bacon Act or remove existing prevailing wage law provisions from construction 

contracts that utilize federal funds or assistance, including financing proposals providing 

federal assistance to local projects. 

Limited Guidance on Project Labor Agreements: 

Infrastructure projects, particularly Iorge ones ore complex: they tend to require 

numerous trades, hold varying interests, and wrestle with conflicting scopes of work. Our 

industry has understood these complexities for decades and have use Project Labor 

Agreements (PLA) as a method for creating project stability, efficiency and 

productivity. The collectively bargained agreements are designed to facilitate these 

complicated construction projects. As this committee continues to investigate the role 

of small businesses in infrastructure and the expansion thereof, PLAs should be viewed 

as a beneficial method for mitigating the risks and inconvenience to the public that 

often accompanies public work projects. They also act as a tool towards ensuring that 

projects are completed on time, and under budget. 

PLAs are not just a 'union tool' nor are they strictly used for large business, 

(although many Fortune 500 companies regularly utilize them) they are on instrument 

for small businesses to ensure their companies prosper. They do so by standardizing 

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work schedules. apprentice-journey level ratios, hours. payment arrangements, and 

other terms and conditions, providing greater cost efficiencies and stability. 

In addition to these benefits, project labor agreements guarantee an available 

supply of knowledgeable, well-trained workers. This helps ensure that projects are 

completed on-time and correctly, ultimately saving taxpayer dollars. PLAs often include 

additional provisions such as: no-strike clauses, provisions for grievances and arbitration 

of disputes, trade jurisdictional issues, and constructive vehicles such as safety and labor 

management committees. Other features include, the regular scheduling of second 

shifts with caps on premium rates, common starting times, lunches for all trades, and 

hiring preferences for workers based on residency. 

The continued use of PLAs on infrastructure work across the country will ensure 

that the money appropriated by Congress is best utilized towards well-maintained, 

promptly-completed, and safety-oriented projects. NECA supports the use of PLAs on 

Federal and Federally-assisted construction and urges Congress to reject all bills or 

amendments to budget. appropriations, and authorization bills that would limit the 

ability of a Federal agency to utilize a PLA. 

Bundling of Contracts: 

Since the 1997 Small Business Act. Congress has implemented and subsequently 

reformed the process known as 'bundling.' This term is used to describe the Federal 

governments practice of consolidating smaller contracts into larger ones. While the 

initial law has been amended numerous times over the decades, it continues to allude 

its original well-intended purpose of decreasing cost and simplifying the bidding 

process. Instead, bundled contracts often grow to a point where small business are 

monetarily incapable of bidding on them. 

The original language in the Small Business Act sought to decrease federal costs 

associated with administrating projects in addition to encouraging greater competition 

on larger bids. Instead, they have continued to result in a method that excludes small 

business from participating. The problems associated with bundling stem not only from 

the financial burden placed on small business to fund such projects but on receiving 

bonding for such work (without adequate bonding a contractor will not be awarded 

the work). To make matters worse, if a small contractor is capable of receiving bonding 

and risks the completing of this job on his company's existence, they run the risk of 

going out of business because of a program that was originally intended to benefit 

them. 

The solution for this issue is simple, unbundle contracts to the maximum extent 

practicable. It is a program that has received patchwork fixes for multiple decades only 

to have its original failings persist. The design and/or project team should break projects 

into smaller pieces with separate project IDs in order to create stand-alone projects: for 

larger projects, create mandatory subcontract requirements. 

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Historic Failure to Follow Prompt Payment Law: 

Nearly 3,400 NECA contractors enter the marketplace every day as small 

business. These hardworking enterprises prosper by continuing to manage the day-today risks that come in an industry where the job is always to work yourself out of a job. 

Meaning that, with construction projects being completed on a timeline, our 

contractors and their workers continuously work to finish the job they were awarded, 

thereby ending the task they receive their pay for. A key component in managing such 

risk comes through analyzing when one will be paid for their work. 

Too often in the construction industry our contractors. working as both the prime 

contractor and the subcontractor, do not receive pay for months. Even with the 

deadlines imposed by prompt payment laws, small business contractors continue to tell 

horror stories of not receiving payment for years on end. Small business knowingly 

assume risk by agreeing to complete work, but they do so under the assumption that 

they will be paid within a reasonable timeframe. In fact, a recent study by ELECTRI 

International entitled, "Addressing Inequitable Payment Practices," confirmed that 

payment cycles are indeed slowing down. While all industry participants feel this effect, 

the study identified that subcontractors. who ironically provide the bulk of the shortterm capital, are the actors least capable of altering the current pay practices. 

These types of payment practices are the result of regulations and laws without 

teeth. The same ELECTRI study claimed there was "little evidence that any contract 

terms incentivized owners and general contractors to pay subcontractors promptly." It 

is because of this lacking structure that recent trends have indicated that payment 

practices in the industry are negatively affecting business growth, construction prices, 

and in some cases have resulted in bankruptcy. The lack of an adequately structured 

payment process has had a clear ripple effect. Because subcontractors are not able to 

anticipate payment. they have begun to bid less work, forcing general contractors to 

bid at a higher price thereby deterring contracting officers. This unintended chainreaction has begun to undermine our industry as a whole. 

To begin the process of rectifying these type of issues, we at NECA encourage 

members of the committee to continue their support for the Rep. Fitzpatrick, Knight, 

and Murphy bill, H.R. 2594, the Small Business Payment for Performance Act which 

requires the project owner (in this case the federal government) to submit interim partial 

payment of at least 50 percent for any require change order work requested. 

Legislation such as this is needed to address the improper pay practices of the 

construction industry; practices which will undoubtedly hamper the economic benefits 

of any future infrastructure plan. 

Workforce Shortage: 

With markets growing at a strong rate and our economy returning to its pre-2008 

levels, the construction industry has seen a clear increase in work. In fact. in many cities 

across the country work has become so plentiful that our contractors are challenged to 

finding enough skilled workers to complete the job. The reasons for this shortage are 

numerous and have been described by thousands of stake holders; who make it clear 

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that regardless of the issue's origin. if our nation is to adequately address its 

infrastructure needs the shortage must be addressed. 

In response to this shortage, NECA has turned to a 70-year-old partnership that 

has produced unequivocally the best electricians in our nation's history. Decades ago 

NECA and the International Brotherhood of Electrical Workers (IBEW) embarked on a 

joint venture to develop the National Joint Apprenticeship Training Program (NJATC). 

The newly rechristened "Electrical Training Alliance" invests $100 million in private funds 

annually in what we believe is the largest and most successful apprenticeship and 

training program in the nation. Today, there are more than 30 0 jointly administered 

local programs that are trust financed. 

This program is an organized and time-tested method for taking people with little 

or no prior knowledge of a craft or trade and turning them into capable, qualified 

crafts persons. Our program is full-time. paid (with benefits). and includes both on-thejob and classroom learning. Ultimately, the goal is to provide the electrical construction 

industry with the highest level of training and skilled workforce possible. To accomplish 

this goal. apprentices receive a required 8.000 hours of on-the-job training and 900 

hours of classroom time. Throughout this multiyear education, all electrical apprentices 

receive incremental raises as they reach certain milestones. They are not a burden to 

the taxpayers because the training is fully funded by the industry without any taxpayer 

assistance. Each year, participants in the program contribute in excess of $600 million 

dollars in federaL state, and local taxes. Lastly, they also receive retirement plans and 

medical coverage for themselves and their families that are also provided at no cost to 

the American taxpayer. 

NECA believe that through ( 1) further encouraging our young people to 

recognize the opportunities that a job in the trades presents, (2) financially incentivizing 

young people who chose this route (proposed by Senator Scott under S. 574) and (3) 

removing any financial or institutional roadblocks for potential entry (see the Rep. 

Meehan/Norcross bill on 529 reform, H.R. 3395), we can responsibly address the skilled 

labor shortage. If we neglect to address this issue. we risk hamstringing the growth that 

has begun to elevate our nation from one of its deepest declines since the great 

depression. 

With that said, addressing our nation's current and future employment needs is 

critically important to our industry and we believe the existing apprenticeship 

infrastructure provided by construction trades is a sure-fire bet for success. particularly 

for small businesses. More important. the program is 100 percent industry designed and 

funded and is a wheel that does not need to be reinvented. 

Conclusion: 

As a small business contractor, I am extremely encouraged by this committee's 

efforts to understand the role of infrastructure projects and the way in which they relate 

to my business. Although particular issues may vary state-to-state. the overarching 

themes of funding, contract reform. and workforce shortages can be found 

nationwide. These issues do not only affect my business in Western Pennsylvania, or 

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