[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                     HEARING TO REVIEW THE VARIOUS
                   DEFINITIONS OF RURAL APPLIED UNDER
        PROGRAMS OPERATED BY THE U.S. DEPARTMENT OF AGRICULTURE

=======================================================================


                                HEARING

                               BEFORE THE

    SUBCOMMITTEE ON RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND
                          FOREIGN AGRICULTURE

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 15, 2011

                               __________

                            Serial No. 112-2


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov




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                        COMMITTEE ON AGRICULTURE

                   FRANK D. LUCAS, Oklahoma, Chairman

BOB GOODLATTE, Virginia,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
TIMOTHY V. JOHNSON, Illinois         TIM HOLDEN, Pennsylvania
STEVE KING, Iowa                     MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas              LEONARD L. BOSWELL, Iowa
K. MICHAEL CONAWAY, Texas            JOE BACA, California
JEFF FORTENBERRY, Nebraska           DENNIS A. CARDOZA, California
JEAN SCHMIDT, Ohio                   DAVID SCOTT, Georgia
GLENN THOMPSON, Pennsylvania         HENRY CUELLAR, Texas
THOMAS J. ROONEY, Florida            JIM COSTA, California
MARLIN A. STUTZMAN, Indiana          TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      KURT SCHRADER, Oregon
AUSTIN SCOTT, Georgia                LARRY KISSELL, North Carolina
STEPHEN LEE FINCHER, Tennessee       WILLIAM L. OWENS, New York
SCOTT R. TIPTON, Colorado            CHELLIE PINGREE, Maine
STEVE SOUTHERLAND II, Florida        JOE COURTNEY, Connecticut
ERIC A. ``RICK'' CRAWFORD, Arkansas  PETER WELCH, Vermont
MARTHA ROBY, Alabama                 MARCIA L. FUDGE, Ohio
TIM HUELSKAMP, Kansas                GREGORIO KILILI CAMACHO SABLAN, 
SCOTT DesJARLAIS, Tennessee          Northern Mariana Islands
RENEE L. ELLMERS, North Carolina     TERRI A. SEWELL, Alabama
CHRISTOPHER P. GIBSON, New York      JAMES P. McGOVERN, Massachusetts
RANDY HULTGREN, Illinois
VICKY HARTZLER, Missouri
ROBERT T. SCHILLING, Illinois
REID J. RIBBLE, Wisconsin

                                 ______

                           Professional Staff

                      Nicole Scott, Staff Director

                     Kevin J. Kramp, Chief Counsel

                 Tamara Hinton, Communications Director

                Robert L. Larew, Minority Staff Director

                                 ______

Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
                              Agriculture

                 TIMOTHY V. JOHNSON, Illinois, Chairman

GLENN THOMPSON, Pennsylvania         JIM COSTA, California, Ranking 
MARLIN A. STUTZMAN, Indiana          Minority Member
AUSTIN SCOTT, Georgia                HENRY CUELLAR, Texas
RANDY HULTGREN, Illinois             PETER WELCH, Vermont
VICKY HARTZLER, Missouri             TERRI A. SEWELL, Alabama
ROBERT T. SCHILLING, Illinois        LARRY KISSELL, North Carolina

                Mike Dunlap, Subcommittee Staff Director

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................     3
    Prepared statement...........................................     4
Courtney, Hon. Joe, a Representative in Congress from 
  Connecticut, submitted letter..................................   125
Johnson, Hon. Timothy V., a Representative in Congress from 
  Illinois, opening statement....................................     1
    Prepared statement...........................................     2

                               Witnesses

Cook, Cheryl, Deputy Under Secretary for Rural Development, U.S. 
  Department of Agriculture, Washington, D.C.....................     5
    Prepared statement...........................................     7
    Submitted questions..........................................   128
Larson, Hon. Donald, Commissioner, Brookings County, South 
  Dakota; Chairman, Agriculture and Rural Affairs Steering 
  Committee, National Association of Counties, Brookings, SD; on 
  behalf of National Association of Development Organizations....    82
    Prepared statement...........................................    83
Collins, Ph.D., Timothy, Assistant Director, Illinois Institute 
  for Rural Affairs, Western Illinois University, Bushnell, IL...    87
    Prepared statement...........................................    89
Fluharty, Charles W., President and CEO, Rural Policy Research 
  Institute, Truman School of Public Affairs, University of 
  Missouri-Columbia, Columbia, MO................................    97
    Prepared statement...........................................    98
Dozier, Mike, Director, Office of Community and Economic 
  Development, California State University, Fresno, Fresno, CA...   103
    Prepared statement...........................................   105


                     HEARING TO REVIEW THE VARIOUS
                   DEFINITIONS OF RURAL APPLIED UNDER



        PROGRAMS OPERATED BY THE U.S. DEPARTMENT OF AGRICULTURE

                              ----------                              


                       TUESDAY, FEBRUARY 15, 2011

                  House of Representatives,
      Subcommittee on Rural Development, Research, 
            Biotechnology, and Foreign Agriculture,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300, Longworth House Office Building, Hon. Timothy V. 
Johnson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Johnson, Thompson, Scott, 
Hultgren, Schilling, Costa, Sewell, Kissell, and Courtney.
    Staff present: Mike Dunlap, Patricia Barr, Tamara Hinton, 
Debbie Smith, Scott Kuschmider, Liz Friedlander, and Jamie 
Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE 
                   IN CONGRESS FROM ILLINOIS

    The Chairman. This hearing of the Subcommittee on Rural 
Development, Research, Biotechnology, and Foreign Agriculture 
to review the various definitions of rural applied under the 
programs operated by the USDA will now come to order. I would 
ask leave of the Committee that my opening statement be 
submitted and incorporated in the record rather than taking the 
Committee's and audience's time reading a relatively lengthy 
statement verbatim, I would ask leave of the Committee to 
submit that.
    The statement is ordered incorporated in the record.
    As everybody here is aware, both the Members of the 
Committee and the audience, the purpose of this bill is to deal 
with questions of rural under relative provisions of Federal 
law, in particular, the 2008 Farm Bill. There are concerns that 
have been evidenced and voiced over some period of time that 
because of too expansive a definition and/or because of failure 
of various Administration agencies to narrow in and report the 
underlying purpose of the bill, could be undermined and that 
spurring rural competitiveness in the global market through 
infrastructure, investment and business lending and assistance 
might be impaired, and that is a good part of the reason why we 
are here.
    Let me also point out that the gentleman from Connecticut, 
my friend, Mr. Courtney, not a Member of the Subcommittee, has 
joined us today. Ranking Member, Mr. Costa, and I have 
consulted and we are pleased to welcome him to join us in the 
questioning of witnesses, unless there is any objection. 
Hearing none, leave is granted. Mr. Courtney, we are pleased to 
have you with us.
    [The prepared statement of Mr. Johnson follows:]

  Prepared Statement of Hon. Timothy V. Johnson, a Representative in 
                         Congress from Illinois
    Good morning, and welcome. In the coming months this Subcommittee 
will be conducting a full review of the activities under its 
jurisdiction, including agricultural research, extension services, 
biotechnology, trade promotion, and our topic today, rural development. 
We will also be reviewing the status of programs specifically 
authorized in the 2008 Farm Bill, and how USDA has utilized these 
authorities.
    The farm bill provided for a number of programs intended to spur 
rural economic development. Through infrastructure investments, 
business lending, and assistance for community facilities, rural 
development programs are designed with the purpose of helping our rural 
communities compete in a global market. As the agency responsible for 
implementing these programs USDA is charged with ensuring rules are 
written in a timely manner so that rural America can receive the 
greatest benefit possible.
    Members of this Subcommittee understand that assisting small, rural 
communities carries with it a great many challenges. Not the least of 
which is ensuring that the limited funds available are targeting only 
rural communities and not diverted to urban areas.
    While we appreciate the USDA's commitment to bringing assistance to 
rural communities, there are several areas that concern me and the 
Subcommittee that the responsibilities laid out by Congress in the 2008 
Farm Bill are not being met. Furthermore, after repeated assurances 
that adequate staff was available to complete work on rural broadband 
and loan programs, despite an influx of funds from the stimulus, I fear 
these funds have been administered to the detriment rural communities. 
I hope that USDA can provide the Subcommittee with solid evidence that 
rural America will benefit from the program before those authorities 
expire.
    It is the purview of Congress to determine how the money entrusted 
to the Federal Government is spent, and where that money is targeted. 
Today we will be looking at a key aspect of how funds are targeted 
through the various rural development programs operated by USDA. In an 
effort to properly target communities, decision makers rely on the 
definition of `rural'. However, defining rural continues to be a 
challenge for policy makers at all levels.
    It is our understanding that USDA has used their waiver authority 
under section 6018 of the Farm Bill to fund projects in areas the Under 
Secretary for Rural Development deemed to be `rural in character.' We 
look forward to an update on how many of the 146 eligible areas were 
awarded funds for rural development projects.
    There are 16 Federal agencies operating 88 rural development 
programs. Virtually none of these programs have identical definitions 
of what it means to be rural. In most cases, the definitions reflect 
the specific nature of the program.
    With so many agencies and programs targeting rural development, 
coordination is important. I hope that our witnesses today can provide 
some insight as to where greater coordination should be sought among 
the various agencies, and whether efficiencies might be gained.
    The 2008 Farm Bill required USDA to submit a report to Congress 
that would review the various definitions of rural, describe the 
effects that the variations in those definitions have on those 
programs, make recommendations for ways to better target funds through 
rural development programs, and determine the effect of the changes to 
definitions of rural on the level of rural development funding and 
participation in those programs in each state.
    Unfortunately, USDA has not yet completed their work due last 
summer. Today's hearing will provide an opportunity for USDA to update 
the Committee on how the revised definitions of rural have affected our 
programs. We hope that USDA will also be able to provide an assurance 
of when their report will be forthcoming.
    We are pleased that USDA is with us this morning to give an update 
on these issues. In addition to USDA's testimony, we are pleased to 
have a panel of distinguished individuals with tremendous expertise in 
economic development. We appreciate the time and effort each of them 
has put into preparing their testimony and traveling to be with us this 
morning and we look forward to their remarks.
    Finally, it is clearly within the jurisdiction of the Congress, the 
full Committee, and this Subcommittee to propose changes in the law 
that would better address these issues and our overarching goal of 
serving the needs of rural America. I appreciate the ongoing 
relationship with USDA and the Subcommittee on Rural Development, and 
want to work together to achieve mutual goals. However, there should be 
no question that it is the Congress, and not unelected administrative 
agencies, who will set the policy for the United States.

    The Chairman. For his preliminary remarks I would turn the 
microphone over to my friend, the distinguished Ranking Member 
from California, Mr. Costa.

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

    Mr. Costa. Thank you very much, Mr. Chairman. Good morning 
to all who are here this day, Members of the Subcommittee, on a 
bipartisan basis. I know we look forward to working together as 
we deal with many of the challenges of the subject matter that 
this Subcommittee has jurisdiction over, from rural development 
to research, biotechnology and foreign agriculture. All of us, 
in one way or another, are touched by the impacts of our 
agricultural districts. The importance of agriculture to 
America's ability not only to maintain its tremendous ability 
to feed itself, but to export our agricultural products 
throughout the world.
    I like to say nobody does it better than we do in terms of 
food, fiber and the quality and the yield of those food and 
fibers, and also using cutting-edge technology.
    Mr. Chairman, today's hearing is very important, and I am 
pleased that you took the time to focus on this, and to have 
our testimony from not only the USDA, but also our witnesses on 
our second panel, the focus on statutory and regulatory 
definitions of rural as they are applied to the United States 
Department of Agriculture in the various programs as to whether 
or not we qualify in our respective states as to that rural 
definition.
    Many of us, Chairman Johnson, you and I and others, worked 
very hard on the 2008 Farm Bill to ensure that it reflected and 
represented the needs of U.S. agriculture, and on a bipartisan 
basis we did a pretty good job. It was the only bill--for the 
new Members--that actually in that Congress followed regular 
order in both Houses and actually was vetoed by the President. 
And on a bipartisan basis, we overrode the veto.
    So, it is important to note the history of the 2008 Farm 
Bill as we focus on reauthorization in 2012. But this morning's 
hearing is very important, I believe, and I again want to thank 
you. We have many areas in the nation, take mine as an example, 
that are rural, that have tremendous agricultural production, 
that are in the top ten agricultural counties in the nation, 
agricultural counties in terms of farm output on the farm gate. 
In other words, they are what we count in terms of gross 
receipts. My counties, Fresno County, and Kern County have been 
number one and number three, respectively, for decades. Fresno 
County is the largest agricultural county in the nation. Kern 
County is number three. Tulare County represented by 
Congressman Nunes is number two, the largest dairy county in 
the nation, yet none of those counties in the whole region 
qualify under the rural definition.
    I would love to invite you. I know my other colleagues 
would love to invite you to the San Joaquin Valley, the 
heartland of California's farm breadbasket. We don't fit under 
the rural definitions, and I would submit to you that having 
farmed there myself and my family for 3 decades, we are pretty 
rural, yet under the USDA's definitions we don't qualify. And 
it is like our tax dollars come here to Washington, but they 
don't come back to the areas I represent. You will see the maps 
and our witnesses will demonstrate that in their testimony, 
there are a host of areas throughout the United States that 
fall in that same category.
    I don't know if it is possible to establish a nationwide 
definition for rural as we continue to deal with the 
challenges, not only like mine, but elsewhere in the country. 
But, I think everyone here, the USDA included, would be hard-
pressed to come up with a singular definition as to what it 
means to be rural in each state in the nation.
    So I am looking forward to the testimony, Mr. Chairman, as 
we wrestle with this effort, as we try to ensure that our 
communities throughout the country are able to participate in 
the farm bill as we hoped and intended it to be when we passed 
it on a bipartisan basis in 2008.
    So I thank you, and I look forward to listening to the 
testimony and I will submit the rest of my comments for the 
record.
    [The prepared statement of Mr. Costa follows:]

Prepared Statement of Hon. Jim Costa, a Representative in Congress from 
                               California
    Good morning, Chairman Johnson. Thank you for calling today's 
hearing and I congratulate you on being named Chairman to this 
Subcommittee for the 112th Congress. I look forward to working with you 
and all the Members on both sides of the aisle on the many issues under 
our jurisdiction. I am proud of what this Committee has accomplished in 
a bipartisan fashion during my time in Congress and I hope we can 
continue down that road for the next 2 years.
    Today's hearing is an important one, because the various statutory 
and regulatory definitions of `rural' applied to USDA Rural Development 
programs have a significant effect on rural communities in my district 
and home state. California continues to struggle with eligibility for 
these programs, whether it is rural housing, health, or essential 
community facilities, largely because of the criteria used to define 
rural communities.
    The use of rural definitions as basic eligibility criteria has 
created a separate set of problems. On the one hand, the establishment 
of different criteria for what is rural depending on the program has 
created a great deal of confusion, even among economic development 
professionals who in many cases are familiar with RD programs.
    Another problem is the nationwide application of a given rural 
definition. I think everyone here, USDA included, would be hard-pressed 
to come up with a singular definition that accurately portrays what it 
means to be rural in each and every state. Unfortunately, these 
definitions do apply and often exclude communities and their residents 
from financing essential infrastructure like housing, basic utilities, 
and health facilities.
    Definitions based on population or distances from urbanized areas 
also do not take into account other socioeconomic factors that could 
elevate communities to be ideal candidates for RD programs. Migration 
flows have caused some cities to grow above the population cutoff 
without the accompanying increased economic development and diversified 
economies that many people associate with urban areas. But they are 
rapidly losing their eligibility for rural programs that aim to meet 
these goals. The Central Valley of California has seen this play out 
time and time again.
    Recent farm bills have made tweaks to the definition of rural, so I 
look forward to hearing from both panels on whether or not a new 
approach is needed. It's no secret that Rural Development is under the 
budget microscope, even with nearly all of their programs being 
oversubscribed. If more rural communities can be better served with a 
different set of criteria or a different regionally-based approach to 
development, then that is something this Committee should consider for 
the next farm bill. I hope USDA will be able to provide this Committee 
with some suggestions from the lessons it has learned from the 
administration of awards not just in annual appropriations, but the 
Recovery Act funds to certain RD programs that aimed to bolster 
essential infrastructure.
    Once again, I welcome today's witnesses and I look forward to their 
testimony. I yield back my time.

    The Chairman. Thank you, Mr. Costa. I would like to remind 
Members that after at the conclusion of each panel, that they 
will be recognized for questioning in the order of seniority 
for Members who were here at the start of the meeting. That is 
fairly traditional and common in each Committee. After that, 
Members will be recognized in order of arrival. I appreciate 
your understanding and the clerk will be supplying me that list 
as we progress through the testimony.
    Our first panel consists of one member. I would like to 
welcome our first witness to the table, specifically Ms. Cheryl 
Cook, Deputy Under Secretary for Rural Development, U.S. 
Department of Agriculture, in Washington. Ms. Cook, please 
begin when you are ready. I don't want to preempt in any way 
what you choose to do. If you want to summarize from your 
statement, which we have in full, we would be more than happy 
to give you more time to actually respond to questions and 
articulate the points you want to make, but that is entirely up 
to you. Proceed.

  STATEMENT OF CHERYL COOK, DEPUTY UNDER SECRETARY FOR RURAL 
                DEVELOPMENT, U.S. DEPARTMENT OF
                 AGRICULTURE, WASHINGTON, D.C.

    Ms. Cook. Thank you, Mr. Chairman. Good morning to you and 
to Ranking Member Costa, and to other Members of the 
Subcommittee. It is my pleasure to be here today to discuss the 
issue that perhaps more than any other caused me to leave a 
perfectly good job in the Pennsylvania Department of 
Agriculture that I enjoyed very much to come back to USDA. We 
simply have to do something about how we account for rural 
resources. In the interest of time, I would like to just submit 
my statement for the record, make a few brief opening comments 
and get right to your questions.
    My written statement includes a complete listing of all of 
our statutory definitions with respect to what is an eligible 
rural area. While there are variations among them, one thing 
they have in common is that they serve as a basic test of 
eligibility. They are gates, if you will. If you don't meet the 
standard, we don't even take your application; a gate does not 
open.
    The other thing our several eligibility standards have in 
common is that they rely almost entirely on the total 
population as the definition of rural. That leaves out other 
obvious characteristics of a rural area compared to a 
metropolitan area, including some that might be of use to this 
Committee as well as to USDA in targeting resources to the 
areas of greatest need and best opportunity.
    Every state and territory has areas that are more rural 
than others, certainly based on total population, but also 
based on other factors like population density, the presence of 
natural assets like lakes and forests, whether zoning exists 
and the types of land uses that are authorized in that zoning, 
the prominence of production agriculture, as Congressman Costa 
was explaining, and the role that agriculture plays in the 
local domestic product and its workforce.
    There are many, many definitions, among them, whether the 
community is large enough to get its own share of Community 
Development Block Grant funds from HUD, or Community Services 
Block Grant funds from HHS.
    Once that basic eligibility is determined, though, and the 
gate opens, both our several statutes and agency regulations do 
provide additional tools to USDA Rural Development staff for 
targeting resources, particularly grant funds to communities 
that have the smallest population and the lowest median income.
    USDA's Economic Research Service has done extensive work on 
how to best target resources to rural areas. And I am pleased 
to tell you that tomorrow they will be releasing an interactive 
atlas online that will give all of us a handy tool for mapping 
the characteristics that I have described, and others, that can 
help us all literally see where rural America is. As the new 
Census rolls out, that becomes more important. I am sure ERS 
would be happy to come do a demonstration of their new atlas 
tool for Subcommittee Members and staff.
    The need to apply a single nationwide standard in each 
program, along with the variety of standards that exist under 
current law--everything from 10,000 in the case of the Water 
and Waste Disposal program, to no rural area requirement at all 
in some other cases--has been challenging for Rural Development 
staff and exasperating for our customers.
    I can give you examples of these challenges from my past 
life as State Director for Rural Development in Pennsylvania. I 
also know many of you can, and some of you already have, given 
me examples that you are dealing with every day as your 
constituents call you in frustration.
    In addition, it would appear that Congress has some 
frustration around this too. In 2008, the farm bill did give us 
some authority for what is called the ``rural in character'' 
exception to recognize that rapidly urbanizing areas may still 
contain pockets of communities that are essentially still rural 
in character. This is a start in flexibility but doesn't quite 
do the whole job.
    In addition, every year, Members of Congress add general 
provisions to our appropriations law declaring that for 
whatever program a certain community that is otherwise not 
eligible, because its population is over that single nationwide 
standard, is nonetheless deemed to be rural until the next 
decennial Census comes out. Of course, that is going to happen 
between now and when Congress writes the next farm bill. And so 
we are going to have communities that think they are safe, 
because they have had a general provision that no longer will 
be in effect. We will also have communities as the Census data 
rolls out that have been eligible and won't be anymore.
    And finally, we will have some communities that have not 
been eligible, but due to population loss, will become so. I am 
reminded of the 2000 Census. The City of Harrisburg, which is 
the state capital of Pennsylvania, dipped below 50,000 
population, and for the first time became eligible for the 
Business and Industry Loan Guarantee program. This opened up 
the whole of south central Pennsylvania to that program for the 
first time.
    We are often asked in Rural Development, why do you have 
housing and business and energy programs? Why do you do health 
clinics? There are whole departments of the Federal Government 
that do these things, so why do you do them too? And the answer 
we give is that Rural Development has a unique role in the 
Federal family. We alone have the field structure, 47 state 
offices, 500 area offices where our staff can work shoulder to 
shoulder with rural communities to help them identify all of 
the resources that are out there, ours and other agencies, get 
them through the application process and help them succeed.
    Rural Development also plays a somewhat unique role within 
USDA. We are not unmindful that we do what we do within the 
Department of Agriculture. I want to congratulate my fellow 
Pennsylvanian Congressman Thompson for his Subcommittee 
chairmanship on the conservation side.
    The definition we have for eligible rural area in business 
programs includes every place except communities greater than 
50,000 and adjacent urbanized areas. What that does is drive us 
out of the adjacent urbanized areas into open space and farm 
land. In states that have been experiencing rapid sprawl----
    The Chairman. If the gentlelady could bring your remarks to 
a close, our time has expired.
    Ms. Cook. Sure. I would be happy to do that.
    For states that have experienced urban sprawl, that makes 
it particularly challenging to balance the priorities of USDA.
    Finally, Mr. Chairman, there are a few instances in which 
current law does provide the ability to go into urban areas 
quite directly. That includes the energy title of the farm 
bill, it includes programs that can benefit food deserts, and 
it include renewable energy from the Rural Utilities Service 
both in rural and non-rural areas.
    And with that, I will stop and address any questions you 
have.
    [The prepared statement of Ms. Cook follows:]

  Prepared Statement of Cheryl Cook, Deputy Under Secretary for Rural 
     Development, U.S. Department of Agriculture, Washington, D.C.
    Chairman Johnson, Ranking Member Costa and Members of Subcommittee, 
it is my pleasure to be with you today to discuss one of the most 
fundamental, and vexing questions we face in USDA Rural Development--
how ``rural'' is defined, and what role rurality should play in how we 
function on behalf of the U.S. Department of Agriculture.
    These are fundamental questions for USDA , as we exist to provide 
economic and community development to overcome obstacles based on 
rurality. Rural areas have experienced economic stress from long-term 
poverty and decades of population decline. Federal assistance from USDA 
is essential to these communities as they often don't have access to 
private capital markets and have limited access to assistance from 
other departments in the Federal Government. Moreover, they do not have 
the total population to support repayment of a bond to finance critical 
infrastructure needs or their population is so widespread that such a 
system would be prohibitively expensive.
    These questions are vexing because, under current law, rurality is 
used to determine a project's basic eligibility for most of our 
programs and is defined almost solely in terms of total population 
thresholds. As a result, a single standard for program eligibility is 
applied equally in New Jersey and New Mexico, in Alabama and Alaska, in 
Virginia and the Virgin Islands. Given that each state has the right to 
determine its own municipal structures, a single standard that may 
sound simple in theory can be difficult to apply in practice. For 
example, Congress added language in the 2002 Farm Bill limiting the 
universe of eligible applicants for the Water and Waste Disposal 
program of Rural Utilities Service (RUS) and the Community Facilities 
program of Rural Housing Service (RHS) to ``cities, towns, and 
unincorporated areas'' whose populations did not exceed the previously 
established population limits. Such language does not properly account 
for the variety of local forms of government including townships, 
boroughs, and other municipalities that in many states describe the 
very less-populated municipalities those programs are intended to 
reach. It also overlooks some of the structural uniqueness of several 
of the original colonies--in the role of a town and the status of a 
village, for example--dating back to the original Plymouth settlement 
in the 17th Century.
    Further, relying almost solely on total population as the 
definition of rural leaves out other obvious characteristics of a rural 
area compared to a metropolitan area. Those characteristics might help 
direct USDA Rural Development's resources to areas of greatest need and 
opportunity. Every state and territory have areas that are more rural 
than others, certainly based on total population, but also based on 
other factors such as population density, the presence of natural 
assets like lakes and forests, zoning regulations and land uses that 
might be covered in local ordinances, the prevalence of production 
agriculture and its infrastructure in the area's gross domestic product 
and workforce, whether a community qualifies for its own share of 
Community Development Block Grant funds from the Department of Housing 
and Urban Development or Community Services Block Grant funds from the 
Department of Health and Human Services or has to compete for some of 
the remainder after urban centers have taken their share, and so forth. 
USDA's Economic Research Service (ERS) has done extensive work on 
rurality, as have the other witnesses you will hear from today. Much of 
ERS' work is available on-line through virtual briefing rooms found at 
http://www.ers.usda.gov/Briefing/. ERS also is about to release a new 
interactive atlas looking at many characteristics of rural areas. I 
believe it will be a very useful tool for Congress, USDA, and our 
private sector partners in rural economic and community development. 
Mr. Chairman, I'm sure that my colleagues in ERS would gladly do a 
demonstration of the new atlas for Subcommittee Members and staff.
    Applying a single standard to determine rural eligibility along 
with the variety of standards that exist in current law has been 
challenging for Rural Development staff and exasperating for applicants 
and lenders.
    Apparently, it also has been a source of frustration for Members of 
Congress. In recognition of the problems created by the rural area 
definitions, the 2008 Farm Bill provided the Under Secretary with 
limited authority to determine areas that do not meet the rural area 
definition as ``rural in character'' and thus an eligible rural area. 
While helpful, this authority has proven far too limited to fix the 
problems with the current definitions of rural area. In addition, each 
year Congress adds a series of general provisions to the agriculture 
appropriations legislation declaring that a certain municipality is 
deemed to be rural even though its population exceeds the statutory 
eligibility standard for that program.
    Given that those general provisions largely expire with the release 
of new decennial Census data, the timing of today's hearing is even 
more important. Many communities that have been eligible by reason of a 
general provision will not be after the new 2010 Census data is 
released. Further, the Census data will show that other communities no 
longer are eligible rural areas for certain programs, while still 
others that have experienced population loss might become eligible for 
the first time in decades. Now is an incredibly important time to 
review rurality and begin determining the best way to achieve our 
shared objectives of helping to create economic opportunities for rural 
citizens and helping them improve their quality of life. Mr. Chairman, 
I congratulate you and the other Members of the Committee for digging 
into these questions now.
    USDA Rural Development administers over 40 different programs 
through its three agencies--Rural Utilities Service, Rural Housing 
Service, and Rural Business-Cooperative Service--delivered through 47 
Rural Development state offices and nearly 500 area offices. These 
programs were authorized by several different laws. A complete set of 
all of our statutory ``rural area'' definitions is attached to my 
testimony as Appendix 1. I would like to focus the balance of my 
testimony today on three of those laws: the Consolidated Farm and Rural 
Development Act, or CONACT; the Rural Electrification Act; and the Farm 
Security and Rural Investment Act, which was amended by the Energy 
title of the 2008 Farm Bill.
    Section 343(a)(13) of the CONACT defines ``rural'' and ``rural 
area'' for programs of USDA Rural Development authorized therein, 
principally business programs and community-based programs. In general, 
the Act provides a definition of ``rural'' or ``rural area'' that is, 
``any area other than--(i) a city or town that has a population of 
greater than 50,000 inhabitants; and (ii) any urbanized area contiguous 
and adjacent to a city or town described in clause (i)''. This 
definition would act as a default definition for new CONACT programs, 
and is historically the definition applied to the business programs of 
Rural Business-Cooperative Service (RBCS).
    The CONACT provides separate definitions for two additional program 
areas. For the Water and Waste Disposal direct loans, guaranteed loans, 
and grants of Rural Utilities Service, the Act defines ``rural'' and 
``rural area'' as a, ``city, town, or unincorporated area that has a 
population of not more than 10,000 inhabitants''. For the Community 
Facilities direct loans, loan guarantees, and grants of Rural Housing 
Service, the Act defines ``rural'' and ``rural area'' as a, ``city, 
town, or unincorporated area that has a population of not more than 
20,000 inhabitants''.
    The Rural Electrification Act's definition of eligible ``rural 
area'' for Rural Utilities Service's electric loan and loan guarantee 
programs was changed in the 2008 Farm Bill from ``any area of the 
United States not included within the boundaries of any city, village, 
or borough having a population exceeding 1,500'', to instead align with 
the Community Facilities program definition in Rural Housing Service, 
i.e., municipalities with a total population not more than 20,000. 
However, those Rural Electric Cooperatives which still had an 
outstanding loan with RUS at the time and had been eligible under the 
prior definition retained their eligibility--once rural, always rural.
    With the exception of Section 9007, the Rural Energy for America 
Program, the portions of Title IX of Farm Security and Rural Investment 
Act of 2002 assigned to Rural Development do not have a statutory 
requirement that projects be financed in a rural area. Proposed rules 
nonetheless including a ``rural area'' eligibility requirement 
comparable to other business programs were published by Rural Business-
Cooperative Service (RBCS) for the Biorefinery Assistance Program ( 
9003), the Repowering Assistance Program ( 9004), and the Bioenergy 
Program for Advanced Biofuels ( 9005) on April 16, 2010 with a 60 day 
public comment period. Our intent was to have these programs mirror 
other types of business financing programs available from RBCS. Interim 
final rules for all three programs have been published.
    Rural Development staff administering these loans, loan guarantees, 
and grants must 