[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


              THE STATE OF INFRASTRUCTURE IN RURAL AMERICA

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 19, 2017

                               __________

                           Serial No. 115-10
                           
                           
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                        COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

GLENN THOMPSON, Pennsylvania         COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia,             DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
BOB GIBBS, Ohio                      JAMES P. McGOVERN, Massachusetts
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas, Vice Ranking 
ERIC A. ``RICK'' CRAWFORD, Arkansas  Minority Member
SCOTT DesJARLAIS, Tennessee          MICHELLE LUJAN GRISHAM, New Mexico
VICKY HARTZLER, Missouri             ANN M. KUSTER, New Hampshire
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
DOUG LaMALFA, California             CHERI BUSTOS, Illinois
RODNEY DAVIS, Illinois               SEAN PATRICK MALONEY, New York
TED S. YOHO, Florida                 STACEY E. PLASKETT, Virgin Islands
RICK W. ALLEN, Georgia               ALMA S. ADAMS, North Carolina
MIKE BOST, Illinois                  DWIGHT EVANS, Pennsylvania
DAVID ROUZER, North Carolina         AL LAWSON, Jr., Florida
RALPH LEE ABRAHAM, Louisiana         TOM O'HALLERAN, Arizona
TRENT KELLY, Mississippi             JIMMY PANETTA, California
JAMES COMER, Kentucky                DARREN SOTO, Florida
ROGER W. MARSHALL, Kansas            LISA BLUNT ROCHESTER, Delaware
DON BACON, Nebraska
JOHN J. FASO, New York
NEAL P. DUNN, Florida
JODEY C. ARRINGTON, Texas

                                 ______

                   Matthew S. Schertz, Staff Director

                 Anne Simmons, Minority Staff Director

                                  (ii)
                             
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page
Bacon, Hon. Don, a Representative in Congress from Nebraska, 
  submitted statement and report.................................     4
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     1
    Prepared statement...........................................     3
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     4

                               Witnesses

Halverson, Ph.D., Thomas, President and Chief Executive Officer, 
  CoBank, Washington, D.C.; on behalf of Farm Credit System......    13
    Prepared statement...........................................    14
Coon, Ph.D., Thomas G., Vice President, Division of Agricultural 
  Sciences and Natural Resources, Oklahoma State University; 
  Chair, Task Force on Deferred Maintenance, Board on Agriculture 
  Assembly, Association of Public and Land-grant Universities, 
  Stillwater, OK.................................................    20
    Prepared statement...........................................    21
Calhoun, Richard R., former President, Cargo Carriers, Cargill, 
  Inc., Silver Spring, MD; on behalf of National Grain and Feed 
  Association....................................................    24
    Prepared statement...........................................    26
Wynn, Curtis, President and Chief Executive Officer, Roanoke 
  Electric Cooperative; Vice President, Board of Directors, 
  National Rural Electric Cooperative Association, Ahoskie, NC...    30
    Prepared statement...........................................    32
    Submitted questions..........................................   123
Otwell, CPA, Jennifer L., Vice President and General Manager, 
  Totelcom Communications, LLC, De Leon, TX; on behalf of NTCA--
  The Rural Broadband Association................................    35
    Prepared statement...........................................    37
    Submitted questions..........................................   123
Macmanus, P.E., Brian E., General Manager, East Rio Hondo Water 
  Supply Corporation, Rio Hondo, TX; on behalf of Texas Rural 
  Water Association; National Rural Water Association............    46
    Prepared statement...........................................    48

                           Submitted Material

National Family Farm Coalition, submitted statement..............   119
National Rural Health Association, submitted statement...........   120

 
              THE STATE OF INFRASTRUCTURE IN RURAL AMERICA

                              ----------                              


                        WEDNESDAY, JULY 19, 2017

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300, Longworth House Office Building, Hon. K. Michael Conaway 
[Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Thompson, 
Goodlatte, Lucas, King, Rogers, Austin Scott of Georgia, 
Crawford, DesJarlais, Hartzler, Denham, LaMalfa, Davis, Yoho, 
Allen, Bost, Rouzer, Abraham, Kelly, Marshall, Bacon, Faso, 
Dunn, Arrington, Peterson, David Scott of Georgia, Costa, Walz, 
McGovern, Vela, Lujan Grisham, Kuster, Plaskett, Adams, Evans, 
Lawson, O'Halleran, Panetta, Soto, and Blunt Rochester.
    Staff present: Bart Fischer, Darryl Blakey, Emily Wong, 
Matthew S. Schertz, Paul Balzano, Rachel Millard, Stephanie 
Addison, Anne Simmons, Evan Jurkovich, Kellie Adesina, Liz 
Friedlander, Troy Phillips, Nicole Scott, and Carly Reedholm.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. Good morning. This hearing of the Committee 
on Agriculture entitled, The State of Infrastructure in Rural 
America, will come to order. I would ask Mr. Bacon to open us 
with a prayer. Don.
    Mr. Bacon. Ladies and gentlemen, we are praying. Dear 
Heavenly Father, Lord, we thank you for a beautiful day. We 
thank you for the privilege of living in this country where we 
are free. And we just thank you for our farmers, our ranchers, 
our agriculture, which is such a rich resource for our country. 
You have blessed us. And, Lord, we ask for your wisdom today 
and for your presence. And we just ask you that you help us do 
a good job for our country. In Jesus' name, amen.
    The Chairman. Amen. Thank you.
    Well, based on the level of conversation before we started 
the hearing, apparently everybody is excited about our topic 
today. This is good stuff. Again, thank you for being here. I 
appreciate it.
    There is, perhaps, no current public policy proposal that 
commands more bipartisan support than the idea of rebuilding 
America's public works. We have all heard the news reports 
about the impact aging infrastructure has on our ability to 
trade, travel, and communicate. But perhaps nowhere is the need 
to renew our infrastructure greater than in America's 
heartland. Many Americans are familiar with the crumbling 
bridges and buckling roads that are highlighted in the news 
stories, and the tragic crisis in Flint has brought into sharp 
relief the urgent need to upgrade our water supply 
infrastructure.
    Like urban America, rural America has its share of roads, 
bridges, and water systems in need of repair. We face unique 
challenges that are different than our neighbors. Rural America 
produces commodities, those fundamental products on which our 
modern economy is built. We produce food, fiber, energy, ore, 
lumber, and everything that goes into the products that are 
made in our factories, factories that, in many cases, reside in 
urban America. And transportation is the lifeline that 
facilitates this partnership. If we cannot get the commodities 
to market, urban manufacturers----
    [Audio malfunction in hearing room.]
    Mr. Yoho. Mr. Chairman, I don't believe your microphone is 
on. It is not working. The red light is on.
    The Chairman. Would you come and read this.
    [Discussion off the record.]
    The Chairman. All right. Is it working now?
    Okay. Speaking of infrastructure needs: transportation, 
improved communications technology remains a tremendous need in 
rural America. Here in this room we take for granted the 
awesome power of smartphones. Universal instantaneous access to 
the Internet has become essential to our lives. And as 
communications technology races ahead, we need to ensure rural 
Americans are not being left behind.
    Further, many of the gains in rural America over the past 
100 years have been due, in part, to the public investments 
made in agricultural research [Audio malfunction in hearing 
room.]
    As we have heard before, the infrastructure on which our 
world class agricultural researchers rely is outdated, 
crumbling, even as other countries are making significant 
investments. At the root of many of these problems is the need 
for capital to be invested in rural America. Our shifting 
population moving out of rural communities into urban and 
suburban counties, is also shifting the tax base making it 
difficult for small communities to finance the upgrades they 
need to continue to be competitive in a modern economy. It is a 
cycle that seems unbreakable. Services are lacking, so families 
move out. As families move out, the tax base shrinks. And as 
the tax base shrinks, services must be curtailed and upgrades 
must be postponed.
    While it is tempting to think it is a local problem, it is 
not. Our modern economy is built on the free movement of goods 
and ideas. We cannot grow our nation's economy adequately if 50 
million rural Americans are unable to participate.
    For 200 years, Congress has debated Federal financing of 
waterways, highways, electric systems, telephone lines, and 
research infrastructure. Across all of those debates, we have 
long understood the need to continue to pull all Americans 
further into the networks of commerce.
    I applaud the President for drawing attention to this 
important issue. Today, we are fortunate to hear from six of 
over 200 organizations participating in the Rebuild Rural 
Coalition.
    I want to thank them and the many other coalition partners 
for joining us here today. It is important that your members 
and our constituents are part of this process.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    Good morning and thank y'all for being here today.
    There is perhaps no current public policy proposal that commands 
more bipartisan public support than the idea of rebuilding America's 
public works. We've all heard the news reports about the impact aging 
infrastructure has on our ability to trade, travel and communicate. But 
perhaps nowhere is the need to renew our infrastructure greater than in 
America's heartland.
    Many Americans are familiar with the crumbling bridges and buckling 
roads that are highlighted in news stories. And the tragic crisis in 
Flint has brought into sharp relief the urgent need to upgrade our 
water supply infrastructure. Like urban America, rural America has its 
share of roads, bridges, and water systems in need of repair. But we 
face unique challenges that are different from our neighbors.
    Rural America produces commodities, those fundamental products on 
which we build our modern economy. We produce food, fiber, energy, ore, 
lumber, and everything else that gets put into the products made by our 
factories--factories that, in many cases, reside in urban America. And 
transportation is the lifeline that facilitates this partnership. If we 
cannot get commodities to market, urban manufacturing centers and rural 
communities alike face challenges producing the very ``made in 
America'' products that create the jobs and grow our economy. Because 
of that, transportation infrastructure looms larger in rural America. 
It's not just roads and bridges, it's also locks and dams and railways 
and pipelines that allow our products to travel to the cities where 
they are needed. ``Made in America'' depends on the transportation 
networks we have built in rural America.
    Like transportation, improved communications technology remains a 
tremendous need in rural America. Here in this room, we take for 
granted the awesome power of smartphones. Universal, instantaneous 
access to the Internet has become essential to our lives. And as 
communications technology races ahead, we need to ensure rural 
Americans are not being left behind.
    Further, many of the gains in rural America over the past 100 years 
have been due, in part, to the public investments made in agricultural 
research. As we have heard before, the infrastructure on which our 
world-class agricultural researchers rely is outdated and crumbling, 
even as other countries make significant investments.
    At the root of many of these problems, is the need for capital to 
be invested in rural America. Our shifting population, moving out of 
rural counties and into urban and suburban counties, is also shifting 
the tax base, making it difficult for small communities to finance the 
upgrades they need to continue to be competitive in the modern economy. 
It is a cycle that seems unbreakable--services are lacking, so families 
move out; as families move out, the tax base shrinks; as the tax base 
shrinks, services must be curtailed and upgrades must be postponed.
    While it's tempting to think this is a local problem, it is not. 
Our modern economy is built on the free movement of goods and ideas. We 
cannot grow our nation's economy if 50 million rural Americans are 
unable to participate.
    For 200 years, Congress has debated Federal financing of waterways, 
highways, electric systems, telephone lines and research 
infrastructure. Across all of those debates, we have long understood 
the need to continue to pull all Americans further into the networks of 
commerce.
    I applaud the President for drawing attention to this important 
issue. Today, we are fortunate to hear from six of the over 200 
organizations participating in the Rebuild Rural Coalition, and I want 
to thank them and many other coalition partners for joining us here 
today. It is important that your members--our constituents--are a part 
of this process.
    With that, I yield to Mr. Peterson for any additional comments he 
might have.

    The Chairman. With that, I would like to yield to Mr. 
Peterson for any comments he would like to make

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE 
                   IN CONGRESS FROM MINNESOTA

    Mr. Peterson. Thank you, Mr. Chairman. And I want to thank 
the witnesses for being with us. And apologize. I have to go 
down the hall and testify on my wolf de-listing bill. I will be 
back, but I might miss a little bit.
    Anyway, as the Chairman said, it is no secret that we have 
infrastructure issues, and we have been in decline. Our roads 
and bridges are in need of repair. And if we don't do it now, 
it will just cost more later. Our rural economy, in particular, 
faces unique infrastructure challenges. And it was said that 
strong infrastructure is necessary in rural America because it 
is so remote, and we depend on it to get our products to 
market.
    I know it is surprising to a lot of folks, but in my 
district and others like it, there are large areas that lack 
broadband service. And there are USDA programs to build more 
broadband. But the problem is we don't have a sustainable long-
term funding source. And we need something like the Universal 
Service Fund that we had when we built out the telephones. That 
is the only reason we got telephones out to every part of rural 
America. And, in my opinion, unless we have something like that 
in place, that can be relied on, we are not going to get this 
broadband done, it will be in fits and starts, with states 
doing things and so forth. Somehow or another, we have to 
figure out how to do this. It is not as easy to do on the 
broadband as it was with telephones, but I think we can do it.
    There are a lot of components that are overseen by 
different Federal agencies. And if we are truly going to 
rebuild and keep our rural infrastructure strong, all these 
pieces need to work together. I appreciate the witnesses being 
here today, and I look forward to their testimony. And I yield 
back.
    [Audio malfunction in hearing room.]
    The Chairman. The chair requests that other Members submit 
their comments for the record so witnesses may begin the 
testimony.
    [The prepared statement of Mr. Bacon follows:]

Prepared Statement of Hon. Don Bacon, a Representative in Congress from 
                                Nebraska
    I ask that The U.S. Infrastructure Advantage report be included in 
the record for the hearing on the state of infrastructure in rural 
America. I applaud the Association of Equipment Manufacturers for their 
continued commitment to the future of our nation's infrastructure. The 
work of industry leaders including my constituent Leif Magnusson of 
CLAAS to produce The U.S. Infrastructure Advantage report is an import 
step to shaping our discussion about infrastructure in Congress. Strong 
infrastructure of all kinds will ensure that U.S. companies in all 
sectors remain competitive. I look forward to working with my 
colleagues to improve our infrastructure systems in the United States.
                               Attachment
The U.S. Infrastructure AdvantageTM
Introduction
    The backbone of America's economy is its infrastructure. To have 
the strongest, most resilient economy in the world, America must have 
the best infrastructure in the world. In short, we must have an 
Infrastructure Advantage.
    America's competitors around the world understand this. They are 
making unprecedented infrastructure investments and working hard to 
overtake the United States. Meanwhile, America is underinvesting, and 
is on the verge of squandering the Infrastructure Advantage we 
inherited from the investments made by our grandparents and great-
grandparents.
    It is time for America to rebuild and modernize its vast 
infrastructure network--our roads, highways, bridges, transit systems, 
ports, waterways, locks and dams, water and wastewater pipelines, as 
well as broadband. We must renew and strengthen our Infrastructure 
Advantage if we are to have the world's preeminent economy in the 21st 
Century and beyond.
    As equipment manufacturers representing the agriculture, 
construction, forestry, mining, and utility sectors in North America, 
several factors impact our ability to manufacture and sell our products 
to customers inside and outside of the United States. These factors 
include labor force skill, trade policies that facilitate commerce in 
overseas markets, and Federal tax credits that boost reinvestment and 
expansion. Another important factor, which is the focus of this report, 
involves the maintenance and modernization of the U.S. infrastructure 
system.
    What makes American manufacturers competitive is not so different 
from what makes the country economically competitive, and maintaining 
our infrastructure in a good and updated state of repair is yet another 
shared factor. In the 2016-2017 Global Competitiveness Report by the 
World Economic Forum, the United States remained in third place behind 
Switzerland and Singapore. More ominously, the U.S. ranked 11th in 
infrastructure competitiveness, with the report noting that 
``stagnating productivity has called for a downward revision of growth 
prospects, highlighting the need for a renewed competitiveness 
agenda.''
    If the United States is to remain a global economic leader, its 
infrastructure competitiveness ranking must be improved. The gradual 
demotion and stagnation of the United States' world infrastructure 
ranking is a direct consequence of an inability to strategically act on 
the opportunities that people, industry, and technology present in 
rethinking U.S. infrastructure.
    This report makes the case for making U.S. infrastructure number 
one in the world and reclaiming the United States' Infrastructure 
Advantage. It outlines the consequence of not taking meaningful steps 
to regain this advantage, and offers five policy areas that lawmakers 
and infrastructure stakeholders should reference when considering 
infrastructure policy proposals for modernizing U.S. infrastructure and 
identifying a sustainable funding source. Rather than re-litigate our 
infrastructure problems, this document offers solutions and moves the 
conversation forward.
The Infrastructure Advantage
    For the past 2 years, AEM and its member companies have sought 
opinions from a broad range of diverse infrastructure stakeholders. 
Based on this feedback it is clear that the United States must support 
and promote the following vision in order to reclaim its Infrastructure 
Advantage--the safe and efficient movement of people and goods, 
connectivity between and within rural and urban America, as well as 
strong economic growth and robust job creation. To effectively compete 
in the global marketplace, America's infrastructure must be the best in 
the world. That is the Infrastructure Advantage.
Why is the Infrastructure Advantage Important?
    Rebuilding and modernizing America's core infrastructure to 
reestablish an Infrastructure Advantage is not only important, it is 
essential if the United States is to maintain its position as the 
world's strongest economy. It makes America more competitive 
internationally and puts domestic industry on the path to higher 
economic growth, greater productivity, and stronger private-sector job 
creation.
    In today's global marketplace, U.S. companies must compete with 
companies from around the world, including ones located in countries 
with much lower labor costs and regulatory costs than the United 
States. This puts U.S. companies at a competitive disadvantage, and it 
creates incentives for U.S. companies to move their operations to 
countries with lower costs in order to compete more effectively.
    To level the playing field, the United States must invest in 
strengthening its comparative advantages. The smartest area to do this 
is through the country's infrastructure system, which is central to 
international competitiveness. It is critical to moving goods, ideas, 
and workers quickly and efficiently and providing a safe, secure, and 
competitive climate for business operations.
    Our competitors around the world understand this. They are spending 
enormous sums and expanding their infrastructure, with China and India 
leading the way.
    Meanwhile, America is headed in the opposite direction. America's 
infrastructure was once the envy of the world and gave U.S. companies a 
big competitive boost in the international marketplace. But in recent 
years we have been underinvesting in our infrastructure, resulting in a 
decline in our roads and bridges, transit systems, air traffic control 
systems, airports, railroads, ports and dams, and water infrastructure.
    If America's businesses are to grow and remain competitive, and if 
foreign investors are to invest in businesses in the United States, 
then America needs to reclaim its Infrastructure Advantage. America 
must modernize and rebuild its infrastructure so that it is once again 
the envy of the world and ranks first in infrastructure 
competitiveness.
    China, India, and other countries with low labor and regulatory 
costs are looking to the future by building a 21st century 
infrastructure capable of supporting a strong 21st century economy. 
This should be a wake-up call for the United States. It is time to 
accept the challenge. It is time to rebuild and modernize our 
infrastructure to ensure that America's 21st century economy is the 
world's strongest economy.
    In the short term, significant investment will be required to 
modernize and rebuild America's core infrastructure. This 
infrastructure investment will create tens of thousands of jobs across 
a range of industries.
    In the long term, the most important economic impact of the 
investment needed to create the Infrastructure Advantage comes as the 
investments are completed. The economic benefits of this investment are 
long-term competitiveness, productivity, innovation, lower prices, and 
higher incomes.
Consequences of Losing the Infrastructure Advantage
    Every day Americans see the impact of underinvestment in our core 
infrastructure--congestion, potholes, transit outages, water main 
breaks, a sluggish economy, and the list goes on. This should not come 
as a surprise.
    The United States is currently investing \1/2\ of what it spent on 
transportation infrastructure more than 50 years ago as a percentage of 
the gross domestic product--close to 1.5% now compared with nearly 3% 
in the early 1960's.
    America is at a crossroads. We either significantly increase 
investment in the infrastructure that has driven our economy in the 
past, or we continue to underinvest. If we increase our investment to 
levels sufficient to reclaim an Infrastructure Advantage, the benefits 
will be significant.
    But what if we instead simply maintain the status quo?
    Over time, these impacts will affect businesses' ability to provide 
well-paying jobs, further reducing incomes. 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 
a loss of 2.5 million jobs in 2025.i
---------------------------------------------------------------------------
    \i\ American Society of Civil Engineers, ``Failure to Act.'' 2016. 
http://www.infrastructurereportcard.org/wp-content/uploads/2016/05/
2016-FTAReport-Close-the-Gap.pdf.
---------------------------------------------------------------------------
    Upon completion of the Interstate Highway System, business 
logistics costs, as a percentage of United States GDP, were cut in \1/
2\ with a decrease from 16 percent in 1980 to eight percent in 
2014.ii Failure to maintain and upgrade this system over the 
past 37 years has instead increased transportation costs for a variety 
of products, across many sectors. Congestion caused by highway systems 
that are at capacity and in disrepair cause 141 million hours to be 
wasted in freight truck productivity.iii
---------------------------------------------------------------------------
    \ii\ TRIP, ``The Interstate Highway System Turns 60: Changes to Its 
Ability to Save Lives, Time and Money.'' June 27, 2016. http://
www.tripnet.org/docs/
Interstate_Highway_System_TRIP_Report_June_2016.pdf.
    \iii\ American Automobile Association, American Trucking 
Associations, U.S. Chamber of Commerce, Joint Congressional Letter. 
January 26, 2015. http://newsroom.aaa.com/2015/01/aaa-ata-u-s-chamber-
ask-congress-fund-roads-bridges/.
---------------------------------------------------------------------------
    Failure to take meaningful action on upgrading United States 
infrastructure could also impact agricultural product transportation. 
Currently, America enjoys a trade surplus with it agricultural exports. 
However, steps are need to repair and upgrade the locks and dams system 
along U.S. inland waterways. These waterways serve as critical 
transportation channels that alleviate congestion on roads and rail by 
transporting agriculture commodities such as corn and soybean. For 
example, the agriculture sector could hypothetically see a 40% decrease 
in economic activity as the result of just one major lock disruption 
along the Upper Mississippi River and Illinois Waterway.iv
---------------------------------------------------------------------------
    \iv\ Yu, T.E., B.C. English and R.J. Menard. Economic Impacts 
Analysis of Inland Waterway Navigability on the Transportation of Corn 
and Soybeans. Staff Report #AE16-08. Department of Agricultural and 
Resource Economics, University of Tennessee. September 2016.
---------------------------------------------------------------------------
Steps To Reclaim the Infrastructure Advantage
    This report outlines five areas that should be leveraged in any 
plan to reclaim the United States' Infrastructure Advantage. Within 
each area, this report includes infrastructure-related policy and 
regulatory suggestions that could be leveraged to facilitate promotion 
and implementation.
Focus on Networks and Systems
    To achieve maximum efficiencies and benefits, infrastructure must 
be addressed on a network-wide and system-wide basis. A ``project here 
and project there'' approach will not work. America must tackle its 
infrastructure problems on a bigger scale. For example, the Interstate 
Highway System would not have produced the economic benefits that it 
has if it was simply a series of disconnected segments. The benefits 
are derived from the fact that it is a connected network. The same can 
be said for our national rail network. And this is especially the case 
when talking about the movement of freight.
    As manufacturers, AEM and its member companies understand the 
importance of timely and reliable delivery--both in the transportation 
of finished products as well as in the parts and pieces that go into 
manufacturing those final products. As such, any proposal or plan must 
consider the effective and safe movement of people and goods as a 
primary objective. This requires efficient and well-designed networks 
and systems.
    In the short term, AEM supports future implementation of dedicated 
transportation funding and policies that specifically target 
intermodal--ship to train to truck--network bottlenecks such as what 
was included in the 2015 Federal surface transportation 
reauthorization. Establishing a dedicated multi-modal freight 
discretionary grant program will ensure that authorized funding will go 
to freight-focused projects only. Further, user fees generated from 
freight providers would go towards this dedicated revenue stream.
    In the long-term, the creation of a dedicated freight network will 
facilitate more efficient movement of products and goods, and directly 
alleviate personal vehicle congestion. AEM and its member companies 
support the continued development and implementation of a national 
freight plan.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Headquartered in West Fargo, North Dakota, and with U.S. 
        manufacturing facilities in Bismarck, Gwinner, and Wahpeton, as 
        well as Litchfield, Minnesota, and Statesville, North Carolina, 
        Doosan Bobcat North America knows how reliant manufacturers are 
        on the surrounding infrastructure system--both in getting raw 
        materials to its facilities that produce loaders, excavators, 
        utility work machines, hydraulic cylinders, as well as 
        attachments for its heavy wheel loaders and excavators, but 
        also getting those component parts and final products out to 
        customers. That process must be efficient, cost-effective and 
        reliable from start to finish.
          ``We depend on predicable and economical transportation and 
        delivery options in getting our products and our attachments to 
        domestic and overseas markets,'' said Doosan Bobcat North 
        America and Oceania President Rich Goldsbury. ``The 
        infrastructure advantage afforded by our facility locations was 
        a principal factor in choosing where we expanded and located 
        our U.S.-based manufacturing operations. In certain cases, our 
        manufacturing facilities are operating along a two-lane 
        highway. As we identify new markets and products lines, it will 
        be critical for us to have a plan and adequate resources both 
        at the state and Federal level to build that supporting 
        physical infrastructure so that operations continue smoothly 
        and our product delivery to other facilities and our customers 
        is seamless--both logistically and economically.''
Maximize Use of Smart Technology
    The integration of technology and infrastructure is already 
underway, but that integration is currently being implemented without a 
broad strategic plan in place. AEM and its member companies support the 
development and implementation of a national plan to upgrade and 
retrofit existing infrastructure systems with the latest in smart 
infrastructure technology. The need for this is two-fold: (1) to ensure 
that U.S. infrastructure is equipped to capitalize on the benefits that 
will come with technological advancements in areas such as embedded 
sensors, Information and Communication Technology, automation, and 
unmanned aerial vehicle use, and (2) to ensure geographic parity across 
the country, particularly in rural areas.
    In the short-term, the United States can help reassert its 
Infrastructure Advantage by auditing cross-agency research and 
development activities in the context of how they advance 
infrastructure innovation in this country. Currently, innovations are 
produced and assessed in silos and opportunities are missed. 
Collaborative policies need to be put in place that facilitate idea 
sharing and innovative partnerships across all agencies, levels of 
government, and the private-sector.
    In the long-term, authorization for new federally supported 
infrastructure construction, maintenance or repair efforts must be 
contingent upon plans for technological upgrades and infrastructure 
adaptation. For example, self-driving cars and the need for sensor 
implementation is paramount to fully leveraging our infrastructure in a 
way that takes advantage of the advancements being made in the 
technological space across a range of industries. Roads, highways, 
bridges, and pipelines can and should do more for users. Federal 
infrastructure policy should require states and localities to 
demonstrate their commitment to implementing smart infrastructure 
across all assets and modalities. Infrastructure policy must put a 
premium on next generation infrastructure that takes full advantage of 
technological advancements that improve upon how current and future 
assets perform.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          As an innovation company with its corporate headquarters in 
        Silicon Valley, and locations across the country, Trimble 
        integrates the digital and physical worlds by combining the 
        Internet of Things, sensor-based monitoring, automation and 
        data analytics into transformative solutions in a wide range of 
        sectors including construction, agriculture, utilities, and 
        transportation. The functionality and effectiveness of Trimble 
        data-enabled solutions rely on a robust deployment of an 
        expansive and reliable broadband infrastructure. To be 
        effective the broadband network must provide ubiquitous and 
        reliable connectivity from locations as diverse as a highway in 
        Los Angeles to a peanut farm in Sylvester, Georgia.
          ``Increasingly, infrastructure must be integrated with 
        technologies such as GPS,'' said Steve Berglund, Trimble's CEO. 
        ``Updating infrastructure assets must involve retrofitting them 
        with technology that is going to enhance connectivity and 
        circumstantial awareness. The need will intensify with more 
        widespread adoption of autonomous vehicles, precision farming 
        techniques, and automated work tools and machines. Our updated 
        infrastructure will need to provide extended utility by 
        actively interacting with the other elements that increase 
        productivity, improve safety, or enhance quality of life--
        whether they are our personal devices, our vehicles, or our 
        tools and machines. The end result will be an infrastructure 
        that is smarter both in terms of performance but also its 
        upkeep.''
Ensure Rural-Urban Connectivity
    Our transportation networks and systems must be developed and 
improved in a way that provides connectivity between and within urban 
and rural America. For example, it is rural America that feeds and 
fuels America. The food, fuel, and fiber produced in rural areas must, 
however, move to urban areas and to world markets. This only happens if 
America's transportation networks and systems provide connectivity. It 
is imperative that policies recognize this and act accordingly.
    In the short-term, agriculture product transportation must not be 
overlooked, and future implementation and resource allocation of a 
national freight plan must involve other infrastructure assets beyond 
surface transportation such as waterways, rail, locks, dams and ports. 
These assets are also critical economic drivers and should be included 
in the freight funding category assigned in future surface 
transportation solutions.
    In the long-term, a plan and commitment to ensure rural America is 
able to take full advantage of autonomous transportation and sensor 
technology must also be a part of a national infrastructure plan. Rural 
communities of populations of 50,000 or less stand to benefit from 
these technologies, as well as the broadband network they rely upon to 
function. Rural America must be included in any national plan to 
retrofit existing or new infrastructure with technologies such as 
embedded sensors. Much like the Federal support needed for public works 
projects, adapting rural infrastructure to technological advancements 
must be a part of the next wave of ensuring parity and connectivity 
between urban and rural America.
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          As a global manufacturer of farm equipment such as combines, 
        forage harvesters, balers, hay tools, and tractors, CLAAS North 
        America not only manufactures equipment critical to agriculture 
        production, an economic driver for rural communities, but also 
        operates facilities in the very rural communities that rely on 
        this equipment. It's a company that contributes doubly to the 
        rural community.
          ``Rural infrastructure and the critical connectivity it 
        provides in feeding America and the world is just one reason 
        why it must be a part of a larger, national infrastructure 
        plan,'' commented CLAAS Global Sales America President Leif 
        Magnusson. ``We look very closely at logistic costs when 
        looking at the larger production picture, and if we can keep 
        that cost lower it means that we can provide our product to our 
        customers--farmers and ranchers in rural communities--at a more 
        competitive price.''
          Broadband connectivity is also an important infrastructure 
        component when considering rural development planning. The 
        Internet of Things (IoT) is transforming agriculture and 
        working to help producers become more resourceful, sustainable, 
        and productive. Closing the digital divide in rural America 
        must be the focus of legislators and government agencies to 
        enable rural communities to compete in the digital age.
          ``Well over 35% of rural America remains without fixed 
        broadband support,'' said Magnusson. ``We manufacture farm 
        equipment that can transmit mission critical data for analytics 
        that then turns into actionable decisions. Connected machinery, 
        fleet vehicles, weather stations, and soil sensors are just 
        some of the early stages of connected farm innovations taking 
        place. The ingenuity of tomorrow's farm starts with the 
        infrastructure investments of today.''
Expedite Project Delivery
    Modernizing and rebuilding America's core infrastructure is costly 
and takes time. Approvals today can take a decade, sometimes longer. 
Delay dramatically adds to costs, and prevents projects from getting 
off the drawing board. Delay also prolongs bottlenecks which waste time 
and energy, causing America to lag behind global competitors. The 
impact of keeping project delivery on time extends beyond the life 
cycle of a project, allowing for all industries to anticipate the 
economic benefits that come with infrastructure update and increased 
capacity.
    In the short-term, Congress must tackle reforming existing and yet-
to-be-determined regulations that impact the most pressing 
infrastructure assets. These include, but are not limited to, automated 
vehicle guidance, water and wastewater rehabilitation standards, and 
big data usage and privacy protection guidance. Tackling these 
regulations now will empower the private sector to continue to 
innovate. It will also provide state and local governments with helpful 
guidance in preparing for future Federal funding opportunities.
    In the long-term, AEM supports a 2 year or less environmental 
approval process for future infrastructure project delivery 
plans.v A legally enforceable deadline from approval of 
funds to a final permitting decision must complement this timeline so 
that project completion can be anticipated and appropriately planned 
for by state and local entities. AEM and its member companies support 
deputizing one agency to oversee large-scale, interstate infrastructure 
project approvals across all modalities and assets--from transportation 
to utilities.
---------------------------------------------------------------------------
    \v\ Common Good, ``Two Years Not Ten Years: Redesigning 
Infrastructure Approvals.'' Philip K. Howard. September 2015.


          Calder Brothers Corporation manufactures Mauldin Paving 
        Products at its Taylors, South Carolina facility, offering a 
        line of construction equipment such as asphalt pavers, asphalt 
        distributors, motor graders, rollers, and water tank trucks--
        equipment that is integral in any road or highway worksite. In 
        this case, manufacturer and contractor depend on a project 
        approval and regulatory process that is streamlined and 
        efficient.
          ``Predictability in project approvals over a multiyear 
        horizon helps our customers determine if and when to place new 
        orders, first and foremost,'' commented Calder Brothers 
        Corporation Executive Vice President Glen Calder. ``If a 
        contractor can reliably predict when projects will be approved, 
        we both can plan accordingly to make sure they have the right 
        equipment to handle these infrastructure challenges. Equally 
        important is the confidence this multiyear predictably gives us 
        as manufacturers to invest in research and development, as well 
        as plan for future facility expansion and job growth.''
Provide Adequate and Reliable Resources
    AEM and its member companies understand how important it is for 
U.S. infrastructure to have a funding mechanism that is reliably and 
responsibly resourced. As varied as infrastructure is, and as varied as 
its uses are, it is appropriate to consider multiple funding proposals 
based on the user, the mode, the product carried, and the frequency of 
use. What might work for highways may not work for waterways, and what 
is suitable for urban public transit may not be suitable for funding 
the infrastructure priorities of rural communities. As such, Federal 
lawmakers must consider a range of options.
    In the short-term, this should include the widespread adoption of 
user fees, such as a gas tax, for all publicly supported infrastructure 
assets, not just ports, waterways, toll roads, or high-occupancy-
vehicle lanes in urban areas. The solvency of the Highway Trust Fund 
depends on identifying and supporting a sustainable funding solution.
    In the long-term, AEM and its members support infrastructure 
financing policies that encourage partnerships with the private sector 
(P3s), and recognize that this must also be coupled with a strong 
Federal investment, as many important and necessary projects are unable 
to generate a revenue stream sufficient to support P3 financing. In 
addition, one of the barriers to fully leveraging the P3 model is that 
not all 50 states have strong enabling legislation to fully facilitate 
these partnerships. While recognizing individual state and project 
needs, steps should be taken to standardize basic P3 enabling 
legislation at the state level.
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          With manufacturing facilities in Pella, Iowa, Vermeer 
        Corporation produces a line of underground infrastructure 
        solutions used on a range of utility infrastructure projects. 
        These ``unseen'' infrastructure networks are critical to the 
        ensuring urban and rural communities thrive. However, for many 
        of these underground networks, public funds are essential and 
        badly needed to complete much-needed repairs and new 
        installations, either as the sole source or as a means to 
        leverage private investment.
          ``Just like with road and highway construction, the utility 
        construction sector needs funding and financing certainty with 
        its projects,'' said Vermeer President and CEO Jason Andringa. 
        ``Utility infrastructure doesn't always attract private 
        investment and that's why Federal dollars play such an 
        important role. Navigating a utility infrastructure project 
        from start to finish requires using every option you have. This 
        has to be the funding and financing approach we take to 
        modernizing and repairing United States infrastructure.''
Conclusion
    For the better part of a decade, stakeholders have painstakingly 
detailed the pitiful state of American infrastructure, highlighted the 
rising costs of inaction, and made continual appeals to decision makers 
at the Federal level to do something--settling for piecemeal and short-
term fixes--to stem the structural and functional decline of roads, 
bridges, ports, locks, dams, and water pipelines. Indeed, the path for 
the United States to retake the lead in the global infrastructure race 
appears steep.
    What are the next steps in reclaiming the U.S. Infrastructure 
Advantage and making our infrastructure great once again?
    AEM and equipment manufacturers will continue to push for a long-
term plan to rebuild and modernize our infrastructure and help us 
reclaim the Infrastructure Advantage. This includes supporting efforts 
at the Federal, state and local levels intended to make U.S. 
infrastructure the priority it should be.
    On a parallel track, AEM and its member companies will urge 
lawmakers to consider the five policy priorities outlined in this 
document in short-term as well as long-term legislative efforts. It is 
time to stop restricting the policy making process to the question of 
funding the infrastructure systems of the 1980s and push forward with 
efforts to retrofit the existing system in a way that will ensure the 
safe and efficient movement of people and goods, facilitate 
connectivity between urban and rural America, and promote economic 
growth and job creation.
    AEM and its member companies will continue to encourage greater 
dialogue and collaboration among a broad variety of infrastructure 
stakeholders about the next big national project, whether it is above 
or below ground, on a magnetic levitation guideway, an autonomous 
vehicle revolution, platooning trucks, or technological upgrades to our 
once-impressive network of intermodal assets. It is time for the United 
States to reclaim its Infrastructure Advantage and meet the needs of 
the 21st century global economy.
About AEM
    AEM is the North American based international trade association 
providing innovative business development resources to advance the off-
road equipment manufacturing industry in the global marketplace. AEM 
membership comprises more than 950 companies and more than 200 product 
lines in the agriculture, construction, forestry, mining and utility 
sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with 
offices in Washington, D.C.; Ottawa, Canada; and Beijing, China.
About the U.S. Infrastructure AdvantageTM
    The U.S. Infrastructure AdvantageTM was developed by a 
task force of executives from the equipment manufacturing industry 
after 2 years of engaging in discussions with, and soliciting ideas 
from, a wide range of infrastructure stakeholders. It will guide the 
strategic direction for AEM's ongoing infrastructure advocacy efforts 
and serve as a tool to assess infrastructure policy proposals at state 
and Federal Government levels. Those contributing include:

    Jason Andringa, President & CEO, Vermeer Corporation, Pella, Iowa
    Steve Berglund, President and CEO, Trimble Inc., Sunnyvale, 
    California
    Glen Calder, Executive Vice President, Calder Brothers Corporation, 
    Taylor, South Carolina
    Ron De Feo, President, Kennametal, Pittsburgh, Pennsylvania
    Rich Goldsbury, President, Doosan Bobcat North America and Oceania, 
    West Fargo, North Dakota
    John Grote, Global Vice President of Marketing and Sales, Grote 
    Industries, Madison, Indiana
    Dennis House, Vice President of Marketing, Topcon Positioning 
    Systems, Livermore, California
    Jerry Johnson, President, Farm, Ranch, & Agriculture Division, 
    Blount International, Oregon, Illinois
    Shan Kirtley, Vice President of Sales & Marketing, Ditch Witch, 
    Perry, Oklahoma
    David Koppenhofer, Executive Director, OEM Sales & Support, 
    Cummins, Inc., Indianapolis, Indiana
    Leif Magnusson, President, CLAAS Global Sales America, Inc., Omaha, 
    Nebraska
    Kevin Smith, President, HammerHead Trenchless Equipment, Lake 
    Mills, Wisconsin
    Jim Wessing, President, Kondex Corporation, Lomira, Wisconsin

    The Chairman. And with that, I would like to welcome our 
witnesses to the table.
    First, we have Tom Halverson, President and CEO, CoBank. 
Mr. Lucas, have you a witness you would like to introduce?
    Mr. Lucas Thank you, Mr. Chairman. We have Dr. Tom Coon, 
Vice President of the Division of Agricultural Sciences and 
Natural Resources of Oklahoma State University; on behalf of 
APLU. He is responsible for the extension service experiment 
stations. He is a wonderful asset, and I look forward to his 
comments today.
    [Audio malfunction in hearing room.]
    The Chairman. Have you a witness you would like to 
introduce?
    Ms. Adams. Thank you, Chairman Conaway. I am pleased to 
introduce Mr. Curtis Wynn, from my State of North Carolina. He 
is the President and CEO of Roanoke Electric Cooperative, and 
the Vice President for the National Rural Electric Cooperative 
Association. Mr. Wynn is nationally recognized in Roanoke, and 
does work to support local communities. They have developed and 
implemented pioneering financing community solar, and broadband 
service programs. Mr. Wynn is a perfect voice to help this 
Committee navigate the complexities of the development. I am 
looking forward to hearing his testimony
    The Chairman. Thank you, Ms. Adams.
    We also have Ms. Jennifer Otwell from District 11, which is 
kind of near and dear to my heart. Jennifer is the Vice 
President and General Manager of Totelcom Communications, LLC, 
De Leon Texas, on behalf NCTA--The Rural Broadband Association. 
And Mr. Vela, would you like to introduce our witness?
    Mr. Vela. Yes. Thank you, Mr. Chairman, for this hearing 
and bringing our attention to the needs of rural America. Brian 
Macmanus is the general manager of the Rio Hondo Water Supply 
Cooperation. He was [Audio malfunction in hearing room.]--
authority where he serves as Vice President. Additionally, 
Brian serves as Vice President of the Texas Rural Water 
Association Board of Directors and President of the South Texas 
Water Utility Managers Association. I am happy to have you here 
today, Brian, and thankful that you are here to highlight the 
water needs of south Texas and of all rural America.
    The Chairman. I thank our witnesses. We are going to have 
to take about a 7 to 8 minute break to reboot the system. 
Please, everybody, stay where you are. We will reboot and try 
to move on. Everybody hang with us.
    If this problem persists, we will simply turn it all off. I 
will ask the witnesses to speak loudly so the stenographer can 
capture what you are saying. And we will not be able to 
broadcast this thing out further than that. But we will move 
forward.
    So with that, Dr. Halverson 5 minutes.
    Oh, by the way, given this delay, given the importance of 
this and how much all of our Members are interested in this, I 
am going to be really strict on the 5 minute clock. If you see 
the red light go on and I start banging the gavel up here, then 
I will need you to wind it up really quickly. And then, 
Members, please understand, you have 5 minutes, and then I am 
going to have to move on to the next person.
    So with that, Dr. Halverson, your 5 minutes.

   STATEMENT OF THOMAS HALVERSON, Ph.D., PRESIDENT AND CHIEF 
EXECUTIVE OFFICER, CoBank, WASHINGTON, D.C.; ON BEHALF OF FARM 
                         CREDIT SYSTEM

    Dr. Halverson. Well, good morning, Chairman Conaway, 
Ranking Member Peterson, and Members of the Committee. Thank 
you for calling this hearing today. My name is Tom Halverson. I 
am the President and CEO of CoBank, and I am testifying today 
on behalf of the Farm Credit system.
    We are proud to be helping to organize the Rebuild Rural 
Coalition, engaging more than 200 organizations from across the 
country that are dedicated to highlighting the unique 
infrastructure needs of agriculture and rural communities and 
advocating for investment in America's rural infrastructure.
    We are grateful for the Committee's interest in rural 
infrastructure, and we ask that, as infrastructure legislation 
moves forward in this Congress, that you work aggressively to 
address the important needs of agriculture in rural 
communities.
    As Rebuild Rural points out, our nation's ability to 
produce food and fiber, and transport it efficiently across the 
globe, is a critical factor in America's global 
competitiveness. Infrastructure that supports rural communities 
and links them to the global market has helped make the United 
States the unquestioned leader in agricultural production.
    People in rural communities have seen their infrastructure 
deteriorate jeopardizing jobs, the competitiveness of American 
agriculture and the quality of life for rural families and 
communities. The scope of the investment that is needed is 
staggering, and government resources cannot fill that need 
entirely.
    Creative solutions that pair government investment with 
private sources of capital hold great promise. We stand ready 
to work with you and the Trump Administration on this important 
initiative. Among the Farm Credit institutions, CoBank is 
uniquely chartered to directly lend to rural infrastructure 
providers. CoBank's $31.5 billion in loan commitments to rural 
infrastructure includes community facilities, rural water and 
wastewater treatment companies, rural electric cooperatives, 
and rural communications service providers.
    CoBank partners with many Farm Credit associations to 
finance an additional $9.4 billion in loan commitments to rural 
infrastructure. We partner with commercial banks to add $1.6 
billion more in commitments to that sum. And as a cooperative 
owned by our customers who live and work in rural America, our 
primary interest is maximizing the quality and the availability 
of infrastructure to rural communities. Hospitals, senior care 
centers, walk-in clinics, schools, and other community 
facilities are critical to the viability of rural communities 
and are important contributors to the quality of life for rural 
families. In many rural communities, those essential facilities 
are not available or need modernization.
    A pilot program authorized by our regulator, the Farm 
Credit Administration, helped to address the need for community 
facility investment. Farm Credit was able to invest $733 
million in 210 rural communities, catalyzing commercial bank 
investment of an additional $315 million on almost \1/2\ of 
those projects. That pilot program expired in 2014, and we 
would hope that this Committee will encourage the Farm Credit 
Administration to facilitate a new sustainable program to 
resume these critical partnerships between Farm Credit, 
commercial banks, and the USDA to support rural community 
facilities.
    GAO estimates that almost $190 billion is needed to cover 
the cost of replacing outdated rural water and wastewater 
infrastructure. There continues to be a well-publicized digital 
divide between urban and rural broadband subscribers. The 
Federal Communications Commission estimated that nearly 40 
percent of rural Americans do not have access to the current 
FCC target for ideal minimum Internet service. That lack of 
access slows the deployment of technology, hampering efficiency 
on our farms, limiting other business opportunities, and 
threatening our local and rural communities.
    Rural America helped pull the country out of the Great 
Recession, thanks to the strength of agricultural exports and 
rural energy production. In recent years, however, the rural 
economy has suffered, due to low commodity prices and other 
difficulties. All of us should be looking for ways to support 
the health and the vitality of the rural economy during this 
period of challenge. And infrastructure investment is one of 
the best strategies to do that.
    Thank you, Mr. Chairman, for the opportunity to testify 
today. And I very much look forward to your questions.
    [The prepared statement of Dr. Halverson follows:]

   Prepared Statement of Thomas Halverson, Ph.D., President and Chief
 Executive Officer, CoBank, Washington, D.C.; on Behalf of Farm Credit 
                                 System
    Good morning, Chairman Conaway, Ranking Member Peterson, and 
Members of the Committee. Thank you for calling this hearing today to 
explore the infrastructure needs of rural communities and agriculture.
    My name is Tom Halverson and I am President and CEO of CoBank. 
Today, I am testifying on behalf of the Farm Credit System. CoBank, is 
a proud member of the Farm Credit System, and we share the Farm Credit 
mission to support rural communities and agriculture.
    Farm Credit is proud to be helping organize the Rebuild Rural 
Coalition, engaging more than 200 organizations from across the country 
focused on U.S. agricultural producers, rural communities, businesses, 
and families. Rebuild Rural is dedicated to advocating for investment 
in rural America's infrastructure and understands that rural America's 
infrastructure needs are fundamentally unique.
    On behalf of the Coalition, we are grateful for the House 
Agriculture Committee's interest in rural infrastructure and ask that 
as infrastructure legislation moves in this Congress, as part of the 
farm bill or other legislation, this Committee work aggressively to 
ensure that the unique needs of agriculture and rural communities are 
specifically addressed.
    As the Rebuild Rural Coalition pointed out earlier this year. those 
in rural communities have seen our infrastructure deteriorate, 
jeopardizing jobs, our agricultural competitiveness, the health of 
rural families and communities. Past public-sector infrastructure 
initiatives often focused on urban and suburban infrastructure 
improvements while ignoring or inadequately addressing the unique needs 
of rural communities.
    American agriculture truly feeds the world and creates millions of 
jobs for U.S. workers. Our nation's ability to produce food and fiber 
and transport it efficiently across the globe is a critical factor in 
U.S. global competitiveness and economics. Infrastructure that supports 
rural communities and links them to global markets has helped make the 
U.S. the unquestioned world leader in agricultural production. Our 
deteriorating rural infrastructure threatens that leadership position.
    Transportation infrastructure improvement is the most obvious need 
in rural communities, though not the only one. Highways, bridges, 
railways, locks and dams, harbors and port facilities all need major 
investment if we are to continue efficiently moving U.S. agricultural 
products to domestic and global markets. For example, \1/4\ of our road 
system's bridges require significant repair, or cannot efficiently 
handle today's traffic and many of the 240 locks and dams along the 
inland waterways are in need of modernization. Most of our locks and 
dams have outlived their useful life. Those waterway corridors 
supported $128 billion in agricultural exports in 2015. Importantly, 
74% of bridges and 73% of roads are in rural areas. Additionally, 
critical needs exist in providing clean water for rural families, 
expanding broadband and other communications capabilities to connect 
rural communities to the outside world, and enhancing the ability to 
supply affordable, reliable and secure electric power for the rural 
economy.
    The scope of the investment needed to sustain and upgrade our rural 
infrastructure is staggering. Clearly the Federal Government must 
continue to play an important role in providing funding and we believe 
that those Federal investments should increase. However, Federal 
resources likely cannot fill the need entirely. Creative solutions that 
pair Federal investment and state/local government investment with 
private sources of capital hold promise for raising a portion of the 
funds necessary to do the job.
    The members of Rebuild Rural, including all of us in Farm Credit, 
stand ready to work with Congress and the Trump Administration on this 
important initiative. In fact, the Farm Credit System has a long 
history of supporting rural infrastructure and CoBank has traditionally 
led those efforts.
Farm Credit and Infrastructure
    Unlike most Farm Credit institutions, CoBank doesn't directly lend 
to individual farmers. Instead, we provide funding to 23 farmer-owned 
Farm Credit associations that, in turn, finance more than 70,000 
agricultural producers in 23 states in the Northeast, Plain States, and 
West. As a cooperative, CoBank is owned by those Farm Credit 
associations along with our infrastructure and agribusiness customers 
throughout the country.
    CoBank is unique in Farm Credit in that we finance or facilitate 
the export of more than $9 billion worth of U.S. farm products 
annually--by our estimate more than 15% of U.S. bulk and intermediate 
agricultural exports--around the world. CoBank also lends to farmer-
owned cooperatives, agribusinesses, and rural infrastructure providers 
that are essential to the financial success of farmers and economic 
success of rural America. The importance of that infrastructure lending 
is what brings me before you today.
    I appreciate that you have called this hearing to examine The State 
of Infrastructure in Rural America. As you know, the infrastructure 
needs of the nation are substantial and exist in every state. But the 
needs in rural America differ considerably from our urban centers and 
their suburbs. Those unique needs deserve a second look and this 
hearing is an excellent opportunity to highlight them.
    In the critical area of agricultural research, Rebuild Rural has 
identified $8.4 billion in funding needs for deferred maintenance in 
the buildings and infrastructure where cutting edge research is 
conducted. Investment in facilities provides critical research for 
ensuring that U.S. agricultural remains the most productive, 
sustainable, and economically efficient producer of agricultural 
products in the world.
    Rural communities also need access to health care, which has become 
an increasing challenge. Eighty rural hospitals have closed since 2010 
and 673 more facilities have been identified as vulnerable--that's over 
\1/3\ of the rural health facilities in the nation. Funding is needed 
to address the 77% of rural counties that are in Primary Healthcare 
Professional Shortage Areas. Telehealth can ease this pressure but only 
with significant additional broadband investment to close the rural-
urban digital divide.
    Financing these improvements is a major part of the challenge we 
face and I would like to describe some of our experience in lending in 
these markets.
Community Facilities
    Hospitals, senior care centers, walk-in clinics, schools and other 
community facilities are critical to the viability of rural communities 
and are important contributors to the quality of life for rural 
families. In many rural communities those essential facilities are not 
available or need modernization.
    Federal investments, made available through USDA's successful 
Community Facilities Loan and Grant program continue to be necessary. 
Attracting private-sector investment in these facilities will help 
speed up the progress of projects and increase the number of community 
facilities.
    Farm Credit institutions are working to create a scalable solution 
for financing rural community facilities in partnership with community 
banks and the USDA. The partnership will focus on building, modernizing 
and expanding rural healthcare facilities, rural senior care 
facilities, rural educational facilities and others critical to 
creating vibrant rural communities.
    Farm Credit will identify rural projects and partner with local 
community and regional banks to create comprehensive financing packages 
to include short- and long-term bond investments paired with USDA 
guaranteed and direct loans and grants that fund facility construction 
and provide stable permanent facility financing.
    Previously, under a pilot program authorized by the Farm Credit 
Administration (FCA), Farm Credit institutions invested in bonds issued 
by the community developing the facility. In creating many of those 
bond investments, Farm Credit worked closely with community banks to 
include them in the financing package and then partnered with USDA's 
Community Facility Loan and Grant program to ensure the project's 
affordability for the community.
Rural Critical Access Hospital Expansion
    For example, in 2016, Farm Credit institutions partnered with Grand 
Marais State Bank, Central Bank and Trust, CenBank, Security State Bank 
and the USDA to finance a $24.7 million expansion project for Cook 
County North Shore Hospital and Care Center in Grand Marais, Minnesota 
(population 1,353). The 16 bed critical access hospital and 37 bed 
skilled nursing facility plans to add 26,150\2\ and renovate 
42,680\2\ of existing space.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Hospital Administrators, county officials and patients break 
        ground on North Shore Hospital's expansion and renovation in 
        2015. Farm Credit, community banks and the USDA partnered to 
        finance the project in Grand Marais, MN.

    A year before CoBank and AgStar (a Farm Credit association that 
recently merged with two others to form Compeer Financial) led this 
effort in Grand Marais, they partnered with three community banks, two 
additional Farm Credit Institutions and a credit union on a hospital 
improvement in Moose Lake, Minnesota. They financed a $38 million 
addition to Mercy hospital that led to 900 more visits year over year 
after completion, saving the residents an additional hour drive to 
urban medical centers in Duluth.
    Under the FCA pilot program, Farm Credit institutions invested $733 
million in 210 rural community projects across the country. Commercial 
banks partnered with Farm Credit on more than 100 of those projects, 
catalyzing an additional $315 million of investment.
    The original pilot program at FCA ended in 2014 and now the FCA has 
to provide specific and individual approval for each community facility 
investment made by each Farm Credit institution. This approach has made 
the community facilities partnership non-viable.
    Under current FCA procedures, Farm Credit institutions have to 
individually apply to FCA for permission to make each bond investment. 
FCA staff reviews the investment applications and prepares separate 
recommendations for action by the FCA Board of Directors. The FCA Board 
then must consider each application separately and formally vote on 
approval. This process is expensive, slow and does not result in the 
robust, sustainable business model necessary to facilitate partnerships 
between Farm Credit, commercial banks and the USDA that would provide 
communities with these vital facilities more quickly.
    Congress should instruct the Farm Credit Administration to create a 
more comprehensive, efficient and programmatic approach to approving 
these investment partnerships. This would greatly enhance financing 
options for rural community facilities and result in more projects that 
provide jobs and offer more benefits for rural families.
    CoBank finances infrastructure in every state. Our 1,267 
infrastructure customers have loan commitments of $31.5 billion with 
CoBank. That portfolio includes community facilities like those 
described above; rural water and wastewater treatment companies; 
wholesale electric generation and transmission cooperatives and retail 
electric distribution cooperatives; and providers of rural telephone, 
Internet, and cable television and wireless services.
    Though CoBank leads Farm Credit's rural infrastructure effort, many 
more Farm Credit institutions are deeply involved. Partnering together, 
Farm Credit institutions finance an additional $9.4 billion in 
infrastructure. We partner with commercial banks to fund another $1.6 
billion in infrastructure. This Farm Credit partnership means that 
rural America has a powerful financial ally in supporting its unique 
infrastructure needs. And, as a cooperative--owned by our customers who 
live and work in rural America--our primary interest is maximizing the 
quality and availability of infrastructure to rural communities.
Water
    There are approximately 54,000 community water systems in the 
United States. The vast majority are small systems with less than 1,000 
taps. Supporting rural communities and the businesses that provide 
their economic lifeblood is a key role for water providers. Without the 
capacity to deliver enough safe water, communities can't grow, 
businesses can't expand, and opportunities for new employers to 
revitalize rural areas are lost. There is significant need for capital 
in this sector to continue to deliver clean and safe water and to 
properly treat waste water to ensure environmental safety. The price 
tag for this investment is high. In 2015 the U.S. Government 
Accountability Office (GAO) released the results of their study of 
rural water infrastructure. They found that many communities have a 
hard time covering the cost of water system improvements or 
enhancements, in part because of their smaller number of residents and 
businesses. The GAO estimates that almost $190 billion is needed to 
cover the costs of replacing water and waste water infrastructure in 
rural communities.
    The Federal Government is by far the largest provider of capital to 
rural water systems and will play a vital role for the foreseeable 
future. The government is able to provide grants and loans with 
repayment terms of up to 40 years. This allows smaller water systems to 
make improvements to their infrastructure in a cost effective manner. 
CoBank offers a variety of loan products to compliment EPA and USDA 
financing, such as bridge financing, interim financing and long-term 
loans. We also believe innovative public-private partnerships can also 
play a vital role in meeting the unique and vast funding needs for 
rural water systems.
    The EPA has estimated that over the next 20 years more than $384 
billion is needed to repair or update the drinking water systems across 
the country. Another $271 billion is needed for the wastewater and 
storm-water systems. More than 10% of that need is to help systems 
comply with Safe Drinking Water Act regulations. Approximately $64.5 
billion of that sum would be needed just for the smallest systems in 
the nation, which make up 83% of the number of community water systems 
that need improvements. That is where many rural systems fit in. And 
for 90% of our nation's water utilities, that need is just to keep 
delivering safe drinking water to their customers.
    Talquin Electric Co-op and Talquin Water and Wastewater serve 
53,000 customers in the Florida Panhandle. Their location necessitates 
preparation and specialized construction to address powerful storm 
impacts. CoBank helped Talquin finance a new sewer main and pumping 
station to serve Wakulla County residents. The station was deliberately 
located away from the coastline to minimize the risk of storm damage 
and associated environmental liabilities. To help the cooperative 
reduce costs, CoBank provided almost $22 million in financing to 
enhance the water and wastewater infrastructure and refinance some of 
the long-term debt to reduce interest rates. Our leasing subsidiary 
provides Talquin with leases for their fleet vehicles. With a variety 
of services, Farm Credit helps Talquin reduce costs to hold rates 
steady for its customers in four Florida counties.
    In Texas, CoBank financing has allowed rural water and waste 
systems address immediate needs to address severe drought. CoBank is a 
primary source of financing for emergency wells and lines of credit for 
emergency situations. We provide gap funding for grant-funded projects 
and provide construction financing for USDA projects. We have also 
helped save utilities significant money by refinancing old expensive 
debt.
Energy
    CoBank provides a variety of loan and leasing products to companies 
that generate and distribute reliable, reasonably priced electricity, 
natural gas, and other essential energy-related services to rural 
communities. We have relationships with 58 of the 64 Generation and 
Transmission (G&T) cooperatives in the U.S. The G&Ts generate 
electricity and transmit it to our electric distribution customers 
under long-term power purchase agreements. The electric distribution 
cooperatives then distribute this electricity to serve their local 
members.
    The USDA's Rural Utilities Service (RUS) is a major provider of 
capital to our electric distribution customers and CoBank frequently 
partners with RUS under joint mortgage agreements to ensure that our 
customers are able to fund their extensive capital spending needs. 
CoBank also maintains a Project Finance division which makes loans 
directly to independent power producers that specialize in producing 
electricity for sale to utilities and corporations under power purchase 
agreements or into the wholesale power markets. Many of our electric 
distribution cooperative customers are also deploying broadband in 
their service territories and CoBank leverages its long experience in 
the communications industry in support of these important initiatives 
that are helping to close the digital divide. CoBank has lent nearly 
$60 million to electric co-ops in districts represented on the 
Committee to support broadband delivery.
    While we continue to see demand for traditional fossil-fuel fired 
generation, especially natural gas-fired plants, renewable energy is 
one of the fastest growing sectors in the economy. Our Project Finance 
division finances many wind and solar projects. Moreover, our G&T and 
regulated utilities customers are increasingly investing in renewable 
energy as costs come down, reliability improves, and customer 
preference for renewable energy increases. Many of our electric 
distribution cooperatives are also investing in renewable energy 
projects to reach their own sustainability goals and reduce their 
reliance on power purchased from others. Bloomberg New Energy Finance 
analysts estimate that U.S. power infrastructure spending will total 
$283 billion over the next 10 years: 70% of this is expected to come 
from renewables, with about \1/2\ of that from solar and the other \1/
2\ from wind.
Communications
    Mr. Chairman, there is not a staffer (and probably not many 
Members, either) who is not regularly checking their smartphone during 
this hearing. Like your staff, their friends, family and classmates in 
college became accustomed to high levels of service from their 
communications technology. But when some returned to their rural 
hometowns and farms, their broadband service did not follow them.
    There continues to be a well-publicized ``digital divide'' between 
urban and rural broadband subscribers. The FCC's 2016 Broadband 
Progress Report estimated that nearly 40% of rural Americans do not 
have access to Internet speeds of 25 Mbps, which is the current FCC 
target for ideal minimum service. 25% lack access to 10 Mbps. Contrast 
that with urban areas where less than 5% lack access to 25 Mbps and 
only about 2% lack access to 10 Mbps.
    That lack of access slows the deployment of technology; thus, 
hampering efficiency on our farms. It stands in the way of adopting 
telemedicine to manage costs and improve health outcomes for our rural 
residents. It limits the availability of our rural students to access 
the Internet to enhance their education, and that in turn is preventing 
some people from bringing their skills and their families to rural 
communities. It hinders businesses from locating in rural areas, 
thereby reducing economic activity and rural employment opportunities.
    Estimating the costs of closing the digital divide vary according 
to assumed minimum required speeds. However, most analysts put the cost 
of meaningfully closing the digital divide at as much as $100 billion 
at the 25 Mbps level. 100% coverage of all Americans at the 25 Mbps 
could cost upwards of $300 billion. By anyone's estimate, it is an 
enormous task and private capital providers, including CoBank, cannot 
do it alone. Government grants, loans or loan guarantees, public-
private partnerships, and a stable regulatory regime that supports 
adequate cost recovery mechanisms for rural broadband operators will be 
essential in closing the digital divide.
    While the cost of expanding broadband in rural communities is 
great, the cost of inaction that results in lost jobs and lost 
communities is even greater.
    President Trump emphasized that importance in Iowa last month as he 
committed to a provision in his infrastructure proposal to promote and 
foster enhanced broadband access for rural America also, saying, ``We 
have to make sure American farmers and their families, wherever they 
may be, wherever they may go, have the infrastructure projects that 
they need to compete and grow.'' Access to enhanced broadband 
infrastructure is essential to the long-term capacity of American 
farmers to compete globally in marketing their production and manage 
their farming operations to high degree of efficiency and 
sustainability. On farm technology has skyrocketed over the past 10 
years, and the most effective use of this technology requires access to 
enhanced communications connectivity.
    CoBank provides a variety of loan and leasing products to help 
communications companies ensure that rural Americans have access to 
advanced broadband services. CoBank provides funding to all types of 
communication providers including rural local exchange carriers, cable 
companies, wireless carriers, and other data infrastructure and 
telecommunication services companies. The RUS is a major provider of 
capital to rural communications companies. CoBank partners with RUS in 
many situations, providing short-term interim financing for capital 
spending projects until permanent financing through RUS is arranged and 
longer-term financing for important projects that may not qualify for 
RUS funding. CoBank also partners with other private-sector lenders to 
catalyze additional capital to finance our communication customers.
    Farm Credit firmly believes that a sustainable cost-recovery 
mechanism is imperative to support the financing of rural broadband in 
high cost areas. If communication companies don't have a sufficient, 
sustainable predictable level of support, deploying affordable 
broadband in high cost areas is not economically viable and therefore, 
not financeable. In addition to the high costs associated with 
constructing broadband infrastructure in rural areas, there are ongoing 
costs associated with maintaining and upgrading these networks to 
accommodate growth of data traffic. The broadband network is a dynamic 
infrastructure, subject to frequent technological advances that require 
upgrades and capital spending.
    One of CoBank's Customers is Big Bend Telephone in Alpine, Texas, 
serving 5,000 telephone lines and 2,800 broadband customers. This small 
family-owned company has operated for 67 years and serves along 485 
miles of the Texas-Mexico Border. Their customers include farmers and 
ranchers, the U.S. Border Patrol, state and local law enforcement, 
schools, medical providers the world renowned McDonald Observatory and 
even Big Bend National Park.
    Serving this huge, sparsely populated territory of 17,593\2\ miles 
is difficult and expensive. There are just 0.333 customers per square 
mile. In New York City, there are 27,000 customers per square mile! For 
their capital needs they rely on the Federal Communications 
Commission's Universal Service Funds and Farm Credit. CoBank worked 
with the Farm Credit Bank of Texas and Capital Farm Credit to finance 
Big Bend. According to Big Bend's General Manager, Rusty Moore, this 
financing ensures that Big Bend can . . . ``deliver the vast array of 
technology-centric solutions required to keep our nation's southern 
border secure and our country stronger as a whole.''
Conclusion
    As I have discussed, the infrastructure needs in rural America are 
significant and unique. While Farm Credit and others are helping to 
finance these needs, more needs to be done. As advocated by the Rebuild 
Rural Coalition, infrastructure legislation by Congress should 
specifically address the unique needs of agriculture and rural 
communities. We also recognize that the Federal Government needs strong 
private investor engagement to partner with to meet the infrastructure 
needs in rural America. Farm Credit stands ready and capable to do its 
part and work closely with the Federal Government and private investors 
to meet rural infrastructure funding needs.
    I appreciate the big job before you in addressing these challenges 
and opportunities and the Farm Credit System looks forward to working 
with the Committee as you begin writing and advancing the farm bill.
    Thank you for this opportunity to testify and I look forward to 
your questions.

    The Chairman. Thank you, Tom.
    Apparently, the clocks and the lights are not working for 
the witnesses. With 30 seconds left, I will give you a tap on 
the gavel as a heads-up.
    So with that, Mr. Coon, 5 minutes.
    Dr. Coon. Thank you.
    The Chairman. Dr. Coon. Excuse me.
    Dr. Coon. That is fine. Tom. That is what my mom called me.

      STATEMENT OF THOMAS G. COON, Ph.D., VICE PRESIDENT,
         DIVISION OF AGRICULTURAL SCIENCES AND NATURAL
  RESOURCES, OKLAHOMA STATE UNIVERSITY; CHAIR, TASK FORCE ON 
                 DEFERRED MAINTENANCE, BOARD ON
  AGRICULTURE ASSEMBLY, ASSOCIATION OF PUBLIC AND LAND-GRANT 
                  UNIVERSITIES, STILLWATER, OK

    Dr. Coon. Thank you, Chairman Conaway, Ranking Member 
Peterson, and Congressman Lucas and other honorable Members. I 
am honored to represent Oklahoma State University and the 
Association of Public and Land-grant Universities, or APLU, 
here today. I also want to thank the Rebuild Rural Coalition 
for including agricultural research infrastructure in their 
initiative. The Farm Credit Council, the American Farm Bureau 
Federation, and other members of the coalition, clearly see the 
connection between the innovation that comes from agricultural 
research at the nation's public schools of agriculture and the 
positive influence that research has on economic development in 
rural America. The Rural Prosperity Task Force lead by 
Secretary Perdue also calls attention to the challenges that 
our rural communities face today. Because most agricultural 
production takes place in America's rural landscape, research 
that strengthens agriculture's future helps to support strong 
school systems, healthcare systems, and thriving businesses in 
rural America.
    My message is simple: First, prosperity in agriculture in 
rural communities has depended on public investment and 
research at our agriculture schools. Second, the future of that 
infrastructure is at risk. Those of you on the Biotechnology, 
Horticulture, and Research Subcommittee heard testimony from 
Dr. Jay Akridge of Purdue University in March about the 
importance of Federal funding in support of agricultural 
research. In the 19th and 20th centuries, that support 
transformed American agriculture and made our industry a world 
leader of innovation.
    In June, deans from public and land-grant universities in 
Florida, California, Alabama, and Texas described ways they 
have leveraged the Federal investment in agricultural research 
with state, local, and private funds to continue growth and 
innovation in their state's agricultural economy.
    In 2015, the APLU commissioned a study to document the 
state of research facilities at public schools of agriculture. 
The study collected data from 91 schools and included nearly 
16,000 buildings and 79 million gross square feet of space. The 
replacement value of that space is $29 billion. The total value 
of deferred maintenance across the 91 institutions is $8.4 
billion. Of this, $6.7 billion, or 80 percent, is in facilities 
that are more than 25 years old. Agriculture colleges are 
funding maintenance at about 60 percent below the university 
average. And because buildings require more maintenance as they 
age, the combination of older infrastructure and under-funded 
maintenance is undermining the productivity and dependability 
of our research enterprise. The USDA Agricultural Research 
Service works closely with public universities. And, in fact, 
30 percent of the research is conducted in facilities of their 
cooperators, most of which are universities.
    In 2012, the ARS released a capital investment strategy 
that is complementary to the APLU study. The ARS has facilities 
valued at $3.7 billion. The report stated a need for $148 
million in annual maintenance funding, and another $100 million 
in annual expenditures to replace aging facilities.
    It is clear that public agricultural universities need to 
tackle these facility challenges on two fronts: One is that we 
need to take better care of our facilities; and the other is 
that we need to replace much of that outdated infrastructure.
    Deans tend to fund faculty lines at the expense of 
infrastructure needs, and that needs to be recalibrated. In 
addition, we need to be honest and transparent about the real 
cost of research. For example, the USDA limit on facility and 
administration costs that can be recovered is set at 50 to 60 
percent of the federally negotiated F&A rate, and that 
undermines our investment in facility maintenance.
    We need to invest aggressively in new facilities and major 
renovations. We proposed a funding mechanism whereby Federal 
funds are used to leverage other investments into our research 
infrastructure needs.
    Federal funding is especially important for addressing 
research needs in the national interest. Federal funds should 
come with some expectations and contingencies. They should be 
competitive. They should address national or regional needs, 
and they should be matched with state, local, university and/or 
private funds.
    The need is great. We project a need to replace $20 billion 
in infrastructure over the next 10 years. If our Federal 
partners can invest \1/2\ of that, it is incumbent on us as 
deans to raise the other \1/2\ through our other partnerships.
    The competitiveness of our agriculture sector, the security 
and safety of our citizens' food supply and, in large part, 
their health, as well as the health of our environment, depends 
on the research our scientists produce. The challenging 
investments that the partnership made in our research 
infrastructure in the 20th century have created a dynamic, 
innovative, and job creating food and agriculture industry and 
a safe and secure food supply today.
    We owe it to future generations to make the investments 
that will ensure they benefit from the bounty of our tremendous 
natural resources, and uniquely American collaboration between 
scientists and the farmers, ranchers, and workers in our 
nation's food and agriculture systems. Thank you.
    [The prepared statement of Dr. Coon follows:]

 Prepared Statement of Thomas G. Coon, Ph.D., Vice President, Division 
     of Agricultural Sciences and Natural Resources, Oklahoma State
    University; Chair, Task Force on Deferred Maintenance, Board on
      Agriculture Assembly, Association of Public and Land-grant 
                      Universities, Stillwater, OK
Introduction
    Thank you, Chairman Conaway, Ranking Member Peterson, Congressman 
Lucas and other Honorable Members. I am honored to represent Oklahoma 
State University and the Association of Public and Land[-g]rant 
Universities (APLU) today.
    I also want to express my appreciation for the inclusion of 
agricultural research infrastructure needs in the Rebuild Rural 
Coalition--The Farm Credit Council, American Farm Bureau Federation and 
other members of the coalition clearly see the connection between the 
innovation that derives from agricultural research at the nation's 
public agriculture colleges and the positive influence that has on 
economic development in rural America.
    The Rural Prosperity Task Force that is being led by Agriculture 
Secretary Sonny Perdue also calls attention to the challenges that our 
rural communities face today. Because so much agricultural production 
takes place in America's rural landscape, research that strengthens 
agriculture's future helps to support strong school systems, health 
care delivery systems, and thriving businesses.
    Perhaps I can summarize my message in this way: prosperity in food, 
agriculture and rural communities has depended on public investment in 
research that supports food and agriculture industries, and we stand at 
a crossroads of commitment for the future of the infrastructure that 
has supported publicly funded research.
Investments in Research Fuel Innovation in Rural America
    I have been fortunate to work with farmers, ranchers and natural 
resource managers in my native Iowa, and in California, Minnesota, 
Michigan, Missouri and Oklahoma. In every case, I have worked with 
university colleagues who see their role as being in support of those 
front line producers and managers. Our scientists push the envelope of 
discovery to develop new insights and new technologies that enhance the 
yield of our rich natural heritage for food, fiber and environmental 
benefits for all Americans.
    Just as roads, electricity, water and other infrastructures support 
and sustain people in our rural communities, the innovations from 
research have helped rural residents build individual and community 
wealth, whether through improved plant and animal genetics, in healthy 
soils and clean water, the latest irrigation scheduling application 
software or improved food safety practices on the farm or in the 
market.
    Those of you on the Biotechnology, Horticulture, and Research 
Subcommittee heard testimony from Dr. Jay Akridge of Purdue University 
in March about the importance of Federal funding in support of 
agricultural research. In the 20th Century, that support transformed 
American agriculture and made our industry a leader of innovation. Dr. 
Akridge pointed out that other nations have followed our lead, and as 
public support for agricultural research has stagnated in the U.S., 
other nations have surpassed us. As of 2011, the nations of Brazil, 
India and China together spend $2.15 for every $1.00 that the U.S. 
invests in public agriculture research and development.
    In June, a number of my colleagues from public and land-grant 
agriculture colleges in Florida, California, Alabama and Texas expanded 
on how they have leveraged the Federal investment in agricultural 
research with state, local and private funds to continue growth and 
innovation in their state's agricultural economy. One of the great 
strengths of the American food and agriculture system is the tremendous 
diversity of environments we use, the yields our farmers and ranchers 
produce and the processed food and fiber products consumers can 
purchase. The Federal partnership with state and local governments and 
with industry and non-government organizations has created a unique 
engine of innovation across the breadth of that diversity.
    We have a similar heritage of resourcefulness and productivity in 
Oklahoma, where in spite of diminished purchasing power of Federal 
funds and recent declines in state funding, we continue to develop and 
release new varieties of hard red winter wheat and forage crops 
developed for the unique soil and farm management practices of the 
southern plains, our scientists develop and release new software 
applications to help manage beef cattle herd health and our scientists 
are creating faster and more definitive technologies for detecting and 
eliminating pathogens in food supply chains.
Research Depends on Modern Facilities
    One of the hallmarks of our agricultural colleges at public 
universities has been the infrastructure dedicated to research, 
teaching and extension in agricultural and natural resource sciences. 
That includes laboratories on university campuses as well as field 
stations for research and extension demonstrations. The Hatch Act of 
1887 recognized the need for specialized facilities dedicated to 
research on agricultural topics, and many states have used the Federal 
capacity funds they receive through the farm bill to build and maintain 
those facilities.
    However, those facilities are aging, and with stagnant or reduced 
Federal and state funding, many of the facilities that helped to drive 
innovation in agriculture have deteriorated to the point of limiting 
their usefulness and safety for conducting 21st century research.
    In 2015, the APLU commissioned a study to document the state of 
research facilities at public colleges of food, agriculture and natural 
resources. The study was conducted by an independent organization, 
Sightlines, and they queried 101 institutions and received responses 
from 91 of them. The study included data from 15,596 buildings, which 
contain 87 million gross square feet of space. They estimate the 
replacement value of this space, based on a larger database that 
Sightlines maintains, at $29 billion.
    Our study followed one completed by the USDA Agricultural Research 
Service in 2012. In that study, they classified the status of 122 major 
research facilities owned by the ARS, which totaled $3.7 in 
capitalization value. That study applied an industry standard of annual 
capital expenditures equal to 4% of the capitalization value to 
conclude that $148 million would be needed annually for maintaining the 
ARS facilities and another $100 million per year for replacement of 
outdated facilities. As much as 30% of the ARS research is conducted in 
facilities of cooperators, most of which are public universities, and 
not in ARS facilities. The Capital Investment Strategy of the ARS is 
complementary to the proposal we have developed based on the APLU 
study. Indeed, implementation of the recommendations from the APLU 
study will benefit ARS research as well.
    One of the more noteworthy findings to emerge from the APLU study 
is that the total value of deferred maintenance across the 91 
institutions is $8.4 billion. Annual capital spending in agriculture 
research infrastructure is estimated to be $1.82/GSF, which is 41% of 
the public university average ($4.40/GSF). Of this, $6.7 billion (80%) 
is in facilities that are more than 25 years old. Because buildings 
require more maintenance as they age, the combination of older 
infrastructure and under-funded maintenance is undermining the ability 
of our research enterprise to provide the information needs of today 
and the future.
    The APLU study estimated the Net Asset Value of the 
infrastructure--in other words the replacement cost minus the cost of 
deferred maintenance to be at 71%. Moreover, the current deferred 
maintenance figure of $95/GSF puts us very close to the threshold of 
$100/GSF that is associated with a greater likelihood of building 
systems failures--such as HVAC or electrical systems--that can result 
in catastrophic losses of research findings.
    Our study at Oklahoma State was reflective of the national study: 
Of our facilities on campus, 49% of the square footage was assessed as 
being in need of major repair or past useful life. Of our facilities at 
our research farms in Stillwater, 38% was in that state of disrepair.
    In some respects, our faculty are being penalized for being too 
resourceful. One of our hallmark programs at Oklahoma State is our 
Wheat Improvement Team, which includes a wheat breeder, a molecular 
geneticist, two entomologists, a plant pathologist, a soil nutrient 
agronomist, a commodity market economist, and a cereal biochemist. 
Together, they have developed a number of varieties of hard red winter 
wheat well suited to the agronomic practices and environmental 
conditions of the southern Great Plains. For the crop that was 
harvested this summer, we had 15 OSU varieties of wheat available for 
growers to plant, and those comprised about \1/2\ of the acreage 
planted in Oklahoma. Our wheat team continues to perform in a way that 
is meeting the agronomic demands of our growers and the wheat quality 
demands of millers. They are doing this in a greenhouse complex that 
was constructed before World War II and in field laboratory buildings 
that were constructed before I was born. We are extremely proud of 
their accomplishments, but we also wonder how much more successful they 
might be with modern facilities.
Addressing the Challenge
    A group of administrators and scientists from APLU developed a set 
of recommendations for following up on the findings of the facility 
survey. Those include two primary directions: one is that we need to be 
better stewards of our facilities. Clearly, the greatest assets of our 
Agricultural Experiment Station resources are the faculty, technicians 
and students who carry out the research. As universities have faced 
stagnant and declining budgets, the tendency has been to protect 
faculty positions as the top priorities. I think there has been a 
tendency to interpret a decrease in funding as a temporary phenomenon 
and so facility maintenance and upgrades are put off until the funding 
picture improves. In the meantime, faculty are expected to bring in 
funding through competitive grants and industry contracts to help 
finance the additional personnel and operating costs of their research. 
In many cases, the optimism that funding will return hasn't been 
fulfilled, and so the facility maintenance delays become permanent 
deferrals and we end up asking our scientists to ``get by'' with 
diminished capacity and increased unreliability of our facilities.
    University administrators need to be more disciplined in adopting 
best management practices for facility maintenance and replacement. We 
need to direct more of the funding for Facilities and Administration--
or Indirect Costs--into implementing those best management practices. 
In addition, we need to clearly communicate with our funding partners 
the real costs of research. Most Federal agencies pay a negotiated F&A 
rate for university-conducted research. Those rates are carefully 
scrutinized by the funding agencies and each university. However, the 
U.S. Department of Agriculture is authorized to fund less than the full 
indirect costs rate, yet we need those funds in order to carry out the 
necessary stewardship of our research facilities.
    Even improved stewardship will not fix the problems that the APLU 
study has demonstrated. Some of the facilities we are using are simply 
outdated and cannot be brought up to 21st century standards. The other 
key recommendation from the APLU task force is to invest aggressively 
in new facilities or major renovations to upgrade and modernize our 
research infrastructure. There is still a great public good that comes 
from research in food, agriculture and natural resource management. The 
nation's interest depends on research findings that are made available 
to all participants in the food, agriculture and natural resource 
economy. The same is true for each state and local governmental entity. 
At the same time, many private interests, from producers to processors 
to wholesalers and retailers derive benefits from publicly funded and 
publicly available research findings. They have a part to play in 
financing investments in America's public agricultural research 
infrastructure.
    We propose a funding mechanism whereby Federal funds are used to 
leverage state, local, private industry, and private philanthropic 
investments into our research infrastructure needs. Our very successful 
public agricultural research enterprise has been built on this multi-
partner model of collaborative funding.
    Federal funding is especially important for addressing research 
needs in the national interest. It would seem important to provide 
Federal funds with some contingencies, such as a required match with 
some combination of state, local, industry and/or non-governmental 
organization support. In addition, Federal funds should be contingent 
on demonstrating that the research will address national or regional 
needs and that it will build on a record of accomplishment in research 
among the faculty and programs that will use the facilities. 
Collaboration across universities should be favored over duplicative 
programs in neighboring states.
    Based on the findings in the APLU study, we determined that we 
would need to replace 68% of the research infrastructure over the next 
10 years in order to position our scientists to be successful in 
addressing food security, food safety, agricultural productivity and 
environmental stewardship needs for the 21st century. The estimated 
replacement cost of all research facilities included in the APLU study 
is $29 billion, and 68% of that is $20 billion. A Federal program of 
investing $1 billion per year over 10 years would help to stimulate the 
other investments needed to complete this initiative and would position 
the U.S. agriculture research system to be on par with other nations 
who are competing in the world food and agriculture markets.
    This proposed level of funding is large. Whether our Federal and 
other partners are up to this challenge, it is important to recognize 
that the need is real and it is of strategic importance. The 
competitiveness of our agriculture sector, the security and safety of 
our citizens' food supply--and in large part their health--as well as 
the health of our environment depends on the research our scientists 
produce. The challenging investments that Federal and state funding 
made in our research infrastructure in the 20th century have created a 
dynamic, innovative and job-creating food and agriculture industry and 
a safe and secure food supply today. We owe it to future generations to 
make the investments that will ensure they benefit from the bounty of 
our tremendous natural resources and uniquely American collaboration 
between scientists and the farmers, ranchers and workers in our 
nation's food and agriculture systems.

    The Chairman. Thank you, doctor.
    Mr. Calhoun for 5 minutes.

   STATEMENT OF RICHARD R. CALHOUN, FORMER PRESIDENT, CARGO 
   CARRIERS, CARGILL, INC., SILVER SPRING, MD; ON BEHALF OF 
              NATIONAL GRAIN AND FEED ASSOCIATION

    Mr. Calhoun. Good morning. I am Rick Calhoun, the immediate 
past Chairman of the Waterborne Commerce Committee of the 
National Grain and Feed Association on whose behalf I testify 
today.
    The NGFA was established in 1896, and consists of 1,050 
member companies that handle approximately 70 percent of the 
U.S. grain and oilseed crops. The importance of infrastructure 
to the success of U.S. farmers in competing to provide 
Americans agricultural bounty to consumers is undisputed. But 
by numerous markers, America's infrastructure is falling 
behind. We have fallen out of the top ten in the World Economic 
Forum's global competitiveness report. We used to be able to 
ship soybeans to China for nationally $80 a metric ton, cheaper 
than Brazil. Today they have narrowed the transportation gap by 
about 75 percent to just $20 a metric ton.
    The American Society of Civil Engineers' most recent 
infrastructure report card doled out the following grades: 
Roads, D; inland waterways, D; and bridges, C+. NGFA 
appreciates the renewed sense of urgency by Congress and the 
Trump Administration to enact an infrastructure package that 
includes a reliable funding mechanism to recapitalize our 
dilapidated inland waterways and restore our rural roads and 
bridges. Today, I will focus on the 12,000 mile inland waterway 
system, which supports 540,000 jobs, and provides the lowest 
cost, most fuel efficient, and environmentally friendly way to 
transport grain and ag products.
    Most of our locks and dams have exceeded their 50 year life 
design, and it is starting to show. During the past decade, 
work stoppages for repairs have increased 700 percent. In 2005, 
Hurricane Katrina halted our ability to ship on the inland 
waterways and ports, sending barge rates up as much as 50 
percent and causing basis values on corn to decline 40 to 70 
per bushel.
    We appreciate that Congress has begun to respond. Thank you 
for passing the WRDA Acts in 2014 and 2016 to streamline 
projects and for increasing operation and maintenance funding 
for locks and dams.
    Also, President Trump recently visited the Ohio River to 
put an unprecedented presidential spotlight on the state of our 
locks and dams.
    But to bring our waterway system into the 21st century, a 
new approach is needed. Here are some ideas that we believe 
would help you get the biggest bang for your buck. Priority 
one, support stronger Federal investment in U.S. locks and 
dams. Currently, there is a portfolio of 25 critical inland 
waterways projects that need to be funded to modernize the 
system at a cost of $8.75 billion. Also, the Harbor Maintenance 
Trust Fund has a $9 billion surplus, and Congress should ensure 
these funds be spent to maintain U.S. ports and harbors through 
dredging.
    Priority two, support the existing public-private 
partnership to finance our locks and dams and oppose unworkable 
tolling and lockage fees. The inland waterway system benefits 
from the successful 3P, where the barge and towing industry, 
but ultimately the U.S. farmer, pays 50 percent of the cost of 
the inland waterways projects through a 29 per gallon diesel 
fuel tax, which is matched by Federal dollars. Perennial calls 
to impose lockage fees and tolling on the inland waterways by 
past Administrations have consistently been rejected on a 
bipartisan basis by Congress.
    Commercial users of the inland waterway locks and dams are 
the only private entities that pay into this trust fund even 
though the benefits are freely enjoyed by numerous other 
stakeholders. Therefore, the question should not be how much 
more can we extract from those who pay, but rather how can we 
get the other beneficiaries of the system to support it?
    Rural America also relies heavily on roads, bridges, and 
highways to transport ag products from farm to market and 
provide access to education, jobs, healthcare, and social 
services. But the roads and bridges that connect the country's 
rural areas face several significant challenges, including 
inadequate capacity to handle commerce, limited connectivity, 
and deteriorated conditions.
    Congress should explore prioritizing increases in Federal 
funding and/or reclassification of rural roads and bridges to 
be eligible for funding.
    One concept that may warrant your consideration is to 
develop a system of block grants where states and localities 
with feedback from rural and ag stakeholders could prioritize 
road and bridge projects they deem most important.
    One final thought: By 2050, the world will be challenged to 
feed nine billion people. If we maintain the status quo on 
infrastructure investment we will fall short of meeting that 
demand.
    We need to be pragmatic. Let's not allow under $9 billion 
in waterways investments to stand in the way of our ability to 
better feed our country and the soon-to-be nine billion people 
around the globe.
    Thank you for the opportunity. I look forward to answering 
your questions.
    [The prepared statement of Mr. Calhoun follows:]

   Prepared Statement of Richard R. Calhoun, Former President, Cargo
Carriers, Cargill, Inc., Silver Spring, MD; on Behalf of National Grain 
                          and Feed Association
    Good morning, Chairman Conaway, Ranking Member Peterson, and 
Members of the House Committee on Agriculture. Thank you for the 
opportunity to testify at this important hearing examining The State of 
Infrastructure in Rural America.
    I am Rick Calhoun, the immediate past Chairman of the Waterborne 
Commerce Committee of the National Grain and Feed Association (NGFA), 
on whose behalf I testify today. The NGFA was established in 1896, and 
consists of 1,050 member companies that operate 7,000 facilities that 
handle approximately 70 percent of the U.S. grain and oilseed crop. 
NGFA also consists of 34 state and regional associations. I also 
previously served as NGFA's elected industry Chairman and am a past 
Chairman of Waterways Council Inc., the national organization 
representing barge and tow-boat operators, shippers, conservation 
groups, as well as labor organizations that focuses on the 
modernization, rehabilitation, and operation and maintenance of our 
nation's inland waterways' locks and dams. I retired June 30, 2017, 
after working my entire 41 year career at Cargill Inc., most recently 
as President of Cargo Carriers, the company's barge and marine 
business, and as Senior Vice President of Cargill's Grain and Oilseed 
Supply Chain North America.
    Throughout my industry career, I witnessed first-hand how important 
infrastructure is to the success of U.S. farmers, ranchers and 
agribusinesses in competing to provide America's agricultural bounty to 
U.S. and world consumers. But over the last decade, I also have 
witnessed an alarming decline in historical competitive advantage that 
our transportation infrastructure has provided U.S. agriculture, and 
the corresponding increase in investment in critical infrastructure 
being made by our foreign competitors.
    The NGFA appreciates and agrees with the renewed sense of urgency 
by this Congress and the Trump Administration to enact a comprehensive 
infrastructure package that includes a predictable and reliable funding 
mechanism to recapitalize our dilapidated inland waterways system, as 
well as to restore our rural roads and bridges. Both are essential to 
the future vibrancy of rural communities and competitiveness of U.S. 
agriculture.
    I want to focus primarily on the 12,000 mile inland waterways 
system, which supports more than 540,000 jobs and provides the lowest-
cost, most fuel-efficient and most environmentally friendly and 
sustainable way to transport grains, oilseeds and other agricultural 
products. The U.S. inland waterways are used to transport about \2/3\ 
of the U.S. grains and oilseeds destined for export while U.S. ports 
help move more than 90 percent of U.S. grain and oilseed exports. In 
addition, U.S. inland waterways and ports are essential arteries for 
farm inputs. For example, 33% of fertilizer relies on this 
infrastructure in order to get essential nutrients to farmers for their 
crops. Our country exports about 25 percent of its total grain 
production, with nearly 50 percent of U.S. soybeans, more than 40 
percent of U.S. wheat, and about 15 percent of U.S. corn exported each 
year. On the meat and poultry side, the U.S. exports approximately ten 
percent of its beef, 20 percent of its pork, and 15 percent of its 
poultry production.
    The U.S. transportation system is used more by agriculture than any 
other business sector. In 2012, agriculture accounted for 22 percent of 
all tons transported, and 31 percent of all ton-miles moved. Thanks to 
our transportation system, U.S. agricultural exports will contribute 
$21.5 billion to the U.S. balance of trade this fiscal year. Exports 
invigorate the rural economy, support more than one million jobs on and 
off the farm, and provide farmers with 20 percent of net farm income.
The Challenge
    Earlier this year, during testimony before the House Transportation 
and Infrastructure Committee on the importance of infrastructure, 
Cargill's Chairman and CEO referenced a BusinessWeek article from 1964 
that still rings true today about the indispensable role transportation 
infrastructure plays in the success of U.S. agriculture. The excerpt 
reads, ``What the grain division does is buy grain at a point of 
surplus and carry it to a point of deficit. Or buy it at a time of 
surplus and carry it over to a time of deficit. Our profit comes from 
being able to do this at a lower cost than our competitors.''
    Historically, the United States has been blessed with a 
transportation system where the four major modes (truck, rail, barge 
and ocean-going vessels) complement and to an extent compete with one 
another. Utilizing the inland river system relieves congestion and wear 
and tear on our highways and helps discipline rail rates. The result is 
a highly efficient, balanced system that provides an edge in a fast-
changing market which saw U.S. agricultural exports double from 2006 to 
2016. For America to avoid losing this edge, we must be strategic and 
willing to make stronger investments in our transportation system. 
However, as a percentage of gross domestic product (GDP) the U.S. is 
spending less on its transportation infrastructure than at any point 
since World War II and our major trading partners are besting us when 
it comes to infrastructure investment.
    As a result, our competition is catching up. USDA data show that in 
2007, the total transportation costs to move a metric ton of soybeans 
from Davenport, Iowa, to Shanghai, China, was $82.83. That compared to 
a total transportation cost of $161.30 to get that same metric ton of 
soybeans from North Mato Grosso, Brazil, to Shanghai.
    Fast forward a decade and our competitive advantage is slipping. In 
the first quarter of 2017, it cost $90.83 to ship a metric ton of 
soybeans from Davenport to Shanghai and $111.80 to transport a metric 
ton from Mato Grasso to Shanghai. Brazil has closed the transportation 
cost gap by $57 or 73 percent per metric ton! Also of concern, Brazil 
and China just announced a joint $20 billion effort in which China will 
invest billions in Brazilian infrastructure projects.
    By numerous markers, America's infrastructure is falling farther 
and farther behind. For instance, the United States has declined to 
11th in infrastructure in the World Economic Forum's most recent Global 
Competitiveness Report. We were seventh as recently as 2008. The 
American Society of Civil Engineers' 2017 infrastructure report card 
doled out the following grades to American Infrastructure: Roads, 
``D''; Inland Waterways, ``D''; and Bridges ``C+''. I wouldn't have 
fared very well bringing home a report card with those kinds of grades.
    A sense of urgency also is warranted given most of our inland 
waterway locks and dams were built in the 1930s and have far exceeded 
their 50 year design life. We're in a high-stakes game of rolling the 
dice:

   During the past decade, there has been a 700 percent 
        increase in unscheduled work stoppages for repairs.

   A recent University of Tennessee study (http://
        economics.ag.utk.edu/publications/logistics/
        EconomicImpactsInlandWaterwaysDisruptions092016.pdf) concluded 
        that disruptions at Mississippi River Lock 25 would result in a 
        loss of 7,000 jobs and $2.4 billion in reduced economic 
        activity.

   Hurricane Katrina in 2005 also demonstrated the economic 
        damage that results when the ability to ship on the inland 
        waterways and ports is halted, as barge rates increased by as 
        much as 50 percent (to 900 percent of tariff) and basis values 
        on corn declined 40 to 70 per bushel, and rippled temporarily 
        throughout the country--affecting not just farmers located near 
        the Mississippi River and the tributaries that feed into it. 
        Higher transportation costs resulted in significantly lower 
        prices paid to farmers, and complicated rail and truck 
        movements, as well.

    We appreciate that Congress has begun to respond! Congress is to be 
commended for enacting Water Resources Development Acts (WRDA) in both 
2014 and 2016 to help streamline inland waterway renovation projects, 
as well as consistently increasing operations and maintenance funding 
for locks and dams stewarded by the U.S. Army Corps of Engineers. 
President Trump also is to be applauded for recently visiting the Ohio 
River to put an unprecedented presidential spotlight on the dilapidated 
state of our locks and dams and the need to fix them.
    But to truly bring our waterways system in to the 21st century, a 
new approach is needed. Thus, as Congress develops priorities for an 
infrastructure package with up to $1 trillion in public and private 
funds, I'd like to take this opportunity to share several ideas on 
where we believe it could get the biggest bang for the buck:
Priority No. 1: Supporting Stronger Federal Investment in U.S. Locks, 
        Dams and Ports
    Currently, there exists a portfolio of 25 critical inland waterways 
modernization projects that need to be funded to modernize the system 
at a cost of $8.75 billion.
    This includes a project of utmost importance to American 
agriculture: The Navigation and Ecosystem Sustainability Program 
(NESP). NESP already has been authorized by Congress and includes 
construction of seven top-priority 1,200 locks (LaGrange, Peoria, 
Upper Mississippi River Locks 20, 21, 22, 24 and 25) at the most 
congested locations on the Upper Mississippi River System and Illinois 
Waterway.
    In addition, the Harbor Maintenance Trust Fund (HMTF) which is 
supported via a 0.125% tax on the value of shipped cargo has a $9 
billion surplus. Unlike the highway trust fund, the HMTF can only be 
drawn on when Congress makes an appropriation. We believe Congress 
should direct that these funds be spent to maintain U.S. ports and 
harbors, including dredging activities. We appreciate that Congress, 
through WRDA 2014, is directing that an increasing percentage of these 
funds be used for their intended purpose.
Priority No. 2: Supporting the Existing Public-Private Partnership To 
        Finance Renovation of the Inland Waterways Locks and Dams 
        without Imposing Counterproductive, Inequitable and Ultimately 
        Unworkable Tolling, Lockage or Tonnage Fees
    Since 1978, the inland waterways system has benefited from a 
successful public-private partnership through the Inland Waterways 
Trust Fund (IWTF). The barge and towing industry (but ultimately mostly 
the U.S. farmer) pays 50 percent of the cost of inland waterway 
construction and major rehabilitation projects, while Federal 
appropriations are used to finance the remaining 50 percent.
    The private-sector's contribution is made through the assessment of 
a 29 per gallon diesel fuel tax paid into the IWTF. In the highly 
competitive global agricultural market, transportation costs typically 
cannot be passed on to the ultimate customer, so they are reflected 
primarily in the price paid for commodities at the point of 
production--the U.S. farmer. It's important to emphasize that in 2014, 
U.S. farmers, agribusinesses and the barge industry raised their 
collective hands and successfully advocated that Congress approve 
legislation to increase this user fee by 45 percent to increase 
private-sector investment in the inland waterways system.
    Unfortunately, commercial users of the inland waterways locks-and-
dams are the only private entities that pay into this trust fund, even 
though the benefits of the inland waterways are enjoyed freely by 
numerous other stakeholders, including recreational users, those who 
receive hydropower, municipal and agriculture water systems, and those 
who benefit from flood control.
    As this Committee is painfully aware, no effort to contribute more 
to deficit reduction or offer to have your user-fees raised to support 
the system goes unpunished. Perennial calls to impose lockage fees and 
tolling on the inland waterways date to the Clinton Administration. The 
Agricultural Transportation Working Group which is comprised of 40 
diverse associations representing the ag value chain, including NGFA, 
believe this is a mistaken approach for several reasons.
    First, the waterways system differs from the highway system, where 
a driver can choose between the new capacity provided by a toll road or 
continue to rely on previously existing non-toll roads. Further, unlike 
highways, major beneficiaries of the inland waterways noted previously 
would not be subject to tolls.
    We encourage Congress to continue its bipartisan opposition to such 
a concept. Imposing additional costs on those utilizing commercial 
barge transportation--on top of the 50 percent cost-share that farmers 
and the private sector already pays into the IWTF--would risk diverting 
traffic from the most efficient mode of transportation available to 
U.S. agriculture, further congesting U.S. highways and resulting in 
higher rail freight rates ultimately paid by farmers.
    In 2015, the Illinois Corn Growers Association conducted a study to 
examine alternative private financing options for Illinois Waterway 
Projects and determined that this could result in an additional user 
fee or lockage fee of $0.014 to $0.036 a bushel. This means that one 15 
barge tow carrying 875,000 bushels of corn could cost an additional 
$31,500 per lock. Again, this would be on top of the fuel tax industry 
already pays.
    As Congress and the Administration debate how to finance 
infrastructure projects, the NGFA believes the question should not be 
``how much can we extract from those who already pay?'' but rather, 
``how can we get other beneficiaries of the system to support it 
financially?'' That is the essence of equity and provides an 
opportunity to greatly modernize the inland waterways system to benefit 
all users.
    Finally, to enhance efficiency and reduce costs of upgrading the 
inland waterways, it will be important that any future funding 
mechanism be reliable and predictable. Projects that are plagued by 
stops and starts because of funding shortfalls create inefficiencies 
that dramatically increase total costs.
Rural Roads and Bridges
    Rural America, the home of 60 million Americans, also relies 
heavily on roads, highways and bridges, which constitute the first step 
in transporting agricultural products from farm to market and provide 
access to education, jobs, health care and other social services, and 
encourage tourism and movement of goods and services. Transportation 
also is a critical factor in a company's decision on where to locate 
new businesses.
    The nation's rural areas account for 97 percent of America's land 
mass and are home to the vast majority of the nation's 2.2 million 
farms. As this Committee knows well, production agriculture, by 
necessity, is geographically dispersed because the sources of 
production cannot simply be relocated to be closer to customers. 
Without functioning rural road and bridges, farmers and ranchers cannot 
get their harvests to consumers both domestically or internationally.
    Roads and bridges that serve and connect the country's rural areas 
face several significant challenges, including inadequate capacity to 
handle growing levels of traffic and commerce, heavier truckloads, 
limited connectivity, deteriorated road and bridge conditions, and a 
traffic fatality rate that is far greater than more urban roads and 
highways.
Funding and Overall Condition
    Road construction and maintenance primarily is a function of 
government, with more than 80 percent of the financing derived from 
fuel taxes, other fees and tolls. Needs and demands for maintenance and 
construction of roads and bridges are outpacing current and projected 
funding, creating a need to identify additional funding sources.
    According to 2012 Federal data, 74 percent of bridges, 73 percent 
of the 4 million miles of public roads, and 33 percent of all vehicle 
miles traveled (VMT) are in rural areas. But only 44 percent of rural 
road mileage is eligible for Federal grants, with the rest maintained 
by state and local funding. Meanwhile,15 percent of the nation's major 
rural roads consists of pavement rated in poor condition, while an 
additional 21 percent is rated in mediocre condition.
    Of the more than 445,000 bridges in rural areas, only 43 percent 
are eligible for Federal aid. More than 20 percent of rural bridges are 
rated either structurally deficient or functionally obsolete. Combined, 
nearly 69,000 bridges on local and minor collector highways in rural 
areas (not eligible for Federal aid) either are structurally deficient 
or functionally obsolete. More than 32,000 bridges in rural areas that 
are eligible for Federal aid either are structurally deficient or 
functionally obsolete.
Potential Solution for Rural Roads and Bridges
    To ensure rural Americans have access to adequate and safe bridges 
and roadways, Congress should explore prioritizing increases in Federal 
funding, and/or reclassification of rural roads and bridges to be 
eligible for funding. One concept that may warrant consideration is to 
develop a system of block grants with guidelines under which states and 
localities could prioritize those road and bridge projects that they 
deem most important. The NGFA would recommend that local rural and 
agricultural stakeholders be required to be consulted as part of a 
state's deliberations to ensure that the needs of farmers, ranchers and 
rural communities are considered fully. Congress also should direct 
agencies to account for the unique needs those rural roads and bridges 
present to ensure they are eligible for Federal grants and funding. 
Finally, identifying adequate long-term funding sources would provide 
certainty, enable better long-term planning, and improve efficiency in 
road maintenance and construction.
Conclusion
    I'd close with a final thought. As you know, by 2050 the world will 
be challenged to feed nine billion people. If the United States 
maintains the status quo on maintaining our transportation 
infrastructure, it will fall far short of meeting that demand. The 
critical waterways projects I've discussed today will take several 
years to construct and complete. So, we cannot wait until the moment is 
upon us to get started. The road to feeding a growing country and world 
population will be met by looking forward, not through the rear-view 
mirror. Let's not allow just under $9 billion stand in the way of our 
ability to feed our country and the soon to be nine billion people 
around the globe.
    Thank you for this opportunity to provide our thoughts on the 
current state of the transportation supply chain and its infrastructure 
that is of vital importance to rural America. We look forward to 
working with this Committee, Congress and the Administration to pursue 
enactment of a comprehensive infrastructure package that will make a 
real, positive difference to rural communities, U.S. economic growth 
and job creation, and world food security for decades to come.

    The Chairman. Thank you, Mr. Calhoun.
    Mr. Wynn, 5 minutes.

         STATEMENT OF CURTIS WYNN, PRESIDENT AND CHIEF
     EXECUTIVE OFFICER, ROANOKE ELECTRIC COOPERATIVE; VICE 
    PRESIDENT, BOARD OF DIRECTORS, NATIONAL RURAL ELECTRIC 
              COOPERATIVE ASSOCIATION, AHOSKIE, NC

    Mr. Wynn. Thank you, Chairman Conaway and Ranking Member 
Peterson, for inviting me to testify today. My name is Curtis 
Wynn, and I am the President and CEO of Roanoke Electric 
Cooperative. We are a member-owned, not-for-profit distribution 
cooperative, and we serve 14,000 rural customers, in some of 
the poorest parts of our state. That is why above and beyond 
just delivering electricity, we have a calling to provide a 
broad set of services and support to help our community thrive.
    Among our biggest challenges, going forward, are adapting 
to changes and consumer demand, accommodating an evolving 
generation mix, and protecting against cyber threats. I am 
going to talk today about some investments that my co-op is 
making to modernize and meet these needs.
    I am aware that resources will be limited in the upcoming 
farm bills, but I believe a separate infrastructure package 
gives us a great opportunity to make further investments like 
these to ensure the success and stability of rural America in 
the 21st century.
    For decades, the Rural Utilities Service's electric loan 
program has been the foundation of what we do, providing low 
cost financing to co-ops for installing and maintaining the 
grid. Today, RUS also helps us fund more advanced projects to 
make our systems more modern, efficient, and secure.
    We have enjoyed strong support for robust RUS funding 
because we are such a good investment for the Federal 
Government providing valuable services to our communities and 
reliably paying back our loans.
    We ask that you help us maintain that support. In the 21st 
century, robust communications infrastructure is just as 
important to our business as are traditional assets like poles, 
wires, and power plants.
    My co-op is currently investing $4 million to lay a fiber 
communications backbone in our service territory. Our main 
motivation is to take care of our internal operational needs to 
make our system more efficient and secure. However, once this 
foundation is in place, there are lots of things we can do with 
it. One option could be providing broadband Internet to our 
customers' homes. Many people in our region don't have access 
to reliable Internet. That puts our consumers, schools, 
hospitals, and employers at a disadvantage.
    I believe it will take many different types of 
technologies, partnerships, and engagement from all 
stakeholders to address this challenge. As Congress thinks 
about infrastructure and telecommunications policy, we believe 
all potential providers who have a community need and a 
willingness to engage, including some electric cooperatives, 
should have access to a diverse set of tools to help bridge 
this digital divide.
    For years, electric co-ops across the country have provided 
information and advice to consumers to help them use 
electricity more efficiently and cost-effectively. Because we 
don't have a profit motive, we have a unique opportunity to 
help our consumers use less energy and save money. For example, 
at Roanoke, we have a program called Upgrade to $ave, where we 
work with our member owners to make energy efficient retrofits 
in their homes, like adding insulation or replacing old HVAC 
units.
    Customers immediately began to save money without making 
any up-front payments. And by sharing the energy savings, we 
ensure full cost recovery for our cooperative. We can do all 
this through a $6 million loan from the USDA through a new 
energy efficiency and conservation loan program.
    In the first 18 months of the program, we worked with local 
contractors to retrofit over 200 homes with an average energy 
savings above 20 percent. That is after the repayment of the 
note. We also recently used a USDA Rural Energy for America 
Program grant to build, through our power provider, a community 
solar project. Now our members have the opportunity to purchase 
energy from these panels investing in clean, renewable energy, 
and lowering their monthly electric bills.
    Last, the Rural Economic Development Loan and Grant Program 
at USDA provides financing so that co-ops can partner with 
local schools, hospitals, emergency services, and businesses to 
fund projects that create jobs and meet our communities' need.
    Since 2012, North Carolina has been involved with 99 REDLG 
projects that created over 2,600 jobs. Most of our country's 
food, minerals, energy, and manufactured goods still come from 
rural areas. That is why the health of rural America should be 
of interest to all Members of Congress and to all Americans.
    You have a great opportunity and an infrastructure package 
to make needed investments that will address our unique 
challenges.
    We look forward to working with you, and thank you very 
much for this opportunity, Mr. Chairman.
    [The prepared statement of Mr. Wynn follows:]

   Prepared Statement of Curtis Wynn, President and Chief Executive 
    Officer, Roanoke Electric Cooperative; Vice President, Board of 
                               Directors,
      National Rural Electric Cooperative Association, Ahoskie, NC
    Thank you, Chairman Conaway and Ranking Member Peterson, for 
inviting me to testify today. My name is Curtis Wynn. I am the 
President and CEO of Roanoke Electric Cooperative headquartered in 
Aulander, North Carolina. I am also Vice President of the Board of 
Directors for the National Rural Electric Cooperative Association. 
Roanoke is a member-owned, not-for-profit, electric distribution 
cooperative serving around 14,000 residential, agricultural, commercial 
and industrial customers in northeastern North Carolina. Our system 
consists of over 2,000 miles of line (about seven members per mile) in 
seven counties.
    We serve some of the poorest, most rural parts of our state. But 
despite those challenges, we are doing some truly innovative work to 
improve the quality of life for our members. While our first priority 
is to deliver clean, safe, reliable, affordable electricity to our 
members, we have a calling to be more than just a poles, wires and 
electrons company. Our broader purpose is to provide the services and 
support that empower our communities to thrive. Rural electric 
cooperatives are much more than just electric utilities--we are the 
engines that drive economic opportunity across the heartland and to 
rural areas everywhere. I am proud of the role we play in these 
communities.
    More than ever, whether you live in a rural area or in a city, we 
are all connected in this country. Rural areas, in particular, still 
grow most of the food, generate much of the power, and manufacture many 
of the goods that this country consumes. When rural areas suffer, the 
country as a whole suffers. That's why the state of rural 
infrastructure should be of interest to all Members of Congress, no 
matter what type of district you represent.
    Among our biggest challenges going forward are adapting to changes 
in consumer demand, accommodating an evolving generation mix, and 
protecting against cyber threats. I'm going to talk today about some 
investments that my co-op is making to modernize and meet those needs. 
I am aware that resources will be limited in the upcoming farm bill, 
but I believe a separate infrastructure package gives us a great 
opportunity to make further investments in these types of projects to 
ensure the success and stability of rural America in the 21st Century.
Rural Utilities Service (RUS)
    In the early 1900's, as urban areas began to electrify, rural areas 
lagged behind. Eventually, farmers and ranchers in remote areas took 
the initiative to form electric cooperatives and did it themselves. In 
the past 80 years, a lot has changed, but the same fundamental 
challenges still exist--how to affordably connect those few customers 
in low-density, high-cost rural areas. What was then called the Rural 
Electrification Administration (REA) is now the Rural Utilities Service 
(RUS) and it is as relevant today as it was back then. REA and RUS 
loans have helped build, expand, and improve the infrastructure across 
rural America necessary to provide power, deliver clean water, and 
deploy advanced telecommunications technologies to rural areas.
    Today, RUS loans help electric co-ops reduce costs and improve 
reliability for our members by financing basic maintenance like 
replacing poles and wires. But it also helps us fund projects to make 
our systems more modern, efficient, and secure.
    RUS depends on a yearly appropriation from the Agriculture 
Appropriations bill. We have historically enjoyed strong support for 
robust RUS funding in large part because we're such a good investment 
for the Federal Government. The President's Budget request for 2018 
estimates that the Federal Government could earn up to $300 million in 
net revenue from RUS loans. We ask that you help us maintain that 
support.
    We also ask that you support policies that allow us to use RUS 
loans to address a broad set of co-op needs--whether for advanced 
utility communications, renewable generation, baseload generation, or 
for making environmental upgrades to existing generation. Just as the 
times have changed and the needs of rural America have changed, so too 
has the RUS loan program. We have appreciated working with the 
Committee over the years to help make the program more streamlined and 
efficient, and we look forward to exploring new ways to continue to 
improve the program. Modernizing the RUS loan program is good for both 
electric cooperative borrowers and taxpayers. The RUS annually reviews 
and approves billions of dollars of loans, and finding ways to more 
efficiently process those loans reduces burdens on taxpayers while 
meeting borrowers' needs more efficiently as well. Another important 
financing option available to electric cooperatives is loans from 
cooperative banks. Co-op banks add healthy competition and a diversity 
of sources of capital to the marketplace. We encourage you to continue 
that policy.
Robust Communications Infrastructure
    In the 21st century, robust communications infrastructure is just 
as important to our business operations as traditional generation, 
transmission and distribution assets. This high-speed communications 
capability makes our system more efficient, it makes our grid more 
secure, and it has the capability to make our consumers more 
comfortable and productive.
    Roanoke Electric Cooperative is currently undertaking a $4 million 
project to lay a fiber communications ``backbone'' in our service 
territory. Our main motivation for bringing this broadband technology 
to the area is to take care of our internal, operational needs. As a 
result, this project will reduce outage frequency as well as response 
time to outages while better equipping Roanoke to help member-owners 
manage energy and reduce system losses. We want to ensure that all of 
our substations can communicate with one another in order that we can 
better predict and manage outages, protect our substations and metering 
equipment from vandalism and theft, and communicate with each 
individual member-owner about their usage.
    Once this foundation is in place, there are a lot of things we can 
do with it. One option we are currently studying is whether we can 
leverage this fiber backbone and partner to provide broadband Internet 
to our consumers' homes. In a world of video streaming, telecommuting, 
video conferencing, online education, and telemedicine, connectivity is 
not a luxury. It's a necessity. A connected home is also a more 
efficient, comfortable taking advantage of ``smart'' technologies like 
thermostats and hot water heaters which assist the cooperative in 
managing peak load and save money for our members.
    Unfortunately, many homeowners and businesses in our region do not 
have access to reliable Internet service. The absence of high-speed 
Internet denies our member-owners and others in the region access to 
all the amenities that most urban areas enjoy. It also discourages 
businesses from investing in our communities which results in missed 
job opportunities.
    Many comparisons are drawn between the lack of access to robust 
broadband service today and the need for electrification in rural areas 
80 years ago--with the urban areas of the country well-served, and 
rural areas being left behind. We believe that many different types of 
solutions will be needed to help rural Americans keep pace with their 
urban counterparts. As Congress contemplates telecommunication and 
infrastructure policies, we believe that all potential providers 
including electric cooperatives should have access to a diverse set of 
tools to help bridge the digital divide.
Innovation and Energy Efficiency
Upgrade to $ave
    For years, electric co-ops across the country have provided 
information and advice to consumers to help them use electricity more 
efficiently and cost-effectively. As I mentioned before, because we 
don't have a profit motive, we have a unique opportunity to help our 
consumers use less energy and save money.
    At Roanoke, we have a program called Upgrade to $ave where we work 
with our member-owners to make investments in energy efficiency in 
their homes that allow them to save money on their bills without making 
any up-front payments or incurring new debt obligation. In return, 
participating member-owners share the energy savings with the 
cooperative at a level that assures immediate financial savings for our 
participants and full cost recovery for our cooperative. In addition to 
improved comfort and saving money for our members, the program promotes 
local jobs by using local businesses and contractors to do these 
building retrofits.
    We can do all this because we received a $6M loan from the Rural 
Utilities Service through the new Energy Efficiency & Conservation Loan 
Program (EECLP). In the first eighteen months of the program, local 
contractors completed upgrades to over 200 homes with average estimated 
energy savings above 20%. Most of the projects involved air sealing, 
duct sealing, insulation, efficient lighting, and installation of high 
efficiency HVAC equipment such as heat pumps.
    In addition to generating energy savings, participants in Upgrade 
to $ave also generate spillover benefits such as reducing demand during 
periods of extreme weather. As a result, our cooperative benefits from 
lower wholesale costs for both peak demand and energy. We use some of 
the surplus benefits that accrue to all member-owners to pay for the 
cost of administering the program, which is an option open to all 
member-owners.
Community Solar
    We're also proud to be partnering with several of our neighbor co-
ops to install a 360 panel community solar project in our service 
territory. Our project was created in the same spirit that drove the 
creation of Roanoke Electric Cooperative. More than 75 years ago, 
electricity was out of reach for residents in our community. A group of 
people joined together to create our electric cooperative and power our 
lives. Today, solar energy is out of reach for a lot of people. Among 
other barriers, it can be expensive to set up and maintain. So we 
answered our members' call to do something about it.
    Today, our members have the opportunity to purchase the energy 
output of these panels, investing in clean renewable energy and 
lowering their monthly electric bills. We think community solar has a 
lot of advantages for our members. For example, it can be a cost-
effective alternative to installing new panels on your own home, and it 
provides options for renters who don't own their own property. Our site 
is well suited for a solar installation, so you can be sure you're 
getting the most out of the sun's potential. And we take care of the 
maintenance.
    Today the North Carolina Electric Cooperatives and its consumer 
members support more than 2MW of community solar at 11 electric 
cooperatives throughout the state. To help make these projects more 
affordable, we have received four Rural Energy for America Program 
(REAP) grants from USDA. The total cost of all these projects was 
approximately $5.1 million and the REAP grants offset approximately 20% 
of the cost, around $1 million.
Microgrids
    A microgrid is a group of interconnected loads and resources 
connected to the main electric system, which can connect and disconnect 
from the grid. North Carolina's electric cooperatives have the state's 
first grid-interconnected microgrid on Ocracoke Island and another 
microgrid in development, the Butler Farms Microgrid. We partnered with 
several organizations, EPRI, Telsa, and Ecobee to implement the 
microgrid.
    The Ocracoke Island microgrid located off the outer banks is an 
exercise in community resilience, protecting the island that is often 
in the path of offshore storms, and can be used for demand response, 
energy arbitrage, and ancillary services in the PJM power market. The 
resources in the microgrid include a 3 MW diesel generator, a TESLA 500 
kW/1 MWh battery, 15 kW of solar, and 300 Internet-connected consumer 
devices (thermostats and water heaters). These resources also can 
reduce reliance on the main power grid during times of high demand when 
the island reaches its peak population in the summer. It also serves as 
an opportunity to test the integration of this technology as the 
state's electric cooperatives look to use the concept elsewhere.
    The Butler Farms microgrid is an opportunity to integrate swine-
waste biofuel generation and solar existing on the farm to support the 
local community. With the addition of a Samsung 250 kW/750 kWh battery 
and distribution controls, the generator can continue to produce 
energy, even if the main grid has been disconnected. Additionally, 
another first for the state, up to 100 homes in the area can be 
supported during times of localized outages through these distribution 
controls. This utility-facing consumer microgrid will also be used for 
demand response to save consumers money when electricity is most 
expensive.
    The North Carolina Electric Cooperatives are working together on 
these innovative research projects in order to learn how these 
technologies can be integrated into our distribution systems, while 
continuing to provide affordable, reliable energy to our members. These 
demonstration projects with successful outcomes can later be integrated 
into the grid through multiple applications modernizing the electric 
system.
Rural Economic Development Loans and Grants (REDL&G)
    No matter how successful you are at delivering electricity, if you 
don't have an economy that supports good jobs, rural America will 
languish. Under the Rural Economic Development Loan and Grant (REDLG) 
program, USDA provides zero-interest loans to utilities (including 
electric co-ops), which, in turn, pass the funds through to local 
businesses and other groups that create jobs in rural areas. This 
positive cycle of business development can strengthen both the co-op 
and the local community by helping stabilize populations and the co-
op's customer base. Since REDLG is funded in part by the interest and 
fees paid by co-op borrowers, it's a good deal for the Federal 
Government as well.
    North Carolina has utilized REDLG loans and grants better than any 
other state in the country. Since 2012, North Carolina electric 
cooperatives have used REDLG programs to partner with 99 projects for a 
total investment of nearly half a billion dollars which have created 
over 2600 jobs. REDLG funding has been used for weatherization, school 
construction, libraries, public safety, medical facilities and 
equipment, industrial buildings and equipment, and infrastructure.
    For example, Energy United provided a $2 million loan to Davie 
County and $1 million loan to the town of Mocksville which was used to 
provide infrastructure to support the recruitment of Gildan 
manufacturing. Gildan ultimately invested $116 million in their new 
facilities at the site and created 292 jobs.
    Another example of how the REDLG program has benefited rural 
communities is the $950,000 loan made by Lumbee River EMC to the Puppy 
Creek Fire Department. The fire department is located in a rural area 
of Hoke County which has grown recently due to its location near 
military bases. Because the fire department didn't have the ability to 
reach the upper floors of some of the newer, taller buildings, 
insurance rates were going up for everyone in the neighborhood. We were 
able to facilitate the purchase of a new ladder truck that could better 
service the community, bringing down insurance premiums for the entire 
community.
Regulatory Reform
    Last, we believe electric cooperatives should have broad latitude 
to take necessary actions they need to take to meet their consumer 
demands. The cooperative model of local, democratic control makes us 
good stewards of our communities. The Federal Government should have a 
reasonable regulatory philosophy that recognizes that relationship.
    We support reforms to the National Environmental Policy Act (NEPA) 
and to the Endangered Species Act (ESA) to promote the development of 
rural infrastructure. In addition, streamlining Federal Government 
management practices on Federal lands will make it easier for electric 
co-ops to maintain safety and reliability by performing needed 
vegetation management to prevent threats to power lines and respond to 
emergencies.
Conclusion
    We are a healthy nation because we have vibrant, bustling urban 
cities and because we have verdant, productive rural areas. 
Unfortunately, whether it's infrastructure or jobs or access to health 
care, it seems that too often rural America gets the short end of the 
stick. You have an opportunity to address some of those disparities.
    Electric cooperatives enjoy a productive partnership with the 
Federal Government and with the communities we serve to promote the 
health of rural America. We look forward to continuing to work with you 
toward that important goal. Thank you again for the opportunity to 
testify here today. I'm happy to answer any of your questions.

    Chairman. Thank you, Mr. Wynn.
    Ms. Otwell, 5 minutes.

           STATEMENT OF JENNIFER L. OTWELL, CPA, VICE
            PRESIDENT AND GENERAL MANAGER, TOTELCOM
COMMUNICATIONS, LLC, DE LEON, TX; ON BEHALF OF NTCA--THE RURAL 
                     BROADBAND ASSOCIATION

    Ms. Otwell. Thank you, Chairman Conaway, Ranking Member 
Peterson, and other Members of the Committee. Thank you for 
inviting me here today to talk about the importance of rural 
broadband as part of rural infrastructure, how that 
infrastructure is built and maintained, and the needs of rural 
consumers.
    Totelcom recently built fiber to the only hospital in 
Comanche County, Texas, enabling countless important functions, 
such as sending CT scans and other diagnostic imaging to 
radiologists in faraway metropolitan hospitals. It is essential 
for our county seniors and other residents to have our hospital 
nearby, and that wouldn't be possible without a high speed, 
high capacity broadband connection. This is one of many 
examples I have witnessed during my tenure at Totelcom of 
broadband making the rural way of life possible, to say nothing 
of the agricultural and energy production and other rural goods 
and services that broadband makes more affordable and available 
to a global market.
    Simply put, broadband is now essential rural 
infrastructure, yet it is an expensive undertaking. Totelcom 
serves an area of around 1,182\2\ miles, with an average of 
only 3.4 customers per square mile. You can do that math. That 
is not enough customers to recoup the cost of delivering 
broadband over such a large area. But 59 percent of Totelcom's 
customers have access to speeds of 10 megabits or greater, and 
29 percent of our customers now have access to speeds of up to 
1 gigabit, thanks to our recently completed Fiber to the Home 
Project in the Town of De Leon.
    These results are similar to what other small rural telecom 
providers have achieved around the country, and none of it 
would be possible without support from the USF High-Cost 
Program, which helps rural carriers make the business case for 
providing the service and securing loans from USDA's Rural 
Utilities Service, CoBank, and RTFC, which are among the very 
few lenders committed and willing to finance broadband-capable 
plants in rural America.
    Indeed, our U.S. loans and high cost USF support work in 
concert to help deploy broadband where it is not sustainable 
and improve it where it already is. For purposes of a 
Congressional infrastructure initiative, let me reiterate: The 
affordable financing is essential to rural broadband 
deployment, but it is not feasible without the presence of 
direct support for recovering the cost of providing the 
service.
    Providing rural broadband is an ongoing effort that 
requires sustained commitment. We cannot declare success just 
for the very preliminary act of connecting a certain number of 
locations.
    Congress was quite visionary in calling for reasonably 
comparable services and rates between rural and urban America 
in the 1996 Telecom Act. The FCC was wise to follow this 
principle by drafting rules for USF that mandate robust 
networks that can be readily upgraded over time to meet 
increasing consumer demands and expectations. Anything less 
would deny rural consumers the educational, economic, 
healthcare, and public safety benefits of broadband that other 
Americans take for granted.
    While USF rules are designed to support robust networks, 
its high cost program budget currently is not as it has been 
under the same hard cap since 2011. Meanwhile, other USF 
program budgets have grown considerably. This hard cap is now 
driving consumer rates higher, deterring rural broadband 
investment, and even cutting USF support for investments 
already made.
    The artificially low high-cost budget is the greatest 
barrier to rural broadband deployment today. Because the USF 
high-cost program is designed well but under-funded, we 
encourage Congress to offset this shortfall via any 
infrastructure package. This would help address the funding 
shortfall and save time and resources that would otherwise go 
towards creating and administering a new program from scratch.
    Thanks to recent reforms, the high-cost program is already 
designed to put support where it is needed most and avoid 
wasteful overbuilding of existing networks by targeting very 
specific locations. Also, efforts to standardize and speed 
Federal land permitting processes would free resources for 
broadband investment, and loan processes could be improved by 
allowing environmental and historical reviews to be conducted 
after funds are obligated but prior to disbursements.
    In short, the best funded, best planned networks may never 
fully deliver on their promise if they are caught in regulatory 
red tape and needless delay. While small rural carriers have 
done a remarkable job of leveraging available resources for 
broadband deployment, much work does remain.
    Fifteen percent of NTCA member customers don't yet have 
access to 10/1 broadband, while 90 percent of Americans have 
affordable access to 25/3 service or greater. The broadband 
industry is eager to close this gap by working with Congress 
and the Administration on policy that helps to build and 
sustain broadband in rural markets that would not otherwise 
justify such investments and ongoing operations.
    Thank you for the honor of testifying today, and I look 
forward to your questions.
    [The prepared statement of Ms. Otwell follows:]

   Prepared Statement of Jennifer L. Otwell, CPA, Vice President and
 General Manager, Totelcom Communications, LLC, De Leon, TX; on Behalf 
                of NTCA--The Rural Broadband Association
Introduction
    Chairman Conaway, Ranking Member Peterson, 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 Jennifer Otwell, 
Vice President and General Manager at Totelcom Communications in De 
Leon, TX. My remarks today are on behalf of Totelcom, 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 37 percent of the 
U.S. landmass; in most of this vast expanse, they are the only fixed 
full-service networks available. Small telecom 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 many rural Americans can access 
thanks to our industry's networks and commitment to serving sparsely 
populated areas.
    Totelcom is a local, community-based telecommunications provider 
with 39 employees serving a 1,182\2\ mile area with an average of 3.4 
customers per square mile. But, 19 percent of our customers reside in 
just 2\2\ miles, while the remaining 81 percent reside in the other 
1,180\2\ miles--so the population density of the more rural areas is 
only 2.75 customers per square mile. We provide just over 4,000 total 
connections to customers, delivering voice services and broadband using 
a variety of methods. We employ fiber-to-the-home technology and 
traditional copper-based facilities to provide broadband to most 
customers, and even fixed wireless point-to-point broadband for the 
most remote portions of our service area.
    Our networks allow agricultural producers and other rural 
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 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.
Unique Challenges of Rural Broadband Deployment
    Building broadband networks is capital-intensive and time-
consuming; building them in rural areas involves a special further set 
of obstacles. The primary challenge of rural network deployment is in 
crossing hundreds or thousands of miles where the population is sparse 
and the terrain is diverse.
    To complicate further the unique rural challenges of distance and 
density, when crossing Federal lands or railroad rights-of-way in rural 
America, network operators must address environmental and historical 
permitting concerns or contractual obligations that can delay projects 
and increase their already high costs. Then, once networks are built, 
they must be maintained over those hundreds or thousands of miles--this 
requires technicians who regularly travel long distances to make 
service calls and customer service representatives trained to deal with 
questions about things like router and device configurations that were 
unimaginable for legacy ``telephone companies.''
    And even the best local networks in rural markets are then 
dependent upon ``middle mile'' or long-haul connections to Internet 
gateways dozens or hundreds of miles away in large cities. Reaching 
those distant locations is expensive as well, and as customer bandwidth 
demands increase--moving from Megabytes to Gigabytes to Terabytes of 
demand per month per customer--so too does the cost of ensuring 
sufficient capacity to handle customer demand on those long-haul fiber 
routes that connect rural America to the rest of the world.
    Small telcos are eager to meet and overcome all of these challenges 
for the rural communities in which they live and serve, but it's 
important that they have the resources and regulatory stability to do 
so considering the importance of broadband to the current and future 
success and quality of life of rural America.
Broadband Is Essential Rural Infrastructure
Rural Broadband Benefits the Entire U.S.
    Rural broadband has far-reaching effects for both urban and rural 
America, creating efficiencies in health care, education, agriculture, 
energy, and commerce, and enhancing the quality of life for citizens 
across the country. A report released last year by the Hudson Institute 
in conjunction with the Foundation for Rural Service found that 
investments by rural broadband companies contributed $24.1 billion to 
the economies of the states in which they operated in 2015. Of this 
amount, $17.2 billion was the direct byproduct of the rural broadband 
companies' own operations while $6.9 billion was attributable to the 
follow-on impact of their operations.
    The Hudson study also determined that while small telcos provide a 
range of telecommunications services in rural areas, much of the 
benefit actually goes to the urban areas where the vendors, suppliers, 
and construction firms that rural telcos use are often based. Only $8.2 
billion, or 34 percent of the $24.1 billion final economic demand 
generated by rural telecom companies accrues to rural areas--the other 
66 percent or $15.9 billion accrues to the benefit of urban areas.
    Additionally, the report found that the rural broadband industry 
supported nearly 70,000 jobs nationwide in 2015 both through direct 
employment and indirect employment from the purchases of goods and 
services generated in connection with broadband deployment and 
operations. Jobs supported by economic activity created by rural 
broadband companies are shared between rural and urban areas, with 46 
percent in rural areas and 54 percent in urban areas.
Immense Benefits for Consumers and Communities
    Beyond the direct economic impacts of broadband network investment 
and operations that I have just described, 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 broadband adoption have the highest 
levels of income and education, and lower levels of unemployment and 
poverty. Access to healthcare is a critical issue for rural areas, 
where the lack of physicians, specialists, and diagnostic tools 
normally 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.
    In Hawkinsville, Georgia, rural provider ComSouth partnered with 
the county public school system to deploy telehealth equipment to 
connect the school nurses' offices with physicians at Taylor Regional 
Hospital. Working with the Georgia Partnership for Telehealth, the 
hospital, the school system, and ComSouth facilitate better health care 
for students who might not otherwise be able to be seen by a physician 
in an area where parents can ill afford to miss a half or full day for 
a doctor visit. This is a very simple but elegant telehealth solution--
the technologies (broadband and the monitoring equipment) are not new, 
but ComSouth helped put the pieces together to improve student health 
and save everyone time and money.
    Other benefits accrue in the form of distance learning and 
commerce. A shortage of teachers in many areas of rural America means 
public-school districts rely on high-speed connectivity to deliver 
interactive-video instruction for foreign language, science and music 
classes. Broadband networks also enable farmers and ranchers to use the 
Internet to employ precision agriculture tools and gain access to new 
markets.
    Retail e-commerce has benefited tremendously from sales in rural 
America as well, where consumers may lack access to local retail 
outlets, but through the availability of rural broadband networks, can 
access a variety of shopping options. According to the Hudson 
Institute, rural consumers generated $9.2 billion in online sales in 
2015 and if all rural Americans had access to broadband networks, the 
authors estimate that Internet sales would have been $1 billion higher. 
A recent Pew Study further finds that among those Americans who have 
looked for work in the last 2 years, 79 percent used online resources 
in their most recent job search and 34% say these online resources were 
the most important tool available to them.
    Indeed, job creation appears to abound when fast, high-capacity 
broadband is deployed in a rural area. In Sioux Center, Iowa, a major 
window manufacturer recently built a 260,000\2\ plant to employ 200 
people. The company considered more than 50 locations throughout the 
Midwest, but selected Sioux Center in part because the rural broadband 
provider enabled this plant to connect with its other locations 
throughout the U.S. using a sophisticated ``dual entrance'' system that 
could route traffic to alternate paths, ensuring that the main 
headquarters 250 miles away and other facilities would remain 
connected. In Cloverdale, Indiana, a rural broadband provider met with 
developers and helped bring an industrial park to its service area. 
Powered by this provider's broadband, the facility brought more than 
800 jobs to the area. In Havre, Montana, a rural broadband provider is 
partnering with a tribally-owned economic development agency to create 
a Virtual Workplace Suite and Training Center that is expected to 
create about 50 jobs. These stories are repeated throughout NTCA member 
service areas.
Consumer Demand, Fiber, and Future-Proof Networks
    Despite these unique rural challenges, small rural telcos have made 
remarkable progress in deploying advanced communications networks. 
Based in the communities they serve, these companies and cooperatives 
are committed to improving the economic and social well-being of their 
hometowns through technological progress wherever possible.
    A survey of NTCA members conducted last year found that 49 percent 
of respondents' customers are served via fiber-to-the-home (FTTH), up 
20 percent from 2013. Twenty-nine percent of customers are served via 
copper loops, 15 percent cable modem, six percent fiber-to-the-node 
(FTTN), 0.5 percent fixed wireless, and 0.1 percent satellite. Due in 
no small part to increased fiber deployment, rural customers have 
access to faster broadband speeds. Per last year's survey, 85 percent 
of NTCA members' customers can purchase broadband at speeds of 10 Mbps 
or higher. Seventy-one percent can now access speeds above 25 Mbps.
    Fifty-nine percent of Totelcom's customers have access to 10 Mbps 
or greater service. The remaining forty-one percent are served by long 
local loops that provide 1 to 6 Mbps service.
    Totelcom recently completed its first fiber-to-the-home buildout in 
the town of De Leon, Texas. Due to that and other Fiber to the Node 
construction projects used to push high speed connectivity further into 
the rural areas, 29% of Totelcom's customers now have access to speeds 
up to 1 Gigabit. We work with our customers on an individual basis to 
find solutions to their broadband needs.
    Totelcom also serves many important community anchor institutions, 
including a rural hospital and related EMS services, a low-income 
government medical clinic that serves three area towns, three school 
districts, two public libraries and nine public safety entities, 
including police and rural volunteer fire departments. In 2015, 
Totelcom built fiber to a new wind power facility, which currently 
operates 87 wind turbines that generate enough energy to power 50,000 
homes in Texas each year. Totelcom also operates our own ``genius bar'' 
in the form of the Totelcom Learning Center, open weekly to assist 
customers in a one-to-one setting in a comfortable environment. 
Customers can bring in their electronic devices and seek assistance 
with email, saving and sending pictures, and even social media.
    As we look to future data needs of our customers and our 
communities, we have taken aggressive steps to focus on the anticipated 
increase in usage, including establishing a future-proof connection to 
a statewide fiber network that provides our middle-mile transport. This 
puts our customers in a great position as data needs grow, as we have 
seen our average data usage increase over 750% within the last 5 years. 
Due to this demand, we continue to employ new technology in our fiber-
to-the-node and copper networks to meet demand, but also continue to 
deploy fiber. The speed and sustainability of deployment, however, 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 the progress discussed above, many parts of rural America 
still need better connectivity. Fifteen percent of NTCA member 
customers don't have access to even 10/1 broadband. In a country where 
the Federal Communications Commission (FCC) has indicated that 90 
percent of Americans already have affordable 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 
of NTCA's members.
    And the price of broadband for the consumer must be considered too. 
As I will discuss later in this testimony, it does no good to build a 
network if no one can afford to make effective use of the services 
offered atop it. Federal law recognizes this by mandating that the 
Federal Universal Service Fund (USF) ensure reasonably comparable 
services are available at reasonably comparable rates in rural and 
urban areas alike. Yet, in many of the rural areas served by smaller 
providers today, this mandate is simply failing to be achieved, as the 
combined effect of recent USF reforms and USF budget cuts have resulted 
in prices that are tens or even hundreds of dollars more per month for 
rural Americans than urban consumers.
    Finally, once a network is built, it is not self-effectuating, 
self-operating, or self-sustaining. Services must be activated and 
delivered atop it, maintenance must be performed when troubles arise, 
and upgrades must be made to facilities or at least electronics to 
enable services to keep pace with consumer demand and business needs. 
In addition to these ongoing operating costs, networks are hardly ever 
``paid for'' once built; rather, they are built leveraging substantial 
loans that must be repaid over a series of years or even decades.
    All of these factors make the delivery of broadband in rural 
America an ongoing effort that requires sustained commitment, rather 
than a one-time declaration of ``success'' just for the very 
preliminary act of connecting a certain number of locations. 
Particularly when one considers that even where networks are available 
many rural Americans pay far more for broadband than urban consumers, 
it becomes apparent that the job of really connecting rural America--
and, just as importantly, sustaining those connections--is far from 
complete. 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 rural markets that would not otherwise justify 
such investments and ongoing operations.
A Holistic Approach to Broadband Infrastructure
    The critical role of communications infrastructure is as necessary 
to the present and future needs of rural America as is electricity and 
other infrastructure that enables the ordinary course of a thriving 
society. The current Administration expressly recognized the importance 
of advanced communications networks by including ``telecommunications'' 
within an initial list of infrastructure priorities prior to taking 
office, followed by over 100 Members of Congress writing to the 
President urging him to include broadband within any broader 
infrastructure initiative. President Trump indeed recently pledged to 
include measures to spur rural broadband in his infrastructure 
proposals. NTCA applauds the apparent consensus already achieved with 
respect to making broadband an infrastructure priority, and welcomes 
the opportunity to participate in a further discussion on how best to 
tackle this priority.
    Before turning to specific thoughts on paths forward, it may make 
sense first to outline a few key objectives for consideration with 
respect to any broadband infrastructure plan:

   First, the plan should at least account for, if not 
        specifically leverage, what is already in place and has worked 
        before. Creating new programs from scratch is not easy, and if 
        a new broadband infrastructure initiative conflicts with 
        existing efforts, that could undermine our nation's shared 
        broadband deployment goals.

   Second, there should be meaningful expectations of those who 
        leverage any resources made available through such an 
        initiative. Looking to providers with proven track records in 
        delivering real results makes the most sense, but whomever 
        receives any support should be required to show clearly that 
        they used those resources to deliver better, more affordable 
        broadband that will satisfy consumer demand over the life of 
        the network in question.

   Third, any broadband infrastructure plan needs to be 
        carefully designed and sufficiently supported to tackle the 
        challenges presented. This is a question of both program focus 
        and program scope.

     From a focus perspective, any infrastructure plan 
            should aim toward getting broadband where it is not and 
            also sustaining it where it already is; deployment of 
            duplicative infrastructure in rural areas that are 
            uneconomic--and may not even support a single network on 
            their own--will undermine the sustainability of existing 
            network assets.

     From a scope perspective, deploying and sustaining 
            rural broadband is neither cheap nor easy; we obviously 
            need to recognize that finite resources are available to 
            address any number of priorities, but any plan that calls 
            for broadband deployment--especially in high-cost rural 
            America--should match resources to the size of the problem 
            to be solved.

   Fourth, any resources provided as part of an infrastructure 
        plan should look to get the best return on such long-term 
        investments. For networks with useful lives measured in 
        decades--especially private investments that leverage Federal 
        dollars--this should mean the deployment of infrastructure 
        capable of meeting consumer demands not only today and 
        tomorrow, but for 10 or 20 years. Putting resources toward 
        infrastructure that needs to be substantially rebuilt in only a 
        few years' time could turn out to be Federal resources wasted--
        and still risk leaving rural America behind.

   Fifth, while the economics of deployment are an essential 
        component of any infrastructure plan, a comprehensive approach 
        to promoting deployment is required. Barriers or impediments to 
        broadband deployment must also be addressed as part of any 
        holistic plan to promote and sustain infrastructure investment. 
        Put another way, the best-funded, best-planned networks may 
        never deliver fully on their promise if they are caught in 
        regulatory red tape and needless delay.
Universal Service Fund and Rural Broadband Infrastructure
    Any potential path forward with respect to broadband infrastructure 
policy should be evaluated against such criteria. As one example of a 
policy with promise, and as NTCA first outlined in a December 2016 
letter to the National Governors Association when that group was 
evaluating infrastructure priorities in collaboration with the 
Presidential transition team, strong consideration should be given to 
leveraging and supplementing the existing high-cost Federal Universal 
Service Fund (``USF'') programs under the oversight of the Federal 
Communications Commission (the ``FCC'') as a primary means of 
implementing a broadband infrastructure initiative.
    The USF programs have been in place for years, and the FCC recently 
reoriented them under a ``Connect America Fund'' (``CAF'') banner to 
promote broadband in high-cost rural areas. The high-cost USF/CAF 
programs are essential both in justifying the business case for 
broadband infrastructure investment in the first instance, and then in 
keeping rates for services affordable atop the networks once they are 
built.
    The FCC's high-cost USF programs therefore could represent a 
logical focal point for future broadband infrastructure initiatives. 
The FCC is the nation's expert agency in telecom policy, and it is 
already tackling the broadband challenges described above with respect 
to availability and affordability. Moreover, recent USF reforms adopted 
by the FCC have sought to: (1) reorient the programs toward broadband, 
(2) ensure funding is targeted to where it is needed (i.e., to places 
where the market does not enable service delivery on its own), and (3) 
define what the FCC considers an efficient level of support in each 
area.
    The reformed program rules now compel significant accountability, 
to the point that support recipients must meet specified deployment 
obligations and geocode new locations to which they deploy broadband 
leveraging USF support. The FCC is also working to finalize rules that 
make USF resources in wide swaths of rural America available for 
companies of all kinds--cable companies, traditional telcos, wireless 
Internet Service Providers, and satellite providers--to leverage in 
making the business case for rural broadband investment and service 
delivery.
    Although some implementation efforts remain ongoing and some 
questions remain outstanding, and while some minor conforming changes 
would likely be needed to implement any resources available as part of 
a new broadband infrastructure initiative, it would seem more 
straightforward to coordinate any new initiative as a supplement to 
such existing programs than to stand up an entirely new program from 
scratch and then attempt ``on the back end'' to coordinate that new 
program with ongoing efforts. Indeed, as NTCA has recently described in 
filings at the FCC and elsewhere, additional broadband infrastructure 
resources, if flowed through the high-cost USF programs, could achieve 
immediate and compelling effects given significant and troubling 
current budget shortfalls in those programs.
USF High-Cost Program Budget
    Unfortunately, these otherwise very effective programs are 
significantly under-funded to achieve their goals as designed, 
relegating tens of thousands of rural Americans to lesser broadband 
than their urban counterparts (or no broadband at all), and leaving 
millions of other rural Americans paying tens or even hundreds of 
dollars more per month than their urban counterparts do for the same 
broadband services. Such impacts undermine the benefit of building 
rural broadband infrastructure in the first instance, as well as 
hindering the value of broadband as a component of a broader economic 
development strategy. They put at serious risk the very ability of our 
nation to achieve the universal service mission articulated by Congress 
in Communications Act Section 254 for millions of rural consumers and 
businesses--and they will undermine the viability of a broadband 
infrastructure initiative if not addressed up-front.
    While the Federal Communications Commission (FCC) thankfully took 
steps to provide some level of additional funding earlier this year 
within the fixed overall USF budget for a subset of carriers that 
elected model-based High-Cost USF support, the funding was insufficient 
to achieve the goals of the model the FCC designed. An additional $110 
million per year is needed to fully fund an alternative model that the 
FCC created to promote broadband deployment. Because of this budget 
shortfall, 71,000 rural locations will receive lower-speed broadband, 
and nearly 50,000 may see no broadband investment at all.
    And the problem is even more dire for those small carrier 
recipients of High-Cost USF that could or did not elect model support. 
The High-Cost USF has been locked at the same budget level overall 
since 2011, and a lower budget target first adopted in 2011 for smaller 
carriers within that overall budget total is now being enforced via a 
strict budget control mechanism that threatens to wreak havoc on 
consumer rates and network investment.
    Under this tightly constrained USF budget, over the next 12 months, 
small rural network operators will be denied recovery of $173 million 
in actual costs for private broadband network investments that these 
carriers have already made. In other words, small rural network 
operators and the customers they serve will need to come up somehow 
with $173 million to pay for broadband investments that the USF program 
would have supported just a year ago--and that the rules would still 
provide for recovery today via USF had it not been for arbitrary 
``haircuts'' made to enforce an artificial budget target adopted 6 
years ago when the program was oriented toward voice services only.
Real World Impacts of USF High Cost Budget Cuts
    Because of these support cuts, rural network operators are already 
increasing rural broadband rates for consumers and cutting back on 
future infrastructure investments. NTCA reports, for example, that one 
member telco has indicated it cannot justify seeking a $26 million loan 
to build high-speed broadband infrastructure due to the USF cuts; a 
project that would have delivered approximately 1,000 miles of fiber to 
over 7,000 rural customers is now on indefinite hold. Similarly, due to 
the USF budget cuts, a cooperative in the upper Midwest will put 
several 2018 new construction projects on hold worth several million 
dollars; these projects would have upgraded or delivered broadband for 
the first time to approximately 500 rural consumers and businesses, but 
the company now needs to scale back future investment because the USF 
cuts are taking away millions of dollars that were counted upon for 
investments already made in the past. In Mississippi, a small rural 
provider has been forced to hold off indefinitely on plans for future 
investments due to the USF budget concerns, instead making minimal 
investments just to keep existing network plant operational rather than 
upgrading that network for higher-speed broadband that would help those 
areas thrive. In Nebraska, a small company with only 12 employees that 
just recently completed a significant fiber-to-the-home project has 
declined to fill four open positions--effectively cutting its workforce 
by 25%--because of concerns with declining USF support and its impact 
on the ability to pay for the network construction already completed. 
And in Iowa, a small carrier has not been able to lower its prices for 
standalone broadband because the USF budget cuts are effectively wiping 
out any support for such connections, despite the intention of the 
reforms and the repeated calls for such a fix from Congress.
    All of these effects translate to one conclusion--the USF budget 
cut is hindering recovery of prior private investments, deterring 
future investments, driving up consumer prices, and hurting job 
creation. These are all directly contrary to the stated goal of a 
broadband infrastructure initiative, and highlight how predictable and 
sufficient USF is a condition precedent to the success of any such 
initiative.
Unpredictability of USF High Cost Support
    Perhaps the most troubling aspect of this budget control is that it 
not only cuts support that the rules indicate should be available, but 
it does so in unpredictable ways. For the last 4 months of last year, 
the budget control was 4.5% on average; for the first 6 months of this 
year, it rose to 9.1% on average. Now, as of July 1, the budget control 
will on average reduce USF support by 12.3% for the next 12 months. As 
if the support losses for investments already made were not bad enough, 
this lack of predictability makes it even harder to justify building 
going forward.
    If a company does not know whether the budget control will be 5% or 
10% or 20% next year--and given the growth trends, all we can guess is 
that the budget control will grow--that company cannot make informed 
decisions to invest in capital-intensive broadband infrastructure. If 
it does not get fixed soon, we will be looking at years of lost rural 
broadband investment to the detriment of millions of rural Americans. 
Rather than creating new programs from scratch or taking flyers on 
untested theories of broadband deployment, why not use a program that 
has a proven track record and has just been improved in recent years? 
Why starve that program's budget while throwing dollars at new 
initiatives that might not work or, worse still, might conflict with 
this proven program? If rural broadband is really a priority, good 
public policy would indicate we should be building upon what has worked 
to promote it, rather than neglecting it.
Congressional Support for Addressing High Cost Budget
    It's not just NTCA that is concerned about the USF budget 
shortfall. In May 2017, nearly 170 Members of Congress--including 22 
Members of the House Agriculture Committee--wrote to the FCC expressing 
serious concern about how the USF budget shortfalls will undermine 
private infrastructure investment and consumer rates. This letter 
demonstrated the shared bipartisan interest in prompt action on this 
issue, and a window of opportunity exists. We are hopeful that with 
continued Congressional interest and leadership we can see these issues 
addressed, and the promise of last year's USF reforms can be realized 
by the millions of rural consumers served by smaller rural network 
operators.
Benefits of Shoring Up USF High Cost Program
    Providing additional resources to allow the FCC's cost models and 
competitive bidding programs to function as designed could yield 
measurably improved delivery of broadband to tens of thousands of 
additional locations at higher speeds, and help deliver service to many 
more who currently face the prospect of no broadband at all. Industry 
estimates show that 71,000 more households would be the beneficiaries 
of better broadband infrastructure if the FCC's cost model were funded 
as designed, while 47,000 households are currently at risk of receiving 
no broadband at all due to a lack of sufficient support.
    Meanwhile, in other rural areas, additional resources could 
mitigate the fact that millions of rural consumers are still forced to 
pay tens or even hundreds of dollars more per month for standalone 
broadband than their counterparts in urban areas--despite the fact that 
hundreds of Members of Congress wrote to the FCC in 2014 and again in 
2015 expressly asking for this concern to be resolved.
    A recent survey of NTCA member companies revealed that the average 
respondent estimates charging $126 per month for standalone broadband 
under the budget control--far more than most rural consumers could 
afford. Further, the average response predicted charging only $70 per 
month for standalone broadband if the budget control were not in place 
and carriers received support for investments under program rules. 
These numbers reveal that the budget control is preventing the High 
Cost program from helping rural providers offer reasonably comparable 
services and rates as called for in the Communications Act.
    From an infrastructure perspective specifically, it is far harder 
to justify future investments in broadband networks when consumers face 
prices such as these and cannot reasonably afford the services once 
delivered. These are concerns common to many rural consumers, and they 
are particularly acute of course in areas with significant rural 
poverty levels and Tribal areas.
    The FCC's various high-cost USF programs--both the CAF II 
initiative and the programs that enable service delivery in rural areas 
served by smaller businesses--therefore offer a ready-made platform 
that, with additional resources but with very little additional ``heavy 
lifting'' or process, could ``hit the ground running'' and yield 
immediate, measurable benefits for rural consumers.
    Other options for implementing a broadband infrastructure 
initiative could include alternative grant or capital infusion programs 
through other agencies, comparable to what several states have used to 
address ``market failure areas''--places where the business case for 
investment is difficult, if not impossible, to make without additional 
resources. At the same time, creating such programs would require more 
administrative effort than leveraging existing programs, and the rules 
for any such new program must still be informed by the objectives I 
first articulated above and any ``lessons learned'' from similar prior 
efforts at the Federal and state levels. For example, as a matter of 
program integrity and to ensure the most efficient possible use of 
resources, it would be necessary to ensure such a capital infusion 
program is carefully coordinated with the existing USF programs, among 
other things. And although some have alternatively touted tax 
incentives as offering promise--and while there are certainly areas in 
which such incentives might help--such measures are unlikely to make a 
material impact in most rural areas where distance and density make it 
difficult, if not impossible, to justify a business case for 
infrastructure investment to start.
Rural Utilities Service Telecom Financing
The Strength of RUS Experience
    Deploying a communications network in a rural area requires a large 
capital outlay due to the challenges of distance and terrain. The 
number of rural network users (as compared with more densely-populated 
urban areas) is too small to pay the costs of deployment and ongoing 
operations through customer charges. As Congress considers the details 
of legislation to promote infrastructure deployment, it's important to 
note that USDA's Rural Utilities Service (RUS) has long played a 
crucial role in addressing rural broadband challenges through its 
telecommunications programs that finance network upgrades and 
deployment in rural areas.
    Since the early 1990s, the RUS telecom programs have financed 
advanced network plant at a net profit for taxpayers and helped deploy 
state-of-the-art networks to rural Americans left behind by providers 
unable or unwilling to serve low-population-density markets. With rare 
exception, RUS, CoBank and RTFC are the primary lenders that small 
rural providers can turn to for outside financing. Not only does RUS 
help rural America remain connected, its Broadband Loan & Guarantees 
program and traditional Telecommunication Infrastructure Loan & 
Guarantees program make loans that must be paid back with interest--
creating a win/win situation for rural broadband consumers and American 
taxpayers.
RUS and USF Work in Concert
    While RUS lending programs finance the substantial up-front costs 
of network deployment, the USF High Cost Fund helps make the business 
case for construction and sustains ongoing operations at affordable 
rates. More specifically, USF by law aims to ensure ``reasonably 
comparable'' services are available at ``reasonably comparable'' rates. 
Not to be confused or conflated, RUS capital and ongoing USF support 
serve distinctly important, but complementary rather than redundant, 
purposes in furthering rural broadband deployment. The availability of 
USF--the ability to make sure that consumers can actually afford to buy 
services on the networks once built--is so essential to the RUS telecom 
loan calculus that uncertainty in the Federal USF program in recent 
years has hindered some of the success, momentum, and economic 
development otherwise and previously enabled by the RUS 
telecommunications programs.
Farm Bill Considerations
    Apart from infrastructure legislation, the pending expiration of 
the current farm bill affords opportunity to review the farm bill 
Broadband Loans & Loan Guarantees program that was first authorized in 
the 2002 Farm Bill. Each subsequent farm bill has made extensive 
reforms to the program with the goal of greater accountability, 
efficiency, and effectiveness. Two rounds of program reforms in less 
than 15 years--the first of which was significantly delayed by the ARRA 
BIP program's use of the Broadband Loan Program mechanism--means that 
the Broadband Loan Program has been almost continuously ``under 
construction'' since its inception, rendering the program inaccessible 
to borrowers for long periods of time. While the program isn't perfect, 
it may be helpful to simply let borrowers use the Broadband Loan 
Program in current form and become familiar with it for a few years 
before undertaking another extensive reform effort.
    NTCA urges the Committee to continue to support the RUS Broadband 
Loan program that is subjected to the farm bill reauthorization process 
at or above current funding levels as you formulate recommendations. 
Furthermore, we urge the Committee to continue its long history of 
support for the Telecommunications Infrastructure and Community Connect 
programs that are also vital to the ongoing deployment and maintenance 
of advanced communications infrastructure throughout rural America.
    The Broadband Opportunity Council (BOC), which includes USDA as a 
member, released a report in September 2015 that recommended 
authorizing more USDA programs to make grants and loans for broadband 
infrastructure. The BOC's January 2017 progress report affirmed this 
recommendation. While more resources for rural broadband deployment are 
needed, involving more government entities and programs in broadband 
financing should be undertaken cautiously to avoid duplicating efforts 
and undermining a coherent, cohesive approach to financing and then 
sustaining rural broadband networks.
Infrastructure Investment and Barriers to Deployment
    Infrastructure investment depends not only on financing but also on 
prompt acquisition or receipt of permissions to build networks. 
Barriers or impediments to broadband deployment must also be addressed 
as part of any holistic plan to promote and sustain infrastructure 
investment. Such roadblocks, delays, and increased costs are 
particularly problematic for NTCA members, each of which is a small 
business that operates only in rural areas where construction projects 
must range across wide swaths of land.
    Permitting and access, particularly with respect to Federal lands, 
can present a significant impediment to the deployment of rural 
broadband infrastructure. Navigating Byzantine application and review 
processes within individual Federal land-managing and property-managing 
agencies can be burdensome for any network provider, but particularly 
the smaller network operators that serve the most rural 40 percent of 
the U.S. landmass. The review procedures can take substantial amounts 
of time, undermining the ability to plan for and deploy broadband 
infrastructure--especially in those areas of the country with shorter 
construction seasons due to weather.
    The lack of coordination and standardization in application and 
approval processes across Federal agencies further complicates the 
deployment of broadband infrastructure. While not specifically 
regarding Federal lands, the terms of local franchises, pole 
attachments, and railroad crossings can also create substantial costs 
and concerns in deploying broadband infrastructure. Government at all 
levels--state and local, counties, tribal lands, and Federal--should 
work collaboratively to harmonize their process to expedite placement 
of facilities.
    These issues significantly affect broadband network operators and 
consumers. In Wyoming, the Bureau of Land Management (BLM) state office 
adopted a unique bonding policy and application process that appeared 
to equate deployment of telecom facilities with installation of 
pipelines transporting hazardous substances, dramatically increasing 
the application burdens and potential costs. In California, the U.S. 
Forest Service waited months to begin work on environmental reports for 
a small rural provider's broadband deployment and then refused a 
temporary construction permit, costing the carrier most of the 2017 
construction season and delaying the project into next year. In Utah, 
carriers have faced construction delays due to inter-agency permitting 
disagreements between the BLM and the U.S. Department of 
Transportation. From my experience at Totelcom, I can attest that when 
building new fixed wireless towers for deployment, the cost of the 
various permits and approvals normally runs higher than the actual 
construction of the tower.
    We have seen much agreement for some time now on solutions to 
simplifying the administrative barriers to deployment. The 
standardization of application, fee and approval policies and 
procedures across Federal land-managing and property-managing agencies 
to the extent possible should be a high priority. The Senate MOBILE NOW 
(S. 19) bill contains changes that should be considered for near-term 
implementation on Federal lands, such as improved ``shot-clock'' 
measures, while the FAST Act (P.L. 114-94) included sound reforms that 
should be extended to smaller projects as well. Such actions would 
enable smaller operators to remain focused on providing high-quality 
broadband service to their customers rather than dealing with onerous 
regulations.
    FCC Chairman Ajit Pai's ``Digital Empowerment Agenda'' contains 
many thoughtful suggestions on how ``to make it easier for [Internet 
Service Providers] to build, maintain, and upgrade their networks,'' 
ranging from greater scrutiny of local franchising regulations to 
ensuring reasonableness in the costs for pole attachments. Chairman 
Pai's formation of a Broadband Deployment Advisory Committee also 
represents a meaningful step in evaluating and taking real action on 
these issues. Continued progress in consideration and implementation of 
such ideas must be seen as an essential component of a holistic 
broadband infrastructure initiative.
    Finally, though rural telcos have long enjoyed productive working 
relationships with RUS, there is always room for improvement. Small 
carriers typically spend about 2 years and about $250,000 securing loan 
approval from RUS. Some providers would love to take advantage of RUS's 
low rates, but the procedural barriers to borrowing from RUS send them 
to private lenders that offer higher rates. RUS could make its 
processes more user friendly and free up resources for broadband 
deployment with loan sequencing reforms that would allow borrowers to 
delay costly reviews until a loan is approved, but before funding is 
released.
Conclusion
    Robust broadband infrastructure is crucial to the current and 
future success of rural America. But the characteristics that enable 
the unique beauty and enterprise of rural America make it very 
expensive to deploy advanced communications services there. Our 
nation's small, rural telecom providers are deploying faster broadband 
throughout their service areas, but no carrier--regardless of size--can 
deliver high-speed, high-capacity broadband in rural America without 
the ability to justify and then recover the initial and ongoing costs 
of sustaining infrastructure investment in high-cost areas.
    A legislative infrastructure initiative offers a unique opportunity 
to provide the resources needed to make these investments, and 
mechanisms that ensure efficiency and accountability in the expenditure 
of funds 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 infrastructure 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.

    The Chairman. Thank you, Ms. Otwell.
    Mr. Macmanus for 5 minutes.

         STATEMENT OF BRIAN E. MACMANUS, P.E., GENERAL
              MANAGER, EAST RIO HONDO WATER SUPPLY
  CORPORATION, RIO HONDO, TX; ON BEHALF OF TEXAS RURAL WATER 
               ASSOCIATION; NATIONAL RURAL WATER
                          ASSOCIATION

    Mr. Macmanus. Good morning, Chairman Conaway, Ranking 
Member Peterson, and Members of the Committee. Vice Ranking 
Member Vela, thank you for your kind introduction.
    It is an honor to testify before you on the drinking water 
and wastewater infrastructure needs and concerns for rural 
America. I am Brian Macmanus, and I serve as the General 
Manager of the East Rio Hondo Water Supply Corporation in the 
Rio Grande valley of Texas.
    In 1979, East Rio Hondo began construction of its potable 
water system with our first USDA Farmers Home Administration 
loan of $1,100,800 to serve 975 customers. These customers were 
farmers, ranchers, rural, and colonia residents who were 
utilizing a mix of contaminated and non-potable water sources.
    The enormous cost to start a water system over such vast 
rural areas was not a possibility without the grants, low-
interest loans, and 40 year terms that USDA funding made 
possible.
    The dollar value of the current infrastructure needs for 
water and wastewater in rural America can be tied directly to 
the current USDA rural water application backlog of $2.5 
billion for almost 1,000 pending applications.
    East Rio Hondo currently has an application pending for 
approximately $4.5 million for a new, 1 million gallon elevated 
water storage tank. This backlog truly represents my utility 
and rural and small community water infrastructure projects 
throughout the country.
    Why does rural America water and wastewater infrastructure 
matter to the average American? It is really simple. First, the 
people living in rural America produce the food, fuel, and 
fiber products for our entire country, and depend on safe and 
clean water to maintain their health and their community's 
economy. Second, all American citizens depend on safe drinking 
water in rural America for the safety of their food supply as 
it takes clean, potable water to wash and process the fruits, 
vegetables, and meats at packaging facilities in rural America. 
Third, the wastewater treated and discharged by rural American 
communities is likely the drinking water source for the next 
community downstream. Although small drinking water systems 
outnumber large water systems ten to one, they still have a 
minority of the country's population, often at a much higher 
cost per household.
    As a prime example, East Rio Hondo has constructed a UV 
light disinfection treatment process at our surface water 
treatment plant to inactivate cryptosporidium, which was 
detected in our raw water source. This project cost East Rio 
Hondo approximately $1.5 million in capital construction, or 
$191 for each and every connection in our system.
    Lack of economy of scale is also demonstrated by East Rio 
Hondo serving 7,850 connections with 466 miles of pipe, 
equivalent to 16.8 connections per mile. Much larger urban 
utilities can have hundreds of equivalent connections per mile 
of pipe, and more easily spread infrastructure cost over their 
larger customer base. USDA funding is what continues to make 
growth and compliance projects truly affordable to rural 
America.
    In 2017, there are still rural communities in the country 
that do not have access to safe drinking water or sanitation 
due to the lack of population density or lack of funding.
    My associate, Finley Barnett, General Manager of S.U.N. 
Water Supply Corporation in Merkel, Texas, is seeking USDA 
funding for the expansion of his system to serve 300 rural 
residents whose wells have gone dry.
    My entire rural neighborhood hauled bottled drinking water 
to our homes due to private wells with salty ground water until 
2009 when East Rio Hondo laid a new pipeline on our rural road.
    My next-farm-over neighbors, Richard and Cheryl Johnson, 
were ecstatic to have safe potable water from East Rio Hondo as 
they had both been previously hospitalized due to fecal 
contamination of their private well from their septic system.
    A very crucial point to take home today is that rural 
America is being overlooked in the funding as currently 
proposed to partially occur through the U.S. EPA's state 
revolving fund process.
    SRF dollars have historically been absorbed by large 
metropolitan water utilities. East Rio Hondo's experience in 
applying for DWSRF funding is that our applications 
historically ranked too low, and have largely been 
unsuccessful. East Rio Hondo's and NRWA's preferred funding 
avenue for water and wastewater infrastructure projects is the 
USDA Rural Development Direct Loan and Grant Program.
    NRWA urges Congress to consider the following rural water 
and wastewater infrastructure concepts: First, provide a 
minimum set-aside for small and rural communities; second, 
provide grants not just loans; third, contract qualified 
private nonprofits to service the USDA water and wastewater 
loan and grant programs. The current checklist for a USDA loan 
and grant project requires an applicant and their consultants 
to complete 90 separate items before beginning construction.
    This checklist is included in Attachment C of my written 
testimony.
    NRWA would like to thank the Rebuild Rural Coalition for 
organizing this effort today. Thank you, Chairman Conaway, 
Ranking Member Peterson, Vice Ranking Member Vela, and Members 
of the Committee for allowing me to testify.
    I would be happy to answer any questions that you may have.
    [The prepared statement of Mr. Macmanus follows:]

 Prepared Statement of Brian E. Macmanus, P.E., General Manager, East 
 Rio Hondo Water Supply Corporation, Rio Hondo, TX; on Behalf of Texas 
       Rural Water Association; National Rural Water Association
    Good morning Chairman Conaway, Ranking Member Peterson, and Members 
of the Committee. It is an honor to testify before you on the drinking 
water and wastewater infrastructure needs and concerns for rural 
America. I am proud to represent the many rural water and wastewater 
utility systems across America in sincerely thanking this Committee for 
your long support of the Department of Agriculture's (USDA) Rural 
Development water programs that have lifted up the quality of life for 
so many of the residents in my home state of Texas and throughout this 
great nation.
    I am Brian Macmanus and I serve as the General Manager of the East 
Rio Hondo Water Supply Corporation (ERHWSC). I am a licensed engineer 
and water and wastewater treatment operator in the State of Texas. 
ERHWSC was incorporated in 1972 and began construction of our first 
pipelines in 1979 when ERHWSC closed our first Farmers Home 
Administration loan of $1,100,800 in order to serve 975 customers. 
Since our inception, we have expanded our water service and started 
wastewater service using additional funding assistance from the United 
States Department of Agriculture (USDA) (see Attachment B). ERHWSC now 
directly serves approximately 24,000 residents in Cameron and Willacy 
Counties, and wholesales potable water to an additional 1,816 people 
through the U.S. Immigration Customs Enforcement, Port Isabel Detention 
Center, the Town of Indian Lake, and to a portion of Military Highway 
Water Supply Corporation, all within a 407\2\ mile service area.
    I come before this Committee representing the Texas Rural Water 
Association which is a state affiliate of the National Rural Water 
Association. The National Rural Water Association (NRWA) is a water 
utility organization with over 31,000 community members. Our member 
communities have the very important public responsibility of complying 
with all applicable regulations and for supplying the public with safe 
drinking water and sanitation every second of every day. Most all water 
supplies in the United States are small; 94% of the country's 51,651 
drinking water supplies serve communities with fewer than 10,000 
persons, and 80% of the country's 16,255 wastewater supplies serve 
fewer than 10,000 persons. In my home state of Texas, the national 
trend continues as there are presently 4,310 community water systems 
that have a population under 10,000 people, representing 93% of the 
water systems in the state.
    I am here today to testify on the water and wastewater 
infrastructure needs of rural America. I believe it is important in my 
testimony today that I identify to the average American who lives in an 
urban or suburban setting why it is important to invest our United 
States Federal budget dollars in the water and wastewater 
infrastructure of rural America. I know that the Members of this 
Committee are very familiar with the fact that our country's food, 
fuel, and fiber come primarily from rural America. The people in 
communities producing the food, fuel, and fiber depend on safe and 
clean water to maintain their health and their community's economy, no 
differently that most Americans. Let's take it a step further though on 
why the average American citizen should care about investing in safe 
drinking water in rural America.
    The United States currently enjoys the safest most affordable food 
supply of any industrialized country in the modern world. This is due, 
in a large part, to the efforts of past and present Members of this 
Committee and we wish to thank you for this tremendous achievement. A 
huge part of this achievement was past investment in the rural water 
infrastructure to produce safe drinking water and properly treated 
wastewater in rural America. Imagine consuming fruits and vegetables 
that were processed at packaging facilities in rural America, typically 
not far from where they are harvested, that were washed in water from 
an unsafe potable water supply. The potential resulting food borne 
outbreak could endanger the health and lives of many people in the more 
populated centers of our country. Fortunately, each of us can follow 
the USDA My Plate nutrition guidelines and make half of our plate fruit 
and vegetables, and do so in confidence because our fruits and 
vegetables were washed with clean potable water in rural American 
packaging facilities and again at our homes to prevent the spread of 
parasitic organisms such as E. coli. This clean potable water used to 
wash them did not show up on its own. In rural America, it was likely 
provided via USDA water and wastewater loans and grants.
    There is a saying in the water and wastewater industry, that a 
certain product rolls down hill. This stands true for any community in 
America, including rural communities, that discharge treated wastewater 
into our rivers and streams. Their wastewater is likely the drinking 
water source for the next community downstream, which could easily be 
an urban center. Sufficient wastewater treatment is critical to 
maintain the safety of the drinking water source. I hope I have your 
attention on the critical need to sustain the infrastructure for our 
water and wastewater systems in rural America.
    One other point which I will cover in more detail later in this 
testimony is that suburban America is now growing into what today is 
rural America. We have all seen the subdivisions occurring in areas 
that were previously farms, ranches, and forests. Growing rural America 
on the outskirts of population centers is a key component of the 
American economy growing again, and having water and wastewater 
infrastructure available to handle new growth is critical for the 
financial viability of these potential developments.
    When thinking about national water infrastructure proposals, I ask 
you to reflect on my previous statement of facts that most water 
utilities are small. These small systems have more difficulty affording 
public water service due to lack of population density and lack of 
economies of scale. My utility, ERHWSC, is a prime example of this lack 
of economy of scale with approximately 7,850 connections being served 
by 466 miles of pipe which equates to 16.8 connections per mile of 
pipe. This concentration is considered high for some rural systems, yet 
large urban centers can have hundreds of equivalent connections per 
mile of pipe, depending upon their density.
    The small community paradox in Federal water policy is that while 
we supply water to a minority of the country's population, we have much 
more difficulty providing safe, affordable drinking water and 
sanitation due to limited resources and technical expertise. Also, 
while we have fewer resources, we are regulated in the exact same 
manner as a large community; we outnumber large communities by a 
magnitude of ten-fold, and Federal compliance and water service is 
often a much higher cost per household. As a prime example of this, 
ERHWSC has constructed an ultra-violet (UV) light disinfection 
treatment process at our surface water treatment plant, to maintain 
compliance with US EPA log removal requirements for the parasite 
cryptosporidium, which was detected in our raw water source. This 
project cost ERHWSC approximately $1.5 million in capital construction, 
or $191 for each and every member (connection) in our system. Much 
larger urban utilities would be able to more affordably spread this 
cost over a much larger customer base. USDA funding made this project 
affordable for the rate payers in ERHWSC.
    A great man named Billie Joe Simpson was the founder of ERHWSC and 
my predecessor until his passing in 2013. He told me shortly before his 
death that he could not believe what ERHWSC had grown into and what an 
impact it had created upon the local rural economy. ERHWSC was truly a 
rural community of farmers, ranchers, rural residents, and colonia 
residents when Billie Joe and his wife Martha Ann applied to USDA for 
our first project. The enormous cost to start a water system over such 
vast rural areas was not a possibility without the grants, low interest 
loans, and long loan terms of 40 years that USDA funding made possible. 
This story of small beginnings and huge results repeats itself, 
although with different demographics, over and over again throughout 
our great country. The continued development of growing rural America 
is a strong stimulus to our nation's economy. The USDA rural water and 
wastewater loan and grant program is what continues to make growth and 
compliance projects like ERHWSC's UV light disinfection system truly 
affordable to rural America.
    The dollar value of the current infrastructure needs for water and 
wastewater in rural America can be tied directly to the USDA rural 
water application backlog of $2.5 billion with 995 pending 
applications. I can tell you from first hand discussions with other 
water and wastewater utility managers in Texas, this number is 
artificially low because many utilities fall into noncompliance with 
regulatory requirements while waiting, sometimes for years, for closure 
on the funding process. As you can see in Attachment B, ERHWSC 
currently has an application pending for $4,454,238.00 for a new 
1,000,000 gallon elevated water storage tank. The backlog of pending 
applications truly represents my utility and rural and small community 
water infrastructure projects throughout the country that can't access 
alternative affordable sources of funding.
    In 2017, there are rural communities in the country that still do 
not have access to safe drinking water or sanitation due to the lack of 
population density or lack of funding--many in rural Texas. Just this 
past week, my colleague Finley Barnett, the General Manager of S.U.N. 
Water Supply Corporation in Merkel, Texas, told me how dependent he was 
on affordable USDA funding for the expansion of his system to serve 300 
rural residents whose wells had recently gone dry. Each day, there are 
numerous rural families driving their pick-up trucks to central filling 
stations to fill up large plastic storage containers to ``haul'' the 
water back to their remote and isolated homes, farms, and ranches. 
Included with my written testimony are just a few of many recent news 
profiles of communities that lack basic drinking water access 
(Attachment A). My water utility and our rural water association's 
mission has been to expand water service to these communities and rural 
areas--often for the first time. The delivery of drinking water and 
sanitation to rural America has been one of the great public health 
accomplishments of the second half of the twenty-first century.
    Over the last 73 years, through the combined financial assistance 
of the U.S. Department of Agriculture's rural water grant and loan 
initiative (exceeding $50 billion), the country has made great 
advancements in the standard of living in rural America. Millions of 
rural Americans now have access to safe potable drinking water that 
their parents did not have. I personally hauled bottled drinking water 
to my home in 5 gallon bottles due to salty groundwater until 2009 when 
ERHWSC laid a new pipeline to me and my neighbors on our rural road. My 
next-farm-over neighbors, Richard and Cheryl Johnson, were ecstatic to 
have safe potable water from ERHWSC as they had both been previously 
hospitalized with gastrointestinal disease due to fecal contamination 
of their well from their septic tank. Thousands of rural communities 
now have public sanitary wastewater systems that have allowed for 
elimination of millions of questionable septic tanks, cess-pools, 
straight pipes, or worse. This rural water infrastructure development 
has been the engine of economic development in rural communities, and 
it has provided for dramatic improvements to the environment and public 
health.
    As an example of the key role that USDA rural water grant and loan 
initiative plays in the development of rural systems and the economy of 
communities they serve, please reference the loan and grant portfolio 
which ERHWSC has generated since its beginnings (see Attachment B). As 
noted above, without the total grant funds and affordable loans 
provided to ERHWSC via USDA funding, rural Cameron and Willacy Counties 
would never have seen the development of a potable water system. The 
farmers, ranchers, rural and colonia residents in ERHWSC's service area 
were utilizing high iron and brackish, non-potable wells, shallow wells 
contaminated by fecal coliform (like Richard and Cheryl Johnson), or 
raw or partially treated Rio Grande River water contaminated with 
wastewater discharges from upstream in Mexico. These south Texans, with 
at times completely inadequate water infrastructure, would never have 
been able to afford a potable water system without the collective 
community efforts made possible via USDA funding. USDA funds for water 
and wastewater infrastructure are critical to the affordability of 
continuing this life-critical service.
    Rural America faces a significant dichotomy today. Some rural areas 
and particularly the Great Plains are depopulating because of changing 
factors in predominantly agriculture economies where farms are larger 
and farmers are fewer. A decreasing customer base makes financing 
projects mandated by continually growing regulations a difficult if not 
unaffordable task. In Texas, many towns and counties in far west Texas 
struggle to overcome depopulation. Other rural communities are 
challenged with areas of rapid growth where populations from nearby 
urban and suburban growth centers are moving to locales of what used to 
be farms, forests, and ranches. It seems at times that everyone wants a 
little piece of the calmness of the country in rural America after the 
wear and tear of work in suburban/urban America. Rural system 
infrastructure that is prepared and capable of growing affordably with 
new arrivals from neighboring population centers is critical for this 
stimulus in our national economy to occur. In Texas this too is 
occurring in the area called the Texas Triangle between Houston, 
Dallas-Fort Worth, and San Antonio. My good friend Chris Boyd, General 
Manager of Mustang Special Utility District, struggles to keep up with 
capital infrastructure in Collin County, Texas, 50 miles north of Fort 
Worth, in an area that is quickly changing from farms to subdivisions. 
Maintaining affordable water and wastewater rates via USDA capital 
project funding is critical for both spectrums of our rural American 
economy.
    Just how much water and wastewater infrastructure demand is there 
today? Every 4 years, EPA works with states and community water systems 
to estimate the drinking water state revolving fund-eligible needs of 
community drinking water systems by state. In 2011, EPA published their 
fifth national assessment of public water system infrastructure needs 
and it showed a total twenty year capital improvement need of $384.2 
billion. This estimate represents infrastructure projects necessary 
from January 1, 2011, through December 31, 2030, or an average of 
$19.21 billion per year, for water systems to continue to provide safe 
drinking water to the public. EPA's Clean Watersheds Needs Survey 
(CWNS) is an assessment of capital investment needed nationwide for 
publicly-owned wastewater collection and treatment facilities to meet 
the water quality goals of the Clean Water Act. These capital 
investment needs are reported periodically to Congress. EPA's 2012 CWNS 
Report was the sixteenth survey since the enactment of the CWA in 1972 
which requires the Report. The total capital wastewater and collection 
needs for the nation are $245.8 billion over the next 5 years, or an 
average of $49.16 billion per year as of January 1, 2012. This includes 
capital needs for publicly-owned wastewater pipes and treatment 
facilities ($197.8 billion), and combined sewer overflow (CSO) 
corrections ($48.0 billion).
    President Trump has made improving the country's infrastructure, 
including water and wastewater, a priority. NRWA is extremely grateful 
for this prioritization and excited about the potential for rural 
America. However, despite my testimony to the critical nature of this 
funding in rural America, my main point here today is to tell you that 
rural and small town America is being overlooked in the proposed 
process to develop the funds for new water and wastewater 
infrastructure initiatives. The funding as currently proposed to 
partially occur through the US EPA's State Revolving Loan process will 
by-pass rural America and be absorbed by large metropolitan water 
developments.
    Most of the funding for rural American's water and wastewater 
development has come from the U.S. Department of Agriculture's (USDA) 
rural water grant and loan initiative because it targets communities 
who are most in need based on economics and water quality. Most of the 
EPA water infrastructure funding is dedicated to larger communities 
because EPA does not require a similar needs-based criteria.

   Approximately 77 percent of Clean Water State Revolving Fund 
        (CWSRF) funding for Fiscal Year 2015 were awarded to 
        communities with a population over 10,000 (EPA Clean Water 
        State Revolving Fund Annual Review (https://www.epa.gov/sites/
        production/files/2016-05/documents/2015_annual_report_
        3-14-16.pdf)).

      Approximately 72 percent of Drinking Water State Revolving Fund 
        (DWSRF) funding for Fiscal Year 2016 were awarded to 
        communities with a population over 10,000 (EPA Drinking Water 
        State Revolving Fund National Information Management System 
        Reports (https://www.epa.gov/drinkingwatersrf/drinking-water-
        state-revolving-fund-national-information-management-system-
        reports)).

    My water system's experience in applying for DWSRF funding is that 
ERHWSC's applications have historically been ranked insufficiently to 
receive funding. The normal annual funding is usually consumed by the 
top projects ranked at the very top of a list of hundreds of applicants 
in Texas alone, and large municipal projects take very large 
percentages of the funding. Although ERHWSC has received DWSRF funding 
on one project recently, it was only due to ranking in the top ten in 
the state, due to potential emergency water outages brought on by 
drought conditions. All other ERHWSC applications for DWSRF funding 
have not scored high enough on the state ranking to receive funding. 
ERHWSC's preferred funding avenue for water and wastewater 
infrastructure projects is the USDA-Rural Development Direct Loan and 
Grant Program.
    If forced to choose, NRWA would prefer the USDA water and 
wastewater loan and grant program over DWSRF, although both can provide 
significant benefit. The USDA water and wastewater loan and grant 
program has been the historical solution for small and rural water 
infrastructure needs and is largely responsible for the success of 
delivering water and sanitation to almost every corner of rural 
America. Since Fiscal Year 1940 USDA's Water Program has made 96,724 
loans and grants totaling $54.6 billion. This is perhaps the most 
discriminating assessment of need because it only measures rural and 
small community projects that meet USDA strict criterion for need-based 
high cost per household and local economic conditions.
    To make sure any water infrastructure initiative helps rural and 
small town America, NRWA urges Congress to consider the following 
global policy principles--and observations--based on their merit:

  1.  A minimum portion of the infrastructure initiative funds should 
            be specifically set-aside for small and rural communities, 
            regardless of how the funding is established. This ensures 
            that small and rural communities are not left out of the 
            solution.

  2.  Allow infrastructure funds some ability to provide grants--not 
            just loans. Commonly, low income communities do not have 
            the ability to pay back a loan, even with very low interest 
            rates, and require some portion of grant or principal 
            forgiveness funding to make a project affordable to the 
            ratepayers.

  3.  A small percentage of water funding programs should be set-aside 
            for experienced nonprofit entities to provide specific 
            technical assistance in completing the applications for 
            water and wastewater infrastructure funding. Small 
            communities often lack the technical and administrative 
            resources to achieve compliance and complete the necessary 
            applications to access the Federal funding programs. 
            Providing these small communities and the funding agency 
            with shared technical resources can expedite loan closing 
            and construction of facilities. This assistance can save 
            thousands of dollars for the community and help the systems 
            maintain long-term compliance with EPA rules by expediting 
            the loan process.

  4.  Federal water funding programs should be used to ameliorate 
            compliance with Federal unfunded mandates or standards. 
            Currently, the Safe Drinking Water Act and Clean Water Act 
            are creating a tremendous financial burden on small and 
            rural communities. Federal compliance costs for the Federal 
            drinking water rules, many for naturally occurring elements 
            in groundwater, can be exorbitant. The U.S. Environmental 
            Protection Agency's (EPA) most recent noncompliance 
            reporting data, via the Government Performance and Results 
            Act, shows that for drinking water regulations 9,949 
            communities are in noncompliance; most all of these 
            communities are simply struggling to achieve Federal 
            compliance and avoid fines.

       EPA lists 444 communities in violation of the arsenic 
            standard; all have a
              population of fewer than 25,000 persons; 98% have a 
            population of fewer
              than 10,000 persons; and 85% have populations under 1,000 
            persons.

       EPA lists 1,374 communities in violation for the most 
            recent disinfection
              byproducts rule; 1,310 have a population of fewer than 
            25,000 persons; and
              94% have a population of fewer than 10,000 persons.

       EPA lists 76 communities in violation for naturally 
            occurring fluoride in
              their drinking water; all but two of these communities 
            have a population
              of fewer than 10,000 persons; and 80% of these 
            communities have a popula-
              tion of fewer than 500 persons.

  5.  Local communities have an obligation to pay for their water 
            infrastructure and the Federal Government should only 
            subsidize water infrastructure when the local community 
            can't afford it and there is a compelling Federal interest 
            such as public health. The USDA water infrastructure 
            program contains this needs-based criterion. USDA calls 
            this the ``credit elsewhere'' criterion and it is unique to 
            USDA's funding.

    As you are aware, Texas is one of the four border states that serve 
colonias. ERHWSC is one of many rural water and wastewater systems that 
has benefitted from USDA infrastructure funds to remedy the deplorable 
conditions that exist in these low-income communities. Colonias are 
often in unincorporated areas, which unfortunately are similar to some 
Tribal areas, and lack some of the most basic necessities such as 
potable water and functional sewer systems, without municipal 
jurisdiction for development or zoning. ERHWSC and many rural water 
supply corporations along the border are prime examples of how a 
regional rural water utility can provide the capacity with USDA capital 
low interest loans and grants to relieve the squalid conditions that 
exist in these communities. NRWA encourages the availability of 
affordable colonia specific funding sources as part of the 
infrastructure package.
    NRWA provides the following conceptual changes specifically to USDA 
water and wastewater loan and grant funding to the Committee for 
consideration:

  1.  Provide the Secretary with the authority to use a small 
            percentage of the funding made available for the Rural 
            Development programs to contract with private nonprofits 
            with demonstrated experience to conduct non-inherent 
            government activities and functions necessary to deliver 
            and service the Rural Utilities Service Water and Waste 
            Water Disposal loan and grant programs. The application 
            process to access USDA water and wastewater infrastructure 
            funding can easily overwhelm the small and rural 
            communities who often lack the capacity to administer and 
            deliver the items required in the lengthy application 
            process. The current application form (see Attachment C) 
            requires an applicant or the applicants engineer or 
            attorney to complete 90 separate checklist items before 
            beginning construction on a project. The back and forth 
            corrections between the applicant and USDA in completing 
            this checklist can often take months and sometimes years. 
            This impediment is compounded by the recent reduction of 
            over 1,000 Rural Development program staff and office 
            locations that can assist applications with the process. 
            NRWA has identified over 40 loan processing and servicing 
            functions and activities that can be performed by non-
            governmental third party entities. The inherent government 
            activities would still be performed by Federal employees. 
            Assistance could include but not limited to preparing the 
            application with all required documentation (audits, 
            environmental report, preliminary engineering report, 
            etc.). Direct assistance could also be performed for 
            preconstruction requirements, closing review, Buy America 
            compliance, construction inspection, rate studies, budget 
            preparation, warranty inspection, addressing letter of 
            conditions, drafting emergency response plans and other 
            activities as needed. Assistance to the applicants in all 
            of the applicant checklist requirements would greatly 
            expedite the process of capital delivery for construction 
            purposes. My personal experience at ERHWSC regarding the 
            loan processing timeframe from application to closing is 
            that it can take years. The assistance of experienced 
            private nonprofits to manage and expedite this process 
            would be a welcome occurrence in rural America.

  2.  Allow the Secretary the flexibility or waiver authority to exceed 
            the current population ceiling of 10,000 for the Rural 
            Development Water and Wastewater Direct Loan and Grant 
            Programs will also help many rural communities. With the 
            changing demographics in Rural America, we believe that 
            providing the Secretary flexibility to assist these 
            communities that are still experiencing economic hardship 
            would be beneficial. The Committee could limit this 
            authority to areas that are rural in character; provide a 
            demonstrated need for financial assistance; demonstrate the 
            ability to complete construction within a reasonable time 
            frame; and demonstrate they cannot afford commercial credit 
            at the prevailing rates and terms.

  3.  Allow the Secretary the flexibility or waiver authority to 
            increase the Water and Waste Water Guaranteed Loan Program 
            to a much higher population ceiling, for example 50,000, 
            would be a benefit to higher populated communities that 
            don't need the subsidized loan or grant funding. This 
            program currently has a positive subsidy of only .48 
            percent. This program has been vastly under-utilized, for 
            example, in FY 2016, only four guaranteed loans were 
            obligated that totaled $7,118,000. This change would 
            stimulate private capital at minimal cost to the Federal 
            Government.

  4.  Allow the interest on these federally guaranteed water, 
            wastewater, and essential community facilities loans to be 
            tax exempt. This modification would generate increased 
            affordable financing options for rural communities 
            including increasing the lending authority and activity of 
            rural banks, allowing for longer loan terms, reduced 
            interest rates as well as improving the marketability of 
            the loans on the secondary market. The utilization of these 
            guaranteed programs would increase while simultaneously 
            reducing the current backlog.

    Thank you Chairman Conaway, Ranking Member Peterson, and Members of 
the Committee for allowing me to testify. I would be happy to answers 
any questions that you may have at this time.
                              Attachment A
                                  [1]
A Toilet, but No Proper Plumbing: A Reality in 500,000 U.S. Homes
The New York Times
By Sabrina Tavernise (https://www.nytimes.com/by/sabrina-tavernise)
Sept. 26, 2016 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Dorothy Rudolph in front of her home in Tyler, Ala., which 
        does not have a septic tank. Credit Bryan Meltz for The New 
        York Times.

    Tyler, Ala.--The hard clay soil in this rural Southern county has 
twice cursed Dorothy Rudolph. It is good for growing cotton and 
cucumbers, the crops she worked as a child and hated. And it is bad for 
burying things--in particular, septic tanks.
    So Ms. Rudolph, 64, did what many people around here do. She ran a 
plastic pipe from her toilet under her yard and into the woods behind 
her house. Paying to put in a septic tank would cost around $6,000--a 
little more than half of her family's annual income.
    ``It was a whole lot of money,'' she said. ``It still is.''
    Here in Lowndes County, part of a strip of mostly poor, majority-
black counties that cuts through the rural center of Alabama, less than 
half of the population is on a municipal sewer line. While that is not 
a hardship for more affluent communities--about one in five American 
homes are not on city sewer lines--the legacy of rural poverty has left 
its imprint here: Many people have failing septic tanks and are too 
poor to fix them. Others, like Ms. Rudolph, have nothing at all.
    That is not so uncommon. Nearly \1/2\ million households in the 
United States lack the basic dignity of hot and cold running water, a 
bathtub or shower, or a working flush toilet, according to the Census 
Bureau. The absence has implications for public health in the very 
population that is the most vulnerable.
    Crumbling infrastructure has been a theme of this country's 
reinvigorated public conversation about race--for instance, a botched 
fix for old pipes in Flint, Mich., that contaminated the city's 
drinking water with lead. But in poor, rural places like Lowndes 
County, there has never been much infrastructure to begin with.
    ``We didn't have anything--no running water, no inside bathrooms,'' 
said John Jackson, a former mayor of White Hall, a town of about 800 in 
Lowndes that is more than 90 percent black and did not have running 
water until the early 1980s. ``Those were things we were struggling 
for.''
    There is no formal count of residents without proper plumbing in 
Lowndes, but Kevin White, an environmental engineering professor at the 
University of South Alabama, said that a survey that he did in a 
neighboring county years ago found that about 35 percent of homes had 
septic systems that were failing, with raw sewage on the ground. 
Another 15 percent had nothing.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Cheryl Ball in her trailer home in Tyler, Ala. Ms. Ball can't 
        afford a septic tank, so she runs a plastic pipe that empties 
        waste behind her property. Credit Bryan Meltz for The New York 
        Times.

    ``The bottom line is, I can't afford a septic system,'' said Cheryl 
Ball, a former cook who had a heart attack several years ago and 
receives disability payments. She lives in a grassy field on which only 
three of seven homes have septic tanks. Most banks now require proof 
that a home has proper sewage disposal before lending, but Ms. Ball 
paid cash for her mobile home--$4,000.
    This area, known as the Black Belt (so called more for its soil, 
than its demographics), is haunted by its history of white violence 
toward African Americans and a deep, biting poverty. Lowndes is one of 
the poorest counties in the country, and its rural population, whose 
trailers and small houses dot the lush green landscape, often cannot 
afford the thousands of dollars it costs to put in a tank. 
Municipalities, with low tax bases, cannot afford extensive sewer 
lines.
    Ms. Rudolph, a retired seamstress, and her husband, a carpenter, 
live in a tiny, white clapboard house that he built after he, his 
parents and his siblings fled their home on land owned by a white man 
who forbade the family to vote. She remembers, as a young girl in the 
1950s, not having electricity. They obtained running water in the early 
1990s, she said, and used an outhouse until the mid-1990s.
    So their white toilet with a fuzzy green cover was a marker of 
progress. A plastic pipe carries its contents outside and empties into 
a wooded area not far from the house. There is no visible pooling of 
sewage, but there are other problems.
    ``The smell gets so bad,'' said Ms. Rudolph, sitting on her porch 
guarding her chicken coop against a marauding fox. When it rains, she 
wages war with her toilet. One recent downpour brought its contents 
gurgling up to the rim.
    ``I was sitting there looking at it and got me a plunger,'' she 
said. ``It took me some plunging to get it clear. I was scared it was 
going to come back and go on the floor. Horrible.''
    She added, ``There's nothing we can do.''
    The problem is prickly for the state. Parrish Pugh, an official 
with the Alabama Department of Public Health, agrees that money plays a 
part.
    ``That's where the rubber hits the road,'' he said.
    ``But Alabama law forbids the use of `insanitary sewage 
collection,' and the responsibility for that rests squarely with the 
homeowner,'' Mr. Pugh said. Resisting is not only illegal, but could 
have health consequences: Raw sewage can taint drinking water and cause 
health problems.
    `` `My parents had a pipe that ran into the woods, and that's good 
enough for me,' '' Mr. Pugh said, explaining a common argument. ``But 
we didn't know as much about disease back then. People are more 
educated nowadays. They are more concerned.''
    The state health department begs, cajoles, and eventually cites 
people who have problems and do not fix them. In the early 2000s, the 
authorities even tried arresting people. That prompted a public outcry 
and the practice soon stopped, but one person spent a weekend in jail 
and others were left with criminal records.
    The department cited about 700 people in the 12 months that ended 
in March, often because someone complained.
    The clay soil makes the problem worse.
    ``Rural wastewater is usually managed with a septic tank and a 
drain field, which slowly infiltrates the wastewater into the ground,'' 
Professor White said. ``Well, it won't go into the ground here. 
Period.''
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          John Jackson, former mayor of White Hall, Ala., said that 
        until the early 1980s, ``we didn't have anything--no running 
        water, no inside bathrooms.'' Credit Bryan Meltz for The New 
        York Times.

    He added: ``There are some options that may be available, but it's 
going to cost thousands of dollars, and most people here can't afford 
it. The answer, quite frankly, is not out there yet.''
    Experts and advocates have tried to find one. Grants from the state 
and Federal Governments to study the problem have come and gone, as 
have academics wielding surveys. There was even talk of self-composting 
toilets.
    ``It's like we're going in circles,'' said Perman Hardy, a cook in 
Tyler who even did a urinalysis (http://health.nytimes.com/health/
guides/test/urinalysis/overview.html?inline=nyt-classifier) for a study 
of health effects. For years, her sewage backed up every time it 
rained. In December, she spent all the money she had saved for 
Christmas presents on a new septic tank.
    Some change is happening. The town of White Hall recently received 
funding to connect about 50 homes to sewer lines, the first in its 
history. Town officials are thrilled: City sewer lines are critical to 
attract businesses that would bring jobs. But the pace is glacial.
    Eli Seaborn, 73, a White Hall councilman, said progress would be 
slow, like the pace of civil rights gains, where legal discrimination 
is gone but lingers in other forms. Similar patience is required for 
sewage, he added.
    ``Time is going to be the only thing that solves this problem,'' he 
said. ``It took more than 50 years for it to happen. But hopefully, it 
won't take more than 50 years to fix it.''
                                  [2]
What happens when a water utility becomes an orphan
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          In tiny Coal Mountain, in West Virginia, residents are left 
        to fend for themselves with a water system they can't afford to 
        test for lead. Government agencies have all but given up on 
        forcing tests even though residents continue drinking the 
        water. Jasper Colt.
          Editor's note: the video clip What happens when a water 
        utility becomes an orphan, is retained in Committee file, and 
        is available at: https://www.usatoday.com/videos/news/nation/
        2016/12/13/what-happens-when-water-utility-becomes-orphan/
        95332502/.
                                  [3]
The American Neighborhoods Without Water, Sewers, or Building Codes
          Low-income residents bought cheap land outside of border 
        cities decades ago. But the promised infrastructure never came.

The Atlantic
Alana Semuels (https://www.theatlantic.com/author/alana-semuels/)
Mar. 3, 2016 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]>

          A boy in Los Fresnos colonia in Texas Jessica Rindaldi/
        Reuters.

    Montana Vista, Tex.--No one objected when developers bought up 
dusty vacant land here in the 1950s and 1960s and turned it into 
unincorporated subdivisions--areas outside city limits where no one had 
authority to enforce building standards.
    Neither the state nor the county stepped in when the developers 
turned around and sold that land--making empty promises to later add 
running water and sewer systems--to low-income immigrants who wanted, 
more than anything, to own a home of their own. And no one batted an 
eyelash when low-income landowners in these unincorporated border 
subdivisions, called colonias, started building homes from scratch 
without building plans or codes, or when they started adding additions 
to those homes as their families grew, molding structures together with 
nails and extension cords and duct tape.
    That's because, in Texas, all of these actions were perfectly 
legal. Texas prides itself on its low taxes and lack of regulation, but 
it's possible that decades of turning a blind eye to unregulated 
building is starting to catch up with the state. Today, around 500,000 
people live in 2,294 colonias, and many still lack access to basic 
services, such as running water or sewer systems. Lots of residents 
live in dilapidated homes with shoddy plumbing and electrical wiring 
that they've cobbled together themselves to save money on contractors. 
And now, they want the state to pay to extend basic services in their 
homes. Water, for instance, should be a human right in America, they 
say.
    ``You have families that live in third world conditions in the 
state of Texas with a modern city just miles away,'' said Veronica 
Escobar, the County Judge of El Paso, who functions as a county chief 
executive. ``But the state of Texas has essentially put counties in 
charge of health, safety and welfare, at the same time they give us 
very limited authority.''
    Alejandra Fierra lives with her husband in the Hueco Tanks colonia, 
where they bought land in 1987. They still don't have access to running 
water or a sewer system. When her children were growing up, she would 
pour water from a well into a tub and wash them, one, two, three, in 
the same water. She does the same for her dishes. She gets a delivery 
of a 2,500 gallon water tank for bathing and washing, and buys bottled 
water from Walmart for drinking and cooking.
    In Montana Vista, a colonia some 22 miles east of El Paso, the 
septic tanks of the 2,400 families who live there frequently overflow, 
creating rivers of sewage in their backyards. In the summer, the smell 
can be horrific. Tina Silva, a resident and activist, lives here in a 
spacious one-story adobe house surrounded by a stone wall. She raises 
chickens and a giant pig in her backyard, where a rusted out car sits, 
half painted, in the sun. She loves her home and her neighborhood, but 
she doesn't understand why it has taken so long to put in a sewer 
system. ``We're human beings. We pay taxes. Somebody needs to listen to 
us,'' she says. Various politicians have promised her they'd help get 
the money to install services, but it's never actually happened, Silva 
told me.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Tina Silva feeds the chickens in her backyard at Montana 
        Vista (Alana Semuels/The Atlantic).

    Part of the problem is that no one wants to take responsibility for 
paying to install these services. The developers who sold the land 
promising water and sewers are long gone. And for many the thinking--at 
least according to Escobar--is that if the homeowners wanted to buy 
land without access to running water, that's their problem.
    It may seem obvious that the homeowners who bought cheap land 
without access to water and sewers should be responsible for installing 
access to services. But that isn't realistic either. More than 40 
percent of colonia residents live below the poverty line, according to 
a 2015 report (https://www.dallasfed.org/assets/documents/cd/pubs/
lascolonias.pdf) from the Federal Reserve Bank of Dallas. The median 
household income in colonias is less than $30,000 per year. And the 
conditions in the colonias are troubling. There are water and mosquito-
borne illnesses, high rates of asthma, lice, and rashes. One doctor 
told the Texas Tribune (https://www.texastribune.org/2011/07/10/
conditions-health-risks-sicken-colonias-residents/) that rates of 
tuberculosis in the colonias are two times the state average and that 
there is a lingering presence of leprosy.
    In 2012, the Texas Department of State Health Services issued a 
nuisance determination in Montana Vista documenting the health problems 
the septic tanks were causing, which meant the El Paso Water Utility 
could receive a grant for more than half of the project costs. In 
December, the Texas Water Development Board agreed to provide a $2.8 
million grant to El Paso Water Utilities so that the utility could 
start designing the sewer system. But it will cost an estimated $33 
million to build the system, and that money has not yet been secured.
    ``It's getting there, unfortunately, it's taking a lot of time,'' 
said Munzer Alsarraj, the infrastructure program manager for El Paso 
County.
    The state is stepping in to upgrade some of the colonias, too. 
Between 2006 and 2014, 286 more colonias, were linked to drinking 
water, drainage, wastewater disposal, paved roads, and legal plats, 
according to the Federal Reserve report. In 2006, 443 colonias had 
access to no basic infrastructure, by 2014, that number had dropped to 
337.
    But it's slow going.
    It's not easy to install infrastructure in areas that are far from 
the main water and sewer lines and in places that have grown with no 
central plan. It was not until 1989 that the Texas Legislature even 
asked state agencies to come up with rules (https://
www.texasattorneygeneral.gov/cpd/historical-laws-colonias) that would 
ensure new residential developments had access to water and sewer 
services. Now, cities can regulate development in Texas, but in 
unincorporated areas, counties have little regulatory power. Zoning 
regulations that would limit the size of buildings or of lots in cities 
don't exist for the colonias.
    In some instances, the county can't install infrastructure to homes 
because they're not up to code. Because people building on 
unincorporated land don't have to follow many rules, there are odd 
constructions in the colonias, including units that combine two RVs, 
homes with rooms tacked onto the side standing on cinder blocks, homes 
with extension cords that run outside, wooden planks as sidewalks. This 
makeshift construction can lead to roof collapses and electrical fires, 
said Irene Valenzuela, the interim director of community services for 
El Paso County.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          A home in a Texas colonia consists of a trailer and a house 
        (Eric Gay/AP).

    The county is giving grants out to people interested in bringing 
their homes up to code, but people are often hesitant, she said. ``I 
think the majority of them are afraid,'' she said. ``They say, `This is 
a takeover. What are you going to ask for next? If you assist me, are 
you going to take my property away when I pass away?' '' Alsarraj, with 
the county, added.
    Then there's the cost. The county is trying to install sewer lines 
in the Square Dance colonia. That colonia is located just a few blocks 
from established subdivisions that are part of the county's water and 
sewer system. But the price of adding those services to the colonia's 
264 homes is $8.5 million. Installing water and sewers in another 
colonia, called Hillcrest, would cost about $120,000 per home, Alsarraj 
said. But the homes are worth just $20,000 to $30,000 each.
    It's ironic, too, that the county is trying to extend water and 
sewers to far-off subdivisions as it also tries to execute a vision 
(https://www.theatlantic.com/business/archive/2016/01/el-paso-urban-
walkable-americans/431661/) that cuts down on sprawl. ``For 30, 40 
years, we've continued to sprawl out to the edges of the [E]arth and it 
was costing us more than we were making as a community,'' Beto 
O'Rourke, a U.S. Congressman who led the charge to cut down on new 
subdivisions, told me.
    But El Paso has had little success regulating far flung 
subdivisions, even when they are incorporated.
    Perhaps most worrying to Escobar and others is that new colonias 
(http://www.bloomberg.com/news/articles/2015-10-15/texas-towns-push-
back-on-instant-slums) are still being built across the state. This 
time around, they have basic water and sewer hookups, but don't have 
paved roads or streetlights, according to the Federal Reserve. Plots 
cost as little as $25,000, and developers offer 20 year financing at a 
12 percent interest rate and just $500 down, according to Bloomberg 
News (http://www.bloomberg.com/news/articles/2015-10-15/texas-towns-
push-back-on-instant-slums).
    It's proof to Escobar that developers will always be willing to 
sell substandard plots of land to people desperate to own a home. But 
she had hoped Texas would step in and regulate.
    Two sessions ago, the county tried to get permission for zoning 
authority over 60\2\ miles near a border crossing south of El Paso. But 
the state legislature refused to grant it, in part because real-estate 
agents objected to the bill, said Escobar, the judge. Legislators also 
didn't believe that government should trump property rights, she said. 
But perhaps that's because they don't have to deal directly with the 
after-effects.
    ``We are having to fix the problems caused by unregulated 
government,'' Escobar said. ``There are innumerable examples and costs 
associated with fixing problems that could have been prevented. There's 
just a fundamental belief in Texas--if you own property, you can do 
what you want with it.''
                                  [4]
Like Flint, water in California's Central Valley unsafe, causing health 
        problems
Fox News Latino (http://latino.foxnews.com/index.html)
By Rebekah Sager (http://latino.foxnews.com/archive/rebekah-sager)
Published March 8, 2016 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          (Photo by Justin Sullivan/Getty Images) (2015 Getty Images).

    While the water crisis in Flint, Michigan (http://
latino.foxnews.com/latino/news/2016/01/22/flint-immigrants-last-to-
know-about-contaminants-in-water/), made headlines around the country 
when the city's leaders exposed residents to a tainted water supply for 
almost 2 years, families living in the Central Valley of California 
have been struggling without clean drinking water for decades.
    The population of the Central Valley, a basin surrounded by 
mountains that once offered hope to migrants like the fictional Joads 
in the ``The Grapes of Wrath,'' today is about 80 percent Latino, and 
92 percent of the migrant farm workers in the Valley are Latino.
    There are vast dairy farms reeking of manure, highways lined with 
fast-food restaurants, liquor stores, prisons and numerous dialysis 
centers.
    Much of fruits and vegetables consumed in the U.S. are grown here, 
and the soil has been decimated by agricultural activity--overuse of 
fertilizers and pesticides, manure from livestock. One result is a 
toxic soup of nitrates in the area's drinking water.
    Residents in towns along the San Joaquin Valley rely predominantly 
on pumps and ground water--which is not effectively regulated for 
contamination.
    When pumped up into people's homes, the nitrates are so dangerous 
that people are known to get rashes when they shower. The presence of 
nitrates in the water supply also has been linked to ``blue baby 
syndrome,'' which is caused by the decreased ability of blood to carry 
oxygen--one of the most common causes is nitrate in drinking water.
    People turn to buying 5 gallon jugs to shower with and using 300 
gallon tanks of non-potable water for basic needs.
    ``Generations of people who live here know not to drink the 
water,'' Susana De Anda, a clean-water advocate and the co-executive 
director and co-founder of the Community Water Center NGO, told Fox 
News Latino.
    ``People pay more for this `toxic water'--sometimes as much as $100 
a month for water just to shower with. On top of that they're paying 
for drinking water,'' De Anda said.
    According to the Environmental Justice Coalition for Clean Water, 
rural Central Valley communities pay the highest drinking water rates 
in the state, with some families shelling out as much as two to six 
percent of their income for water that they can't drink.
    According to a Pacific Institute report (http://www.pacinst.org/wp-
content/uploads/sites/21/2013/02/nitrate_contamination3.pdf), nitrate 
exposure's health impacts in the Central Valley fall disproportionately 
on poor Latino communities.
    Due to the state's severe drought, new wells have to be dug more 
deeply, demand is high and the cost is between $1 million and $2 
million.
    ``The drought actually causes the pollutants in the soil to be more 
concentrated and levels of contaminants such as nitrates to rise. Also, 
when deeper wells are dug, and that would be by maybe wealthier 
farmers, they actually end up syphoning water away from poor 
communities,'' Genoveva Islas--program director at Cultiva la Salud 
(``Cultivate Health''), a nonprofit health advocacy organization in the 
Central Valley--told Fox News Latino. ``And it creates a real 
inequity.''
    Most people in the area live a large distance from the closest big 
grocery store. Liquor and convenience stores become the default place 
to buy food and produce, and, all too often, sugary drinks are less 
expensive than drinking water.
    ``We're in a food desert. People would buy water in bulk, but big 
stores are often very far outside of communities, and so families make 
a tough trade-off. Soda might be more affordable,'' De Anda said.
    In addition to other factors, the consumption of soda vs. water is 
one of the leading reasons for the severe health problems in the 
Valley. The region has big problems with obesity and the highest rate 
of Type 2 diabetes in the state.
    An analysis of state's death records by the Fresno Bee (http://
www.fresnobee.com/news/local/article19499391.html) and the Center for 
California Health Care Journalism at the University of Southern 
California paints a vivid picture of the disproportionate toll diabetes 
has taken in the Valley.
    At least 19 people die from diabetes-related complications in the 
eight San Joaquin Valley counties every day, the highest rate in the 
state.
    ``I've lived here all my life, and not until I was an adult was 
really aware of dialysis clinics. Now, I have an aunt and a close 
family friend who are both on dialysis. I'm seeing a number of these 
[places] pop up. More than ever before,'' Islas says.
    The Central Valley may be the fruit and veggie center of the 
country, but for poor people healthy food is still significantly more 
costly than food sold in bulk, such as beans, rice, tortillas, white 
bread, ground beef and large bottles of soda. Many of the stores in the 
Valley offer free soda with groceries, and a small bottle of water runs 
about $1.69 versus a large soda at 99.
    In the last 3 years, the state has paid to retrofit water filters 
on drinking fountains in some pockets of schools and daycare centers, 
and provided filtered bottle stations, where people can fill-up 
containers. But Islas says it's not universal.
    ``There's still a lot of marketing of sugary drinks to kids, which 
in addition to diabetes and obesity, dental health problems. In Flint, 
the Governor has set aside money for the kids impacted by the lead, but 
in the Central Valley, we have the same issues of long term health 
problems for impoverished kids. We use education as a pathway out, but 
if you're thirsty or you have health concerns, it's pretty hard to 
learn,'' Islas says.
    The drought in California may be shining a light on the region and 
its water supply, but the issues in the Valley have been left largely 
unaddressed.
    ``All these are interim solutions, but we also need to create water 
awareness. The water may look clean, but that doesn't make it safe. It 
shouldn't matter who you are or where you live, clean drinking water is 
a basic human right,'' De Anda says.

          Rebekah Sager is a writer and editor for FoxNews.com. She can 
        be reached at [email protected]. Follow her on Twitter 
        @rebekah_sager.
                              Attachment B

                                               East Rio Hondo Water Supply Corporation USDA and DWSRF Debt
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Unpaid
  Closed Loans With                 Original       Original         Principal     Interest    Monthly    Maturity     Grant Amount          Notes:
 USDA Original Date                   Date     Principal Amount      Balance        Rate      Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
USDA RD                   91-14      2/8/1978       $163,000.00              $--   5.00%       $801.00    2/8/2018                    AWSC Merger paid
                                                                                                                                       in full
USDA RD               91-01, 91-    9/17/1979     $1,100,800.00              $--   5.00%     $5,405.00   3/12/2020     $2,866,000.00  Original system
                             02                                                                                                        note
USDA RD                   91-03      5/7/1981       $556,500.00              $--   5.00%     $2,683.00    5/7/2021     $1,669,500.00  Original plant &
                                                                                                                                       distribution
USDA RD                   91-06     3/14/1996       $909,500.00      $590,038.59   5.00%     $4,393.00   3/14/2036       $580,500.00  Plant expansion
USDA RD                   91-11     9/26/2003       $677,000.00      $568,195.04   4.25%     $2,969.00   1/26/2043               $--  MASWT plant
USDA RD                   91-12     9/26/2003     $7,890,200.00    $6,561,632.81   4.25%    $34,560.00   9/23/2043     $1,946,200.00  MASWT plant
USDA RD                   91-15      5/2/2001       $593,800.00      $478,165.06   4.50%     $2,696.00    5/2/2041               $--  Arroyo WSC
USDA RD                                                     $--              $--   0.00%           $--         N/A     $2,392,000.00  Wastewater, PH I
USDA RD                   91-18     11/9/2010       $650,000.00      $593,417.73   3.759%    $2,620.00   11/9/2050       $104,000.00  Nelson Rd. ground
                                                                                                                                       storage tank
USDA RD                   91-17    10/22/2014     $3,065,200.00    $2,994,878.07   4.00%    $12,813.00  10/22/2054               $--  FM510 Transmission
                                                                                                                                       line
USDA RD                   91-22                     $677,000.00      $677,000.00   2.125%    $2,133.00   4/10/2058       $379,400.00  UV Disinfection
                                                                                                                                       project
USDA RD                   91-26                     $243,600.00      $243,600.00   1.750%      $719.00   4/10/2058               $--  UV Disinfection
                                                                                                                                       project
                                              -----------------------------------                                  ------------------
                                                 $16,526,600.00   $12,706,927.30                                       $9,937,600.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Loans Pending Closing With USDA
--------------------------------------------------------------------------------------------------------------------------------------------------------
USDA RD                                           $1,109,000.00                    2.75%     $3,812.00                 $2,872,838.00  Colonia WW Phase
                                                                                                                                       II
USDA RD                                             $889,000.00                    2.50%     $2,932.00                   $484,700.00  Bean Road
                                                                                                                                       Transmission
                                                                                                                                       Pipeline
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Loan Applications
--------------------------------------------------------------------------------------------------------------------------------------------------------
USDA RD                                           $4,454,238.00          Loan & Grant Determination Pending                  Unknown  1.0 MG Elevated
                                                                                                                                       Water Tower
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       USEPA--Drinking Water State Revolving Fund
--------------------------------------------------------------------------------------------------------------------------------------------------------
Texas Water           L10 00198     8/14/2014     $1,379,000.00    $1,264,300.00   *         $8,364.83    9/1/2034       $591,000.00  HWWS Pump Station
 Development Board
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Not Fixed.

                              Attachment C

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    The Chairman. Well, thank you very much.
    The chair will remind Members that they will be recognized 
for questioning in order of seniority for Members who were here 
at the start of the hearing. After that, Members will be 
recognized in the order of arrival. And, again, I appreciate 
Members' understanding, the strict adherence to the 5 minute 
clock.
    I now recognize myself for 5 minutes.
    Well, thank you very much for your testimony. It is clear 
the challenges facing the entire spectrum of infrastructure 
with respect to rural America. And the witnesses have laid that 
out really, really well this morning. I appreciate that.
    Ms. Otwell, one of the fundamental concepts behind Federal 
communications policy was this universal service. In other 
words, everyone should have a landline.
    Can you talk to us about why that was important in the past 
and why, looking forward, that we need to morph that concept 
across the entire spectrum of communications?
    Ms. Otwell. Absolutely. Thank you, Mr. Chairman.
    The concept of universal service is that no matter where an 
American lives, if they are lucky enough to be in a rural area 
or if they live in an urban area, that they should have access 
to equal services at reasonably comparable rates.
    It started with voice services, and it was a huge success 
for rural America. We got everyone connected. Now we are 
connecting everyone with broadband, which is the connection of 
the present and of the future, and it is even easier to see the 
benefits of a broadband connection with the educational 
opportunities, telehealth, telework, some smart farming 
initiatives. Broadband makes everything more efficient. The 
concept of universal service is something that every single 
representative at this table can agree upon, the fact that 
whether you are connecting people with water, electricity, 
actual highways, or the information superhighway, that the 
continued connection to that, regardless of where you live, is 
what continues to make America the land of opportunity.
    The Chairman. I wish the rest of us were as cooperative as 
the Cities of Comanche and De Leon were. With respect to your 
hospital, it is about equidistance between the two communities, 
and it is a great example of a good partnership.
    Mr. Calhoun, I live in a relatively dry part of Texas. We 
call the Pecos River a river, but it would only be called that 
in Texas.
    Help us understand how do we go about communicating to 
those who don't really have an appreciation or direct contact 
with locks and the waterways of our country to make sure they 
understand it is important? How can we do a better job of 
communicating that?
    Mr. Calhoun. Well, thank you, Mr. Chairman. It is a tough 
thing to do, because the further that you are away from a 
navigable river, the less important it would seem to you. But I 
would contend that there are many different things, from 
airplane jet fuel to agricultural products to coal to steel to 
cement, everything that builds and rebuilds America and will 
make it great again.
    A lot of them move on the waterways. And we just need to 
continue to tell our story. And the real key is getting people 
within this body, within Congress, to understand the value of 
it and getting your colleagues that don't understand the value 
of the rivers and the navigable waters of the nation to 
understand them better. I think that is one of the things we 
can continue to do, as well as educate the general public. But 
education, as we all know, is a difficult task.
    The Chairman. Sure. I appreciate that.
    Dr. Halverson, I was pleased to see that CoBank was able to 
step up and meet the needs of Texans when they were facing 
drought conditions, by providing emergency capital and gap 
funding to communities in need. For reference, how quickly can 
communities access private capital for such projects? By 
comparison, how long would an USDA project take and does a 
partnership help expedite the project?
    Dr. Halverson. Well, thank you, Mr. Chairman.
    We, as a privately owned cooperative, have tried to be as 
extremely responsive in terms of time, terms and conditions to 
our customers as we can, whether the situation that they face 
is a wildfire or a flash flood, or what have you. We work with 
lots of partners to that end, be they partners in the Farm 
Credit System, the Department of Agriculture, state and local 
authorities, or whichever combination is most appropriate.
    We value, particularly, our relationship with USDA, and we 
look for ways to expedite those situations to the maximum 
degree possible when they arise.
    The Chairman. I appreciate that. Again, thank you, 
witnesses, for your being here today and being really clear 
about the needs of rural America.
    Mr. Peterson, 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman.
    Ms. Otwell, I had the Minnesota telecom people into my 
office yesterday, and they were telling me that, for $200 
million a year, we could get broadband everywhere. And in your 
testimony, it says $110 million. What is the number? Do you 
know?
    Ms. Otwell. Absolutely. I can speak to that.
    The rural community-based carriers that NTCA represents, we 
currently have two paths for how we are going to go about 
regulations, these updated regulations. Both are significantly 
under-funded, though the first is a model-based path. And that 
one ties a certain number of locations to a certain amount of 
money. That one is under-funded currently by $110 million. And 
we know because it is tied to numbers and locations, how many 
consumers that affects. So that is going to affect 70,000 rural 
Americans that are going to get less broadband than they would 
under full funding. And 50,000 additional rural Americans 
probably will receive no broadband because of the underfunding.
    On the other side, the non-model side, is actually worse. 
They are under-funded for the next 12 months by $173 million. 
And that represents money that has already been invested, but 
the support mechanism is under-funded so much that they did not 
receive that recovery of $173 million. What that means is they 
plan their infrastructure projects for 2018, 2019 and forward. 
They have to make up that difference. That difference has to 
come from somewhere. So that means lesser deployment to the 
tune of that amount. That is where you get those different 
amounts.
    Mr. Peterson. This is money that is used to actually put 
the system in place.
    This is not necessarily the money to keep it running once 
it gets there.
    Ms. Otwell. That is actually the money to keep it running. 
In rural America, because we have so few customers per square 
mile, we need that ongoing support to make the business case to 
be there in the first place.
    Mr. Peterson. One of the reasons, from what I know, the 
Universal Service Fund worked for telephones is that we had a 
tax on the bill, and so you could collect it from everybody. 
But we don't have a tax on the Internet. There is no way to 
collect anything from broadband service. What we are doing is 
we are collecting money on the telephone, and we are using some 
of that for broadband. And that is why, when I hooked up my 
hunting cabin, I had to put a landline in even though I didn't 
want one, because that is what I had to do in order to get 
Internet, I guess.
    Ms. Otwell. You are absolutely correct.
    Part of the changes to our regulations now, we no longer 
would necessarily need to require that landline. However, 
because it is so under-funded, the average company, in order to 
provide standalone broadband would cost $226 in our area to 
provide standalone broadband, and that is not a reasonable cost 
compared to urban America.
    But you are exactly right. That is part of the problem.
    Mr. Peterson. Well, I have some co-ops that have really 
done a great job. They have taken money from RUS and other 
places, and they have gotten 1 gigabyte service to every 
community in their service territory. We have other places that 
don't have anybody out there serving them because the big 
companies abandoned those folks, and there is no co-op in that 
area, and so forth. And so they have nothing.
    I have been trying to figure out how we can work this out. 
And it is very frustrating. We had one situation where the city 
in this county had service, and the state had a grant program 
that would have worked to extend it to the rest of the county. 
But the two big companies that I won't mention that were in 
that city vetoed it. They not only abandoned these areas, they 
are actually standing in the way of us getting service out 
there. And I had the electric co-op come in and try to talk 
them into going into the business. Well, they looked at the 
situation. And because there is no ongoing funding to make up 
the shortfall, they decided they couldn't do it.
    Somehow or another, we have to figure out how to get a 
funding stream, as I said in my statement, that is there on an 
ongoing basis so people can go out and extend this stuff out 
there and make it happen, like we did with telephones back in 
the 1930s. And whatever we can do to get that done, sign me up.
    Thank you very much. I yield back.
    The Chairman. The gentleman yields back.
    Mr. Austin Scott, 5 minutes. 
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I was 
just wondering if maybe the telecom companies can tell us where 
that hunting camp was. I am kidding. I am just picking on you, 
Mr. Peterson.
    Ms. Otwell, I read your testimony. And the one issue, I 
take with it is that you say we are paying more for the same 
level of service. I would suggest we are paying levels and 
paying more not getting the same level of service in rural 
America. I live in a little town of Chula, Georgia, in between 
Tifton and Ashburn. And while, certainly, Ashburn has had its 
challenges with Internet services, Tifton being a little 
larger, has done better. But you get into those small towns 
that even are pretty close to larger areas, our service is 
subpar at best.
    And it was interesting that my neighbor decided to try a 
different route because they weren't satisfied with what they 
currently had. And so when they tried that different route, the 
different route didn't work. Then they had to go back into a 
waiting list to even get back on the Internet service that they 
had before, which, again, was a little slow.
    I appreciate you mentioning ComSouth in Hawkinsville in my 
district. They are a great company. I want to mention one of 
the things that has become a concern to us in Georgia with a 
different carrier up in the northern part of the state is that 
they take money to expand the networks, but it is the CAF 
funds, I believe--is that correct--where they are actually 
supposed to--well, maybe those funds are being taken and not 
being used for the proper purposes, and maybe being diverted to 
other projects.
    What type of accountability measures would you suggest so 
that we make sure that the money that we as Congress put into 
expanding access actually gets used for access, instead of 
supplanting funds that the companies would have put into those 
areas?
    Ms. Otwell. That is a great question, Congressman. I 
appreciate that.
    Whenever we talk about the small company, the rural 
community-based carrier, Universal Service Fund, some of our 
forms have recently been updated for more accountability. For 
example, all companies, no matter which model or which 
regulation path you took, every year we have to report geocoded 
locations to all the locations we build broadband to. And if 
you are in that model-base path, we actually even have to 
report locations we previously have built to. At the end of 
that 10 year period, the FCC will have a geocoded map of every 
single place that we have broadband service. We also are not 
receiving support in certain Census blocks. Census blocks that 
are deemed either too low cost for the high-cost area or have a 
competitor already serving without support, those blocks are 
not eligible for support. Our system really has been built to 
only put the money where it is desperately needed and to 
enforce build-out requirements in those areas.
    Mr. Austin Scott of Georgia. You mentioned one thing that 
we need to revisit, and that is competitors. It seems to me 
that one of the problems is that once someone receives a grant 
for an area, if they are not doing a good job in that area, 
nobody else is eligible for a grant in that area when maybe 
they would do a better job for the people.
    Ms. Otwell. That is not untrue. And what you are mostly 
talking about there are areas that we call the----
    Mr. Austin Scott of Georgia. It is or is not true? It is 
true or it is not true?
    Ms. Otwell. That others may not be eligible?
    Mr. Austin Scott of Georgia. That is right.
    Ms. Otwell. You are correct about that. Those are what are 
in the price cap areas. So that is your larger providers 
usually. There are lots of rural areas that they cover that 
there is not as much accountability for.
    Mr. Austin Scott of Georgia. In an area where, say, 
Windstream had taken a grant to expand access, but maybe did 
not do what we expected them to do with the grant, because of 
the way the current law is written, you can't turn around and 
support somebody else that may come in and do what the funds 
were intended for.
    Ms. Otwell. For example, a company like mine, we cannot 
come in and receive funding for that area. Most of these areas 
are your higher-cost areas with fewer consumers. And so without 
that ongoing support, there is really not a business case for 
one network much less two. We do try to not be inefficient in 
our building and using funds in the same area.
    Mr. Austin Scott of Georgia. Sure.
    Ms. Otwell. But that is an issue.
    Mr. Austin Scott of Georgia. But my concern is where we 
have allocated Federal money to expand it. It is not being used 
by the company as we intended for it to. But then we can't help 
somebody who actually would compete with them.
    Ms. Otwell. Now, there is an option. In some of the latest 
reforms, some of those companies can turn in some of their 
areas that they are not serving, and there is----
    Mr. Austin Scott of Georgia. They are not going to do that. 
They are not going to voluntarily turn in those areas.
    Mr. Chairman, my time has expired, but I hope that we will 
continue to look at that area, because a lot of money is being 
taken and then not used for the purpose that it was intended 
for.
    The Chairman. The gentleman's time has expired.
    Mr. David Scott.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    As we approach this issue of rebuilding the crumbling 
infrastructure, there is another pressing need that we need to 
attach to that. I believe strongly that divine intervention and 
divine providence has played an extraordinary role in the 
movement forward of our nation. And nowhere is that more 
prevalent than in our having the right people at the right time 
in the right places, and we have had many great Presidents, two 
of which are FDR, Franklin Delano Roosevelt, who gave us the 
New Deal, and Dwight David Eisenhower, who gave us the building 
of the highway interstate system. Both men at the right time.
    But it wasn't just that. It was the fact that they utilized 
these Public Works programs to address lifting up the 
employment, and the opportunities, and training that strengthen 
and broaden a new era, each time. And as we move to rebuild 
this crumbling infrastructure, we have another problem, and 
that is the crumbling family infrastructure.
    We have an extraordinarily high unemployment rate which is 
accompanied by the opiate crisis. And where is that happening? 
No greater place than where we are going to rebuild the 
crumbling infrastructure, in our inner cities, and in the rural 
areas, where, among our American young men, the employment rate 
in some of our rural and urban centers is a staggering 41 
percent.
    And so I would like for us to take a look at a bill that we 
have introduced in a bipartisan way. Kevin Cramer and I, my 
Republican friend and I, have come up with a bill that would 
use this Public Works, Private Works Partnership as we move to 
rebuild the crumbling infrastructure, much as Dwight David 
Eisenhower used the Highway Bill, much as Franklin Delano 
Roosevelt, without which we never would have survived.
    We have a severe opiate crisis throughout our community. 
But nowhere is it more piercing than in the rural areas. 
Families breaking down, joblessness, hopelessness. We put House 
Resolution 52 together that would direct our Secretary of Labor 
to connect on-the-job apprenticeship training programs that 
would help in these areas.
    Our American families right now are in a crisis, 
particularly as it appeals to our young men between the ages of 
18 and 39.
    And so we hope that we can address that as we move forward. 
And our bill is H.R. 52, and my colleague, Kevin Cramer, and I, 
the gentleman from North Dakota, would appreciate it if you 
did.
    Let me ask you, Dr. Halverson, in your testimony, you 
described the Community Facilities Program as a successful 
model for public-private partnerships. Could you tell us, is 
there anything that we in Congress can do to help you improve 
this program?
    Dr. Halverson. Well, this is a program that we think has 
proved highly successful over time on its face. It also is 
successful, not just for the individual investments that have 
been made, but also because it mobilizes and catalyzes 
additional capital to communities that need it. So not just 
capital from CoBank and/or the Farm Credit System, but from 
community banks, local banks, and state and local authorities, 
and our request to the Committee to help us do this is to speak 
with our regulator.
    We have an approval process now that I would describe as 
administratively burdensome, one at a time approvals. We would 
like to see that become an institutionalized programmatic 
approval process so that the business can be executed in a more 
sustainable and viable manner, because we think there are ample 
opportunities for us to do this in rural America, and we would 
like to do it in a more skilled way than we currently can.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    The Chairman. Thank you. The gentleman yields back.
    Mr. Rick Crawford.
    Mr. Crawford. Thank you, Mr. Chairman.
    Dr. Halverson, the President has indicated that private 
dollars can be leveraged with public funds to repair crumbling 
infrastructure. In your view, are the private financiers of 
CoBank prepared to meet that demand?
    Dr. Halverson. We absolutely are. As I said in my verbal 
testimony and written testimony, CoBank and the Farm Credit 
System cannot meet every demand for every project in every 
place in America. We have decades of experience, however, of 
leveraging private-sector capital, working closely with 
commercial banks, in particular, and USDA and others to do 
precisely that. What is happening and changing, particularly 
around communications infrastructure is technology is changing, 
the demand for capital that deal with these issues is growing.
    We have a great track record, we believe, of doing the 
right thing to meet the needs, and we would like to continue to 
do more of it and make a substantial contribution, along with 
all of the other sources of capital that include commercial 
banks, other private sources, as well as state and local 
governments where appropriate, and the Department of 
Agriculture.
    Mr. Crawford. CoBank has a history of these kinds of 
partnerships, financing through partnerships with local banks, 
as you mentioned, and through utilities, the Rural Utilities 
Service. Why do you think others have been sort of shying away 
from that type of partnership?
    Dr. Halverson. Well, I want to give credit where it is due, 
right? There are thousands of community banks across the 
country who do a lot to provide for the needs of their local 
communities, and regional banks as well. But as you heard in 
Ms. Otwell's testimony and other members of the panel here this 
morning, it is nothing new in the economies of scale problem. 
There aren't that many people in rural America, so the revenue 
stream that is possible upon which to make investments and 
build businesses is much more challenging where population 
densities are as low as they are in rural America.
    And in its wisdom, the Congress established the Farm Credit 
System 101 years ago, and our mission is to meet that 
fundamental issue, and do as much as we possibly can to meet 
the needs of agriculture, and in the last several decades, 
infrastructure investment. And we intend to continue to do 
that, and broaden and deepen our partnerships with other 
capital providers to meet these very substantial needs that you 
are hearing about this morning.
    Mr. Crawford. Ms. Otwell, in your testimony, you talked 
about the important distinction between raising capital for 
construction and assistance in funding the ongoing costs of 
servicing the system. It is kind of like buying the horse and 
feeding the horse.
    Ms. Otwell. Exactly.
    Mr. Crawford. The initial investment is one thing, but the 
upkeep is another. Can you talk about that? Why is it not 
enough to just simply provide cheaper financing to rural 
systems?
    Ms. Otwell. Absolutely. Thank you for the question. It 
does. It takes both. The initial loan from either public 
sources or private sources is what helps us put the 
infrastructure in the ground. But as I talked about in my 
testimony, with only 3.4 customers per square mile, that is 
simply not enough customers to provide for the ongoing costs of 
operating that network, making the loan repayments, et cetera. 
We really do need that predictable, sustainable support to make 
the business case for the loans in the first place and the 
investment in the first place.
    Mr. Crawford. I am going to stick with you on this one too. 
If you would kind of explain some of the effects of the 
shortfalls of the USF, how that is affecting you and other 
companies like you in rural communities that you serve.
    Ms. Otwell. Sure. Just like when I was talking to Mr. 
Peterson, we have some actual numbers for the shortfalls. For 
the model side, it is 70,000 rural Americans will get lesser 
service, 50,000 may get none. For my company alone, it is 551 
customers over the next 10 years. And if you are one of those 
customers, you are likely in some of the highest cost areas 
that we serve, which means you likely don't have another 
option. So that is definitely a detriment to rural companies.
    Companies are having to slow down their investments. When 
we are making long-term investments like this, any sort of 
unpredictability definitely is hard to make those long-term 
investments on. Workforces are reducing in some cases, and so 
it is really bad for rural consumers.
    Mr. Crawford. Thank you.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Ms. Adams for 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman, Ranking Member 
Peterson.
    And thank you to all of the witnesses who have testified 
today. And particularly to you, Mr. Wynn. Thank you for coming 
in from North Carolina.
    Ensuring that we have sound and flourishing rural 
infrastructure is essential to addressing disparities in 
economic opportunity. The state of our rural infrastructure 
affects food security, education quality, access to necessities 
like broadband, clean water, and many other important issues 
that North Carolina and states across America face. Hopefully, 
the Committee won't lose sight of what constitutes rural in 
terms of my district and many others across the country.
    Also looking forward, we must ensure that any potential 
infrastructure package addresses the concerns of our rural 
areas, land-grant universities, particularly 1890s, and our 
most vulnerable Americans.
    Mr. Wynn, let me begin with you and ask, in your testimony, 
you mentioned that in today's world of video conferencing and 
online education, telemedicine connectivity is not a luxury, it 
is a necessity. I agree with you. Broadband Internet helps 
close educational divides. It provides access to quality 
healthcare and crucial work support. But unfortunately, many 
North Carolinians still don't have access to reliable Internet 
service.
    Could you talk a little bit about what types of tools that 
you believe electric cooperatives should have access to in 
order to help bridge this digital divide between the haves and 
the have nots?
    Mr. Wynn. Yes. Thank you, Ms. Adams. And as some of the 
colleagues here at the table have been already saying, it is a 
challenge, and it is a necessity to have those things as rural 
citizens. And we hear it clearly from our members who know that 
rural electric cooperatives have brought electricity to rural 
areas where no one else would. And we are hearing that same 
theme as we realize that broadband and telecommunications is 
necessary.
    Some of the tools that are necessary, of course, obviously, 
funding is a major need. I think that we have an opportunity 
that we are seeing at our cooperative as we try to address this 
in the ability to leverage what we already have. And as I 
mentioned in my testimony, we have started building 
infrastructure for the purpose of providing better service for 
being more cost effective from a utility standpoint.
    But as we build this infrastructure and start looking at 
the possibility of leveraging that infrastructure to bring 
broadband, doing it in a way that is closely connected and tied 
in with our current business structure is one that provides 
somewhat of a promising opportunity for us, because a lot of 
the investment is already being made on the utility side of the 
business, and to leverage that investment to bring broadband is 
in many ways making the numbers look a lot better.
    I think that the tools, some of them have already been 
mentioned, as far as looking at the Universal Service Fund, as 
far as looking at RUS financing, those tools are great, but 
many of my colleagues across the country are still finding it 
very hard to make the numbers work because of the sparseness of 
our populations.
    Ms. Adams. Thank you very much.
    Dr. Coon, it is good to have you here representing APLU. 
Last month, the Committee heard testimony from Dr. Walter Hill 
from Tuskegee who, in his testimony, talked about the 
devastating land-grants deferred maintenance. Tuskegee alone 
has about $43 million. My alma mater, North Carolina A&T, has 
as part of its course, $8 billion.
    What infrastructure priorities would you recommend to 
ensure that 1890s and all land-grant universities are prepared 
to take on the important agriculture research of the 21st 
century?
    Dr. Coon. Well, one of the great opportunities here is for 
the Committee, through policy, but then also in the 
administration of that through the USDA, to identify those 
priorities. For example, our sister institution, Langston, has 
a very strong programming goat research and delivering that 
information to goat producers not only in Oklahoma but far 
beyond. I know the small farmer programs at North Carolina A&T 
are very strong programs. We talked about that.
    Dr. Hill was on the Committee that I was a part of, and we 
talked about having sort of several tiers to a grants program 
for infrastructure. So that you can set the priorities as they 
are needed to support those kinds of programs, but also that 
the level of funding is tiered as well. If there is a need for 
$1 million to help with the facility, that that is not in some 
way competing with another program that another university 
requires $30 million for.
    Ms. Adams. Okay. Great. Thank you very much. I am out of 
time.
    Mr. Chairman, I yield back.
    The Chairman. The gentlelady's time has expired.
    Mr. Davis for 5 minutes.
    Mr. Davis. Mr. Chairman, I find it ironic that out of all 
the microphones that don't work today, it happens to be mine. 
Is there some type of conspiracy from any of our colleagues?
    Completely on purpose, let the record show. But now what is 
wonderful is I have two microphones, so I am in stereo and even 
louder.
    First off, thank you to the witnesses. I want to start my 
questioning with Mr. Calhoun. I am about to go over to another 
hearing for another committee that I serve on, the 
Transportation and Infrastructure Committee, to talk about the 
importance of our locks and dams in our inland waterway 
navigation system. And I would like to get your opinion on a 
few of the issues that you mentioned in your opening testimony 
in regards to that inland waterway system.
    As you know, Mr. Calhoun, there are a lot of my farmers 
that rely upon their grain being able to be shipped via barge 
on the Illinois and Mississippi Rivers in and around the areas 
that I serve in central Illinois. But we saw the Obama 
Administration zero out dollars for those projects in the line 
item that we call NESP.
    Can you give us a brief synopsis of why it is important for 
our agricultural sector, not just in the Midwest, but 
nationwide, to have access to that inland waterway system and 
why it is crucial to invest more dollars into it?
    Mr. Calhoun. Thanks, Congressman. The two words that I 
always come back to are competition and capacity. And without 
the waterways, the nation is going to lack capacity to get your 
farm products to market. And when you don't have enough 
capacity, do prices go up or down? They go up. And the price of 
transportation goes up. The price of grain then goes down.
    And likewise, when you want to have competition, you want 
to have different modes. You need the access to the waterways, 
and competition is a great thing when it comes to American 
business. Those are the two words that I focus on.
    The projects in your neck of the woods are very important. 
They are very important. I had a previous life. I worked for 
Cargill for 41 years. They are very important to all the 
members of the National Grain and Feed Association. They are 
important to all farmers, because the river prices every bushel 
of grain that is produced in this country, not just the ones 
that are grown around the river. When the prices along the 
river decline, the prices all over the nation are going to 
decline.
    And so it is very, very critical, some of these locks and 
dams are older than I am, and I am old. And they need to be 
replaced and they need to be revitalized. Because if we have a 
catastrophic failure, it will cost this country billions of 
dollars if you shut down one of these segments for extended 
periods of time. And I don't think this nation can afford to do 
that.
    I know you are on the T&I Committee, and I wish you great 
luck over there. We are very excited about what the President's 
come out, and he is paying attention to infrastructure. But the 
trillion dollar question always is, who is going to pay for it 
and how is it equitably to be done.
    Mr. Davis. Right. Thank you very much for your response.
    Dr. Coon, I thank you for being here. As somebody who 
represents a land-grant institution in central Illinois, the 
University of Illinois, I am always thankful that anyone from 
Oklahoma State continues to support the U of I colors every 
time you come in. I notice that Chairman Lucas does the same on 
a regular basis. I am thankful for that.
    But in all seriousness, I want to talk to you a little bit 
about ag research. It has been dwindling. I mean, we haven't 
grown it at the rate that other research dollars and other 
agencies have grown. Now, as we move forward, I only have a 
little bit of time left, so if you could on behalf of all the 
land-grant institutions, and especially the one I represent, 
can you kind of talk about some of the regulatory hurdles that 
you face in accessing those ag research dollars right now and 
what we can do to relieve them in the future?
    Dr. Coon. Thanks for the question, Congressman. And first 
of all, there is no blue. This is all black.
    Mr. Davis. It is that orange.
    Dr. Coon. Yes. Well, that is \1/2\ of the Illinois colors. 
Congressman Lucas just showed up. I had to cover that.
    Seriously, with respect to the regulatory hurdles, any kind 
of public investment is going to come with some level of 
accountability. And we understand and we appreciate that. We 
want to be accountable.
    But sometimes the accountability ends up consuming more of 
our time, perhaps, than the actual doing of the research. And 
if we can find a way to get to a point of simply saying, did we 
do what we said we would do? Did we spend money responsibly to 
accomplish it? And did what we accomplish make a difference, or 
do we have a reasonable expectation that it will make a 
difference? If we can get back to sort of those sorts of 
principles, it might help.
    Certainly, in animal handling and well-being, it is 
important that we are good stewards of the animals that we work 
with, pretty high levels of accountability there as well, 
sometimes puts us in kind of a quandary of, well, are we going 
to invest in that or are we going to, actually, going to get 
some research done with the facility?
    Mr. Davis. Thank you. My time has expired.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Ms. Plaskett for 5 minutes.
    Ms. Plaskett. Thank you, Mr. Chairman. And thank you all 
for being here.
    This is, of course, one of the primary subject matters that 
we here in ag need to be discussing.
    I was very grateful that yesterday, I had a meeting with 
the Secretary of Agriculture and talked with him about the 
President's infrastructure proposal and the need to really have 
concretely in there issues relevant to the rural area.
    Dr. Halverson, you mentioned in your testimony innovative 
public-private partnerships and the role that they play in 
helping to meet financial needs for infrastructure projects. 
That is a particular area that is very important to me.
    Before coming to Congress, when I had a real life, I was an 
attorney doing public finance law. Public-private partnerships 
are something that I think are very important and instrumental.
    One of the concerns I have with regard to public-private 
partnerships is how do we incentivize developers and others to 
come to rural areas to engage in those projects? And how do we 
incentivize developers to come into areas where there is not 
going to be the amount of local public funding to support that?
    For example, in the Virgin Islands, which I represent, we 
face enormous financial issues. And so what are the ways that 
you think that we can deploy funding into rural areas that have 
those limited local resources? And have you seen that, and what 
are examples of that that you can cite for us?
    Dr. Halverson. Well, thank you, Representative Plaskett, 
for the question. The facts and circumstances in the local area 
are going to be very determinative in what is possible, right? 
Whether you are in a place with one person per square mile or 
50 persons per square mile and so forth is going to make a big 
difference. The level of capital requirement and the type of 
business that we are talking about.
    That is a long way of saying, it depends on what the facts 
and circumstances are and the location that you are looking at. 
And there isn't a one-size-fits-all answer. You can look at 
them on a continuum, and on one end of the continuum you need a 
higher amount of public funding, Universal Service Funds, and 
other forms to help drive down the costs. But you always look 
for the ability to attract institutions, like CoBank and our 
partners in the Farm Credit System, who are providers of 
reasonably priced capital in loan form.
    And there are, in fact, a great array of private companies 
already that are in the infrastructure business, whether it is 
communications or otherwise. And we bank a lot of those 
companies, and they are always looking for new places to go to 
continue to grow their businesses. We try to support them in 
whatever way is appropriate. If you have a particular situation 
you would like us to look at, we would be happy to do so.
    Ms. Plaskett. Thanks. Thanks so much.
    Ms. Otwell, a question for you. In the agriculture 
appropriations bill, they recently reported out, the full 
committee report, language directing USDA, the FCC, and the 
Commerce Department to prepare a report that details each 
agency's area of responsibility for addressing data speed. We 
talk about building infrastructure, we talk about the role of 
broadband in that infrastructure for rural areas. One of the 
things that we find very troublesome is the data speed and the 
lack thereof in rural areas, and this becoming a divide for our 
farmers and for these communities in rural areas.
    Do you believe that it is the Agriculture Department's area 
of responsibility to address this? And if so, how? And how does 
the Department of Agriculture and this Committee work to create 
any broadband infrastructure investment plans in this area?
    Ms. Otwell. Thank you, Congresswoman. That is a very good 
question. We do have issues with speeds in rural areas. 
Sometimes that is what we talk about when we are trying to 
build future proof networks. And when we are putting fiber in 
the ground, that is only limited by the electronics on either 
end. And so when we try to build networks, that is part of what 
we are trying to put in the best possible infrastructure to be 
ready for the future. Some of what the FCC still deems as 
broadband is really not fast enough to do all these 
applications that we talk about.
    One thing we do want to think about is with limited 
resources from whatever possible way, we don't want to 
necessarily reinvent the wheel. The FCC oversees that Universal 
Service Fund that has been revamped. It is ready to go. It just 
doesn't quite have enough funding in it right now.
    We are always interested to hear other opportunities, 
things like that. But we want to be careful not to reinvent 
processes and not be efficient in that way. We also don't want 
to overbuild networks where they do already exist and waste 
money that way either.
    Ms. Plaskett. Okay. Thank you very much.
    I yield back. Thank you.
    The Chairman. Yes, ma'am. The gentlelady's time has 
expired.
    Mr. Rick Allen, 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman.
    And we are, I guess, going to talk about broadband here and 
the critical application of that service. Obviously, we know 
that agriculture, from a technology standpoint, has advanced 
very rapidly. And I will say that I planted some peanuts, and 
the first time I have ever done that, and I touched the wheel 
of the tractor, and I planted them like 17" over from the year 
before. And so it is pretty amazing what we are able to do in 
agriculture today.
    But the bottom line is, we have to do something about 
connecting our rural America, our farmers, and all those in 
agribusiness, not only through the various programs, but also 
education and things of that nature. And we have to have good 
service, because these folks are, obviously, very dependent on 
it.
    With that, as far as, if you could share your 
organization's perspectives on the need to develop 
infrastructure that supports broadband in both wired and 
wireless formats and, in particular, where access to high-speed 
mobile services are currently lacking. Who in the panel would 
want to address, how can we get where we need to get here?
    Ms. Otwell. I would love to speak to that. Thank you, 
Congressman.
    Mr. Allen. Yes.
    Ms. Otwell. We do see a lot of working together with 
wireless networks. In our area, in some of our most remote 
areas, we do actually use a fixed wireless product to serve, 
especially some of those farms in those extremely remote areas. 
However, the thing to know about that is that even with a 
wireless network, those customers don't know which one they are 
on. They don't care. They are still generating huge amounts of 
data.
    You talked about some of the smart farming initiatives. 
People are using video streaming for some of the educational 
things, telehealth applications, that is generating huge 
amounts of data. And any wireless network cannot handle that 
amount of data except over a very short distance. You still 
have to have that wired network in place to the tower to be 
able to offload that data.
    In our area, we also have some national cellular carriers 
that have towers in our area, and we have built fiber to those 
towers, because they face the same problem. It is still a huge 
amount of data that has to meet the rest of the world 
somewhere.
    Mr. Allen. Is this like a density issue, in other words, 
costs per user situation to pay for this amount of data that is 
needed?
    Ms. Otwell. It is. I mean, it doesn't matter if you are in 
a rural area or not, we are still using massive amounts of 
data. And certain networks just can't handle that yet.
    Mr. Allen. Okay.
    Yes, sir.
    Mr. Wynn. Yes. Congressman, I think the same issues that 
the farmers and other people that you mentioned are having, so 
are utilities, electric co-op.
    Mr. Allen. Okay.
    Mr. Wynn. Because the way we operate as a business now has 
changed tremendously over time. We have to have smarter devices 
downstream on the lines, which really require broadband 
infrastructure. Anything we do now has to almost be connected 
some way and have some level of communication.
    One solution that we are looking at is as we build our 
infrastructure as the electric cooperative, the members who are 
being served by us are also reaping the benefits of that. So 
that leveraging is another possibility that we are toying 
around with. The utility, the cooperative that is having to do 
this is almost not an option as it once was in the past, so 
there may be some opportunities.
    Mr. Allen. All right. Well, we have private companies 
implementing broadband service or co-ops in private companies 
right now. We have had this tremendous lag from getting service 
to the user as we get more dispersed into the less populous 
areas of the country. And, of course, that is a financial 
matter.
    Of course, it sounds like it is also a data requirement 
matter. In other words, our farmers and folks like that need 
tremendous access to data, and I guess it is the same in the 
electric co-ops as well, it is pretty complex?
    Mr. Wynn. Absolutely. Data is becoming the thing that we 
really have to have to operate. And it is really driven by the 
demands of our members or consumers. What they expect today is 
totally different from before, and data is definitely in the 
mix of being necessary.
    Mr. Allen. Right. Well, of course, in my district, 
agriculture is the number one industry. And in my State of 
Georgia, agriculture is the number one industry. I don't quite 
understand why we can't serve that industry the way we need to 
serve that industry with these technical services. And, 
obviously, electric co-ops are a big part of my district as 
well. Thank you for your testimony.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. Panetta for 5 minutes.
    Mr. Panetta. Thank you, Mr. Chairman.
    And thank you to all the witnesses who are here, your 
preparation, your time, as well as your testimony. I appreciate 
you coming in. And I apologize for having to step out, but I am 
back, and now you get to hear from me a little bit.
    I hail from the central coast of California, what many of 
my members here know as the salad bowl of the world. We have a 
number of specialty crops. Specialty crops take a lot of labor 
to produce. Unfortunately, we have a lack of labor right now, 
and that is an issue. And there is, obviously, two ways to deal 
with that. One is here in Congress with proper immigration 
reform, but two is mechanization in dealing with the lack of 
labor.
    One of the valleys I have is Salinas Valley. Right now, it 
is obviously big in specialty crops. There are a number of 
other valleys. But one of the other valleys that is paying 
particular interest to the Salinas Valley is Silicon Valley, 
because they are seeing that that is kind of a way to go in 
regards to where their investment can go. And that is 
happening. We are seeing a lot of ag tech innovation. And they 
are very excited about it, let me tell you. They are very 
excited about coming up with ways to help the farmers out to 
fill that lack of labor.
    But my question to you is, and what I am seeing and what I 
am hearing, is that without proper broadband, the mechanization 
will not be implemented, and it will inhibit innovation when it 
comes to mechanization. And so I was wondering if any of the 
witnesses could testify to that fact as to how it does inhibit 
innovation, how it could prevent actual implementation of 
mechanization in our agriculture.
    Dr. Halverson. Well, I will take a stab at that, 
Congressman Panetta. I have had the opportunity to be out in 
your area, and we have some very important Farm Credit partners 
who lend to farmers and ranchers in your district and all over 
the State of California. But I hear that exact same thing all 
over the country. Right? I go out and I visit farmer producers 
all over the place. And modern technology, which generates 
exponential growth in data, as my colleagues just indicated, is 
a substantial contributor to the dramatic increases in 
productivity in American agriculture over our lifetime.
    And there is no end in sight to the upside to our ability 
to continue to produce. We do have some significant 
constraints, however, in our ability to realize the tremendous 
value that our agricultural productivity can generate in the 
long run. Right? One of them is the transportation 
infrastructure, the other is communications.
    If Congressman Allen were here, I would tell him the same 
thing. If you get into your combine or your tractor, sometimes 
you need a USB chip with a bunch of data in it and you need 
wireless communications; otherwise, you can't actually operate 
your technology. To your point, it becomes a real impediment.
    Many of the pieces of high technology equipment these days 
that people use, whether in specialty crops in particular, they 
get downloads of new software overnight. Their difficulties get 
diagnosed remotely from the foreign country where the thing was 
produced or from somewhere else in the country, and they can't 
take it to a shop, and there is not somebody for 500 miles to 
come and fix it. It gets diagnosed remotely.
    What we are seeing is a dramatic convergence between the 
communications industry and the agricultural industry, because 
they are so interdependent on each other. And our ability to 
continue to generate the kind of agricultural productivity that 
we have, whether in base row crops or specialty crops, 
increasingly depends on our ability to deploy high-quality, 
ubiquitous communications infrastructure.
    Mr. Panetta. Exactly. Thank you.
    Any other witnesses?
    Dr. Coon. Yes. Congressman, just a few other things. 
Information really is key to success in agriculture today. And 
the faster the better. And so in cooperative extension, we find 
ourselves with a tremendous opportunity to deliver information 
and programs to producers very effectively using technology, 
but it doesn't get to them if they don't have the bandwidth. 
Right? So that is one of the challenges.
    And, likewise, we have a meteorological network within 
Oklahoma that we provide, along with the University of 
Oklahoma. And, again, it is extremely valuable information for 
producers in determining when it is best to spray or burn or 
whatever, but they have to be able to get that data, so it is 
really key.
    One of our ag econ faculty members is conducting a study 
currently. It is USDA funded. Dr. Brian Whitacre is looking at 
if you make it available, how do people use information when it 
becomes available in a rural setting? And so he is going out 
and basically, creating hot spots in rural communities and then 
studying the behavior of people as they use that to get 
information. What are they using it for? Where are they going, 
and so on.
    Finally, rural health is also tied in with this. And our 
dean for the Center of Health Sciences, Dr. Kayse Shrum, is 
developing a network to provide telemedicine, in effect, in 
rural communities. Again, we have to have that bandwidth.
    Mr. Panetta. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. Denham, 5 minutes.
    Mr. Denham. Thank you, Mr. Chairman, and thank you for 
holding a hearing on this important topic.
    This is an area I focus a lot on, on Natural Resources and 
Transportation and Infrastructure as well. I introduced the New 
Water Act, because in our area, agriculture does not survive 
without having, not only proper conveyance, but equally 
important, if not more important, proper storage.
    And I thought it was important to make sure that we had a 
program where we could borrow money where users would pay that 
up-front funding back, as a water user, I pay for my water, and 
that would go to paying back the infrastructure.
    Our challenge is, like WIFIA and TIFIA, we need another 
type of funding for the Bureau of Reclamation districts, so the 
New Water Act would deal with WIFIA.
    Mr. Macmanus, I wonder if you could tell us a little bit 
about some of the work that has been done with WIFIA and 
whether or not you see other benefits to storage across the 
country?
    Mr. Macmanus. Congressman, thank you for your question. I 
was beginning to feel a little neglected up here.
    But our focus in the water industry is on potable water, 
predominantly. We do not focus on the irrigation and delivery 
and conveyance for crop production. But we deliver 
predominantly to people's homes, businesses, and commercial 
facilities, processing facilities but not irrigation water. We 
are not familiar intimately with that program.
    Mr. Denham. But you have utilized WIFIA in the past?
    Mr. Macmanus. Sir, I am not familiar with that program.
    Mr. Denham. Okay. Well, let me just ask it one step 
further. On the Clean Water Act, we end up with a lot of 
compliance issues. You had talked about this in your testimony.
    What I have heard from some water users is that the 
compliance issue oftentimes is a hindrance to putting new 
projects in place, because they are concerned about whether or 
not, as they have implemented new projects, they can actually 
achieve the compliance and end up facing penalties that they 
would not have faced previously.
    Mr. Macmanus. Yes, sir. The example I gave in my testimony, 
the UV disinfection system, we sampled our raw water the first 
time in 2010. And when our samples came up positive for the 
cryptosporidium, we had to start a process of implementation to 
get this infrastructure built to have a treatment technique 
that would deal with these log removals that the EPA requires.
    My concern with the regulation itself is no matter how the 
results on our raw water turn out again in the future, if the 
cryptosporidium is no longer there, the EPA still mandates that 
I provide the treatment continuously whether or not the 
cryptosporidium is even present anymore. A lot of the 
regulations that we deal with don't necessarily have a real-
world practical application.
    The other side of this story is we have been treating the 
same raw water from the Rio Grande River in our treatment 
facility with conventional coagulation, sedimentation, and 
filtration for 30 years, have never had a water-borne disease 
illness outbreak. And now that we have started testing for 
cryptosporidium, I have to add an additional $1\1/2\ million of 
infrastructure to treat an organism that we have haven't really 
had an issue with.
    Do the regulations always make sense? No, sir, I can't say 
that they do on the investment that we have to make in that 
regard.
    EPA is always going to err on the side of safety when it 
comes to public health, and their drive on this whole issue on 
the cryptosporidium goes back to Milwaukee when you had a 
massive release of manure into the receiving stream or the raw 
water source for the City of Milwaukee, and they had a massive 
water-borne disease outbreak. We are not looking at the same 
circumstances by any means, but we are still having to comply 
with those strict issues.
    And I will give you another example.
    Mr. Denham. Thank you. My time is short. I have one more 
question. But I do agree that we have seen a lot of projects 
that have been hindered just because of the compliance and the 
fees associated with it.
    My final question. Mr. Calhoun, on the Transportation and 
Infrastructure Committee, we talk a lot about the inland 
waterways and the conveyance of a lot of our products that move 
interstate commerce through our waterways.
    We have a 29 tax, fuel tax, that goes to the Inland 
Waterways Trust, which is also matched by public funds. It is a 
great way to make sure that those waterways stay open. But we 
always see new efforts to put new fees, toll ways, locks and 
dams, that could interfere with that interstate commerce. I 
wonder if you could briefly discuss that.
    Mr. Calhoun. Certainly, thanks, Congressman. I commented in 
my testimony about our objection to tolls and fees. There is 
the difference between the waterways and a toll road. First of 
all, if you build a new toll road, you still have the state 
highway you could drive on and go around it. You have other 
alternatives than paying these high-priced fees, and we don't 
see that on the waterways. You have one way to go, and it is 
through the locks and dams.
    And we feel very strongly that you are going to penalize 
the users of the system, in this case the American farmer. 
Because if you have a 25, 50, 75 charge, that will have to 
be passed through to either the ultimate consumer or the person 
who produced the product. So that cost is going to go 
someplace.
    Mr. Denham. Thank you. I am out of time, but if I could ask 
you to respond in writing, if you could elaborate on the other 
beneficiaries that may also have a stake in the inland waterway 
system and making sure that it works properly. We are looking 
at those other beneficiaries that might also not be able to be 
helpful.
    Mr. Calhoun. Absolutely.
    Mr. Denham. I yield back.
    The Chairman. The gentleman's time has expired.
    Ms. Blunt Rochester.
    Ms. Blunt Rochester. Thank you, Mr. Chairman.
    Many people don't realize that Delaware, they might drive 
to our beautiful beaches, but don't recognize the diversity of 
our state. We have a very strong agricultural community, and so 
I want to, first, thank the Chairman and the Ranking Member for 
this panel. I mean, speaking of diversity, it is very diverse 
issues as well.
    Really, I want to address my first question to Dr. Coon. 
And I am on the Biotechnology, Horticulture, and Research 
Subcommittee, and so it kind of dovetails with Ms. Adams' 
question and also Mr. Davis' question. As we know, there are 
many benefits of research conducted at public universities, 
including the fact that the information gathered is publicly 
available and transferable. The academic setting allows for 
more long-term goals in research, and we can look forward, and 
it is not constrained by the profitability goals of private 
research. Also, as our country ramps up and tries to make sure 
that our investments are there, it helps us to be competitive.
    I am fortunate to have two land-grant institutions in my 
state, University of Delaware, which is my alma mater, and also 
Delaware State University, both doing really great research in 
the areas that are important to this Committee and supported by 
Federal funds.
    But you talked about the fact that, basically, you have to 
deal with faculty lines over facility lines. And my question 
is, how does deferring maintenance over time increase the 
likelihood of agricultural research being dominated by private 
research? And what kind of research may we lose out on because 
of this shifting dynamic?
    Dr. Coon. Thank you, Congresswoman. I appreciate the 
question, your thoughtful considerations there.
    I think, in part, the risk of everything become being 
privatized, it is real. And at the same time, right now, we 
have a healthy balance in that a lot of the fundamental 
research that is important for agriculture still is being done 
primarily at the public universities. It has been that way, 
still is that way. And where the private-sector takes over is 
in the application of that, developing varieties, using 
technology that was originally developed at the universities. I 
think that is a good balance.
    And the risk is if the support for the fundamental research 
goes away, what will happen to the private interests that have 
depended on that in the past? Will they pick that up? There is 
a lot of risk with it. A lot of things don't turn out, and so 
the payoff isn't quite the same. We run the risk of losing our 
overall capacity if it all becomes in the private-sector.
    And then at the same time, the private-sector tends to 
focus on the larger commodities, the more profitable areas and 
so on. Specialty crops tend to not get as much attention, and 
some of the other local issues don't get the attention that 
they might otherwise.
    Ms. Blunt Rochester. Thank you.
    I have a quick question for Mr. Wynn. It might not be 
quick, but I have a quick question for you. You mentioned 
microgrids. Can you talk about why these are an important 
infrastructure investment, and also, if there is potential for 
them to help alleviate the maintenance cost of having to wire 
our most rural areas?
    Mr. Wynn. They are important because of the diversity of 
our system and how it is evolving and the demands of our 
consumers.
    Having a microgrid also provides more resiliency when there 
are outages. And electricity is becoming more and more 
critical, and the loss of it is becoming more and more of an 
issue when it is not there. Microgrids provide another 
opportunity to make sure that our systems are more resilient.
    We are kind of going back from where we come, because in 
the beginning, that is what we really had, was microgrids, and 
we got larger and became more centralized. I think that is 
important.
    The second part of your question was?
    Ms. Blunt Rochester. And do you think it would help 
alleviate the maintenance of having to wire?
    Mr. Wynn. There are situations even with our system where 
we are looking at the possibility of microgrids, especially in 
rural areas where you, in some cases, have miles and miles of 
line to get to a load that is centralized, that is very far 
away from the centralization. There are going to be 
opportunities, yes, that I think microgrids will make a lot of 
sense financially.
    Ms. Blunt Rochester. Great.
    And I only have like 10 more seconds, and I wanted to ask 
Ms. Otwell a really quick question.
    You mentioned about sending information to the FCC on the 
geocoded map. Is there a map of the country, I have heard yes 
and no, that shows how we look from a broadband perspective?
    Ms. Otwell. I don't think there is an accurate one right 
now. How about that?
    Ms. Blunt Rochester. Thank you.
    The Chairman. The gentlelady's time has expired.
    Mr. Dunn, 5 minutes.
    Mr. Dunn. Thank you, Mr. Chairman.
    Dr. Coon, in recent months, a proposal to cap the indirect 
cost of certain Federal grants, research grants, has been 
floated. Today, fortunately, in the Appropriations Committee, 
they are marking up a bill that would prohibit those caps on 
NIH grants and USDA grants.
    Would you discuss the impact those caps have on your 
research?
    Dr. Coon. Thank you, Congressman. I appreciate the 
question. And thank you also for all who had a part in 
protecting us from that change.
    We call them facilities and administration costs. They are 
real. If we are doing research in a building that was built for 
classes, that is great, but the research that is going on in 
there wasn't necessarily included in that original 
construction. We really have to recognize that the mission of 
the university going into research is beyond what it was 
created for, or what our state funding offers for.
    We really need to find a way to pay for the actual cost of 
the utilities that go into the research and so on.
    Mr. Dunn. I am going to suggest that you keep pounding on 
everybody that the cost of overhead is how you do business. I 
mean, your business is research.
    Dr. Coon. Absolutely.
    Mr. Dunn. Your overhead is not going to go away.
    Dr. Coon. It is real.
    Mr. Dunn. Yes, it is real. So thank you very much. I am 
going to keep you in mind.
    Dr. Coon. Thank you.
    Mr. Dunn. Ms. Otwell, I so liked the last question on the 
mapping, because that is the complaint that I hear about, that 
the maps aren't real. We hear that there is broadband and there 
isn't, or there isn't broadband and there is. And so I am just 
going to ask, submit to you that I think that we need some 
better maps. And I have an Internet page that looks like it 
reveals that information, can you comment.
    Ms. Otwell. And that is why some of our reforms have 
changed, to give a better view of what is exactly out there to 
each and every location. I think that is definitely the reason 
why some of those have changed.
    Mr. Dunn. In general, it is a bad idea for the government 
to be competing against private enterprise in these spaces. 
However, Mr. Scott made a good point. Just because you have a 
provider and service in there doesn't mean it is good service.
    In the 2 minutes or so left to us, I would like you and I 
to speculate on which technology or technologies are actually 
ultimately going to deliver the broadband to all the rural and 
remote areas in our country, whether the Virgin Islands or in 
the second district of Florida, which is very agrarian, and a 
lot of areas that are under-served. This is part cost-benefit 
analysis, and it is part sort of science techie analysis. I 
also sit on the Science, Space, and Technology Committee. We 
think we have some insights to share with you over there on 
that. Please speculate.
    Ms. Otwell. You are right. There are definitely some 
varying options for different technologies. However, I would, 
once again, restate that a lot of those futuristic 
technologies, some of your satellite and wireless and whatnot, 
those cannot handle the amount of data currently that we are 
looking at.
    In my company alone, our average usage for our users at 
night has gone up more than 750 percent over the last 5 years. 
And that is not slowing down. It grows exponentially by the 
day. And so right now, the only technology that can handle that 
much data is a fiber network.
    Some of these other options are great for that last little 
bit to reach the consumer. I had mentioned that we also use 
some fixed wireless in some of our higher cost areas. It is a 
better benefit ratio. But there comes a point where you have to 
have that wired network to complement all of those other 
options. They really are complementary networks.
    Mr. Dunn. I actually sat with some of the very, very large 
ISP providers. I don't need to name them. You know who they 
are. And they are hesitant to build out that. It is the cost-
benefit analysis. They just don't see that they are ever going 
to get that investment back on fiber or wire or beamed 
broadband. But they do think that they have the solution in 
hand with satellites. There are new satellites, new cube sats, 
constellations of cube sats that they have already rented the 
launch times in Florida to put these things up.
    I think that that is what you are going to see, is going to 
be the----
    Ms. Otwell. The only thing I would say about satellite 
technology, especially in these rural areas, sometimes our 
network is the only voice network, and that is still extremely 
important for public safety purposes, things like that. And 
with satellite, you do have issues with weather. Sometimes they 
have latency issues, and so we do want to keep that in mind 
too, that there are other things that these networks are used 
for that maybe some of that technology is just not quite there 
and can provide just yet.
    Mr. Dunn. All right. Well, thank you very much. I thank all 
the panel.
    I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back his time. Thank 
you.
    Mr. O'Halleran. Tom, I am going to figure out how to say 
your name one of these days.
    Mr. O'Halleran. We will talk about it. Thank you, Mr. 
Chairman.
    Getting back to cost-benefit analysis, I guess I wasn't 
going to go in that direction initially, but it is the right 
direction to go in.
    We have these urban centers all around the world, but in 
America especially, and then we have rural areas. And they are 
interdependent on one another. There is just no doubt that the 
urban centers need that electrical grid, they need the water, 
they need the natural resources that come out of these rural 
areas, they need the food. And the rural areas need the 
telemedicine. They need the quality of life issues. The urban 
areas need the rural areas. On the weekend, this coming 
weekend, we will be flocking out of Washington to get to those 
rural areas to relax and enjoy and hopefully have decent 
broadband.
    But the core issue here is that there is a cost-benefit 
analysis on that side of the equation. The idea that this 
interdependency is only a one-way street that we have to look 
at these urban centers with large populations in order to make 
sure that we have benefit from the cost standpoint when it is a 
shared environment. And we must find a way to be able to 
identify that.
    What I am asking is does anybody up there know of any type 
of studies that have been done to clearly identify this cost-
benefit of the urban environment coming out to us and our 
environment coming into urban all the time, and that this is a 
crucial area for us to invest in as a country, and the urban 
people get as much out of it as we do in rural Arizona? 
Anybody.
    Ms. Otwell. I would be happy to speak to that. I don't have 
it in front of me. I would be more than happy to send it to you 
afterwards. Last year, the Hudson Institute did a study in 
combination with the Foundation for Rural Service that showed 
just rural broadband infrastructure contributed $24 billion to 
the nation's economy as a whole, and that \2/3\ of that 
actually benefited urban Americans with only \1/3\ of it 
benefiting rural Americans.
    And so just like you said, they need us; we need them. And 
so anything we can do, like providing adequate broadband in 
rural areas, everything we do to make rural areas more 
efficient saves money for urban Americans too. The price of 
milk, different commodities that come out of rural America, 
those efficiencies in turn help urban Americans save too.
    Mr. O'Halleran. Ms. Otwell, I did read in your testimony, 
or somebody did. But the core issue to me is that we study the 
economic development potential and the potential of the cost to 
rural areas of serving that population that is coming out. The 
cost to the children that live in rural areas by not having the 
education necessary, the cost-benefit of rural areas being able 
to go out and compete for language teachers, doing it through 
telecommunications or broadband, telemedicine through 
broadband, instead of having to have that specialist at the 
hospital.
    There are these benefit analysis processes that must go on, 
I believe, in order for us to get a true picture and thereby be 
able to justify the investment in broadband throughout our 
country. Because my district, when you take a look at Navajo at 
60 percent unemployment and White Mountain at 80 percent 
unemployment, these are critical issues. In rural America in 
general, the unemployment rate is so high, much higher than in 
urban settings.
    And so we have to find a way to balance this process in an 
appropriate way, and get others to recognize the need for more 
of a community approach to this than just, well, I have to run 
a line from point A to B, and here is how much it costs, and we 
just can't do that. It costs us all, if the quality of life of 
people and our ability to get people to service the 
infrastructure of America is lost, and these towns and cities 
are lost.
    I open up that to anybody for discussion in 34 seconds.
    Dr. Halverson. Well, sorry. Go ahead.
    Mr. Wynn. I yield.
    Dr. Halverson. I mean, the logic of that is very 
compelling, Congressman. The challenge, of course, is it is 
really, really hard to measure. Right? We recently produced a 
piece of research to try to illuminate the differences between 
the service provision and various infrastructure segments in 
rural America versus urban America, and we found it challenging 
to get data to demonstrate the case and to measure some of 
these things.
    What you tend to get is organizations who are focused on a 
more micro level on their industry, their region, or what have 
you. I am unaware of anyone who has done this in the way that 
you are describing, which is kind of on a national basis, to 
try and come up with some proxy for what is the value to urban 
America of everything they get in rural America and, therefore, 
that they ought to contribute in some way to paying for, which 
is, we would probably agree is worthy, but very, very hard to 
measure.
    Mr. O'Halleran. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. LaMalfa, 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman.
    Ms. Otwell, you mentioned that there are Federal proposals 
to accelerate the ability to do projects, and examples I have, 
like in the Siskiyou County in the far north part of my north 
Cal district, you have delays from U.S. Forest Service, for 
example, in starting environmental reports, because they are 
doing a lot of other things besides that.
    For one provider, their project has already cost them a 
full year, and now additional delays are taking into the next 
year. This happens a lot. You have BLM, where there is cross 
jurisdiction, perhaps. Again, Forest Service, California 
Department of Transportation. Then you have to deal with NEPA 
and historic preservation compliance.
    And we are not talking like we are building a dam here. We 
are not building a four-lane freeway. We are running some wire, 
maybe in a lot of cases already down in, perhaps, an existing 
right-of-way or something that will be buried and never seen 
again after we have made our initial footprint.
    Do you see that some of the proposals being talked about to 
accelerate projects is--do you really think it would provide 
any true regulatory relief? Do you have any recommendations 
that we could build off of those to take it a little farther 
and be able to accelerate what people need in these areas?
    Ms. Otwell. Absolutely. Thank you, Congressman. That is a 
very timely question. Anything that can be done to streamline 
the many difference processes, especially involving areas that 
deal with Federal lands, would be helpful and free up resources 
to go back into deployment.
    For example, sometimes when you are dealing with those, you 
are going to have to file the same type of report and reviews 
across many different agencies. They all have their own 
timeline, they all have their own processes. Anything that can 
streamline that would definitely be a savings, and maybe having 
a certain agency be a lead on that and kind of oversee the 
whole process.
    Another thing that happens sometimes, we have duplicative 
reports between state and Federal levels. Sometimes, if there 
is a way that the Federal permit can use the state review as 
being useful, then that helps too.
    Mr. LaMalfa. Well, we are looking at some one-stop shopping 
proposals. Do you see anything on the horizon already I might 
not be aware of that is being done administratively or other 
legislation that we should be aware of to get behind?
    Ms. Otwell. There are a few things. I know there was a 2015 
highway bill that involved some NEPA reviews, trying to 
consolidate those, but they were only for projects over $200 
million, which is quite a bit larger than most of our companies 
are doing. Sometimes, even just making sure those thresholds 
are low enough to benefit the small companies as well would be 
very helpful.
    Mr. LaMalfa. Yes. A tiny threshold maybe would be good 
here, because these seem like pretty low impact, low footprint 
projects we are talking about.
    Mr. Wynn, kind of a similar line with you here on this, is 
that you mentioned that reform priority, NEPA, ESA. And we are 
going to have a pretty good look at ESA this week as well. 
Would significant reform help stretch the dollars significantly 
further for infrastructure funding? With the limited funds we 
have available, do you see these hangups being actually very 
costly in getting them accomplished?
    Mr. Wynn. Yes. Congressman, they are costly in terms of 
lost opportunities that we otherwise would have if those were 
not there. So the short answer is yes.
    Mr. LaMalfa. Not necessarily the building of the 
infrastructure, but just blowing up the idea, people look at it 
and throw their hands up and say----
    Mr. Wynn. In our world, yes, there are costs. And some of 
those regulations are really driving us towards private sources 
of funding because of the overhead burden that is there, the 
need for engineers to come in and do the inspections even after 
the fact.
    We think there are some real costs involved that----
    Mr. LaMalfa. What would be one or two things you would like 
us to get done in that area, if we could? One NEPA, or what 
would it be?
    Mr. Wynn. Well, really, just recognizing the nature of our 
business. We are electric cooperatives that really don't have a 
profit motive at all. We are governed by people we serve. Just 
the model itself really can alleviate some of the concerns that 
may be there that we are not going to intentionally do 
something that would hurt our neighbor if you would. I think we 
just really should be taking a new look at the motive behind 
some of the regulations in the beginning and realizing that the 
threat that might have been feared is not there any longer.
    Mr. LaMalfa. Bring them back to the original mission?
    Mr. Wynn. That is right.
    Mr. LaMalfa. Okay. Thank you, panelists.
    And thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman's time has expired.
    Ms. Lujan Grisham, 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman, and thank you 
for this hearing today.
    Ms. Otwell, the Federal Government has historically played 
a major role in the expansion of all major technology advances 
in communications. Whether it is electricity or radio, the 
telephone, the Federal Government has certainly made these 
technologies ubiquitous throughout the country.
    And, well, it feels a little bit awkward to say this, given 
that I have been talking about broadband since, it seems like, 
laying fiber was invented. Clearly, for rural America, it is 
the next frontier. And unless we get that done, we are not 
going to be able to support, not only our rural communities, 
but I would submit that even in ag, narrowing it completely, 
just the advances now in dairy farming, where quite literally 
we have dairy cattle wearing pedometers and computer technology 
figuring out when these cows are ovulating, and they are having 
a huge increase in the success rates of fertilization for their 
herds by using technology.
    Interestingly enough, where we have some of the largest 
dairies in the country, we can't access any of this technology 
in a routine and productive manner. And when we talk about 
innovations in ag communities, we know that most of these large 
ag enterprises are, thank goodness, are in rural America and 
providing incredible economic footprints as well as feeding the 
world. But they can't take advantage of those innovations and 
the work that we invest in, in other titles in the farm bill 
unless we deal with broadband.
    And my colleague, Congressman Scott, he actually stole my 
question, because I spent 30 years working in state government 
on and off, and the big issue about any technology investments 
through government was that the accountability aspects, we 
would be promised a product, we would be promised that this 
would happen in this way, that would not occur. We would spend 
billions of dollars and folks would feel a bit as if we are not 
understanding technology in the way that makes it reasonable 
for a lot of stakeholders or folks who are doing that contract 
work or competitive review or accountability, perhaps we 
shouldn't be investing anymore. And the problem is, of course, 
that is not right and, at least in my opinion, that gets you 
nowhere.
    You started to talk about accountability. What could we do 
in addition that makes it very clear that getting broadband 
everywhere it needs to be should be a priority and should be in 
the farm bill, making sure that states like mine, where you 
heard them refer to the Navajo Nation, 90 percent of the Navajo 
Nation has no access to the Internet, 90 percent.
    We have to get that addressed, and they are a huge ag 
producer. What else can we be doing?
    Ms. Otwell. Thank you, Congresswoman. I appreciate the 
question. To be perfectly honest with you, for the community-
based rural carriers that have served some of those most rural 
areas, we have just undergone the reform to address some of 
those sparsest areas. However, the funding is not there for the 
mechanism.
    We have actual numbers for how much it is unfunded. You can 
see the investment that rural broadband deployers want to put 
in but simply can't because it is not there.
    Ms. Lujan Grisham. But I want to make that case for you. I 
agree with you.
    Ms. Otwell. Yes.
    Ms. Lujan Grisham. What would I tell my colleagues about 
making sure that the investments that we could put into the 
farm bill would be carried out in the most effective, 
reasonable, and accountable manner, given that, I would guess, 
there is not a single Member who hasn't felt like some 
stakeholder in a technology investment at government didn't 
exactly get what we thought we were going to get and yet spent 
a ton of money? Any specific ideas that we could advocate for 
that, because I feel like the farm bill is one of the most 
accountable efforts in terms of a private-public partnership to 
advance the issues that we think are a priority, including 
rural economic development.
    Is there anything specific for you, or anybody on the 
panel, that we could contemplate to create that balance, and 
then maybe provide an incentive for more funding as a result?
    Ms. Otwell. I think just pushing those that have worked on 
these mechanisms to fund them, that accountability is there, 
the targeted funds to build those targeted locations is there.
    There was a letter that many of the Committee Members 
signed to the FCC earlier this year talking about that lack of 
funding, impressing upon them to put the funding there, to put 
these reforms into action, because it will build broadband.
    Ms. Lujan Grisham. Thank you. I yield back.
    The Chairman. The gentlelady's time has expired.
    Chairman Lucas for 5 minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    Dr. Coon, in your comments, you noted that the land-grant 
universities, and I would be remiss if I don't remind everyone 
the miracle and the wonder of the Morrill Act of 1862, and the 
1862 land-grants, and the 1890 land-grants, and the 1994 
facilities. That opportunity for the first time truly in the 
history of the world for anyone with enough effort, enough 
energy, and some smarts to be able to secure a college 
education. Just an amazing thing, the land-grant universities.
    But you mentioned the $29 billion replacement value of the 
infrastructure of these facilities and the $8 billion in 
deferred maintenance that we face now. Could you expand for a 
moment on what kind of things we are talking about that $8 
billion would go to? And would you explain how that would help 
facilitate researchers, students, and the industries that 
utilize all this information that is developed?
    Dr. Coon. Well, thank you, Congressman. I appreciate your 
loyalty to the land-grant system and share your respect for it.
    Where we find ourselves is we need to look at ways of 
solving the problem without simply going out and saying we are 
going to spend $8.4 billion. Because the kind of facilities--
let me use it as an example from Oklahoma State. We have a 
dairy barn. It is a beautiful dairy barn built in the 1940s. 
And gorgeous design and so on. Our Holsteins don't fit in it. 
It was built for Jerseys. Our Jerseys would probably fit in it, 
but they wouldn't stay in it today if we tried to put them 
there. And it is this gorgeous wooden roof that has no 
protection or prevention for a fire. And so to go in and make 
that a useable facility, we would spend millions of dollars to 
put sprinklers in and so on and so forth, and end up with a 
substandard facility.
    In cases like that, we are better off to do what we are 
doing, which is to build a new free stall barn at a lot lower 
cost that is going to last for a long time. Some of it is 
simply replace it. But the rest of it is to, as I said, to be 
more diligent in ourselves in using our finances to make sure 
that we are taking care of the facilities. And no one wants to 
spend money on that, because it isn't glitzy and it doesn't get 
the attention of the public. But, the bottom line is it is good 
stewardship, and that is what we need to take on.
    Mr. Lucas. And those facilities enable the scientists, who 
are also professors and teachers, working with the 
undergraduate and graduate students to do their work.
    Expand on that for just a moment. Sometimes we forget that 
land-grants are a hands-on experience.
    Dr. Coon. Absolutely. Well, one of the great risks that I 
fear is if we don't address this adequately, we are going to 
continue to lose our most valuable faculty, our greatest 
expertise, either to the private-sector, or it may be we are 
stealing each other's best, perhaps from one university to 
another. But what that means is that we no longer have that 
expert on our campus teaching students, either graduate 
students or undergraduates. In other words, we are not creating 
the next generation of scientists.
    And so it is important to have the research done. But in 
the process of conducting that research, we are also building 
in the sustainability of this whole approach to agriculture 
that we created beginning in 1862, where research is what is 
driving innovation in agriculture.
    Mr. Lucas. I was late this morning, slightly, because a 
number of us from the Financial Services Committee had gone 
down to the Federal Reserve Board to visit with the Chair and 
the Vice Chair and one the Governors. And we got into a 
discussion about productivity and the decrease in the rate of 
productivity improvement in this country in the last 20 years. 
And the bottom line from their research department was, 
essentially, we weren't investing with the intensity we had in 
the previous decades or century, and that this dramatic 
increase in productivity, which is how you increase people's 
standards of living. They produce more. You don't run faster. 
You work more efficient with more efficient processes, that we 
were entering a point where, through lack of investment, that 
rate of productivity was slowing in comparison to the rest of 
the world, and that, if we were going to increase the standard 
of living, we had to enhance that, which tees off quite well in 
what you are describing about continuing the mission.
    Because there will come a time, correct, as you just noted, 
where if we don't invest enough, and that infrastructure, both 
physical and intellectual, will go away, and we will never 
catch up once we are behind the curve.
    Dr. Coon. Well, as you know, we have a fantastic wheat 
breeder, Dr. Brett Carver, who heads up our wheat improvement 
team, and he puts up with some really ugly facilities.
    Mr. Lucas. He could work on any of four continents if he 
wanted to go somewhere.
    Dr. Coon. Yes, he could. He could go anywhere in the world 
and be paid a lot more than we are paying him. Don't let him 
know that I said that.
    But, the point is he will probably stay with us. And I am 
going to do everything I can to make sure he has great 
facilities. He will probably stay with us. But who is going to 
follow him? How do we replace him if we don't have any better 
facilities than we have today?
    Mr. Lucas. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Ms. Kuster, 5 minutes.
    Ms. Kuster. Thank you, Chairman Conaway. And thank you for 
this hearing on rural America. We appreciate it.
    Most of you have spoken about conditions that are very 
familiar to me in New Hampshire and rural New England. And we 
have talked about all of these things in the 4\1/2\ years that 
I have been in Congress, and made some good progress on red-
listed roads and bridges, replacing aging municipal water 
systems, modernizing our electrical grid, and expanding 
broadband access to our rural communities.
    But I want to focus in on the broadband, because that has 
been of particular concern to regions of my district. According 
to the FCC 2016 Broadband Progress Report, there are over 
99,000 Granite Staters who live without access to fixed 
advanced telecommunications capability. And a lack of broadband 
infrastructure has had significant consequences for those rural 
regions of the state. When the rural markets go unserved, 
companies are less likely to relocate and invest in new jobs. 
Housing prices are now depressed because of lack of access. 
Schools are burdened with costs and hospitals are less likely 
to use innovative telemedicine.
    My question is for Jennifer Otwell. In your testimony, you 
referred to the importance of the Universal Service Fund and 
how it relates to Federal loans and grants by small telecom 
providers. Can you explain why it is so important and what 
effects the current shortfalls in the budget are having on 
small telecom providers in rural communities?
    Ms. Otwell. Absolutely. Thank you, Congresswoman. The 
Universal Service Fund is what allows our company to make the 
business case to have those networks in the high-cost rural 
areas in the first place. If we only have 3.4 customers per 
square mile, those customers themselves cannot pay enough, or 
should not have to pay enough to make those networks feasible. 
While we have programs like RUS and companies like CoBank and 
RTFC that provide the capital to make that initial investment, 
the loan programs that allow us to make those very finance-
heavy investments, we really need that predictable sustainable 
USF support to make the business case for it to be there in the 
first place.
    Ms. Kuster. My question is what can we do in a bipartisan 
way? And in particular, do we need to change how the USF 
collects fees? And I am concerned about what is going to happen 
to rural broadband deployment if the high-cost budget doesn't 
change.
    Ms. Otwell. You and me both. That is a very good question. 
There are proposals out there to start thinking about 
contributions and who is contributing to the fund. Those are 
very pressing questions that the FCC needs to work through, and 
we need Congress to continue to press them to work through 
those issues.
    Ms. Kuster. Thank you.
    Now this is a question for Curtis Wynn. Can you share with 
us a bit what the increased adoption of distributed energy 
resources, like wind or solar, is doing in your system? I know 
you have community solar. And if you could talk about your 
investments for the future, are you considering distributed 
energy in future investments?
    Mr. Wynn. Yes, Congresswoman. We are, in North Carolina, 
really embracing this whole concept or movement, if you will, 
of distributed energy resources. We are investing, as you 
mentioned, in the community solar projects. There are several 
in the state where, if you look at it from the standpoint of 
how it gets the availability of solar to every person who wants 
it, whether they are a renter or they live in an area that has 
trees that can't get to the sun, it is available through a 
model that has been pretty creative and very effective. So that 
has been one area.
    But as in terms of the impact, it is another source of 
power, is the way we look at it. And how it fits into the grid 
is very important, and we are making the adjustments. Because 
the traditional way that the grid was built was basically not 
designed to have the fluctuation and power sources coming as 
they are. But that is not an excuse. That is just a reality of 
how things are going. And we are making adjustments.
    As a matter of fact, in my testimony I mentioned that we 
have a microgrid project that is an experimentation opportunity 
for us to see how it can be more fully deployed throughout the 
whole state with other systems, and across the nation, because 
it actually is a collaboration between our national association 
and our state G&T.
    Ms. Kuster. Well, I just want to give a shout-out to a 
wonderful project in my district, the Town of Peterborough, New 
Hampshire, where they took a water treatment facility that had 
big ponds, and they used USDA funding for a much more efficient 
tertiary water treatment plant, and then they took the 7 acres 
where the ponds had been and filled it in and covered the whole 
thing with solar. And the whole town is using it. It is great.
    Thank you. I yield back.
    The Chairman. The gentlelady's time has expired.
    Mr. Yoho.
    Mr. Yoho. Thank you, Mr. Chairman. Thank you all for 
enduring a long hearing, and we appreciate you being here.
    I would like to expound on what Chairman Lucas was talking 
about. But before that, I want to mention what Congressman 
Crawford said about the horse. Buying the horse is the cheap 
part. Being a veterinarian, I know that. And that is the easy 
part.
    I want to start with you, Dr. Coon. With the land-grant 
universities, and I hail from Florida, University of Florida, 
Double Gator. And they're great facilities. I mean, it is a 
marvel. I went to vet school there. Their vet school would put 
a lot of human hospitals to shame. Great facility. And then we 
met with the director of IFAS, and he was talking about they 
need more facilities, and we have to build them. And yet they 
are complaining about the maintenance of maintaining them. And 
so I want to praise my university, and I am going to pick on 
them a little bit, because I know this applies to all 
universities in the land-grant situation.
    When we put these infrastructures in, sometimes they become 
a Taj Mahal. And they are looking at expanding a research 
facility. We were just down there on an ag tour. And they were 
talking about the new research facility that they are going to 
put in, state of the art. But I worry about the maintenance of 
this.
    And so when you put in a project, what do you do for long-
term maintenance? And before you answer that, I want to add 
that I was talking to somebody that is in charge of a 
municipality, their infrastructure as far as their water, 
wastewater. And I asked them, I said, ``What do you build into 
the project to take care of it, for the maintenance and 
replacement 10, 15, 20 years down the road?'' He shocked me 
because he says, ``Oh, we don't plan on that.''
    When you guys design something, as you are the association 
for public land-grants, when you sit down and you are into your 
think tanks and you are talking to people, yes, build this nice 
facility, but where is the funding for the maintenance? Because 
where we are at today, and Chairman Lucas brought this up, the 
competitiveness and the productivity of what we have today is 
based on what we invested in 150 years ago, and now we are at 
the point where we haven't kept up with that. How do we get 
beyond that for the next generation so that your top researcher 
stays at your university and that it invites the new ones?
    What is your recommendations on that?
    Dr. Coon. Well, thank you, Congressman. We talked about 
this in one of the reports that preceded this. And that was 
that, basically, if you are going to get Federal funds, you 
need to have a stewardship plan as part of the proposal. In 
other words, to answer your question, before you ever are 
granted the funds. It is a best practice that we have shirked, 
and just as the fellow you talked with perhaps may have in the 
water treatment system. We need to build it in at the 
beginning.
    And one of the ways that we are already doing that is, if 
someone comes to us and says they want to give us land, but 
they want us to keep it forever so that it doesn't get 
developed, and so on and so forth, that is great. And what we 
say to them is, we will do that under one condition: Provide us 
an endowment that will cover those maintenance costs. We need 
to do the same with anything we build.
    Mr. Yoho. Let me ask you about that, because I know some of 
these universities are sitting on a billion or billions of 
dollars endowment. The question that I have here is what are 
some of the ways that the institutions are looking beyond 
Federal appropriations to modernize the facilities and 
equipment? Keep in mind where we are as a nation. We are at $20 
trillion in debt. And we have to bend that cost curve or this 
is going to get worse next year and the next year.
    Go ahead.
    Dr. Coon. For one thing, it is always going to be a mixed 
package. Federal funds are part of it. They are never going to 
be the whole package. State funds have to be part of it, 
university funds and others. If it involves teaching, student 
fees end up coming in and helping to cover it as well. 
Philanthropy is huge. It is big part of it, certainly for us 
and for a lot of universities.
    That is part of the mixed package, I guess, but the 
opportunity here at the Federal level is to use Federal funds 
to bring that other money. In other words, to make it 
contingent. You only get the Federal funds if you are able to 
match it with these other sources.
    Mr. Yoho. I am going to move on to another question. I am 
running out of time.
    Ms. Otwell, so many times we can bring the infrastructure, 
the rural broadband, so far. How do you go that last mile? What 
is the best way to go? Because, as you said, you might have one 
or two people per square mile. Who should be responsible for 
that? And is there a smarter way to do it? And then keeping in 
mind 20 year replacement or maintenance of that.
    We have 20 seconds.
    Ms. Otwell. Okay. Exactly. We are looking to put in future-
proof networks as much as possible. If you are going to go 
through putting in a piece of fiber into the ground, you want 
it to be what will last for 20, 30 years. Some of those older 
networks, there is really not a midrange network. The older 
networks, they are already almost obsolete for what we are 
going to need them for in just a few years. There are different 
technologies. You almost always need that fiber----
    Mr. Yoho. I am out of time, and I will reach out to you. 
Thank you, ma'am, because I want to follow up.
    The Chairman. The gentleman's time has expired.
    Mr. Soto, 5 minutes.
    Mr. Soto. Thank you, Mr. Chairman.
    I have the honor of representing central Florida on citrus 
and cattle country. We, in the citrus areas, are facing a huge 
crisis with citrus greening. Over 70 percent of our production 
is down from peak production. And as we are developing 
resistant rootstocks that are currently about to be deployed, 
we are going to need an ability to be able to get these out 
into the field quite a bit.
    And I want to thank you, Dr. Halverson, you and CoBank, for 
your partnership with our citrus producers.
    If we were able to get out a lot of these resistant 
rootstocks, are you prepared, with your bank, to work with our 
growers and government to help really deploy these, even if 
they are semi-resistant in getting us closer to addressing this 
great crisis?
    Dr. Halverson. Absolutely, we are. I mean, that is really 
why the Farm Credit System is here, to support agriculture. 
There are risks, obviously, associated with that, and the 
industry is facing some really catastrophic difficulties. We 
will absolutely be able and willing to support the growers 
through other Farm Credit Association institutions that will 
lend directly to the growers but also to the co-ops as well.
    Mr. Soto. Well, as we continue on our quest for the 
resistant-proof, citrus greening rootstock, in the meantime, 
there are a lot of good strains that are being developed right 
now.
    The second thing I would like to talk about is organics. As 
we know, investments in infrastructure are key to spurring more 
production of organics, including organic grain. And since it 
has to be processed in a facility that is certified to handle 
organic products, it could require a lot of investment in 
infrastructure.
    How can CoBank and other of our ag lenders help with these 
organic hotspots to bring more opportunities to our rural 
economy?
    Dr. Halverson. Well, there is clearly a lot of dynamic 
change going on in agricultural production. Organic production 
is a part of that. And without getting into too much detail 
about the mechanisms and mechanics of becoming organically 
certified and otherwise, we, the Farm Credit System, we, 
CoBank, we finance everybody. We finance organic producers, and 
non-organic producers.
    What I would say, as you know, we are delighted to be 
focused and have the Committee's attention as well focused on 
infrastructure, because whether you are an organic producer or 
not an organic producer, all of these producers are going to 
benefit from the type of quality of infrastructure that we are 
focused on providing for them.
    Mr. Soto. Well, I would strongly encourage you all to 
consider pilot programs on the subject, being that the profit 
margins are pretty good, and they really bode well for the 
future of our American farmers.
    Turning next, this Committee is about new infrastructure, 
which is really an opportunity in rural America. And I know 
that our national rural electric cooperatives are really 
leading the way in renewable energy.
    And, Mr. Wynn, you may be familiar of the Town of Clewiston 
in Florida, which is run predominantly by bagasse, which is a 
byproduct of sugar. Where are we with renewables and going 
forward? How key is that going to be in delivering energy in 
our rural communities?
    Mr. Wynn. I think you said it in terms of its deployment. 
NRECA and its member systems have been very aggressive in many 
ways and very proactive in terms of deploying renewable energy. 
Many of our cooperatives are developing systems on their 
utility lines to help to modernize the system, help them become 
more resilient. We have really embraced that. It is conceived 
as a part of our future, and we are embracing that.
    Mr. Soto. Well, I strongly encourage you to consider 
continuing doing that, whether it be biofuels through 
byproducts of commodities that aren't used, whether it be 
hydroelectric or solar, these are all great opportunities for 
areas that may not have access to other sources.
    And I want to end with you, Ms. Otwell. We have certain 
fields in Florida where they have WiFi to be able to measure 
how tall a crop is, or sensors to develop when they need to 
have more water nutrients. Do we have that capability now in 
most of our farms, based upon our broadband access to really 
have those types of high-tech opportunities available?
    Ms. Otwell. Absolutely. And we are trying to build to as 
many farms as we possibly can. And with the fully funded USF 
budget, we will have the ability to make those investments, 
knowing that there is a business case to build out to the most 
rural farms in those areas.
    Mr. Soto. Thank you, and I yield back.
    The Chairman. The gentleman yields back.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman, and thanks for this 
important hearing as well, looking at the state of 
infrastructure in rural America.
    Mr. Macmanus, I have a close working relationship with the 
Pennsylvania Rural Water Association. I appreciate what you all 
do at the state level, and certainly our National Rural Water 
Association. When we talk, especially potable water, we kind of 
hear about some cities that have had some issues. But, I know 
when some of my townships and boroughs are replacing water 
lines, we are still finding some wooden water lines.
    And so my question for you is you recommended allowing not-
for-profit organizations to take over some of the non-
inherently governmental activities and functions of USDA. What 
activities are you talking about, and how would this suggestion 
improve the ability of systems like yours to build 
infrastructure and serve our rate payers?
    Mr. Macmanus. I have been doing USDA rural development and 
loan and grant applications for 17 years at East Rio Hondo, and 
I can tell you the most difficult part is the bureaucracy of 
the waiting process of the back and forth between the funding 
agency and the entity. And what we are proposing is that 
nonprofits would be able to do the loan processing and 
servicing functions that is difficult, in particular for small 
communities, to follow the process.
    And I mentioned in my testimony Attachment C, the 90 points 
that the individual systems have to do on the checklist. I 
think it is greatly beneficial. If you had an individual whose 
sole function in life was to help the system and the USDA 
employees that are processing the loans to get a complete 
package from the applicant initially up front and then to push 
that through with the USDA employees, that is the exact type of 
assistance we are talking about. Hands-on, checking the list 
off with the customer, the applicant, and then helping the USDA 
employee verify their end of it as well.
    Mr. Thompson. Thank you.
    On the theme of bureaucracy, and how that impacts on 
infrastructure, I had the opportunity to go to the White House 
last week for a small luncheon, bipartisan, but it was on 
infrastructure. Really pleased to hear the White House. The 
President is committed to make sure that there is some type of 
rural title within that, which was outstanding. I know 
Secretary Perdue has done a lot of work with that.
    But it was interesting to me that the numbers, where the 
Federal Government owns, if you want to put it that way, about 
eight percent of infrastructure. We fund 12 to 14 percent of 
it. But we permit 100 percent of infrastructure.
    And the countries like Australia, which is pretty green 
actually, in their infrastructure, is my understanding, they 
have reduced their permitting time down to 18 months, a 
considerable economic activity that it has increased. Our 
average for this country is 10 years, not 1\1/2\ years.
    And so my question, just a broad question. When it comes to 
infrastructure in rural America, and Ms. Otwell already 
outlined some strategies on how to do this without really 
cutting any, without compromising the environment. How 
important is this in terms of the infrastructure in rural 
America? What would it mean for you or your members if we were 
able to get the permitting streamlined, get it closer to 
Australia versus our current 10 years?
    I will just throw that open to whoever would like to 
respond.
    Ms. Otwell. I'm sorry. Go ahead.
    One thing for our companies, the less time and energy and 
resources we have to spend on permitting for multiple agencies 
and on individual basis, the more time we have to build 
broadband.
    Mr. Thompson. Mr. Macmanus?
    Mr. Macmanus. And I would add, Congressman, when you have 
identified a need in your system, you need the infrastructure. 
The faster you can get that built, the less the inflation 
factor of your identified cost is going to have on eating away 
at what you are applying for. If you are sitting, waiting, 
because of permitting and other issues, the money that you are 
trying to apply for is not going to be sufficient by the time 
you get to construction. You are going to have to turn around 
and apply for another loan or whatever it may be to find that 
additional financing to actually complete the project if there 
is a long delay in the permitting. It has a direct impact on 
the end-user on the cost that they will end up paying for the 
project itself.
    Mr. Thompson. Dr. Halverson, I appreciate CoBank and Farm 
Credit. I appreciate in your testimony you had about the role 
of both with our rural critical access hospitals. I mean, we 
have had 80 rural hospitals close since 2010. Part of that is 
just dealing with the bureaucratic cost inefficiencies. And so 
I am out of time, but I just want to say I appreciate the role 
that both CoBank and Farm Credit has played. Because if we 
don't have those facilities in our rural communities, I don't 
care how you pay for healthcare, we don't have access to 
healthcare. So thank you.
    The Chairman. The gentleman's time has expired.
    Mr. Costa, 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman. I think this 
is a very important conversation. I thank the Chairman and the 
Ranking Member for holding this hearing.
    A lot has been discussed about broadband. I am not going to 
go back over that area. Obviously, it is important. 
Transportation, access to our markets to move our farm products 
to where they need to go is clearly critical, not only for our 
population centers, but also for our export purposes. Water has 
been discussed earlier. It seems to me the focus of the 
discussion, though, on water has been more as it relates to 
local water quality issues and water access to rural 
communities.
    I don't know that any of you have touched upon the notion 
possibly in this effort to develop a bipartisan, big 
infrastructure investment in America that we are considering 
water projects that have been so important to the West for 
generations. I am talking about major water projects to 
investing and using, not only investments in reservoirs, but 
the kinds of investments that we might see in groundwater 
recharge and using all the water management tools in our water 
toolbox to take advantage of the changes that are occurring.
    What I would like to ask the witnesses is--let's say that 
we come together with--the President's talked about $1+ 
trillion package, and we are still grappling on how we finance 
that. But it seems to me that the rural component is going to 
be some part of it, if we are successful. Now, is it going to 
be 20 percent of it, 25 percent of it? I know this Committee 
would like to, obviously, put our stake out there in terms of 
what we think is appropriate for rural America. That often gets 
overlooked. I would like you to respond to that.
    I would also like you to respond to the notion of 
leveraging. We have a number of localities, either counties, 
communities, service districts, that put together financing to 
help deal with their water needs, their infrastructure needs. 
Are there transportation needs? States that have put up 
significant money that have skin in the game.
    One of the ways that we always finance projects here is 
Federal, state, and local funding. Are we going to acknowledge 
and reward those localities or those states that already are 
making investments so that we can further leverage the 
potential of this infrastructure package?
    Who would like to address those basic concepts? Because, I 
mean, we all have our wish list. And then finally, how do we 
prioritize? Because we all have our wish list, but how do we 
prioritize where the greatest needs are for rural America, 
knowing that transportation, water, and communications, i.e., 
broadband and others are critical needs.
    Dr. Coon. So thank you, Congressman. There is a lot to 
cover there, and I promise I won't try to do it all.
    But, in terms of the investment and attracting other money, 
leveraging money, part of it is thinking about what is it that 
attracts private capital, for example. And generally, it is the 
promise of a return on that investment. And so the public-
private partnerships that work very well in other sectors, 
could they apply here? Are there applications, whether it is, 
perhaps, with irrigation projects, like you have suggested, or 
others where there is something to be earned over the long-term 
that would justify private investment in those projects. That 
is one example.
    And as I said earlier, one of the things is whatever 
Federal funds come, they really need to be tied to other 
sources of funding or the Federal money doesn't come.
    Mr. Costa. Should we reward states and localities that 
already have skin in the game as we construct the package?
    Dr. Coon. Absolutely.
    Mr. Costa. How do we prioritize?
    Mr. Calhoun. If I could, I think that is a difficult 
question, because I guarantee you, if you went around to 20 
people and said let's prioritize where the project should go, 
you are going to get 20 different answers.
    Mr. Costa. I know it is difficult.
    And I don't want to end up with just a political response 
in the legislation, hopefully, we come together with, because 
we know how the political responses usually get handled.
    Mr. Calhoun. Well, I would look to get answers from your 
constituents and then try to get a group like this to come 
together and try to make that prioritization, because if we 
went around here today and you saw all the questions that were 
asked----
    Mr. Costa. No. And the needs are going to be far greater 
than what we are funding that with, or we will be able to come 
up with.
    Mr. Calhoun. Absolutely.
    Mr. Costa. And that is why it is important to prioritize 
based upon some sort of criteria that makes sense.
    Mr. Calhoun. Yes. I am not sure I can tell you what that 
criteria is.
    The Chairman. The gentleman's time has expired.
    Mr. Bost for 5 minutes.
    Mr. Bost. Thank you, Mr. Chairman.
    Mr. Calhoun, in your opening testimony, you referred to the 
need to fund 25 different inland waterway modernization 
projects. Can you tell us, the Committee, where those are, 
where they are located, what benefits they will have as the 
bottom line, and for the shippers, that use the waterways?
    Mr. Calhoun. Certainly. The 25 projects are projects that 
have been authorized but not appropriated by Congress over the 
years. A number of years ago, the Inland Waterway Users Board 
came together with the Corps of Engineers and tried to 
prioritize these projects in the order of importance based on a 
criteria of risk of failure, where the greatest economic 
benefit was to the nation. A number of different criteria. And 
that list at the time was developed at a point in time, and, of 
course, as time changes, that list could change too. But that 
is where the list came from. And it is all over the system. It 
is in the Gulf regions. It is in the upper Midwest. It is in 
the Pittsburgh area. It is all over the navigable system.
    Mr. Bost. Could you elaborate a little bit on the 
importance of the Federal and non-Federal levee systems, and I 
will tell you where I am going with this, but as far as 
navigation and the importance of flood protection?
    Mr. Calhoun. Well, navigation is just one of the values of 
the inland waterway system. Certainly, flood protection, 
irrigation, water use. We talked about water use, in California 
you pay for water. You don't pay for water off the Mississippi 
River.
    Mr. Bost. Right.
    Mr. Calhoun. There are a number of different beneficiaries. 
The problem we have had funding the river, historically, is 
only one of the beneficiaries pays anything into the trust 
fund, which is why the trust fund is low today.
    There are a lot of beneficiaries. And the trick has been, 
how do you charge someone on the other side of the levee for 
having that levee there? And when you talk about privatizing 
the locks, how do you charge recreational boaters for using it, 
for the improvement on the value of the real estate? 
Municipalities don't pay for water. There is a lot of value 
being created, but nobody is being charged. And for the first 
200 years in the nation, nobody was charged anything.
    It is a more recent trend that we want to try to have the 
users pay that back. But so far, we have only identified one 
user that we have been able to tax.
    Mr. Bost. Right.
    Dr. Halverson, as a follow-up to the question I just asked 
on the importance of levees. In Illinois, the Len Small levee 
in my district is a non-Federal levee that was breached, what 
they refer to as the holiday flood of 2015 and 2016. Let me 
tell you, it was no holiday.
    Dr. Halverson. I imagine.
    Mr. Bost. There is a mile-wide gap in this levee now. And 
this leaves about 38,000 acres of productive farmland in 
several rural communities without any flood protection.
    Would Farm Credit, or any other lender, for that matter, 
engage with a levee district to finance a reconstruction of the 
non-Federal levees in the absence of any involvement with the 
Army Corps of Engineers?
    Dr. Halverson. That is a very good question. I can't tell 
you the answer, off the top of my head. I would give you a 
commitment that we will go and research that and come back to 
you in writing.
    Mr. Bost. We are trying desperately to figure out the 
damage, as a matter of fact, one reason why I wasn't here 
earlier is we were in Transportation dealing with the Army 
Corps specifically on this, because if we don't get that one 
repaired, it is not only for the farmland, but also for 
navigational purposes. Because if you look at the State of 
Illinois and you go down to the bottom, there is a place where 
the river bends like this. It is actually called the Dogtooth 
Bend. It is about 17 miles around. Drops 12 in that 17 miles. 
If that levee is not replaced, it is already cut better than a 
mile of the 3 miles across, and navigation from New Orleans to 
the Great Lakes will be stopped.
    And so we are trying desperately to express how important 
it is to put the protection back in place. And it is amazing 
when dealing with bureaucracies how we can't get things done.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    Mr. Lawson, 5 minutes.
    Mr. Lawson. Thank you, Mr. Chairman. And a welcome to the 
Committee. When I left the Committee, you all were talking 
about the tremendous amount of infrastructure research that the 
land-grant institution had such a backlog. I want to ask a 
question about that.
    But I was deeply concerned about the co-ops, because I can 
recall, when I was growing up in the rural areas, when we first 
got electricity, my brother and I stayed up all night trying to 
see what was going to happen with that light, but it never did 
go out. And so that was very interesting.
    But my question today centers around there are 1,000 people 
that are moving to Florida a day. And we are told that a lot of 
these people now, they wanted to be on the coastline, but now 
they are moving into rural areas where they are going to be 
served by co-ops.
    My question will be what kind of pressure does this put on 
electric co-ops, Mr. Wynn? Because if that many people come in, 
and Florida is now the third largest state in terms of 
population in America, but it is going to put a considerable 
amount of pressure on co-ops. How are they going to be able to 
handle it?
    Mr. Wynn. Well, we are welcoming growth from most co-ops. I 
know many of us don't get an opportunity to see growth. I know 
the ones in Florida are experiencing that. But the good thing 
about it is that the good news is that we have access to 
capital, which is the biggest restraint that we would probably 
run into in terms of getting people to build the lines. That is 
something that we can always do. But, fortunately, we have 
three very good sources of capital. CoBank is one, RUS is the 
other, and CFC is another. And then there are syndications that 
can happen to bring other people to the table to do the 
financing.
    I don't really see many barriers, barriers to the growth, 
but it is certainly something that can be managed and has been 
managed in other areas.
    Mr. Lawson. Okay. And I guess the question would be with 
the President's proposal to cut back on rural funding, serving 
in the Florida Legislature for a number of years, roundabout 28 
years, House and Senate, one of the greatest things that, when 
the gavel went down, that we carry back were water projects. 
Water projects from these local governments in those areas, 
which I had about 13 rural counties that I was serving in. 
Water projects meant everything to him.
    And so when they are doing this farm bill, and I know the 
Chairman here, and they probably referred to it, it would be 
just devastating to cut back on water projects for rural areas. 
And if you have already talked about it, I don't think there is 
enough talking that we can do about it. I would ask Dr. 
Halverson, will you comment on that.
    Dr. Halverson. Well, I would share your focus and your 
concern, Representative Lawson. I refer to my testimony, the 
fact that there is somewhere in the ZIP Code of $190 billion 
worth of investment required in refurbishing and reinvesting in 
the nation's water infrastructure. That number gets bigger 
every day, not smaller. It is a deferred maintenance bill.
    We are making contributions as CoBank and the Farm Credit 
System. We would like to do more, but we can only make a small 
dent in what is a very large total requirement there. But we 
are very passionately committed to doing so, and that is why we 
are so encouraged by the Committee's interest in moving this 
forward and expanding that activity.
    Mr. Lawson. Okay. Thank you.
    And, Dr. Coon, I have limited time left. And you might have 
mentioned it. I caught the back end when I was going to the 
other committee. What are universities doing to try to make up 
for all of the infrastructure backlog that they have in terms 
of research?
    Dr. Coon. We are looking for help everywhere we can get it. 
Basically, it ends up being pretty much crisis management. If 
we have freezers that go down, we have to go and address that 
right away. And so that takes our attention away from whatever 
else we might have been doing. We really need to step back and 
develop more complete plans that are more sustainable than the 
current reactionary mode that we are operating in.
    Mr. Lawson. Okay. Thank you.
    Mr. Chairman, I yield back.
    I know one thing, in your closing argument if you could 
say, how does this relate with our competition with other 
countries.
    The Chairman. Thank you. The gentleman yields back.
    Mr. Arrington, do you have questions?
    Mr. Arrington. Thank you, Mr. Chairman. I do.
    The Chairman. Five minutes.
    Mr. Arrington. Thank you all for coming. And we have a 
budget markup today. I apologize for coming in late.
    But Ports-to-Plains is a transportation infrastructure 
initiative to enhance and expand transportation in middle 
America, essentially from Texas to Canada. Probably most of you 
are familiar with it. And, again, I apologize if I am making 
you repeat yourself. But talk about initiatives like Ports-to-
Plains and the transportation infrastructure and how important 
that is, and how would you rank that, and what thoughts do you 
have, strategically, on that component of sustainable rural 
communities in getting our food, fuel, and fiber to market?
    And anybody can take the question. Whoever wants to 
volunteer first.
    Mr. Calhoun, they seem to think you have the answer to 
this.
    Mr. Calhoun. Well, that was a draft, by the way. I don't 
know I volunteered.
    But I am not familiar with the initiative that you are 
speaking about, which is why I didn't volunteer. But, one of 
the things when we talk about the inland waterways, one of the 
problems that we face is we are not actually under the 
jurisdiction of the Transportation Department. It comes under 
the Army Corps of Engineers. It is handled in a different 
fashion.
    When you talk about the things that I talked about today, 
that we have talked a lot about, broadband and everything else, 
but just physically the roads and bridges to get around this 
country, which are getting old and dilapidated and in need of 
fixing up. There is a large job to do, and it needs to be done 
in a coordinated fashion as much as we can. I don't know that I 
answered your question.
    Mr. Arrington. Yes. No. That is great.
    Dr. Halverson. I would just supplement that by saying the 
Administration is very focused on international trade and our 
trade balance and the like. And agriculture is one of the 
biggest single positive contributors to the trade balance and 
the current account balance of the United States for many, many 
years. That looks likely to be the case in the future, provided 
we can continue to innovate and continue to invest in our 
backlog of infrastructure weaknesses.
    We need to be able to get our agricultural production from 
the farm gate to a waterway. And ultimately, \1/4\ to \1/3\ of 
all of our agricultural production gets exported to foreign 
markets. It is vitally important. And it is why the Rebuild 
Rural Coalition is very, very focused on it, because our long-
term trade, our long-term competitiveness for rural America and 
the quality of life is very dependent on our ability to get our 
products to the marketplace.
    Mr. Calhoun. Yes. Last year, the U.S. ag exports, they 
contributed $21.5 billion to the balance of trade. And trade is 
very important to this country. And as I mentioned in my 
remarks, feeding a growing world is going to be very important 
to this country. And you cannot do it without the 
infrastructure.
    And the other thing that we haven't talked about here much 
today is just the length of time it takes to build this 
infrastructure and get to where we need to be. Some of these 
projects, particularly on the inland waterway system, have 
taken 10, 15, 20 years to build. And then the permitting 
process before that. If you start today, you are not going to 
be done for a decade. And we just can't afford to delay this 
process any longer.
    Mr. Arrington. Thanks again for your time.
    And, Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back his time.
    Thank you all.
    Dr. Halverson, given the role that the Rebuild Rural 
Coalition had in putting the panel together today, would you 
give us a couple of seconds or a couple of sentences on how you 
have been doing with that coalition? And are you worried that 
partisan politics might creep into what you are trying to do 
and accomplish? And if that is the case, what are you doing to 
try to avoid that?
    Dr. Halverson. Thank you, Mr. Chairman. We have been 
serving in a, call it a convening capacity for that coalition. 
We are deeply excited and enthusiastic about the fact that we 
have been able to convene such a broad and deep group of 
institutions around what others have said should be and 
hopefully will be a relatively bipartisan agenda. There is 
seemingly, not a lot of things people can agree on these days, 
particularly here. We are hopeful and optimistic, based on the 
dialogue we are having within that coalition, that this is a 
bipartisan consensus.
    The devil is in the details, and there will be challenges 
ahead if we get legislation or an ability to mobilize some of 
the resources that everybody is interested in and addressing 
the question that Mr. Costa asked, which is how do you allocate 
that and so forth? But hopefully, that good old fashioned 
allocation mechanism that Congress has been familiar with for 
over 200 years can be digested in a relatively nonpartisan way. 
And we are hopeful and optimistic, and we will do everything 
within that coalition to support your efforts in that regard.
    The Chairman. Well, thank you very much. I appreciate that. 
Thank you for what the coalition is doing and the impact that 
you are going to have.
    We are at a great point with two opportunities to address 
within this broad spectrum of challenges. We will have the 
infrastructure bill probably before the farm bill, but we will 
have the infrastructure bill as well as the farm bill itself to 
take a look.
    The bad news about the farm bill is we are going to have a 
whole lot fewer resources this time than we did in 2014 to get 
that done, which will present terrific challenges. Mr. Costa 
asked about setting priorities. We are going to get an exercise 
in trying to do that, because we will have to get the farm bill 
done.
    I appreciate all of you coming to D.C. today and presenting 
a very clear statement as to why this is important to rural 
America, the impact across the entire spectrum. All your 
comments are very timely and much appreciated. And we hope 
there are other people listening and paying attention to this 
today, because this is a big deal to the folks like us who, 
like Jodey and I, live in rural America, and so we appreciate 
that.
    Under the Rules of the Committee, today's hearing will 
remain open for 10 calendar days to receive additional material 
and supplemental written responses from the witnesses to any 
question posed by a Member.
    This hearing of Committee on Agriculture is adjourned. 
Thank you.
    [Whereupon, at 1:00 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
         Submitted Statement by National Family Farm Coalition
    The National Family Farm Coalition (NFFC) and their member 
organizations represent farmers, ranchers, community-based fishermen 
and their rural communities who strive daily to provide food and create 
jobs by adding value to sustainable agriculture and fisheries. In order 
to further these goals, our farmers and their communities rely on 
critical rural infrastructure such as affordable and reliable water and 
waste water systems. Rural Communities continue to lose population with 
the graduation of each senior high school class. What's left behind are 
the elderly and the poor representing the under-served in communities 
who are sometimes susceptible to suffer from health issues or witness 
environmental degradation due to a lack of safe drinking water and 
waste water sewer systems.
    In an Environmental Protection Agency (EPA) report entitled Still 
Living Without the Basics in the 21st Century: Analyzing the 
Availability of Water and Sanitation Services in the United States, the 
U.S. EPA echoed this predicament. In the report, EPA highlights the 
fact that the people who lack these basic services live in some of the 
most productive farmland in the United States, along the U.S.-Canada 
and U.S.-Mexico borders, on Indian reservations, and in the states of 
the South and the Southeast. The EPA report further states that rural 
people are working and living in rural areas with dilapidated or 
nonexistent infrastructure. For example, rural places with populations 
of less than 1,000 and rural farm populations have the highest 
percentage of homes lacking services, well above the national average 
of 0.64 percent. See, http://opportunitylinkmt.org/wp-content/uploads/
2015/07/Still-Living-Without-the-Basics-Water.pdf.*
---------------------------------------------------------------------------
    * Editor's note: the hyperlink to the report, Still Living Without 
the Basics in the 21st Century: Analyzing the Availability of Water and 
Sanitation Services in the United States, is no longer valid. The 
correct link is http://rcap.org/wp-content/uploads/2017/05/Still-
Living-Without-the-Basics-Water.pdf.
---------------------------------------------------------------------------
    NFFC members--like all rural residents--rely heavily on the USDA's 
Water and Environmental Program (WEP) for funding to meet the needs 
safe drinking water and environmentally sound sewer systems. Other 
relevant water and waste water program includes EPA's Clean Water State 
Revolving Fund (CWSRF), Drinking Water State Revolving Fund (DWSRF), 
and Environmental Justice Grants and Cooperative Agreements. In Fiscal 
Year 2016, USDA Rural Development through WEP, funded 945 projects with 
a total funding amount of $1,766,037,313. NFFC applauds USDA for its 
implementation of the WEP program. Nevertheless, we are compelled to 
point out that equity issues exist when local leaders of the funding 
projects place poor and minority communities on the back burner when 
deciding which area of the local municipality to first service.
    Under the USDA regulations that guide the implementation of the 
Water and Environmental Program, small towns and cities with 
populations of less than 10,000, have discretion, through the votes of 
local elected officials, as to which part of the city or town will be 
first serviced with new or improved water or sewer systems. Applicable 
case studies reveal that non-minority, affluent parts of a rural city 
are serviced first with USDA loans and grants. This environmental 
injustice typically occurs when USDA WEP funds are exhausted and the 
town's project is cut back or down sized during the design phase. When 
downsizing occurs, the city council votes to fund the project in the 
rich part of town leaving the poor minority communities on a funding 
waiting list that may take decades to receive attention. Poor rural 
communities that must wait for basic services such as water and sewer 
will continue to see a swift decline in population. Young rural 
citizens are not likely to remain.
Housing
    Rural residents--farmers and fishermen as well as small business 
entrepreneurs--also need access to high-quality, dependable broadband 
Internet services. As the USDA moves to become more efficient by 
requiring farmers to submit many of their reports online, the ability 
to upload and share data in a timely manner becomes even more 
necessary. `Last mile to the farm' initiatives, such as Maine's Three-
Ring Binder project, have been supported by rural development funds 
through public-private partnerships that should be continued and 
expanded, especially as the proposed cuts to rural USDA offices go 
forward. We must think of this initiative as equivalent to the rural 
electrification projects in the 1940s and 1950s or, even more apropos, 
a universal service obligation like the post office or the phone 
companies. Broadband is indisputably necessary to the continued 
development of our farms and fisheries, rural economies and 
communities.
    The National Family Farm Coalition recommends that Congress 
mandate, through statutory language, that all rural communities, 
regardless of socioeconomic status, are treated equitably in the 
application of all water, waste water, housing, telecommunications and 
environmental programs, regardless of funding shortfalls.
                                 ______
                                 
        Submitted Statement by National Rural Health Association
    The National Rural Health Association (NRHA) is pleased to provide 
the Committee on Agriculture a statement regarding the state of 
infrastructure in rural America and the role it plays in rural health 
care delivery.
    NRHA is a national nonprofit membership organization with a diverse 
collection of 21,000 individuals and organizations who share a common 
interest in rural health. The association's mission is to improve the 
health of rural Americans and to provide leadership on rural health 
issues through advocacy, communications, education and research.
    Access to quality, affordable health care is essential for the 62 
million Americans living in rural and remote communities. Rural 
Americans are more likely to be older, sicker and poorer then their 
urban counterparts. Access in rural America is impeded by not only 
geography, but also by decreasing reimbursements, physician shortages, 
and excessive regulatory burdens.
    Rural communities rely on rural infrastructure--from suitable roads 
and bridges, to clean water and broadband Internet access--to serve as 
necessary access points for a community, just as they rely on the rural 
health care delivery system as their access point for medical services. 
Investing in hospitals, broadband, and transportation will not only 
bolster local rural economies, but will also provide increased access 
to care.
The Rural Hospital
    Investing in rural health infrastructure is more important than 
ever as rural America faces a hospital closure crisis. Eighty-one rural 
hospitals have closed since 2010, resulting in 10,000 rural Americans 
losing their jobs and 1.2 million rural patients losing access to their 
nearest hospital. Even more concerning are the 673 rural hospitals at 
risk of closure.\1\ Sustained Medicare cuts threaten the financial 
viability of one in three rural hospitals. The loss of these hospitals 
would result in 11.7 million patients losing access to care in their 
communities. Continued cuts to rural providers have taken their toll, 
forcing far too many closures. Medical deserts are appearing across 
rural America, leaving many of our nation's most vulnerable populations 
without timely access to care.
---------------------------------------------------------------------------
    \1\ 81 Rural Hospital Closures: January 2010-Present. (n.d.). 
Retrieved July 21, 2017, from http://www.shepscenter.unc.edu/programs-
projects/rural-health/rural-hospital-closures/.
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    Paired with the closure crisis, rural hospitals are also facing a 
brick and mortar crisis. Several rural hospitals standing today are 
original Hill Burton facilities. Built decades ago, these facilities 
need renovations or replacements, but unfortunately the rural hospital 
or community does not have the resources to replace their buildings.
    Local care is necessary to ensure patients' ability to adhere to 
treatment plans, to help reduce the overall cost of care, and to 
improve patient outcomes and their quality of life. The crisis of rural 
hospital closures cannot be overstated: closures are devastating to the 
health of a community and to its local economy. When a rural hospital 
closes, rural residents lose access to their nearest emergency room. 
Rising Emergency Medical Services (EMS) costs, delays in obtaining 
results from diagnostic laboratory tests and scans, and difficulty in 
obtaining treatment for chronic conditions characterize communities 
that have experienced hospital closures. Additionally, the network of 
other providers that surround hospitals tend to become unstable or 
dissolve completely when a hospital is lost.\2\
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    \2\ Thomas, S.R., MPP, Kaufman, B.G., BA, Randolph, R.K., MRP, 
Thompson, K., MA, Perry, J.R., & Pink, G.H., Ph.D. (2015). A Comparison 
of Closed Rural Hospitals and Perceived Impact (Rep.). Chapel Hill, NC: 
NC Rural Health Research Program.
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    The economic implications of rural hospital closures are 
staggering. When a rural hospital closes, the community it served 
experiences a per-capita income decrease of $703. Unemployment 
increases by 1.6 percentage points. Retirees and businesses are 
discouraged from relocating to the community. If all of the 673 
vulnerable hospitals were to close, rural America would lose 99,000 
direct health care jobs and 137,000 additional community jobs. Over 10 
years, rural communities will lose $277 billion in GDP.\3\
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    \3\ http://www.shepscenter.unc.edu/wp-content/uploads/2015/04/
AfterClosureApril2015.pdf.
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    Both the physical health of patients and the fiscal health of local 
economies are hurt when rural hospitals close. Therefore, it is 
imperative to fortify this key aspect of the health care infrastructure 
in rural communities. To help stabilize rural hospitals, Medicare bad 
debt cuts must end. Under the ACA, Medicare bad debt reimbursement to 
rural hospitals was cut. Unfortunately, for those hospitals with a 
large pool of dual-eligible patients, bad debt cuts can spell financial 
disaster.
    Bad debt cuts hurt the rural health infrastructure in particular 
because rural areas have a higher proportion of dual-eligible patients 
than urban areas. Bad debt cuts have been partially responsible for the 
closure of one rural hospital per month since 2010. In order to stem 
this closure rate and avoid the serious economic and health-related 
implications of more rural hospital closures, cuts in bad debt 
reimbursement must be reversed. Enactment of such a policy would 
empower rural hospitals to not only treat the poorest, sickest patients 
in its community, but also to remain operational and provide access to 
care to rural Americans.
Rural Transportation
    In rural America, transportation infrastructure is dilapidated. 
Traffic crashes and fatalities are 2\1/2\ times more likely to occur on 
rural non-interstate roads.\4\ Over \1/3\ of rural America's roads are 
in poor or mediocre condition.\5\ Due to such poor conditions, farmers 
may have difficulty transporting crops to market. Small business owners 
may be unable to attract customers. Logistics can be more expensive. 
And in the health sector, patients face barriers to care that can range 
from inconvenient to insurmountable.
---------------------------------------------------------------------------
    \4\ Rural Hospital Closures Decimating Rural Health Care Delivery 
(2016). National Rural Health Association; Washington, D.C.
    \5\ Rural Transportation Facing a Rough Road. (2017, June 30). 
Retrieved July 26, 2017, from https://www.infrastructurereportcard.org/
rural-transportation-facing-a-rough-road/.
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    Rural transportation infrastructure can encumber--or, with 
improvement, expedite--travel to medical care providers. Patients who 
must travel long distances to providers and those who lack readily-
available methods of transportation are more likely to be late to or 
altogether miss appointments, face disruptions in care for chronic 
diseases, and forego preventive care because of transportation costs. 
The regularity with which patients use some medications, like insulin 
for diabetes patients, decreases the further the patient lives from his 
or her provider.\6\
---------------------------------------------------------------------------
    \6\ Transportation Fact Sheet (Rep.). (n.d.). Washington, D.C.: 
Rebuild Rural.
---------------------------------------------------------------------------
    The transportation infrastructure of rural America can be a key 
barrier for accessing health care. For those that cannot afford to miss 
work hours, do not own a car or another mode or transportation, or live 
considerable distances from the nearest clinic or hospital, poor 
transportation and inadequate roads cause unnecessary difficulty that 
discourages patients from seeking primary and preventive care. If 
patients utilize primary and preventive care, then health outcomes 
improve. Additionally, such utilization of primary and preventive care 
helps reduce health care costs.\7\ Therefore, improvements in 
transportation contribute directly to making health care more 
accessible.
---------------------------------------------------------------------------
    \7\ Rural Health. (n.d.). Retrieved July 24, 2017, from https://
www.ruralhealthinfo.o/topics/transportation#consequences
---------------------------------------------------------------------------
    Increasing access to care via infrastructure improvements requires 
public funding and leadership. The public maintains roads and bridges; 
therefore, public funds are required to renovate them. Rural America 
faces a unique challenge in this regard: only 44% of rural road mileage 
is eligible for Federal grants. Expanding eligibility requirements for 
Federal funding will allow more rural roads to become eligible for 
Federal funds,\8\ thereby increasing opportunities for refurbishment.
---------------------------------------------------------------------------
    \8\ Syed, S.T., Gerber, B.S., & Sharp, L.K. (2013). Traveling 
Towards Disease: Transportation Barriers to Health Care Access. Journal 
of Community Health, 38(5), 976-993. http://doi.org/10.1007/s10900-013-
9681-1.
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    Other measures should also be taken to improve rural transportation 
infrastructure. Developing a system of block grants for investment has 
significant upside. Block grants would allow states and local 
communities to assign priority to certain infrastructure projects. If 
rural stakeholders are involved in setting priorities, Federal block 
grants can both fund rural infrastructure improvements, while limiting 
the cost to the Federal Government and incentivizing an efficient use 
of government resources.
    Finally, widespread adoption of the public-private partnership 
(PPP) concept could achieve results like those of block grants. As 
private companies vie for the government's business, competitive 
economic forces drive the prices of their services down. Additionally, 
private corporations promise high quality in order to compete. Value 
engineering, emphasis on rapid project completion, innovation, and 
utilizing economies of scale are advantages of PPPs.\9\ Thirty states 
and the District of Columbia have drafted or passed legislation 
allowing PPPs to undertake infrastructure improvements. If the Federal 
Government can do the same to bring PPPs to more of the country's 
infrastructure improvement projects, the result could be infrastructure 
that helps facilitate, rather than deny, patients' access to health 
care.
---------------------------------------------------------------------------
    \9\ Written Testimony on The State of Infrastructure in Rural 
America, 115th Cong. (2017) (testimony of Richard R. Calhoun).
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Telemedicine to Bridge Infrastructure Gaps
    Telemedicine can serve as a method of circumventing the challenges 
of physical infrastructure. It has, for some time, experienced growth 
in popularity and capabilities. For the physician, telemedicine eases 
the consultation process. All physicians can benefit from consultation, 
but the practice is particularly relevant to younger, inexperienced 
doctors. Especially for young doctors working in rural and health 
professional shortage areas, ease of consultation may encourage them to 
remain in their respective communities. This would help reduce the 
ongoing physician shortages in rural America.
    Last, telemedicine can help diminish the need to see patients in 
person for preventive appointments or education sessions. Of course, in 
many cases physicians have no choice but to call a patient into the 
office or venture to a patient's home, for example, to perform a 
physical examination. However, for those cases in which the physician 
does not need to see the patient in person, he or she can visit with 
the patient virtually, eliminating the need for travel on the part of 
the physician or the patient.
    To encourage the implementation and use of telemedicine, the 
Federal Government must lead on two fronts. First, geographic site 
restrictions in Medicare must be lifted to encourage the widespread 
realization of the benefits of telemedicine. Restrictions like these 
inhibit adequate reimbursement for rural providers that use 
telemedicine services to see patients.\10\ Second, the licensure 
process for telemedicine providers must be streamlined. Current 
licensure restrictions can be cumbersome and limiting to providers for 
whom telemedicine would be hugely beneficial. Encouraging uniformity 
among state regulatory bodies that handle licensure is imperative. 
These bodies should be encouraged to collaborate to allow rural 
telemedicine users to obtain licenses efficiently and effectively care 
for their patients.\11\
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    \10\ Stitt, C. (2017, March 3). Infrastructure Spending and Public-
Private Partnerships--by Charles. Retrieved July 26, 2017, from https:/
/www.hudson.org/research/13407-infrastructure-spending-and-public-
private-partnerships.
    \11\ Daniel, H., BS, & Sulmasy, L.S., JD. (2015). Policy 
Recommendations to Guide the Use of Telemedicine in Primary Care 
Settings: An American College of Physicians Position Paper. Annals of 
Internal Medicine,787-789. doi:10.7326/M15-0498.
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Rural Broadband
    Before expansions in telemedicine can become widespread, steps must 
be taken to shore up the rural broadband infrastructure. Internet 
access in rural America is poor compared to access in urban areas. 
Thirty-nine percent of rural Americans lack access to appropriate 
broadband Internet speeds (as defined by the FCC). In urban America, 
only 4% lack access to Internet of these standard speeds.\12\ Internet 
access for health care providers is worse in rural areas than in urban 
areas as well: 7% of providers in rural America lack access to 
appropriate Internet speeds. The national average is 1%.\13\ Last, even 
when the appropriate speed is available, it can be three times more 
expensive in rural areas than in urban areas.\14\ Before health 
outcomes can significantly improve in rural America, comprehensive 
broadband access is needed.
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    \12\ Giger, J., & DeVany, M. (2013). Streamlining Telemedicine 
Licensure to Improve Rural America (Issue brief). Washington, D.C.: 
National Rural Health Association.
    \13\ 2016 Broadband Progress Report. (2016, January 29). Retrieved 
July 19, 2017, from https://www.fcc.gov/reports-research/reports/
broadband-progress-reports/2016-broadband-progress-report.
    \14\ Kaushal, M., Patel, K., McClellan, M.B., Darling, M., & 
Samuels, K. (2016, July 28). Closing the rural health connectivity gap: 
How broadband funding can improve care. Retrieved July 19, 2017, from 
https://www.brookings.edu/blog/health360/2015/04/01/closing-the-rural-
health-connectivity-gap-how-broadband-funding-can-improve-care/.
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    The ramifications of lacking appropriate Internet are manifold. 
Without reliable Internet connections, modern telemedicine is 
impossible. Timely consultations are made more difficult. Patient 
education and access to provider information is limited.
    There would be significant benefits to the rural health care system 
from improving rural broadband access. Rural areas can be equipped with 
cutting-edge telemedicine services. Rural patients can be empowered to 
seek education regarding their medical care. Patients and providers can 
benefit through access to electronic health records.
    The Federal Government can support broadband Internet access for 
rural America through a few courses of action. First, it must continue 
funding for the Universal Service Fund (USF). Cuts have diminished the 
USF budget considerably. Sufficient funding is a prerequisite to 
adequate broadband access in rural areas. Additionally, continued 
support of the Rural Utilities Service's (RUS) Broadband Loan Program 
can help to finance the high up-front cost of developing a broadband 
network in a rural area, thereby removing barriers to implementing 
broadband networks in rural areas.
    Finally, like the case of transportation infrastructure 
improvement, PPPs and public-private cooperation (PPC) can drive down 
the cost of network implementation and improve quality through 
competition and shared risk. A public entity, whether on the local, 
state, or Federal governmental level, can lower barriers like 
regulation and taxation of private companies to incentivize the 
extension of broadband Internet services to rural communities.
    Again, the permeation of broadband Internet access into rural 
communities can work to improve or encourage patient engagement in 
care, patient education, the convenience of provider consultations, and 
the adoption of telemedicine. Each of these areas can translate into 
enhanced health care access and improved health outcomes.
Conclusion
    Rural infrastructure could be improved to better provide the health 
care services that rural Americans need. Rural hospital closures, poor 
transportation, lack of telemedicine services, and insufficient 
broadband coverage inhibit patients' access to care, worsen health 
outcomes, and increase health care costs. Increased funding for 
infrastructure in rural health can improve access to health services 
and stimulate economic growth in rural America.
    The National Rural Health Association appreciates the opportunity 
to provide our input to the Committee. We greatly appreciate the 
support of the Committee and look forward to working with Members of 
the Committee to continue making these important investments in rural 
America.
                                 ______
                                 
                          Submitted Questions
Response from Curtis Wynn, President and Chief Executive Officer, 
        Roanoke Electric Cooperative; Vice President, Board of 
        Directors, National Rural Electric Cooperative Association *
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    * There was no response from the witness by the time this hearing 
was published.
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Questions Submitted by Hon. Vicky Hartzler, a Representative in 
        Congress from Missouri
    Question 1. When traveling around my district and talking with 
everyone from school teachers to farmers, the need for access to high 
speed broadband is always on the top of my constituents' minds. I 
joined my colleagues in a letter to President Trump earlier this year 
in asking for rural broadband to be included in the infrastructure 
package, and I have been working diligently with state and local 
partners to address the challenges facing the rural portions of my 
district.
    I have found there is inconsistency with the definition of rural 
broadband across the country and throughout various Federal programs. 
Currently, the FCC defines broadband speed at 25 megabits per second 
download and 3 megabits per second upload while various programs within 
the Rural Utilities Service at USDA have different minimum speed 
definitions for broadband.
    Would a unified definition of broadband across Federal agencies 
create a more equitable environment for rural Americans? How would a 
unified definition of broadband impact infrastructure investment 
decisions on companies?

    Question 2. Is the FCC the best suited Federal agency to set the 
Federal benchmark for high speed Internet?
Response from Jennifer L. Otwell, CPA, Vice President and General 
        Manager, Totelcom Communications, LLC; on behalf of NTCA--The 
        Rural Broadband Association
Questions Submitted by Hon. Vicky Hartzler, a Representative in 
        Congress from Missouri
    Question 1. When traveling around my district and talking with 
everyone from school teachers to farmers, the need for access to high 
speed broadband is always on the top of my constituents' minds. I 
joined my colleagues in a letter to President Trump earlier this year 
in asking for rural broadband to be included in the infrastructure 
package, and I have been working diligently with state and local 
partners to address the challenges facing the rural portions of my 
district.
    I have found there is inconsistency with the definition of rural 
broadband across the country and throughout various Federal programs. 
Currently, the FCC defines broadband speed at 25 megabits per second 
download and 3 megabits per second upload while various programs within 
the Rural Utilities Service at USDA have different minimum speed 
definitions for broadband.
    Would a unified definition of broadband across Federal agencies 
create a more equitable environment for rural Americans? How would a 
unified definition of broadband impact infrastructure investment 
decisions on companies?
    Answer. A unified definition of broadband would only impact rural 
broadband investment to the extent it helped identify areas in need and 
then directed sufficient funding through the USF High Cost program to 
meet the Communications Act principle of reasonably comparable services 
and rates in urban and rural America. The High Cost program is what 
helps rural carriers make the business case to serve territory where 
the customers gained cannot begin to cover the enormous capital and 
operating expenses of rural network deployment.
    The FCC decided over 2 years ago that a 25/3 Mbps broadband 
connection represented ``table stakes'' for modern communications. Many 
reports on the state of the Internet today report average speeds that 
are relatively close to this figure as well. And yet the FCC's High 
Cost program is not designed or funded to ensure rural Americans can 
receive at least such speeds. Instead, most components of the High Cost 
program only aim to promote the deployment of 10/1 Mbps service, 
apparently because the High Cost program lacks the resources to support 
more robust, efficient, and future-proof deployments.
    Thus, even if there were a ``unified definition'' of broadband 
across Federal agencies, in the absence of resources to back that 
definition up, a definition--assuming it were set at speeds comparable 
to what most urban Americans enjoy--would only serve to highlight the 
failure of our universal service policies to help rural America keep 
pace. In fact, the High Cost program has been under the same overall 
hard cap since 2011, and the underlying budget that helps enable 
investment and operations specifically by smaller operators based in 
rural America is predicated upon the same 2011 funding levels as well.
    As a result, an additional $110 million per year is needed to fully 
fund an alternative model that the FCC created to promote broadband 
deployment--this shortfall will leave 71,000 rural locations with 
lower-speed broadband and nearly 50,000 may see no broadband investment 
at all. And just as troubling if not more so, the outdated budget level 
dictates that small carrier recipients of High-Cost USF that could or 
did not elect model support will, from July 1, 2017 through June 30, 
2018, be affirmatively denied recovery of $173 million in actual costs 
for private broadband network investments that these carriers have 
already made.
    A recent survey of non-model NTCA member companies revealed that 
the average respondent estimates charging $126 per month for standalone 
broadband under the budget control--far more than most rural consumers 
could afford. Further, the average response predicted charging only $70 
per month for standalone broadband if the budget control were not in 
place and carriers received support for investments under program 
rules. These numbers reveal that the hard cap on the High Cost budget 
that has been in place since 2011 is preventing the High Cost program 
from helping rural providers offer reasonably comparable services and 
rates as called for in the Communications Act.
    Thus, to summarize, a Federal definition of broadband, if revisited 
regularly to keep pace with technology developments to ensure true 
reasonable comparability, could create a more equitable environment for 
rural Americans. But such a definition is only as good as the 
underlying programs designed to achieve it--and in the case of 
universal service policy, such a goal must be tied to sufficient 
resources in the form of USF support to support deployment of networks 
capable of delivering broadband at the ``Federal speed.''

    Question 2. Is the FCC the best suited Federal agency to set the 
Federal benchmark for high speed Internet?
    Answer. The FCC--with the expertise and data the agency has at its 
disposal--is well situated among Federal agencies to set a Federal 
benchmark for broadband. But again, setting one Federal benchmark will 
only be helpful if matched with resources to finance and support 
broadband deployment in the highest-cost areas of the nation. It is 
also worth noting that RUS, which continues to help finance in the 
first instance construction of many of the networks in rural America 
just as it did in wiring rural America for electricity, can and should 
play a useful role in any such exercise, particularly as (in its 
financing role) it takes a unique and well-informed long-term 
perspective on the sustainability of rural infrastructure, rather than 
merely thinking of short-term objectives that might quickly become 
outdated.

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