[Senate Hearing 115-600]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 115-600

                           RURAL DEVELOPMENT
                          AND ENERGY PROGRAMS:
                          PERSPECTIVES FOR THE
                             2018 FARM BILL

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

                                HEARING

                               BEFORE THE

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION


                               __________

                           SEPTEMBER 28, 2017

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry
           
           
               [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


       Available via the World Wide Web: http://www.govinfo.gov/
       
       
                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
32-301 PDF                 WASHINGTON : 2019    

__________       


           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                     PAT ROBERTS, Kansas, Chairman

THAD COCHRAN, Mississippi            DEBBIE STABENOW, Michigan
MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
JOHN BOOZMAN, Arkansas               SHERROD BROWN, Ohio
JOHN HOEVEN, North Dakota            AMY KLOBUCHAR, Minnesota
JONI ERNST, Iowa                     MICHAEL BENNET, Colorado
CHARLES GRASSLEY, Iowa               KIRSTEN GILLIBRAND, New York
JOHN THUNE, South Dakota             JOE DONNELLY, Indiana
STEVE DAINES, Montana                HEIDI HEITKAMP, North Dakota
DAVID PERDUE, Georgia                ROBERT P. CASEY, Jr., Pennsylvania
LUTHER STRANGE, Alabama              CHRIS VAN HOLLEN, Maryland

             James A. Glueck, Jr., Majority Staff Director

                DaNita M. Murray, Majority Chief Counsel

                    Jessica L. Williams, Chief Clerk

               Joseph A. Shultz, Minority Staff Director

               Mary Beth Schultz, Minority Chief Counsel
               
               
               

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

Rural Development and Energy Programs: Perspectives for the 2018 
  Farm Bill......................................................     1

                              ----------                              

                      Thursday, September 28, 2017
                    STATEMENTS PRESENTED BY SENATORS

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, 
  Chairman, Committee on Agriculture, Nutrition, and Forestry....     1
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     2

                                Panel I

Hazlett, Anne C., Assistant to the Secretary for Rural 
  Development, United States Department of Agriculture, 
  Washington, DC.................................................     6
Davis, Richard A., Acting Administrator, Rural Housing Service, 
  United States Department of Agriculture, Washington, DC........     7
Parker, Chadwick, Acting Administrator, Rural Business Service, 
  United States Department of Agriculture, Washington, DC........     8
McLean, Christopher A., Acting Administrator, Rural Utilities 
  Service, United States Department of Agriculture, Washington, 
  DC.............................................................    10

                                Panel II

Botts, Aleta, Executive Director, Kentucky Center for Agriculture 
  and Rural Development, Elizabethtown, KY.......................    29
Ronnebaum, Elmer, General Manager, Kansas Rural Water 
  Association, Seneca, KS........................................    30
Stephens, Christopher, President/CEO, Coweta-Fayette EMC, 
  Palmetto, GA...................................................    31
Shanks, Brent H., Director, NSF Engineering Research Center for 
  Biorenewable Chemicals, Iowa State University, Ames, IA........    34
Law, Denny, CEO, Golden West Telecommunications Cooperative, 
  Wall, SD.......................................................    33
Olinyk, Mark, President, Harvest Energy Solutions, Jackson, MI...    35
                              ----------                              

                                APPENDIX

Prepared Statements:
    Botts, Aleta.................................................    52
    Davis, Richard A.............................................    60
    Hazlett, Anne C..............................................    64
    Law, Denny...................................................    67
    McLean, Christopher A........................................    84
    Olinyk, Mark.................................................    88
    Parker, Chadwick.............................................   102
    Ronnebaum, Elmer.............................................   105
    Shanks, Brent H..............................................   111
    Stephens, Christopher........................................   114
Question and Answer:
Botts, Aleta:
    Written response to questions from Hon. Debbie Stabenow......   122
    Written response to questions from Hon. Patrick J. Leahy.....   122
    Written response to questions from Hon. Kirsten Gillibrand...   123
Davis, Richard A.:
    Written response to questions from Hon. Pat Roberts..........   125
    Written response to questions from Hon. John Thune...........   148
    Written response to questions from Hon. Patrick J. Leahy.....   148
Hazlett, Anne C.:
    Written response to questions from Hon. Pat Roberts..........   152
    Written response to questions from Hon. Debbie Stabenow......   153
    Written response to questions from Hon. John Thune...........   160
    Written response to questions from Hon. Patrick J. Leahy.....   161
    Written response to questions from Hon. Amy Klobuchar........   168
    Written response to questions from Hon. Kirsten Gillibrand...   169
    Written response to questions from Hon. Heidi Heitkamp.......   174
Law, Denny:
    Written response to questions from Hon. Kirsten Gillibrand...   175
McLean, Christopher A.:
    Written response to questions from Hon. Pat Roberts..........   176
    Written response to questions from Hon. John Thune...........   199
    Written response to questions from Hon. Patrick J. Leahy.....   200
    Written response to questions from Hon. Kirsten Gillibrand...   208
Olinyk, Mark:
    Written response to questions from Hon. Debbie Stabenow......   209
Parker, Chadwick:
    Written response to questions from Hon. Pat Roberts..........   211
    Written response to questions from Hon. John Thune...........   233
    Written response to questions from Hon. Patrick J. Leahy.....   233
    Written response to questions from Hon. Kirsten Gillibrand...   236
Ronnebaum, Elmer:
    Written response to questions from Hon. Patrick J. Leahy.....   238
Shanks, Brent H.:
    Written response to questions from Hon. Pat Roberts..........   241
    Written response to questions from Hon. Debbie Stabenow......   241
Stephens, Christopher:
    Written response to questions from Hon. Patrick J. Leahy.....   243
    Written response to questions from Hon. Kirsten Gillibrand...   245


 
                           RURAL DEVELOPMENT
                          AND ENERGY PROGRAMS:
                          PERSPECTIVES FOR THE
                             2018 FARM BILL

                              ----------                              


                      Thursday, September 28, 2017

                              United States Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                     Washington, DC
    The committee met, pursuant to notice, at 9:34 a.m., in 
room 216, Hart Senate Office Building, Hon. Pat Roberts, 
Chairman of the committee, presiding.
    Present or submitting a statement: Senators Roberts, 
Boozman, Hoeven, Ernst, Grassley, Thune, Daines, Stabenow, 
Leahy, Brown, Klobuchar, Bennet, Gillibrand, Donnelly, 
Heitkamp, Casey, and Van Hollen.

 STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF 
KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    Chairman Roberts. Good morning, members of the Committee. I 
call this hearing of the Senate Committee on Agriculture, 
Nutrition, and Forestry to order.
    Today's hearing marks this Committee's ninth hearing this 
year, dedicated to listening to our stakeholders from around 
the country on how our authorized programs are currently 
working or need improvement, as we work towards farm bill 
reauthorization during this Congress. This includes taking a 
look at spending requests and proposals for 39 programs in the 
farm bill that do not have a budget baseline, and as I have 
said at each of these hearings, our Committee must be mindful 
of the very tough budgetary environment that we have to face.
    While it is a principal duty of this Committee to ensure 
the next farm bill provides our nation's agriculture producers 
with the necessary tools and resources to feed a growing and 
hungry world, our responsibilities and the role of the USDA do 
not stop there. It is also critical the next farm bill works to 
support rural businesses and cooperatives and health clinics 
and schools, renewable energy, and bio-based product 
manufacturers and other essential service providers. They all 
serve as the backbone of the communities our farmers and 
ranchers call home.
    Earlier this year, at our Committee's first field hearing 
in Manhattan, Kansas, home of the ever-optimistic and fighting 
Wildcats, we had the opportunity to hear from a number of 
stakeholders that I believe share much of the same passion and 
commitment to rural America as our witnesses today--and to the 
witnesses, I apologize for the lateness of the hearing. Thank 
you for being very patient.
    We listened to the manager at the Nemaha-Marshall Electric 
Cooperative explain how low-interest, utility service electric 
loans make it possible for small cooperatives to provide rural 
Kansas with affordable and reliable energy. A Kansas biofuels 
producer spoke about the important role renewable energy plays 
in helping to create rural jobs and a new market demand for a 
number of commodities important to all of our member states. We 
heard a rural telecom provider discuss daily challenges that 
she faces in working to provide high-speed broadband to an area 
in western Kansas roughly the size of Connecticut and Vermont--
the distinguished Ranking Member from the--the Senator from 
Vermont has departed--but with 3 million fewer people.
    I hope today's hearing will continue that conversation and 
provide our Committee opportunities to hear a broader 
perspective of the needs throughout farm country.
    On our first panel today we are pleased to have the 
Assistant to the Secretary of Agriculture for Rural Development 
and the three Acting Administrators for the Rural Utility 
Service, Rural Housing Service, and Rural Business Cooperative 
Service. They will discuss Secretary Perdue's vision for 
fostering growth and economic prosperity throughout rural 
America and provide an update on program functions within the 
USDA Rural Development.
    For our second witness of panels--or, pardon me, 
witnesses--we will hear from a broad set of private sector 
stakeholders, including representatives of rural cooperatives 
who work every day to provide essential utility services to 
farmers, ranchers, and small towns all across the country. They 
include a non-profit organization that provides training and 
other support for small business development, a university 
professor leading state-of-the-art research in renewable 
chemical product development, and finally, an entrepreneur 
whose business model is helping farmers and other small 
businesses save on energy costs through the installation of 
renewable energy systems.
    Again, I look forward to our discussions today regarding 
the rural development and energy titles of the farm bill, and 
to hearing from our witnesses about their recommendations to 
improve these programs and provide our rural communities with 
the necessary economic tools they need to grow and thrive.
    It is my privilege now to present Senator Stabenow for any 
opening remarks she would like to make.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
                          OF MICHIGAN

    Senator Stabenow. Well, thank you so much, Mr. Chairman, 
for holding this hearing to discuss issues that are so 
critically important to small towns and rural communities in 
Michigan and Kansas, and all across the country. I want to 
welcome our witnesses today. Thank you for your work.
    Earlier this year we held a hearing to examine the state 
the farm and rural economy. There we heard, loudly and clearly, 
that those who live and work in rural America are facing tough 
economic times. But we also learned that there are many 
opportunities to invest in the future of our small towns and 
rural communities, create good-paying jobs, and help them get 
back on a good track.
    Rural communities are often the first to feel the effects 
of an economic downturn and the last to see the impacts of an 
improving economy. As a result, we should be making more 
investments in rural America, not less.
    Looking ahead to the next farm bill, we need to think 
strategically about how we can achieve long-term economic 
growth in every region of the country. I have always said that 
the farm bill is a jobs bill. The rural development and energy 
titles that we are discussing today have a wealth of 
opportunities to provide a bright future for rural America. I 
grew up in one of those small towns in northern Michigan and I 
know how important it is that we have robust economic 
development efforts, support for agriculture, and support for 
business expansion. So strengthening our rural communities and 
ensuring a high quality of life that young people will want to 
go home to is very personal for me.
    In order for our communities to thrive they need to be able 
to compete in the 21st century economy. Improving access to 
high-speed Internet is one of the top ways to make sure that 
happens. USDA provides critical support and capital to expand 
broadband access. We need to strengthen the tools available to 
extend high-speed Internet to every corner of the country.
    We also need to continue investing in other forms of rural 
infrastructure. It is unacceptable that there are small towns 
that cannot afford to modernize their water systems to provide 
clean drinking water.
    Small businesses need access to capital as well. Rural 
business loans help entrepreneurs grow their businesses, while 
also offering new employment opportunities for the community at 
large. We need to continue to invest in innovation that will 
keep driving these economies forward.
    In Michigan, agriculture and manufacturing are the heart of 
our economy. We do not have a middle class unless we make 
things and grow things. That is why we created opportunities in 
the last farm bill to support bio-based manufacturing. Instead 
of using petroleum, companies are creating new products from 
American-grown crops. The economic benefit is twofold--new 
markets for our farmers, and new jobs and manufacturing 
opportunities for our businesses.
    Additionally, the farm bill invests in renewable energy 
which also leads to job creation. According to a new report, 
there are now 92,000 clean energy jobs in Michigan alone. The 
popular Rural Energy for America Program, known as REAP, helps 
producers and businesses lower their utility bills through 
installing renewable energy systems and making energy 
efficiency upgrades. Innovations in advanced biofuels are 
helping us to become more energy independent and pay less at 
the pump.
    It is the clear the opportunities we created in the 2014 
Farm Bill are helping our small towns create jobs and support 
communities where parents want to raise their children. So as 
we begin work on the next farm bill, I look forward to building 
on that progress to help rural America reach its full 
potential.
    Thank you, Mr. Chairman.
    Chairman Roberts. I thank the Senator.
    Senator Thune. Mr. Chairman.
    Chairman Roberts. The distinguished Senator is recognized.
    Senator Thune. Mr. Chairman, in the event I cannot get back 
or have a witness I would like to introduce, is that possible--
that is on the second panel?
    Chairman Roberts. I think that is certainly possible.
    Senator Thune. Well, Mr. Chairman, I just want to first off 
thank you and Senator Stabenow for having this hearing. This is 
an important title in the farm bill. I have a panelist today 
from South Dakota, a good friend, Denny Law, a very incredibly 
capable general manager and CEO of Golden West 
Telecommunications Cooperative, which is headquartered in Wall, 
South Dakota.
    His company serves my hometown of Murdo, South Dakota, 
where my dad still lives. He will be 98 in December. He spends 
a lot of time watching cable and on the Internet, and he is 
probably one of my most-informed and least-patient 
constituents, because, inevitably, he calls me to complain 
about whatever it is he is seeing that we are doing.
    But Golden West has been around for a long time, since 
1916. They provided telephone, Internet, and cable services 
across the state, and Denny has a 27-year history in that 
industry, all in South Dakota, serving both East and West 
River. What makes his current job as CEO of Golden West 
Telecommunications Cooperative so challenging is his company's 
location in one of the most rural areas of the country, with 
ranch and farming operations positioned miles apart and often 
one to two hours from a larger city like Rapid City. Yet Denny 
has managed to meet the rural broadband challenges by 
developing reliable broadband in this area, providing access 
for jobs, education, and health care. Denny has helped keep a 
large part of rural South Dakota in touch with the necessities 
and benefits of the telecommunications industry that most of us 
in other parts of the country take for granted.
    Denny has served as General Manager of Sioux Valley 
Telephone Company and Hills Telephone Company in Dell Rapids, 
South Dakota. He went on to become the Eastern Region Manager 
at Golden West, and he has served as CEO of Golden West since 
2008. He has got a bachelor's degree in science and journalism 
from South Dakota State University, and went on to receive his 
master's in administrative studies in human resources from the 
University of South Dakota, which means he is very conflicted 
when it comes to the football season.
    But I want to thank Denny for appearing before this 
Committee and for sharing your recommendations on how this 
Committee, through the next farm bill, can help you and your 
company improve access to broadband in rural areas. So welcome. 
I thank you, Mr. Chairman, for that indulgence and appreciate 
having Denny Law here today.
    Chairman Roberts. Well, thank you, Senator. I know you are 
very busy and urge you to keep working on tax reform as a very 
important member of the Finance Committee, more especially on 
behalf of the Thune-Roberts Amendment, as it is known in South 
Dakota, or the Roberts-Thune Amendment as it is known in 
Kansas.
    [Laughter.]
    Chairman Roberts. We are going to introduce the first panel 
of witnesses today. Ms. Anne Hazlett currently serves as 
Assistant to the Secretary for USDA Rural Development. An 
Indiana native, Anne has worked in agriculture for over 15 
years, working in both the U.S. House and Senate, and has most 
recently served as Republican Chief Counsel for the Senate 
Committee on Agriculture, Nutrition, and Forestry, in addition 
to her public service in Washington.
    Anne was Director of Agriculture for her home state where 
she managed the Indiana State Department of Agriculture and was 
an advisor to the governor at that time, Governor Mitch 
Daniels, on agriculture and also rural issues. Outside of 
public service, Anne was in private law practice where she 
advised clients on agricultural and environmental regulatory 
matters. She is a graduate of Kansas State University, 
graduating magna cum laude with a bachelor of science degree in 
agriculture communications. In addition, she holds a law degree 
from Indiana University and a master's degree in agriculture 
law from the University of Arkansas.
    Anne, we are delighted to have you before our Committee 
today. Welcome back.
    The next witness is Mr. Rich Davis. Rich has been serving 
as the Deputy Administrator for Community Programs and Rural 
Development since August of 2010. The community programs 
provide direct and guaranteed loans and grants to help our 
rural communities develop or improve their essential community 
facilities for public use in rural areas. These facilities 
include health care, schools, public safety, and a variety of 
other project types.
    Sir, we thank you for your service and thank you for being 
here today.
    Joining us next is Mr. Chad Parker. Mr. Parker currently 
serves as Deputy Administrator for Cooperative Programs and has 
worked in the Department of Agriculture Rural Development for 
more than 26 years. In his current capacity, Mr. Parker manages 
a team that provides assistance to rural communities in the 
areas of cooperative development, research and education, 
cooperative statistics, regional strategic planning, and place-
based initiatives. That is quite a list. It is hard to 
pronounce all of those things with the T's in them.
    Thank you for your service, sir.
    Our last witness on this panel is Mr. Christopher McLean. 
Mr. McLean is the Acting Director of the Rural Utility Service, 
RUS. He oversees the operations of the planning, policy, and 
finance agency, focused on rural electric, telecommunications, 
broadband, water, and sewer systems.
    Thanks to all the witnesses for being here today.
    Anne, why don't you kick off?

STATEMENT OF ANNE HAZLETT, ASSISTANT TO THE SECRETARY FOR RURAL 
     DEVELOPMENT, UNITED STATES DEPARTMENT OF AGRICULTURE, 
                         WASHINGTON, DC

    Ms. Hazlett. Good morning, Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee. I am truly honored with 
this opportunity to discuss prosperity in rural America, a 
passion that I know that I share with each of you here today 
and a topic that is of critical importance as you write the 
next farm bill.
    Growing up in Indiana, agriculture and small towns have 
been my life's calling. Starting in the 4-H program as a young 
girl, I followed my love of farming and rural places through 
college and into law school, so I could be an advocate for 
rural America. Over the course of my career I have been blessed 
to serve as counsel to both the House and Senate Agriculture 
Committees during drafting of the 2002, 2008, and 2014 Farm 
Bills. I have also had a chance to represent the rural interest 
in my home state as Director of Agriculture.
    In each of these chapters I have developed a sincere 
appreciation for the role of policy and partnerships in 
assisting rural communities craft and execute a vision for 
their future. I also have a deep respect for each of you as 
chief advocates for the rural interests of your state, and an 
understanding of the monumental challenges that you face in 
writing a single bill that will meet so many different needs.
    As you prepare to begin writing the next farm bill, I will 
start with what you already know from many of the states that 
you represent, which is the fact that conditions in many rural 
communities are incredibly challenging. Today, 85 percent of 
the poorest counties in America are in rural areas. When kids 
get older and look to begin their careers, very few come home 
to the towns in which they grew up, and in many small towns 
there is simply not the access to critical infrastructure that 
folks need to stay connected to a modern economy.
    When we look at these challenges, whether in Kansas or 
Michigan, North Dakota or Indiana, we are asking, what can we, 
at USDA, do to make a difference to help build prosperity in 
these treasured places? In answering that important question, I 
have found that the best answers come from the ground outside 
of D.C.
    Just last week I made a visit to Olivia, Minnesota, which 
is a small city that has recently built a daycare facility. 
Asking how the town had come to make this forward-looking 
investment, I was told by a local official that the reason was 
simple. When any site selector comes to visit their town, they 
are always looking for four things, he told me: daycare, high-
speed Internet, good roads, and rail access.
    At USDA Rural Development, we want to be a partner to 
communities like Olivia, in building prosperity. Through the 
farm bill, Congress has provided tools to assist in many of 
these needs. As we look to enhance the use of these resources, 
Secretary Perdue has set several priorities for our team at 
USDA.
    First, we are focused on partnerships and coordination. 
Secretary Perdue is leading a task force on Agriculture and 
Rural Prosperity that has brought together the many federal 
agencies and departments that impact rural communities. In this 
effort, we are developing action-based solutions for four key 
issues that are impacting rural America: quality of life, the 
rural workforce, innovation, and economic development. With 
these federal resources, we will then be looking to work in 
strong collaboration with our many partners at the state and 
local level who are on the front lines making difference in 
these communities.
    Second, we are tackling infrastructure needs that I know 
are a key issue in many of your states. Put simply, robust, 
modern infrastructure is a necessity, not an amenity, for rural 
America. With that, the administration has proposed the 
creation of a new infrastructure fund that would offer a more 
flexible source of investment tools to respond to the needs of 
rural America, such as broadband connectivity.
    Finally, we are focused on innovation, finding new ways to 
assist rural communities in addressing the many challenges and 
opportunities they face. Earlier this month, Secretary Perdue 
announced his intention to create a Rural Development 
Innovation Center. Led by an innovation officer, this team will 
house several important functions such as data policy and trend 
analysis. We hope, with this addition, that the Center will 
help our agency become more forward-focused and better equipped 
to assist communities in developing effective grass-roots 
solutions.
    In closing, I want to extend a heartfelt thank you for what 
you do each day to be a strong voice for rural America. As you 
move forward in writing this next farm bill, Secretary Perdue 
and I are committed to working with each of you to ensure that 
rural America is a place of prosperity for generations to come.
    Thank you.
    [The prepared statement of Ms. Hazlett can be found on page 
64 in the appendix.]
    Chairman Roberts. Thank you, Anne.
    Mr. Davis.

STATEMENT OF RICHARD DAVIS, ACTING ADMINISTRATOR, RURAL HOUSING 
 SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE, WASHINGTON, 
                               DC

    Mr. Davis. Good morning. Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee, I appreciate this 
opportunity to testify before you today.
    Let me begin by thanking Congress for its ongoing support 
of rural communities. With your support, the Rural Housing 
Service, or RHS, has made significant and transformative 
investments to strengthen the nation's small towns and rural 
communities.
    Rural Development's fundamental mission is to increase 
economic opportunity and improve the quality of life in rural 
America. A Community Facilities program, a key part of the RHS 
portfolio, supports this mission by investing in critically 
needed community infrastructure. Our program provides rural 
America with access to much-needed capital, where financial 
options are limited or non-existent.
    In recent years, demand for the low-cost, long-term 
financing has surged, and the direct program has experienced a 
nine-fold increase in funding level. Community Facilities 
expects to utilize 100 percent of all of its appropriated funds 
this fiscal year, and continues to maintain a strong pipeline 
of projects for next year.
    Currently, the total portfolio of Community Facilities 
investments is $8.8 billion, with the majority invested in the 
rural health care sector, educational facilities, public 
buildings, and public safety infrastructure. The financial 
health of our portfolio remains strong, and the direct loan 
program will have a negative credit subsidy rate in Fiscal Year 
'18.
    The unique flexibility of Community Facilities also lends 
itself well to addressing current issues and challenges facing 
rural America. As you know, rural towns and communities have 
been hit hard by the opioid crisis. RHS can play an important 
role in mitigating the impact of the opioid crisis in rural 
America by strengthening investment in mental and behavioral 
health care and other facilities that provide treatment, 
prevention, and recovery support.
    Community Facilities also continues to prioritize 
investment in the future of rural America's children by 
supporting a wide range of daycare and educational facilities, 
including charter schools. A positive start will provide rural 
children with opportunities to further education and 
achievement. Building on this foundation, this program also 
strongly supports rural higher education institutions to meet 
critical regional industry needs and physician and other 
skilled professional shortages across rural America.
    In recent years, as the size and complexity of our projects 
has grown, Community Facilities has taken a leadership role in 
facilitating public-private partnerships to leverage critical 
financial, project management, technical expertise, and 
innovation to leverage large, complex, community infrastructure 
projects. Public-private partnerships enable our programs to 
serve more rural communities and assist more rural residents 
with economic growth, job creation, and access to critical 
services. As we move forward, RHS is confident that it will 
successfully implement the programs needed for a thriving rural 
America.
    Thank you again for this opportunity to share with you how 
RHS expands economic opportunity in rural America through 
improving the quality of life for rural residents every day. 
Thank you.
    [The prepared statement of Mr. Davis can be found on page 
60 in the appendix.]
    Chairman Roberts. We thank you, Mr. Davis, especially for 
being on time.
    Mr. Parker.

   STATEMENT OF CHADWICK PARKER, ACTING ADMINISTRATOR, RURAL 
   BUSINESS-COOPERATIVE SERVICE, UNITED STATES DEPARTMENT OF 
                  AGRICULTURE, WASHINGTON, DC

    Mr. Parker. Good morning.
    Chairman Roberts. Good morning.
    Mr. Parker. Chairman Roberts and members of the Committee, 
thank you for this opportunity to discuss our programs at the 
Rural Business-Cooperative Service. Rural Development has 
consistently been the leading advocate for strengthening our 
nation's rural economies through increasing access to capital 
in rural areas, and expanding the bioeconomy, including 
supporting opportunities for biofuels and renewable energy.
    Rural Development's programs and services, in partnership 
with other public and private sector funding, are at the 
forefront of improving the lives of rural Americans. Our 
programs not only promote rural business employment 
opportunities, they keep jobs in rural America and help rural 
economies compete in the global marketplace.
    To date, in Fiscal Year 2017, the Rural Business-
Cooperative Service has successfully delivered approximately 
$1.7 billion in funding to rural Americans, that help 12,500 
businesses create or save about 55,000 jobs. Our path forward 
is to focus on our ability to efficiently and responsibly 
provide government services that meet the needs of rural 
Americans.
    Rural Business-Cooperative Service remains committed to 
revitalizing rural communities by expanding economic 
opportunities, creating jobs, improving rural infrastructure, 
and expanding markets for existing rural businesses in order to 
ensure a vibrant economy. We administer numerous direct loan, 
guaranteed loan, and grant programs that not only directly make 
capital available but, more importantly, attract investment 
capital to rural areas that might not otherwise see such 
investments.
    Rural Business-Cooperative Service continues to be a leader 
in helping ensure America's independence and security, 
promoting the creation and expansion of renewable energy 
projects and jobs in rural America. We currently administer a 
suite of programs that promote a more sustainable energy 
future.
    The Rural Energy for America Program, or REAP, is our most 
successful and competitive renewable energy program. REAP 
promote energy efficiency and renewable energy development for 
agricultural producers and rural small businesses. In Fiscal 
Year 2017 alone, REAP will provide funding for over 1,200 
projects, with total project costs over $1 billion, and 
leverage nearly 18 times the amount of REAP budget authority 
provided for the year.
    Cooperatives are an important business model and the 
cornerstone for business development in many rural communities. 
Cooperatives provide rural residents with job opportunities, 
enhanced educational and health care services, and products 
that enable them to compete in the global economy. Cooperatives 
create local job opportunities and cooperative revenues are 
maintained and recirculated locally.
    One of the largest and most popular opportunities for 
cooperatives is the Value Added Producer Grant Program. The 
Value Added Producer Grant Program provides grants to 
agricultural cooperatives and producers. The grant funds may be 
used for planning activities and for working capital for 
marketing value-added agricultural products and for farm-based 
renewable energy, enabling America's producers to compete in 
the global economy.
    The Rural Business-Cooperative Service is committed to 
promoting economic prosperity in rural communities through 
improved access to capital and economic development on a 
regional scale. As we move forward in the new fiscal year, we 
continue to examine our operations and look for opportunities 
to create efficiencies and seek opportunities to target and 
leverage resources for the greatest impact.
    Thank you for the time, Mr. Chairman and members of the 
Committee. It is truly an honor to be here today and I hope my 
testimony proves to be informative.
    [The prepared statement of Mr. Parker can be found on page 
102 in the appendix.]
    Chairman Roberts. I am sure it will. Thank you, Mr. Parker. 
Thank you for your 26 years.
    Mr. McLean.

 STATEMENT OF CHRISTOPHER McLEAN, ACTING ADMINISTRATOR, RURAL 
  UTILITIES SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE, 
                         WASHINGTON, DC

    Mr. McLean. Chairman Roberts, members of the Committee, 
thank you for the opportunity to testify today and thank you 
for your support for rural electric, water, telecommunications, 
and broadband infrastructure investment through the Rural 
Utilities Service.
    The recent storms of this season remind us how important 
basic utility infrastructure is to the quality of our lives. 
The heroic response of legions of rural utility workers helping 
damaged systems restore power, communications, and water 
illustrates the true spirit of rural America and the long-term 
success of the public-private partnership that has been 
nurtured by this Committee and the USDA.
    The USDA investments in basic infrastructure help deliver 
reliable and affordable electricity, faster Internet service, 
and clean, safe water, to help healthy rural communities grow 
and prosper.
    Today our rural utilities portfolio of loans outstanding is 
nearly $60 billion. Our annual program level is approximately 
$9 billion. In our electric program, RUS funding is helping 
utilities strengthen rural electric infrastructure. Our 
electric partners are replacing aging plants, investing in 
smart grid technologies to increase efficiency, expanding 
transmission capacity, and hardening the grid against natural 
and manmade disaster.
    This fiscal year, RUS expects to obligate over $4 billion 
in improvements in every element of the electric grid, as well 
as new investments in energy efficiency and renewable energy.
    Our telecommunications program finances broadband and 
advanced telecommunications services. Data shows that nearly 40 
percent of rural Americans lack access to robust, reliable, 
modern broadband service. During Fiscal Year '17, RUS expects 
to obligate over $427 million for state-of-the-art 
telecommunications and broadband technologies in some of the 
nation's more remote areas. These investments connect 
communities to the information age and the world to rural 
America's talents, services, and products.
    The RUS Community Connect and Distance Learning grant 
programs are making profound differences in the communities 
they serve. So far this year, RUS has obligated nearly $6 
million to fund first-time broadband service in some of the 
most under-served communities, and $24 million for distance 
learning and telemedicine projects.
    In our water and environmental programs, RUS works to 
maximize limited loan and grant funds to support water and 
wastewater projects, often serving some of the most financially 
needy communities in our nation. We are focused on helping 
communities provide the quality water and wastewater services 
that are essential to the health, safety, and economic future 
of those who live and work in and around small-town America. 
For Fiscal Year '17, the water program expects to use over $1.7 
billion to build or improve water and waste facilities.
    For our entire agency, RUS continues to work to streamline 
our procedures, better coordinate our efforts, and automate 
where we can. For example, our new RDApply system is allowing 
borrowers and the agency to reduce paper, speed approval, and 
enhance efficiency. We continue to work to improve the customer 
experience as well as make sound decisions that deliver value 
to the American taxpayer.
    Thank you again for the opportunity to discuss how RUS 
works to support increased economic opportunity and the quality 
of life in rural America. Thank you.
    [The prepared statement of Mr. McLean can be found on page 
84 in the appendix.]
    Chairman Roberts. Thank you, Mr. McLean, and thanks to all 
of the witnesses. Anne, let us start off with you.
    Share with us your vision under Secretary Perdue's 
leadership--this is new--for the Rural Development Innovation 
Center. Is there a particular example you could tell us about 
regarding how the Center would improve the assistance provided 
to our rural communities?
    Ms. Hazlett. Thank you for that question, Chairman Roberts. 
Secretary Perdue's vision is that we use our resources at Rural 
Development, both our programs and people, to partner with 
rural communities in rural prosperity, and one of the ways that 
we want to do that is through innovation. I mentioned this 
Innovation Center that he has announced his intention to 
create. This is a team that is going to work alongside the 
three agency administrators and carry out a number of important 
activities, such as data analysis and program outcomes 
measurement. We are also looking to drive some other activity 
from the Center that would be designed to foster capacity 
building and partnership development.
    A specific example I think that I can give is in the area 
of trend analysis and partnerships. When we think about 
communities in rural America, and some of the challenges that 
they face, whether it is the loss of a particular sector of its 
economy or the rise of a new health challenge such as the 
opioid epidemic, we hope that a team of folks devoted to 
innovation can help those communities by identifying best 
practices that have been successful in other communities 
addressing that same issue and link them, where appropriate, to 
other program tools or other partnerships.
    I have a specific example I guess I can share recently from 
Kansas. I had an opportunity to visit on rural health care with 
Secretary Jackie McClaskey as well as Mr. Holdren from the 
Kansas Farm Bureau. They were interested in the challenge of 
recruiting doctors to rural communities. We had a discussion 
about best practices and pilot initiatives that could be 
driven, and I think that is a specific example of an issue that 
is in many other states as well, that the innovation team could 
help with.
    Chairman Roberts. I appreciate that very much.
    Mr. Davis, I co-sponsored a bill earlier this year which 
would prioritize community facility funding for the 
construction of, or improvements to, addiction treatment 
facilities, as mentioned by Anne. Could you comment on the 
demand your agency has seen over the past couple of years for 
projects focused on addiction treatment? I think we have a big 
problem out there.
    Mr. Davis. Yes, sir. Thank you for that question, Chairman 
Roberts. I agree. We have seen an uptick in the interest in 
these facilities. In the past fiscal year, checking our 
numbers, we have invested in $300 million of substance abuse, 
substance use disorder type facilities to treat folks with 
those issues, and currently we are seeing a pipeline going into 
Fiscal Year '18 of about $400 million in these--in the needs 
for these facilities. So I would say yes, we are seeing that 
need and thank you for the funding we have received to help 
invest in those types of facilities.
    Chairman Roberts. I appreciate that very much.
    Mr. Parker, you oversee a wide variety, to say the least, 
of programs that assist rural businesses. Can you discuss how 
the particular programs currently within your purview are 
geared towards stimulating rural economies in a targeted way?
    Mr. Parker. Thank you for the question, Chairman Roberts. 
Yes, our Rural Business Cooperative Service programs provide 
loans, grants, and guarantees, but they also do numerous other 
targeted ways to improve rural America and rural business 
lives.
    Some of the ways are we provide, one, by having that field 
staff working in each of our rural communities. They can work 
with the business organizations. They can work with the local 
lenders to make sure there is access to capital and that they 
understand how to reach those pieces of capital.
    Some of our programs allow community lenders, banks and 
other types of lenders, to--because we put a guarantee on those 
loans they are able to sell portions of those loans out to the 
secondary market, allowing them to continue to lend in their 
community beyond what their normal lending limit would be.
    We also have programs that reduce energy cost, for the ag 
producers and rural small businesses, through energy efficiency 
and renewable energy, allowing those businesses to prosper and 
be more viable in the rural economy. We have programs that help 
create new markets for our ag producers, allowing them to gain 
the revenues from value-added products. We have programs that 
allow farm credit institutions to gather funds and invest in a 
strategic manner through investment funds into rural 
communities.
    We have ways that provide resources and activities around 
the development of cooperatives and the development of new 
businesses, providing funding to organizations that assist in 
those ways. We have programs that provide technical assistance, 
job training, and feasibility studies, so that our rural 
businesses are not wasting the capital that they go in and 
invest.
    Thank you, sir.
    Chairman Roberts. Thank you. I have one real quick question 
for you. Mr. McLean--and this was for the entire panel but time 
does not permit me to ask this one question to all of you.
    Mr. McLean, what would be the key challenge that you face 
administering rural development programs that are authorized in 
the farm bill? Can you name me--give me your key challenge.
    Mr. McLean. Thank you, Senator. I would say that the key 
issue for RUS, we have a passion for broadband deployment. We 
are anxious to be able to connect all of rural America. Our 
primary tool that we have available to us are loan dollars, and 
those loans depend significantly on revenue streams that are 
under the jurisdiction of the Federal Communications 
Commission.
    The key challenge for us is to be able to make long-term 
lending, based on the promise of the Telecom Act of 1996, of 
specific, predictable, and sufficient universal service 
support, and where we see stability in those support levels we 
see growth in demand for our loan products. Where we have 
uncertainty of the predictability there is a hesitancy of the 
private sector to be able to invest in telecommunications in 
rural areas.
    The good news is, in Kansas, they are figuring it out. We 
have some of our finest borrowers and great examples. In fact, 
we recently approved a Kraw-Can Kansas loan in our Senior Loan 
Committee and we have RTC in western Kansas that is doing 
wonderful things there. But it is a big, big challenge and it 
depends very much on revenue sources that are beyond the 
control of the service provider and beyond the control of the 
agency.
    Chairman Roberts. Thank you very much. Senator Stabenow.
    Senator Stabenow. Thank you, Mr. Chairman, and welcome 
again to all of you and I appreciate your work.
    Ms. Hazlett, first of all, welcome back to the Committee. 
It is wonderful to have you with us. Broadly, before getting 
into specifics, I know that you said in your testimony that the 
USDA Rural Development, thanks, in part, to the farm bill, is 
the only agency in the Federal Government that has the distinct 
mission of creating jobs in rural areas by supporting small 
businesses, basic infrastructure, and providing access to high-
speed Internet.
    That is why I was very concerned--I know you were not there 
at the time--when the President released his budget that 
targeted cuts in all of those areas at USDA. I wonder if you 
could speak to, in broad measures where you see us going on 
rural development and if you think we need more resources to 
support rural development programs or less?
    Ms. Hazlett. Thank you, Ranking Member Stabenow, for 
raising that important concern. I would simply respond that I 
understand that rural is different, that no two rural 
communities are the same, and while they may face similar 
challenges they may need different resources to address that 
challenge. I am committed to serving the needs of rural America 
and to being a partner in rural prosperity. I am committed to 
working with you and the members of this Committee to meet the 
needs of your rural constituents, and lastly, I am committed to 
making effective and efficient use of the resources that 
Congress provides to meet those needs.
    Senator Stabenow. Thank you very much. I look forward to 
working with you on that as well, and I would just say, from 
our side, there is bipartisan concern about making sure we are 
not cutting back on significant things like rural water 
infrastructure or small business, and so on. I look forward to 
working with you on that.
    I would like to talk about broadband, which is a passion of 
mine, and, Mr. McLean, you were talking about that being a 
passion of yours and your agency's as well. When we think about 
how we move forward quality of life in small towns, whether it 
is the small businesses I have talked to that want to sell 
their products around the world but still be in northern 
Michigan, looking at the Great Lakes and enjoying the beautiful 
quality of life that we have in Michigan. Whether it is our 
hospitals that want to be able to connect and provide the 
highest quality medical care, or it is the connectivity of 
rural schools, and so on, we know that this is the piece--at 
least I believe it is the piece. I would like you to speak to 
this and would welcome each of the panelists to speak about the 
priority right now of making sure that we are connecting and 
not leaving rural America behind, as technology is advancing so 
fast.
    I would also like to know your comments further about rural 
broadband, high-speed Internet, and whether or not you will 
commit to using every tool at your disposal to expand high-
speed Internet to small towns and rural communities in 
Michigan, as well as all across the country.
    Mr. McLean.
    Mr. McLean. Well, thank you very much. Absolutely, we are 
taking a by-any-means-necessary approach in the Rural Utility 
Service, using every tool that we do have available to us. My 
colleague, Keith Adams, who heads the telecom program, works 
with other federal agencies to coordinate our efforts. In our 
electric program we are seeing rural electric cooperatives 
deploy smart-grid technologies using fiber assets, which then 
can be leveraged in partnership with local telcos or the co-ops 
themselves, to be able to provide consumer-based broadband 
services.
    We are seeing some amazing projects come before our loan 
committee where we have reliable revenues and reliable levels 
of universal service support, where we are seeing fiber to the 
home. We just recently approved a batch of loans in South 
Dakota that are some of the more remote areas that are bringing 
fiber to the home technology.
    So it is possible to be able to do this, but there are 
segments of the rural market that the story is still being 
written as to what levels of support will be available. There 
is a major proceeding at the Federal Communications Commission 
to address those rural areas of large telecom providers that 
need levels of support, and we are watching very, very closely 
and, where appropriate, providing advice on how those new 
support mechanisms will reveal themselves and inspire 
investors, rural electric cooperatives, local telco 
cooperatives, small-town telecom companies, and new providers 
to be able to invest in broadband services in those underserved 
areas.
    Senator Stabenow. Thank you. I know my time is up, but 
would anyone else like to speak from their perspective?
    Ms. Hazlett.
    Ms. Hazlett. Thank you, Ranking Member Stabenow. I would 
add, just stepping out from the program side for a second, I 
would just raise the opportunity for collaboration here. I 
mentioned the Agriculture and Rural Prosperity Task Force that 
Secretary Perdue is leading. I think a lot of this, from his 
perspective, also comes down to leadership and just needing to 
see the different federal agencies that play a role in this 
important issue, working together. I know that he and Chairman 
Pai are in close contact and looking at how our policies can be 
driving towards that common goal.
    Senator Stabenow. I would just say, I think this is the 
issue of the moment. At one point, it was connecting the 
farmhouse at the end of the road with a phone, and with 
electricity, and now it is high-speed Internet. If we do not 
fix that we are not going to see the quality of life that we 
want in our rural communities. Thank you.
    Chairman Roberts. Senator Boozman.
    Senator Boozman. Well, it is interesting. This, really--I 
just echo what the Ranking Member just said. This is so, so 
very important. I think, in Arkansas, 84 percent--we are not 
doing as well as Kansas, evidently, so I need to visit with the 
Chairman about that. But 84 percent, lack access to quality 
broadband, which is 30 percent, higher than the national 
average. So it is something that really is very, very 
important.
    I guess the question I would have, Ms. Hazlett and Mr. 
McLean, is we are getting ready to write the farm bill. You 
know, what policies do we need to change? What do we need to do 
differently to make it such that it is easier, to get these 
things done?
    Ms. Hazlett. Thank you, Senator Boozman, for that question, 
and thank you for your leadership on this issue.
    As we look at the importance of broadband infrastructure 
and the tool, the lifeline it is for quality of life and 
economic prosperity, we are really looking at this at USDA from 
three different pieces. I mentioned looking at the different 
agencies that were working on this topic at the federal level 
and making sure there is better collaboration there, also 
looking at how to increase innovation in the deployment of this 
technology, and then the third piece is what you are touching 
on. What are those internal processes and programs that we have 
at USDA and how can we make our tools easier to use, easier to 
apply for? We look forward to working with the Committee in the 
coming months, as you are writing this bill, to offer specific 
improvements to the farm bill broadband programs.
    Mr. McLean. I would say that the key issue is bringing 
revenues up and stable, whether it is through the customer base 
or state and federal universal support mechanisms, and bringing 
costs down, and one of the ways that we can help here in Rural 
Utility Service, is bringing costs down, is by providing 
affordable finance and long-term finance to those that do 
invest, and then looking for opportunities for partnership and 
leveraging. If we can find multiple uses for the same 
infrastructure it brings the cost down for all of those users.
    So we are seeing synergies between smart grid and 
broadband. We are seeing synergies between public safety and 
broadband deployment. When rural providers deploy broadband, we 
are also seeing wireless providers take advantage of that 
capacity along the highway.
    So it is finding multiple uses for the same infrastructure 
to bring the cost of the infrastructure down and having a 
reliable source of financing and revenues for those who are 
actually putting--those investors who are putting their dollars 
at stake.
    Senator Boozman. Good. Very good. Well, I know that--I know 
you all are committed. I know the Secretary, Secretary Perdue 
is committed and understands the importance of this. As you are 
hearing from the Committee, it is something that is our minds, 
the minds of our constituents. You simply cannot go forward in 
this day and age that we live without having that ability.
    I would like to switch gears a little bit. Ms. Hazlett, as 
you know, RUS's water and wastewater loans and grants are very 
important to rural America, including rural Arkansas. Earlier 
this year, in a Water, Fisheries, and Wildlife EPW Subcommittee 
hearing that I chaired, one of my constituents testified about 
his struggles with a lack of running water. However, with the 
assistance of a USDA grant they were able to drill wells to 
bring fresh, reliable drinking water to their home and the 
homes of their neighbors.
    As we look to write legislation to address our nation's 
crumbling infrastructure and write the next farm bill, these 
two are not mutually exclusive. Can you, or Mr. McLean, talk 
about USDA's water and wastewater programs and what more can be 
done to ensure that rural America has access to safe, reliable 
water?
    Ms. Hazlett. Thank you for--Senator Boozman, for raising 
this important issue. I understand that the water resources in 
rural communities are great. I have seen it in my own travels. 
We will certainly steward the resources that you provide to 
meet these challenges. If you provide funding, we will build 
infrastructure with the dollars that are provided.
    Certainly there is always opportunity for improvement in 
our programs and I would allow Administrator McLean to 
elaborate on some specific opportunities that we might have to 
make this program even stronger.
    Senator Boozman. It is interesting. This gentleman that I 
referenced was right outside of Fayetteville, which you know 
very, very well.
    Ms. Hazlett. I do.
    Senator Boozman. Yes, sir.
    Mr. McLean. Yes. Well, thank you very much, and this year 
alone the Rural Utilities Service has obligated about $35 
million of investments in rural water in the state of Arkansas, 
and we are very, very proud of that.
    Senator Boozman. We appreciate that very much.
    Mr. McLean. Very, very innovative municipalities that are 
bringing water and sewer systems to their communities. But it 
is hard. It is tough.
    Our loan and grant programs are focused on communities of 
10,000 or less, and we have to mix that loan and grant 
combination in order to try to target the grant dollars to 
those areas that need it the most. There is always more demand 
for resources than we have available, and we just--we work 
really hard to be able to spend down to the very last penny in 
order to invest those resources wisely.
    Senator Boozman. Yes. Thank you and thank you, Mr. 
Chairman.
    Chairman Roberts. Senator Leahy.
    Senator Leahy. Thank you, Mr. Chairman, and I thank the 
panelists. As I mentioned, we have a Judiciary Committee 
meeting going on two doors away and I am trying to be at both 
of them. But I am always concerned on rural development 
matters. It is one of the reasons I have stayed on this 
Committee all these years. Coming from as rural a state as you 
are going to find, we have an opioid epidemic that is 
devastating our communities, including rural areas in Vermont.
    Chairman Roberts and Senator Donnelly, to their credit, 
have introduced a bill requiring USDA to make a priority of 
community facility direct loans and grants for substance abuse 
disorder treatment services, including telemedicine facilities 
and so on. I think we should make a priority for substance 
abuse disorder treatment. However, we also have to find new 
resources to combat it. We need to find a way, in the farm 
bill, to increase funding for community facilities to combat 
opioid addiction.
    Ms. Hazlett, I know you are looking at this very closely 
and I will ask you this. Will you support efforts not only to 
prioritize grants that will combat the opioid epidemic but to 
increase our investment in community facilities, direct loans 
and grants to continue serving communities, as loans and grants 
do now, and what can the Department do to strengthen and 
improve rural development programs to help those struggling 
with opioid addiction? I mean, it has become, in some places, 
an epidemic, and this is not a Democratic or a Republican 
issue. It is something that I think it is fair to say every 
single Senator on this panel worries about.
    Ms. Hazlett. Thank you, Senator Leahy, for raising this 
important issue, and thank you for your leadership.
    Secretary Perdue recently held a listening session in New 
Hampshire where he heard from various stakeholders about this 
crisis, and we had an opportunity to see some of the things 
that are working in the Northeast very well to address this 
issue.
    I think USDA's role in this topic, we certainly have that--
the immediate, short-term programs for communities to access, 
as they are helping build that immediate response. Our 
Community Facilities Program is certainly one of them. We also 
have the Distance Learning Program as well as some prevention 
grant resources.
    I think another significant opportunity for USDA really is 
that longer horizon. However, we are well positioned to be a 
strong partner in addressing some of the root challenges that 
are often at the heart of this issue.
    Senator Leahy. But you are going to need more money in 
these programs to do that. Is that correct?
    Ms. Hazlett. Certainly resources will be needed.
    Senator Leahy. Are you going to push for those resources?
    Ms. Hazlett. You have my commitment to steward whatever 
resources are provided.
    Senator Leahy. Are you going to push for us providing those 
resources?
    Ms. Hazlett. You have----
    Senator Leahy. I am wearing my hat as the Vice Chairman of 
the Appropriations Committee now.
    Ms. Hazlett. You have my commitment to steward the 
resources that are provided.
    Senator Leahy. Well, I would say to steward them you are 
going to have to get them, and I realize the restraints. You 
know, I have talked with Secretary Perdue about this too, but 
you have got to ask for the money and you have got to push for 
the money.
    Chairman Roberts. Senator, I am sure that you and I will 
receive a call from Anne, if not the Secretary, for adequate 
funding on this most important topic, and we are united in that 
effort.
    Senator Leahy. Yes. This is not a Republican or Democratic 
issue. We are all concerned.
    We also have our forest economy. You know, Vermont depends 
on a $1.4 billion forest-based economy every year, which is a 
lot of money in a small state like ours. We have some really 
nice wealthy forests. But in Vermont, and across New England, 
we are struggling with the recent loss of important markets for 
low-grade wood, due to the closure of several pulp and biomass 
mills. We need a market, of course, for high-grade wood. We see 
that in construction and furniture and everything else. We also 
need a market for low-grade wood. We have to have both if we 
are going to really manage our forests. If you have non-
existent or poor forest management, we all know that fire is 
going to occur.
    So how can rural development programs in our existing farm 
bill help to expand our forest products market and support a 
strong forest products industry? I mean, we talk a lot about 
our agricultural crops that we are all used to seeing benefit 
from these rural development programs, but forests are also an 
important part of that rural economy, are they not?
    Ms. Hazlett. Thank you, Senator Leahy, for raising an 
important sector of the Northeast economy. I had an opportunity 
to travel with Secretary Perdue to the Northeast earlier this 
month and certainly saw firsthand the importance of this 
industry in the region.
    I am committed to preserving and enhancing the diverse 
rural economy through Rural Development's many programs. I will 
let Acting Administrator, Mr. Parker, elaborate on some of the 
business tools that might be there to help that sector.
    Senator Leahy. Well, and my last question, Mr. Chairman, I 
was disappointed when I saw that the President's budget 
proposed to eliminate rural housing service grant programs, 
including Section 502, 504, and 515. These provide essential 
affordable housing in rural America. Will you--I am asking Ms. 
Hazlett, you and Mr. Davis--will you work with the Secretary 
and this Committee, because we all have rural areas that are 
affected, to find out how we can create a sustainable housing 
strategy for rural America, that is sustainable in both 
affordability and access?
    Ms. Hazlett. Thank you, Senator Leahy. I appreciate the 
importance of that issue in rural communities and we will work 
with you ensure innovation and that we leverage the resources 
provided.
    Senator Leahy. Mr. Davis? Mr. Davis, will you work with us 
too?
    Mr. Davis. Absolutely, sir.
    Senator Leahy. Yes, I kind of expected that answer. I just 
wanted to hear it.
    Mr. Davis. Well, no, we would be most interested in working 
with you. It is an important segment of rural America, of the 
rural economy, and important to the success of rural America. 
So absolutely.
    Senator Leahy. Thank you.
    Chairman Roberts. Senator, I noted that Mr. Davis nodded 
his head up and down vigorously.
    Senator Leahy. So can you say on the record it was a 
vigorous nod.
    Chairman Roberts. That is correct. Senator Daines.
    Senator Daines. Chairman Roberts and Ranking Member 
Stabenow, thanks for holding this hearing. You know, I spent 
decades in the private sector before entering public service. 
In fact, I got to be part of building a world-class cloud 
computing company in my hometown of Bozeman, Montana. I 
certainly know the impact that technology has in our 
communities and how access to broadband can break down 
geographical barriers.
    As we say back home, technology has removed geography as a 
constraint. With connectivity, a family in rural Montana can 
start up their own small businesses and have access to global 
markets. When Oracle acquired our company several years ago, as 
they were building out their global cloud computing structure, 
think about this. They have three cloud command centers around 
the world for their 365, 24 by 7 cloud operations. For the 
seventh-largest cloud computing company in the world, which is 
now Oracle, they have three cloud command centers. For Europe, 
Middle East, and Africa, it is London. For Asia Pacific it is 
Bangalore. For the Americas it is Bozeman, Montana. So it 
demonstrates the fact we are not talking about just backwaters 
players now. This is NBA-level, first-string companies in the 
technology sector.
    But this is going to be impossible to keep moving forward 
unless we close this rural-urban gap, the gap between high 
speeds that urban residents have access to and the lack of any 
speeds that rural residents have. I always find it interesting. 
Sometimes I hear about that we have got to get from 4G to 5G in 
some of these areas. There are places in Montana that have not 
even found the alphabet yet. We are not talking about G.
    It is one of the reasons I am hosting a tech summit, in 
fact, a Montana Tech Summit, in Missoula in early October. We 
are going to bring industry and government leaders together to 
talk about how technology can continue to help rural 
communities grow.
    Additionally, programs like the Farm Bill Broadband Loans 
and Community Connect grants are important to rural areas 
across the country. However, they only work when they are 
applied correctly and efficiently in communities that truly 
have need.
    Administrator McLean, RUS broadband loans and grants have 
helped many rural communities in the United States. However, 
the impact of some programs like the Community Connect Grant 
initiative have been limited in my home state of Montana. For 
example, Montana has not yet received a Community Connect Grant 
during the program's 15-year tenure.
    Could you help explain the criteria for this and similar 
grants and loans, and how Montana communities and businesses 
can be better utilizers of this important program?
    Mr. McLean. Sure. Thank you. I would be delighted to. First 
of all, Montana has some of the finest rural telecom companies 
in America, including Lincoln Telephone recently secured an RUS 
loan in telecom infrastructure, and so we are really proud of 
that partnership.
    The challenge in the Community Connect program is it is 
small in number of dollars and highly, highly competitive. The 
focus on our grant programs, in general, whether it is in 
telecommunications, electric, or water, are to focus the 
limited grant dollars on those areas that have the highest 
need. So the scoring criteria will favor the most remote, the 
most poor, the most underserved. Community Connect is focused 
on communities that have zero broadband, no broadband 
availability at all.
    We are able to do right around 10 or so grants a year, 
based on the dollars that are appropriated. Some years it has 
been significantly less. A couple of years we have been able to 
shake out the cushions and get a few extra dollars and make it 
a little bit more. But it has been typically right around $10 
million and we do about 10 grants, and they are just very, 
very, very competitive.
    We are delighted to work with communities, and we do 
webinars, and would be happy to help advise community groups on 
how to apply, and we look forward to working with you and your 
staff to find ways to improve the success rate.
    Senator Daines. Thank you. I want to shift gears for a 
moment in the time I have left to talk about tribal broadband 
issues. Montana is home to 12 federally recognized tribes the 
state recognized, the Little Shell. We know that access to 
broadband opens up new possibilities, opportunities truly for 
our tribal communities.
    Unfortunately, according to the FCC's 2016 Fixed Broadband 
Report, 65 percent of the population on tribal lands lack 
access to fixed telecommunications services, 65 percent. Many 
small companies in Montana have stepped up to bring wireless 
and broadband access--we are grateful for that--including 
Nemont Wireless and Tribal Communications, but I think the 
Federal Government does play a role in this.
    A question to Mr. McLean, what is RUS doing to expand 
access to tribal communities?
    Mr. McLean. Thank you very much. Tribal communities are a 
key focus of our outreach. We are in frequent contact with 
tribal organizations and working with the FCC and the NTIA to 
be able to provide outreach and explain how our programs work.
    One of the challenges that we do face in tribal communities 
are, frankly, rights-of-way where the ownership of land is 
often a checkerboard. Some land is privately held, some land is 
held in trust, and some land is held by families that are 
dispersed, maybe not even aware of their ownership of the land. 
I actually worked on a--there was a major project in Montana 
that ran right up against that problem and it was not able to 
be completed because there was inability to be able to get 
consensus on how the rights-of-way would be managed.
    Senator Daines. Yes, thank you. I know I am out of time 
here. We are good at playing checkers in Montana with the 
nature of land ownership, that is for sure. So, anyway, thanks 
for the comments. Thank you.
    Chairman Roberts. Senator Donnelly.
    Senator Donnelly. Thank you, Mr. Chairman, and I would like 
to thank Anne Hazlett. Thank you so much for your service. It 
is always great to see a fellow Hoosier here on the Committee. 
Before we get into the questions, I want to thank you for your 
service to the people of Indiana and to the country. I am sure 
you will make all of us proud in your new position at USDA.
    I want to ask you, also, about an issue that is dear to 
your heart and mine, and to many Hoosiers and to all of us. I 
know you are aware of the difficulties that many of our 
communities are having when responding to the challenges of 
addiction. I have been working with a number of members on the 
Committee in trying to assure that USDA has the resources it 
needs to help our rural communities respond more effectively.
    I have been fortunate to introduce a pair of bills with 
Chairman Roberts and Senator Strange, and I want to thank them 
both for their partnership, to help provide rural communities 
with what is needed.
    Opioids and substance abuse impact every community but 
accessing treatment is even more of a challenge in some of our 
rural areas, as you know, across our state too. Can you discuss 
how USDA's community facilities and telemedicine programs will 
help rural families and rural communities address the crisis?
    Ms. Hazlett. Thank you, Senator Donnelly, for raising this 
important issue and for your leadership on it. Both of the 
programs that you highlight are certainly being used well right 
now to address both providing treatment facilities in 
communities as well as using innovation through telemedicine to 
access those services that might not be located in the 
immediate town. Certainly Mr. Davis can go into specific 
numbers that we have with those programs.
    I think one of the things I would like to circle back to 
that I am excited about, I mentioned in my beginning remarks, 
the Innovation Center that Secretary Perdue intends to create. 
I think this is a good example of an issue that, for 
communities that are finding themselves in the crosshair for 
the first time and want to know what has worked well in other 
places, whether it is through treatment resources or some of 
the other ways that a rural community might have a unique asset 
that can be leveraged to address this challenge, that is a 
great example of where best practices are something that the 
Innovation Center can then disseminate so that communities do 
not feel alone.
    Senator Stabenow. Ms. Hazlett, also, I am sure we both 
agree that substance abuse and addiction education and 
prevention programs are really critical to ensure we are not 
only treating the symptoms but also working to prevent it from 
occurring in the first place. A program you are aware of, 
Purdue Extension, which has great reach into our rural 
communities around the state, they offer family substance abuse 
prevention programs like Strengthening Families program, which 
has been shown to lower levels of substance abuse in younger 
people.
    Can you discuss how important for rural communities 
programs like these are for their families?
    Ms. Hazlett. Absolutely. I have actually had an opportunity 
to see that program firsthand, on the ground, in Scott County, 
Indiana, and I think one of the great strengths of a program 
like that is that it is looking at some of the underlying 
causes that lead, for many of these situations, lead families 
into many of these situations. When we look at those types of 
programs, I think we are not just changing that immediate 
situation but we are potentially changing a generation and we 
are having a broader community conversation about factors that 
need to be addressed to have prosperity and quality of life in 
these areas, things like public transportation, food security, 
literacy rates. It becomes a catalyst for a broader 
conversation that will result in stronger communities and a 
stronger rural America for the future.
    Senator Donnelly. Thank you, Ms. Hazlett. Thank you, Mr. 
Chairman.
    Chairman Roberts. Senator Casey.
    Senator Casey. Thank you, Mr. Chairman. I wanted to start 
with a question for Ms. Hazlett on a Pennsylvania initiative 
that has been replicated in other states, but I want to make 
two brief comments, first, the broadband focus of this hearing 
and the, I think, bipartisan concern about that is significant, 
and I think the problem is urgent.
    I spent a lot of time, in August, going to counties in our 
state that are substantially rural. We have got 67 counties but 
48 are rural counties, and I was in counties where 50 percent--
Juniata County, 52 percent of the folks that live in that 
county do not have high-speed Internet. Sullivan County, 69 
percent, Susquehanna, 66. Counties all across the state that 
have 40, 50, 60 percent without broadband. So it is a major 
impediment for small businesses, kids in school, and the like, 
so we are grateful that there is a focus on it. We have got to 
do a lot more.
    Secondly, I am hoping that history repeats itself in the 
appropriations process, where the administration unfortunately 
made a series of proposals in the budget which would eliminate 
water and wastewater program, eliminating the rural business 
program, eliminating interest payments to electronic and 
telecom utilities, eliminate Rural Economic Development 
Program, on and on and on.
    The appropriators chose to do otherwise. I am grateful for 
that. I hope history repeats itself, though, when it comes to 
the administration's proposal with regard to the farm bill, 
which is to say it is outrageous and obnoxious does not get to 
the heart of it. Cutting the Supplemental Nutrition Assistance 
Program by, I think it was $193 billion over 10 years. So we 
are hoping that this Committee will be in bipartisan opposition 
to those kinds of cuts.
    There are my comments. I wanted to ask you about, though, 
the Fresh Food Financing Initiative, which is a success story 
from Pennsylvania replicated in a number of states around the 
country. Pennsylvania's program created over 5,000 jobs--or 
created or retained, I should say--$190 million of investment, 
just from that one initiative, by putting down just $30 
million. So put down 30, get 190 in investment. It has helped 
in food deserts and it is also a program where there is a 
substantial personal investment up front, but it has worked out 
well in a lot of states.
    My question is, how do you see that initiative in the 
Department of Agriculture going forward, because it has been 
battle-tested or road-tested and I want to get your sense of 
it.
    Ms. Hazlett. Thank you, Senator Casey, for raising an 
important issue. Food insecurity and hunger in rural 
communities is certainly a piece of quality of life as well as 
economic opportunity and prosperity.
    When we look at the Healthy Food Financing Initiative, I 
think you see an exciting model of a public-private 
partnership, not only a public-private partnership but an 
innovative way in looking at solving a long-standing challenge 
in many communities. Rural America is certainly not immune from 
that.
    We are looking forward to working with the national fund 
manager that has been designated for this program, as they move 
forward with implementation, really as an opportunity to learn 
from their experience and to leverage some of the relationships 
that they have working in this sector, to enhance further 
investments in this area, particularly in low-income rural 
communities.
    Senator Casey. Well, I hope as we go forward if there are 
things that are priorities, funding or otherwise, that the 
Committee can help with, I hope you alert us to that.
    I just had one more question for you, and I know you can 
probably amplify this in writing, but the Value Added Producer 
Grant is a valuable resource to assist small businesses and new 
and beginning veteran farmers with the development in marketing 
of new products to increase income. In our states, these grants 
have been awarded to custom beef processing, to create 
processed milk products, and finished and bottled wines.
    Can you elaborate more on the program and how this program 
can be expanded to reach new audiences?
    Ms. Hazlett. Thank you. This program really touches 
everything from jam to lotion to everything in between. It has 
really opened doors to new business opportunities for a broad 
range of agriculture producers, allowing them to bring new 
products to market.
    As Congress looks to improve the program in the next farm 
bill, we would be pleased to work with the Committee for any 
thoughts you have about changes to make to improve its 
effectiveness.
    Senator Casey. Great. Thanks very much. Thank you, Mr. 
Chairman.
    Chairman Roberts. A vote has been called. In the interest 
of bipartisanship, which is a very strong element of this 
Committee, I am now yielding the gavel to the distinguished 
Senator from Michigan, on a temporary basis.
    [Laughter.]
    Senator Stabenow. I do not know, Mr. Chairman. I may not 
give it back.
    Chairman Roberts. There is always that worry.
    Senator Stabenow. [Presiding.] Thank you, Mr. Chairman. 
While you vote and then when you come back I will go do the 
same. So thank you very much. I think next up we have Senator 
Bennet.
    Senator Bennet. Thank you. Thank you, Mr. Chairman. Thank 
you, Madam Chair. Thank you for your service, all of you.
    I want to express my gratitude to the Secretary of 
Agriculture, Secretary Perdue, for hosting a meeting earlier 
this week with Senators that are concerned about the fire 
borrowing issue, which I know is not the topic of this hearing. 
But I just want to say to my colleagues, this is something 
that--solving this is long overdue. There is strong bipartisan 
support. The Secretary of Agriculture, much to his credit, is 
following up on commitments that he made during the 
confirmation process and I hope that we will come together and 
finally solve this issue for our states--not just our Western 
states but states all over the country.
    Ms. Hazlett, I just wanted to ask you, actually, a somewhat 
related question. I have been around Colorado all this year, as 
I am every year, from La Junta to Alamosa, and everywhere 
around the state, and it is clear that rural communities, as 
they are in America, continue to struggle with this challenging 
commodity environment, farm incomes decreasing, but also, in 
our part of the world, with prolonged drought and limited 
access to affordable land and water. At the same time, 
scientists estimate that new technologies could sequester 30 to 
50 percent of carbon emissions across the economy while 
enhancing soil health and farm resilience, meaning there is 
additional value in our farmland that is not being taken into 
account.
    I was pleased to hear Mr. Censky last week discuss his 
commitment to prioritize climate change in the interest of 
future generations. I agree with his assessment of that as 
well, and I think Colorado's producers do, as well. We have a 
unique opportunity to use USDA programs to improve the 
livelihoods of the next generation through addressing climate 
change and diversifying economic opportunities for farmers and 
ranchers.
    So I wanted to ask you, Ms. Hazlett, whether you are 
willing to work with the Committee and our team to identify 
opportunities to decrease the amount of carbon pollution in our 
atmosphere while also enhancing farm incomes.
    Ms. Hazlett. Thank you, Senator Bennet, for raising this 
issue. You know, at USDA, for many years, our motto has been 
committed to the future of rural communities. Our programs have 
adapted and adjusted to issues that have been important at the 
time, and that will not change. Thank you.
    Senator Bennet. I am glad to hear that, and I know, in some 
ways we are on the cutting edge here, but it is so important 
for us to plan for the future, to be resilient for the future, 
and where there is the possibility of adding new streams of 
income to our farmers' and ranchers' operations I think it is 
critical for us to consider what those look like.
    Is there anybody else who would like to say anything about 
that? Okay.
    I wanted to talk about water infrastructure as well, and 
let me also say, Madam Chair, that I think that the concern 
about broadband is one that everybody on this Committee shares, 
and our communities definitely share. When we say that one 
community can have broadband and another community cannot have 
broadband, it is tantamount to say one group of students can 
have textbooks this year and another group of students cannot 
have textbooks this year. It is entirely unacceptable from the 
standpoint of rural children in my state, and I know in yours 
as well. So we have got to stay focused on it.
    I also just wanted to talk a little bit about water 
infrastructure. I was in Cuba, meeting with the Minister of 
Agriculture, who pointed out to me that they do not have a 
tractor in Cuba that is newer than 50 years old, and that 
seemed like a great opportunity for us. But then I left and I 
thought to myself, well, we do not have water infrastructure 
that is less than 50 years old, in a lot of parts of rural 
America, and including in Colorado.
    The USDA's Rural Utility Service has a significant backlog, 
as has been discussed, of applications for loans and grants to 
repair and rehabilitate rural water infrastructure. Last year, 
in Colorado, this program provided 13 loans and 6 grants, all 
to communities of fewer than 5,000 people, yet there is nearly 
a $30 million backlog, in Colorado alone. Despite this, the 
President's budget proposal zeroed out the water infrastructure 
program.
    Mr. McLean, I would like to ask you what you view as the 
biggest hurdle to reducing this backlog in the program.
    Mr. McLean. Well, we execute the laws that Congress 
passes----
    Senator Bennet. Yes.
    Mr. McLean. --and the appropriations that Congress 
provides, and so to our greatest extent possible we try to 
focus our resources where they can be the most helpful. We 
typically allocate water funding to our state Offices of Rural 
Development, and then, at the end of the year, if individual 
states do not use those dollars, we pool them on the federal 
level and then target them towards high-priority projects. But 
at any given time, I do have projects that are awaiting 
funding, and the ingenuity and creativity of our staff and the 
rural water and sewer authorities across the country take those 
resources and leverage them, and we look for every opportunity 
to be able to stretch those dollars.
    Senator Bennet. So would you say the backlog is that there 
is not enough money?
    Mr. McLean. Right. The backlog is projects awaiting 
funding.
    Senator Bennet. Right. So here is another place where we 
are failing to invest, and I think we have to find a way, 
because we have to recognize there are budget constraints. We 
have to find a way to have a more creative approach to 
financing projects as well. But I think the idea that they 
would zero out this particular part in the budget is just 
entirely unacceptable, I would say, to Democrats and 
Republicans on this panel, and we are going to have to figure 
out a different solution.
    Thank you, Madam Chair, and I thank my colleagues.
    Senator Stabenow. Thank you very much, and I would 
underscore your comments as well, Senator Bennet.
    Senator Van Hollen, welcome, and it is your turn.
    Senator Van Hollen. Thank you, Madam Chair, and thank all 
of you for your testimony.
    I just want to pick up on the broadband deployment point. I 
heard, as Senator Bennet was talking, or I saw most of you 
nodding your heads saying that broadband deployment was 
essential to economic development in rural areas. Do you all 
agree with that?
    Mr. McLean. Absolutely.
    Senator Van Hollen. Would you all agree that we have still 
got a lot of work to do to make sure that we have adequate 
deployment to meet the economic needs of rural America?
    Mr. McLean. Yes, sir.
    Senator Van Hollen. So I wanted to raise with you the issue 
that is pending right now before the FCC. They have a 706 
inquiry. Are you familiar with that inquiry?
    Mr. McLean. Yes, sir, I am.
    Senator Van Hollen. Because I have been hearing a lot about 
this from rural parts of my state, and just that inquiry is 
whether or not, for the purposes of determining whether we have 
adequate broadband deployment in rural areas, or any area, we 
can say that wireless deployment is good enough and that we do 
not also have to look at the deployment of fixed broadband. Are 
you familiar with that?
    Mr. McLean. Yes, sir.
    Senator Van Hollen. Okay. The national Rural Electric 
Cooperative Association is one of many that have filed comments 
in that case, and on page 2 of their filing they just state, 
flat out, ``The Commission''--meaning the FCC--``should 
continue to assess fixed and mobile broadband separately in 
determining whether advanced communications capabilities are 
being deployed to all Americans in a reasonable and timely 
fashion.''
    Do you agree with that statement?
    Mr. McLean. Yes.
    Senator Van Hollen. You do. So my question now is whether 
or not the Department of Agriculture has weighed in or 
commented as well, before the FCC, with respect to the proposal 
that is pending, the 706 inquiry.
    Mr. McLean. So I will defer to Ms. Hazlett, who--to give 
the answer.
    Ms. Hazlett. Thank you, Senator Van Hollen. I am not aware 
of this issue but will certainly be happy to follow up today. 
Secretary Perdue has placed a top priority on broadband 
deployment and connectivity in America, and we will be happy to 
get you that information.
    Senator Van Hollen.. Well, let me----
    Mr. McLean. Senator----
    Senator Van Hollen. --okay, I----
    Mr. McLean. --Senator----
    Senator Van Hollen. --yes.
    Mr. McLean. --let me, if I may, address that point. We have 
not filed as a petitioner with the FCC. We have an ongoing 
dialog with the FCC, and the Secretary of Agriculture is 
chairing the Agriculture and Rural Prosperity Task Force, which 
the Chairman of the FCC is a member. They--I can report that 
broadband is a key focus of that effort, and that dialog, 
although not proceeding as a formal petition, is ongoing 
between the Executive branch agencies.
    Senator Van Hollen. Okay. Well, I would just say--and I 
took the Secretary at his word as well that he is engaged in 
these issues--but if he is not fully aware and engaged with 
what is happening at the FCC, the grants that are provided by 
the Department of Agriculture, the rural communication loans 
and the rural broadband loans and grants, they are all very 
important. But what is happening in the FCC could have an even 
bigger impact on the deployment of broadband in rural areas, 
and that is why you have got the National Rural Electric 
Cooperative Association and all others weighing in.
    So I am going to ask you whether or not the Department of 
Agriculture will weigh in with the FCC and let them know that 
the position of the Department of Agriculture is to not count 
wireless deployment as a total substitute for fixed deployment. 
There are huge differences between the two in terms of the 
capabilities and the costs.
    So I know you cannot answer that today but I would like the 
Department of Agriculture to get back to us, to get back to me 
and let me know if you are willing to weigh in formally on this 
issue, because everyone says, and I believe you, that you care 
about broadband deployment. This action before the FCC is going 
to have a really big impact on the future of broadband 
deployment in rural areas. Thank you.
    Senator Stabenow. Thank you very much for those important 
questions, and Senator Grassley.
    Senator Grassley. Senator Stabenow, I am waiting for the 
second panel to ask questions, so I do not have any.
    Senator Stabenow. All right. Very good. Well, I think at 
this moment then we will thank each of you for being with us on 
the first panel and move to the second panel. We would ask 
those folks to come up and we will proceed.
    [Pause.]
    Senator Stabenow. As we switch, I am going to recess for 
just a moment so that I can vote before the time runs out. 
Chairman Roberts, will be back in just a moment. Thank you.
    [Recess.]
    Chairman Roberts. [Presiding.] I call the Committee back to 
order. Thanks to the first panel, and we appreciate your 
testimony. I would now like to welcome our second panel of 
witnesses before the Committee.
    First we have Ms. Aleta Botts. Ms. Botts is the Executive 
Director of the Kentucky Center for Agriculture and Rural 
Development, a position to which she was named in 2013. She has 
over 15 years of experience working on agriculture and rural 
development policy issues and helping individuals in our rural 
areas understand issues relating to policy and financing. You 
could be of help to individual Senators, I would imagine.
    Before returning to Kentucky to work for KCARD, Aleta spent 
almost 10 years working on agriculture and other issues at the 
federal level as a policy staffer in the U.S. House of 
Representatives. She grew up on a farm in Menifee County, 
Kentucky, received her BS and MS in agricultural economics from 
the University of Kentucky. She currently lives on a small farm 
in Menifee County with her husband and two children.
    Welcome to you, ma'am. We look forward to your testimony.
    The second witness is Mr. Elmer Ronnebaum, General Manager 
Kansas Rural Water Association in Seneca, Kansas, America, 
where he is the General Manager.
    Mr. Ronnebaum's career has spanned five decades, and has 
been focused on working to ensure all of Kansas's rural 
communities have access to safe and affordable water. First as 
a Program Director and then as General Manager of the Kansas 
Rural Water Association, Elmer has been critical to the 
development and facilitation of many training venues for public 
water systems. Furthermore, under his leadership, the Kansas 
Rural Water Association has developed a statewide water GPS 
mapping program, and the popular self-help program called KAN 
STEP, which has been responsible for the construction of nearly 
90 community facilities using local volunteer labor services. 
He and his wife, Kathleen, hail from Baileyville, Kansas.
    Elmer, I am glad you are here to join us today.
    Our next witness is Mr. Christopher Stephens. Mr. Stephens 
is President and CEO of Coweta--I think I am doing that right--
--
    Mr. Stephens. Coweta.
    Chairman Roberts. --Fayette Electric Membership 
Corporation, headquartered in Palmetto, Georgia. Mr. Stephens 
graduated from Newnan High School in 1987 and attended the 
Georgia Institute of Technology where he graduated with a 
bachelor of electrical engineering degree back in '91, and 
earned his professional engineering certification in 1998.
    Once out of college, he worked as a design engineer for 
Ritz Instrument Transformers in Waynesboro, Georgia, and then 
Utility Consultants in Atlanta, before becoming Supervisor of 
Engineering at Coweta-Fayette EMC in 1996. Mr. Stephens is a 
native of Newnan, Georgia, where he lives with Lori, his wife, 
and their two children. We look forward to your testimony, sir.
    Senator Thune has already given a marvelous introduction to 
you, Denny, so we will let that stand for the record, but 
welcome, we really appreciate your coming and we look forward 
to your testimony.
    Our next witness is Mr. Brent Shanks, who is the Director 
of the NSF Engineering Research Center for Biorenewable 
Chemicals, from Iowa State University, home of the Fighting 
Cyclones, in Ames, Iowa. I now turn to Senator Grassley for 
this introduction.
    Senator Grassley. It is my honor, and I have had a chance 
to just have a short conversation with Dr. Shanks. He is the 
Mike and Jean Steffeson Chair of Chemical and Biological 
Engineering at Iowa State University. Dr. Shanks is the 
Director of the National Science Foundation Engineering 
Research Center for Biorenewable Chemicals and an Anson Marston 
Distinguished Professor in Engineering. He has been on the 
faculty of Iowa State since 1999, where he has focused on 
converting biomass feed stocks into chemicals and fuels.
    We welcome you, Dr. Shanks.
    Chairman Roberts. I was going to turn to the Ranking Member 
to introduce our final witness but again, in the spirit of 
bipartisanship, I am delighted to introduce you, sir.
    Our last witness is Mr. Mark Olinyk. Mr. Olinyk is Chief 
Executive Officer of the Harvest Energy Solutions and one of 
its co-founders. Mark is responsible for developing Harvest's 
operating strategies and all external advisor relationships.
    He holds a BBA degree from Michigan State University--
obviously why the Ranking Member wanted to introduce you, with 
the green and white. The distinguished Ranking Member had me 
decorated in green and white when we had our hearing up there, 
so I just want you to know that. When you come to Kansas you 
can wear purple--and an MBA from the University of Michigan.
    I thank you for joining us today, Mr. Olinyk.
    Mr. Botts, if you could start off with your testimony--Ms. 
Botts. Pardon me.

 STATEMENT OF ALETA BOTTS, EXECUTIVE DIRECTOR, KENTUCKY CENTER 
 FOR AGRICULTURE AND RURAL DEVELOPMENT, ELIZABETHTOWN, KENTUCKY

    Ms. Botts. Thank you. Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee, thank you for the 
opportunity to testify here today on rural development issues 
and thank you for having this hearing. The programs being 
discussed today touch every person living in rural America.
    The Kentucky Center for Agriculture and Rural Development, 
known as KCARD, has been providing technical assistance 
services for agricultural producers, organizations, co-ops, and 
businesses for 16 years in the Commonwealth of Kentucky. 
Through this work, we see firsthand the conditions facing ag 
producers as they start new businesses, seek to add value to 
their commodities to capture more of that food dollar, and face 
significant challenges to their bottom line. In Kentucky, this 
work means that we help businesses developed by ag producers at 
all stages of development.
    This work would not be possible without the support of the 
federal Rural Cooperative Development Grant program. This 
program, authorized in the farm bill, provides support for 
KCARD to be the resource for the development of co-ops in 
Kentucky. By forming cooperatives, farmers are able to achieve 
gains that would be out of reach if they were facing the market 
alone. In Kentucky in just the past few years, KCARD has worked 
with an organic feed mill co-op, a small sweet potato co-op, a 
grain elevator co-op, and multiple farmers' markets, and right 
now we are working with a group of producers seeking to 
purchase a portion of a large agribusiness that serves them, 
creating continuity for that agribusiness and its owners and 
creating a way for the producers to gain a stake in a business 
directly serving them.
    The RCDG program has delivered results nationwide, as 
centers like KCARD have developed over 300 co-ops and 350 non-
co-op businesses and created or saved over 10,000 jobs in just 
a documented eight-year timespan. It deserves to be 
reauthorized in the farm bill and funded at the highest 
possible level in annual appropriation bills.
    Through the combined resources of RCDG and the Kentucky Ag 
Development Fund, KCARD addresses complicated ag business 
situations every day. Through KCARD's work with businesses, we 
see at the ground level their experiences with various federal 
grant and loan programs. We have worked with the vast majority 
of Value Added Producer Grant recipients in Kentucky in the 
past five years, so we have seen the applications, the record-
keeping required, and the paperwork challenges.
    This program is important because the funds go to producers 
and producer groups themselves to advance the goal of 
producers, securing a greater percentage of that food dollar. 
The program is a good investment for the Federal Government. It 
accomplishes this through submission of business plans, 
financial projections, estimates of customer growth, and 
pricing calculations.
    I have elaborated in my written testimony on ways to 
improve the program but just to quickly summarize, the business 
plans are important. We should consider a rolling application 
process for planning grants, we need to maintain producer 
eligibility restrictions, and we need to recognize that rural 
development is uniquely suited to run this program, due to the 
assets they have on the ground.
    RCDG and VAPG are just two rural development programs 
critically important to fostering job creation, and RCDG is 
critical to VAPG's success, providing the support that VAPG-
eligible businesses need to launch and thrive.
    Rural development programs respond to a need driven by the 
notion that economies of scale are harder to achieve in rural 
areas, that services are harder to provide because of that, and 
that people living in these rural areas deserve the same access 
to services and opportunity as those living in metro areas.
    KCARD staff works with farmers and rural businesses every 
day to help them survive and thrive. I live in a rural area on 
a rural water system, I use rural broadband provided by a rural 
telecom co-op to do my work, I buy my electricity from a rural 
co-op, and I can, unequivocally, say that these programs are 
critical to the health of our rural areas. If we want our rural 
areas to be strong, we have to support all of these programs 
working together to deliver needed infrastructure, foster job 
creation, and provide a high quality of life for our rural 
citizens.
    Thank you.
    [The prepared statement of Ms. Botts can be found on page 
52 in the appendix.]
    Chairman Roberts. We appreciate your testimony.
    Mr. Ronnebaum.

  STATEMENT OF ELMER RONNEBAUM, GENERAL MANAGER, KANSAS RURAL 
               WATER ASSOCIATION, SENECA, KANSAS

    Mr. Ronnebaum. Chairman Roberts and Ranking Member 
Stabenow, members of the Committee, my name is Elmer Ronnebaum. 
I am General Manager of the Kansas Rural Water Association and 
I appreciate the opportunity to speak to you today.
    My experience with rural water goes back to the early 1970s 
when I was elected to a steering committee and then 
subsequently served for 14 years on the Board of Directors as 
we formed and developed and constructed a large regional water 
supply in Nemaha and Marshall counties. It went on to serve 
some 700 rural residents and farmsteads in the two communities 
of Centralia and Corning. That first project was funded with a 
loan only from the then Farmers Home Administration.
    About 10 years later, we needed to expand the capacity due 
to the needs of that water system. We obtained a second loan 
from then Farmers Home Administration, again another loan only.
    I am here today to ask you for your support to continue the 
funding for that program, which is today known as the Water and 
Wastewater Loan Program, operated under USDA Rural Development.
    The public water supply systems in the United States number 
more than 50,000. I represent the Kansas Rural Water 
Association but also the other 44 state associations that make 
up the National Rural Water Association, and their membership 
of some 31,000 member utilities. Ninety-two percent of those 
public water supply systems serve populations less than 10,000, 
and 80 percent of the 16,000 wastewater utilities in the nation 
serve populations less than 10,000. In Kansas, there are 786 of 
the 855 public water supply systems that serve fewer than 
3,000.
    The issue of affordability of drinking water is a major 
concern for those public water supply systems across the United 
States. The Rural Development Program is critical to addressing 
that effort. The USDA program provides help to citizens to have 
more affordable rates because of the provision for longer-term 
financing than the EPA-funded state revolving loan funds, or 
that commercial credit can offer.
    I tried to put the issue of affordability into some 
perspective. In reviewing the costs that were incurred by a new 
public wholesale district in Strong City, Cottonwood Falls, and 
the little Chase Rural Water District in Kansas, without USDA 
Rural Development funding of loans and grants, and a small 
portion from the Community Development Block Grant, the 
citizens in Strong City, Kansas would have had their water 
rates quadruple to $25 per 1,000, making 5,000 gallons of water 
cost $167, a $42.50 minimum, and roughly $25 per 1,000, for a 
total of $167 for 5,000 gallons. That is absolutely not 
affordable in most communities.
    Strictly relying on commercial credit and the EPA loan 
program, which addresses compliance, is not adequate. The USDA 
Rural Development Program varies from that because it takes 
affordability as a primary factor in the consideration of these 
loans. We compliment the agency for developing an online 
program for the application process. RDApply has helped the 
borrowers and it certainly has helped the agency.
    Thank you, Chairman Roberts, for the opportunity to 
comment. I would be happy to take any questions later.
    [The prepared statement of Mr. Ronnebaum can be found on 
page 105 in the appendix.]
    Chairman Roberts. We thank you, Elmer. Thank you for your 
long service on behalf of Kansas. I do not know about 
Centralia. Centralia used to beat up on the Holton Wildcats all 
the time. I just did not think that was right.
    Strong City has a great rodeo and obviously you cannot 
afford water at those kinds of prices. Excellent example. Thank 
you so much.
    Mr. Stephens.

 STATEMENT OF CHRISTOPHER STEPHENS, PRESIDENT AND CEO, COWETA-
                 FAYETTE EMC, PALMETTO, GEORGIA

    Mr. Stephens. Thank you, Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee for inviting me to 
testify. I am the President and CEO of Coweta-Fayette Electric 
Membership Cooperation, a not-for-profit electric cooperative 
in Georgia. We provide electricity to nearly 70,000 members, 
operate over 6,000 miles of line, and employ around 200 people.
    The farm bill is essential to co-ops because it contains 
tools we use to keep the lights on in rural America, generate 
and distribute electricity from renewable sources, modernize 
the grid, and promote economic development in the communities 
we serve. For decades, the Rural Utilities Electric Loan 
Program has been our foundation, providing low-cost financing 
to co-ops for installing and maintaining the grid. It has been 
the most important rural development tool in this country's 
history.
    Today co-ops are adapting to changes in consumer demand, 
accommodating and evolving generation mix, and protecting 
against cyber threats. The farm bill helps us fund essential 
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 service to our communities and 
reliably paying back our loans. We ask that you help us 
maintain that support in the farm bill.
    In the 21st century, robust communications infrastructure 
is just as important to our businesses as our traditional 
assets like poles, wire, and power plants. My co-op is 
currently conducting an economic study to determine the 
feasibility of building out a broadband network. Our main 
motivation is to take care of 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 facilitating the 
connection of our members' homes and businesses to broadband 
Internet. Some people in our region do not have access to 
reliable Internet, and that puts our consumers, schools, 
hospitals, and employers at a disadvantage.
    Another part of modernizing the grid is deploying new 
energy sources for helping our customers save money, by 
managing their own energy better. Coweta-Fayette EMC is a 
founding member of Green Power EMC, which sources renewable 
energy from low-impact hydro plants, biomass landfill gas, and 
solar. At the end of last year, Green Power EMC projects were 
generating 270 megawatts of electricity, enough power to serve 
over 200,000 homes, and that will nearly double by the year 
2020.
    We also sponsor separate efforts to bring solar 
installations to schools and to help our consumers finance 
money-saving home energy efficiency projects. We urge the 
committee to reauthorize programs like Rural Energy for America 
program, and the Rural Energy Savings Program to ensure that 
electric co-ops can continue to meet the evolving demands by 
our member owners.
    In addition to our electrification work, cooperatives play 
a vital economic development role in the communities we serve. 
Since 2009, Georgia co-ops have funded around $10 million 
through the Rural Economic Development Loan and Grant Program, 
also known as REDLG. These projects include the renovation of a 
hospital and construction of a new cattle feed operation to 
support local agribusiness. We believe the REDLG program is a 
valuable tool in offsetting population flight and job losses in 
rural America and around the country. We urge the Committee to 
work with us to ensure ample funding for REDLG throughout the 
next farm bill and beyond.
    Lastly, allow me to mention an issue of vital importance to 
the health of electric co-ops in Georgia, specifically. Plant 
Vogtle is a nuclear power plant partially owned by Oglethorpe 
Power, our generation co-op. Currently construction is underway 
to add two reactors at Plant Vogtle. However, the unforeseen 
bankruptcy of the project's general contractor has put this 
project in jeopardy. Congress must extend existing nuclear 
production tax credits in order to make this project's 
completion viable.
    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 all Americans. You have a great opportunity in the 
farm bill to make needed investments that will address our 
unique challenges.
    Again, thank you for the time to testify.
    [The prepared statement of Mr. Stephens can be found on 
page 114 in the appendix.]
    Chairman Roberts. Mr. Law.

  STATEMENT OF DENNY LAW, CEO, GOLDEN WEST TELECOMMUNICATIONS 
                COOPERATIVE, WALL, SOUTH DAKOTA

    Mr. Law. Thank you. Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee, good morning and thank 
you for this opportunity to testify on promoting the deployment 
and sustainability of broadband in rural America.
    My name is Denny Law. I am the CEO of Golden West 
Telecommunications, based in Wall, South Dakota. My remarks 
today are on behalf of Golden West and NTCA, the rural 
broadband association, which represents approximately 850 
community-based providers of advanced telecommunications 
services in the very most rural parts of this country.
    Golden West began operations in 1916, and today we provide 
broadband Internet service, cable television, and voice 
telecommunications services. Golden West serves customers 
across 24,500 square miles in South Dakota. That is an area 
larger than the states of Maryland, New Jersey, Connecticut, 
and Delaware, combined.
    Golden West has been an RUS borrower since the early 1950s, 
and just last week we received approval for our most recent 
loan. USDA's Telecom Lending Programs have stimulated billions 
of dollars in private capital investment in rural 
telecommunications infrastructure around this country.
    Despite the tremendous success of the USDA Telecom Program, 
rural broadband deployment would not be possible without the 
Universal Service Fund High Cost program as well. The USF 
program helps rural carriers make the business case for network 
deployment through use of private capital and/or securing loans 
from the Rural Utility Service and the limited number of other 
private lenders committed and willing to finance broadband-
capable plant in rural America.
    Unfortunately, while USDA programs promote, and the USF 
rules are designed to support robust networks, the High Cost 
USF budget is not. A hard cap and resulting budget shortfall is 
now driving consumer rates higher, deterring rural broadband 
investment, and even cutting USF support for investments that 
have already been made. In fact, in the nearly 40 percent of 
the U.S. land mass that is served by rural carriers, the 
artificially low High Cost budget is now the greatest barrier 
to rural broadband investment that carriers face right now. 
Because of this limit, tens of thousands of rural consumers 
will see lower speeds or no broadband at all, precisely what 
recent reforms were intended to alleviate.
    We are requesting Congress to help press for a fix to this 
problem and we urge the FCC to take action as promptly as 
possible to address this budget shortfall.
    The permitting approval and review process for deployment 
of networks across federal and state land-owning agencies must 
also be addressed in any holistic plan to promote and sustain 
infrastructure investment. The best-funded, best-planned 
networks may never deliver fully on their promise if they are 
caught in regulatory red tape and needless delay.
    Robust broadband must be available, affordable, and 
sustainable for rural America to realize the economic, health 
care, education, and public safety benefits that advanced 
connectivity offers. Therefore, the rural broadband industry is 
eager to close the rural broadband gap by working with Congress 
and the administration on public policy that helps to build and 
sustain broadband in rural markets.
    Golden West and NTCA member companies thank the Committee 
for its leadership and its interest on all of these issues, and 
we look forward to working with you on behalf of the hundreds 
of small operator members of NTCA and the millions of rural 
Americans that we serve.
    Thank you for your time and I look forward to your 
questions later.
    [The prepared statement of Mr. Law can be found on page 67 
in the appendix.]
    Chairman Roberts. Thank you, Mr. Law.
    Dr. Shanks.

  STATEMENT OF BRENT SHANKS, Ph.D., DIRECTOR, NSF ENGINEERING 
    RESEARCH CENTER FOR BIORENEWABLE CHEMICALS, IOWA STATE 
                     UNIVERSITY, AMES, IOWA

    Mr. Shanks. Chairman Roberts and Ranking Member Stabenow 
and Committee members, I thank you very much for this 
opportunity to testify, particularly about biomass utilization, 
clearly, near and dear to the state of Iowa but also broadly to 
the country. But I think what is important about this area 
relative to some of the other testimonials that we have heard 
today is this is one that not only impacts farm security, rural 
infrastructure, but also a broader impact on society. So it is 
a case where we can see that rural America really has a strong 
impact on the greater society, and I think that is an important 
thing to always keep front and center.
    Title IX has a very important aspirational goal of 
producing advanced biofuels from biomass, and this is a 
wonderful aspirational goal. Underneath that we have 
established the concept of a biorefinery which would not only 
produce advanced biofuels but also co-products of renewable 
chemicals and biobased products. Importantly, the way this 
title is constructed is it looks at the challenge of that 
aspirational goal, which includes technological challenges, 
market challenges, and infrastructure challenges, and says, how 
do we build actions--authorize actions underneath it to address 
those challenges? That is a very important way to look at the 
problem. But I would argue, or I would suggest there is another 
way, a complementary way to look at it, which is how do we take 
advanced biomanufacturing to judiciously produce renewable 
chemicals and biobased products that can actually enable us on 
the pathway to that grand vision that we have?
    What do I mean by ``judiciously''? We can develop 
technologies that, in the nearer term, can produce renewable 
chemicals, but then as they mature can be leveraged into 
advanced biofuels. We can develop markets in renewable 
chemicals that will then be in place for when we are ready with 
all those pieces in the biorefinery to make it work. We can do 
incremental investment on existing infrastructure to make sure 
that when we come to the biorefinery, which will require a 
large capital infrastructure, we can lower that hurdle for that 
capital infrastructure.
    It is my opinion that if we utilize advanced 
biomanufacturing to produce renewable chemicals, what we can do 
is create successes on the way to the pathway of what we 
ultimately want, which is advanced biofuels. The analogy I 
think of with this is when you think of NASA. NASA creates a 
vision and says, ``We are going to Mars.'' What we do is 
establish technologies along the way to that. But those 
technologies have value in their own right, and NASA does a 
wonderful job of articulating the value of that.
    I think we need to do the same thing in biomass 
utilization. We have a wonderful objective to create advanced 
biofuels but we also have the ability to create successes on 
the way to that ultimate success.
    Thank you very much for your time.
    [The prepared statement of Mr. Shanks can be found on page 
111 in the appendix.]
    Chairman Roberts. Mr. Olinyk. Thank you very much, Doctor.

STATEMENT OF MARK OLINYK, PRESIDENT, HARVEST ENERGY SOLUTIONS, 
                       JACKSON, MICHIGAN

    Mr. Olinyk. Thank you, Chairman Roberts, Ranking Member 
Stabenow, and distinguished members of the Committee for 
inviting me to speak with you today.
    My name is Mark Olinyk. I am the President and CEO of 
Harvest Energy Solutions. We are a solar energy design, sales, 
and installation company based in Jackson, Michigan. I have 
been in and out of the agricultural sector most all my life. I 
was raised on a farm, I farmed on my own for a while, I was the 
farm manager for the largest farm in the state of Michigan in 
the early 1980s. I owned a grain elevator where we warehoused 
over 11 million bushels of grain for the USDA. After that, I 
got into manufacturing, but I missed the farmers and I missed 
the people of agriculture, and I was looking for a way to 
reconnect with them.
    In 2006, I was approached to work in the renewable arena 
and thought this was my way back to working with farmers in the 
Midwest. We started a company called Harvest Energy Solutions. 
Over the past few years, we have grown from a two-men-in-a-
truck operation to over 50 professionals, and growing. Our main 
focus is farmers and rural customers in the states of Iowa, 
Illinois, Indiana, Michigan, Ohio, Kentucky, Tennessee, 
Missouri, Wisconsin, and Pennsylvania. Our agricultural 
customers include dairy, poultry, hog, grain, greenhouse, hop, 
fruit and vegetable farms, as well as wineries and breweries 
and food processors.
    We were pleased to be joined by you, Ranking Member 
Stabenow, in 2015, at a ribbon-cutting ceremony for a solar 
installation at a winery in northern Michigan. That project, 
like so many others in this space, was made possible by the 
USDA's REAP initiative. REAP grants are available through the 
USDA to assist farmers and rural business owners to invest in 
renewable energy systems or make energy-efficient improvements.
    Harvest Energy has been successful, in part, because of the 
smart federal investments in rural communities like REAP. REAP 
has been a component of 25 to 30 percent of our sales. Allow me 
to give you a quick example of the immediate effect that REAP 
has on a solar investment.
    Typically our customers will see a seven-year payback when 
they purchase solar for their farm or business, after which the 
electricity from that investment is virtually free. With a REAP 
grant award, the same farmer or business owner will see an 
approximately four-year return on investment. Many times the 
REAP grant is the determining factor of their buying decision.
    There are typically three times more REAP grant 
applications than available funding in a given year. I would 
strongly recommend to this panel not only to reauthorize the 
program in the upcoming farm bill but consider increasing the 
mandatory funding associated with it. That means more clean, 
renewable energy, more jobs and economic growth in our 
struggling rural communities. I know that this Committee has a 
lot of big decisions to make, but please know that Harvest and 
others like us deal with REAP conversations on a daily basis.
    I want to thank the Committee again for inviting me to
    Washington, DC, to share my perspective and the perspective 
of countless farmers and small rural business owners throughout 
the country. I look forward to your questions.
    [The prepared statement of Mr. Olinyk can be found on page 
88 in the appendix.]
    Chairman Roberts. We thank you, Mark.
    Senator Grassley.
    Senator Grassley. Thank you, Mr. Chairman, for your 
courtesy, letting me go out of turn.
    Dr. Shanks, given your research experience in biorenwables, 
what lessons learned or specific effective practices do you 
feel should be included in the energy title of the farm bill in 
order to for the U.S. to continue being a global leader is 
biorenewables?
    Mr. Shanks. Thank you for that question, Senator Grassley.
    I think always one of the challenges is how do you pose a 
problem and then when the agency carries out that, how they 
respond to the language. As I mentioned in my testimony, the 
way we have currently set up is a vision of a biorefinery, and 
so most of the opportunities are set up around how do we impact 
the production of advanced biofuels. I think there is 
opportunity to say we need successes along the way. Let us 
consider technologies that maybe are not ready for advanced 
biofuels but can produce renewable chemicals that still have 
great value and get us on that path.
    I think these are some of the things that we need to 
consider in terms of how do we get from where we are to where 
we want to go.
    Senator Grassley. Yes. Next, for you, Dr. Shanks, what are 
the prospects for advanced biofuels given the current crude oil 
price of about $50 a barrel? Because I think you indicated, in 
what I read of your testimony, that certainty of petroleum 
product pricing would be beneficial, but if you are in a free 
market environment I do not think you can expect that to be 
something Congress is going to decide.
    Mr. Shanks. That is exactly right. So I worked for Shell 
Oil Company, actually, before, so I have worked on both sides, 
both the oil side and the renewable side, and that is 
absolutely correct. This is one of the challenges when the 
target is primarily just a fuel, which is going to be very 
tightly controlled relative to the price of crude oil.
    There are opportunities with renewable chemicals, biobased 
products, that actually have advantaged and unique performance 
properties that create value proposition so that you can 
decouple them, to some degree, from the price of fossil carbon, 
and that is a tremendously important part of the path forward, 
in my opinion.
    Senator Grassley. Why do you--also for you--why do you 
characterize renewable chemicals as ``ancillary'' in the 
current biorefinery strategy?
    Mr. Shanks. So, again, when we look at the objective of a 
biorefinery, which is to make advanced biofuels, there is now 
an acknowledgement that there is an important role for bio-
based products and renewable chemicals with that. However, the 
language that always comes out is how do we take the byproduct 
stream? How do we take the side streams that are not being used 
for advanced biofuels? This is really limiting innovation and 
limiting our ability to make progress, technologically, on the 
way to that goal.
    Senator Grassley. Mr. Hazlett--I should nt say--I am sorry. 
I have got one more question for you. In your testimony, you 
stated that the U.S. chemical market is over $200 billion in 
annual sales. What percent of the $200 billion do renewable 
chemicals currently account for? Additionally, are there any 
projections for where renewable chemicals might reasonably be 
in 10 years?
    Mr. Shanks. Yes. So this is always a challenging question 
and there is complete--there are chemical consulting companies 
that make their business to project what that is. I am 
certainly not in the position to be as definitive or as 
forward-looking as some of them. But we are less than 1 
percent. You can envision that 10 percent of that market is a 
reasonable capture strategy. Clearly, there are a number of 
things that have to be advanced to get to that point.
    To put it in a more concrete term, the state of Iowa passed 
a renewable chemical production tax credit. This is the first 
year that is in place. It is 5 cents per pound of produced 
building-block chemical from renewable products. Already there 
are 15 companies looking at applying for that credit, which 
would be for production for this year, that they will 
officially apply for in January.
    So the answer is there is a lot of opportunity out there, 
and a lot of innovation out there, so I think there is--that 10 
percent is not an unreasonable objective.
    Senator Grassley. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Heitkamp.
    Senator Heitkamp. Thank you, Mr. Chairman. This is an issue 
that is near and dear to my heart. My colleague, Senator 
Hoeven, and I represent one of the most rural states in 
America, and we appreciate and understand how critically 
important the rural development piece of this is. In fact, I 
have two tests on whether I think a rural area will survive. 
First is do we have rural water, which is absolutely critical 
going forward for many, many families, to make sure that the 
water is pure and clean. The other test is can they stream 
Netflix, right, because if you cannot stream Netflix, if you 
cannot get access to broadband, it is going to be increasingly 
more difficult, not only to keep our agriculture economy in 
these rural areas thriving but to build out and develop value-
added opportunities that will keep our children at home.
    We are very, very interested in making sure that the 
historic commitment that the Federal Government has made to 
rural development, which has paid off either repayment of 
loans, but absolutely producing the highest quality food source 
in the world, making it possible for us to continue to do what 
we do in rural America, none of that would be possible if we 
had not electrified, if we have not--now looking at broadband, 
if we had not made these investments.
    I want to thank you all for the roles that all of you play 
in doing exactly that.
    I want to talk a little bit about what would happen if, in 
fact--you probably all saw the budget that the administration 
advanced--what would--and we will start down at the end, and 
welcome, it is good to see you again. She used to work for Earl 
Pomeroy so I had to give her a shout-out. You know, let us just 
ask all of you what you think the consequences would be if we 
adopted this administration's budget as it relates to rural 
development. We will start on that end.
    Ms. Botts. Thank you, Senator. Well, certainly we have to 
recognize that the rural development programs that are in place 
have no rival in Federal Government. They are not duplicative 
to other programs, and we have to dedicate enough resources for 
these programs to do what they are designed to do, which is 
help these rural communities survive and thrive.
    We would say that any effort to reduce the resources to 
these programs will be detrimental to rural areas.
    Mr. Ronnebaum. Senator, when it comes to rural water, if 
the funding from USDA Rural Development is not available, many 
of those projects will simply not be built.
    Senator Heitkamp. If I could just take a minute, what will 
happen to operation and maintenance and the opportunity not 
only to build new facilities but maintain what you currently 
have?
    Mr. Ronnebaum. The USDA Rural Development finances circuit 
rider programs and we provide, through our association, as a 
technical assistance provider, daily operation maintenance and 
technical funding application assistance to those communities. 
The communities in Kansas, and many across the Midwest, have a 
declining capital--human capital. We typically have 25 percent 
turnover of operators annually in the state of Kansas. These 
field techs are essential to maintaining critical services. 
Miltonvale, Kansas, yesterday lost two operators and one of our 
people is in there today, and was already yesterday afternoon, 
helping that town maintain service.
    Senator Heitkamp. Thank you. Mr. Stephens?
    Mr. Stephens. Thank you, Senator. I certainly appreciate 
this opportunity and we really want to continue supporting the 
electric utilities and building out the basic infrastructure, 
but we also see a need in continuing to support the Rural 
Energy for America REAP Program, the Rural Energy Savings 
Program, and also REDLG which helps promote economic 
development in our communities.
    Senator Heitkamp. Thank you. Mr. Law?
    Mr. Law. Thank you, Senator. We would continue to support 
robust funding for broadband efforts, including the Rural 
Utility Service Broadband Development programs as well as the 
various grant programs that are available, as well as the 
traditional infrastructure program. It is my understanding that 
the budget proposed for that is relatively stable at that time, 
but certainly as the process evolves we will continue to 
advocate for strong funding.
    Senator Heitkamp. If I can just make a point there, stable 
budget is going to maintain and help us keep what we have got. 
We desperately need to expand rural broadband, which, along 
with Shelly Capito, we are working very hard in my office.
    If I can just get two more questions? Thank you, Mr. 
Chairman.
    Mr. Shanks. There is no question that infrastructure is 
tremendously important, and even when we get into manufacturing 
of some of these products we need to have that infrastructure.
    I would say what is also important is actually creating 
value in these communities, and a great example of that is 
three years ago there was a $148 million facility built in 
Osage, Iowa, called Valent BioSciences, to make biobased 
products. So there is great opportunity here as well.
    Senator Heitkamp. Thank you.
    Mr. Olinyk. If the REAP grant initiative was disbanded, for 
whatever reason, it would make it very difficult for many 
farmers to dip their toe into renewables. We sell to farmers 
because, typically, they have space and they have friendly 
townships. We look forward to working with this group, and as I 
talk to hundreds, or maybe thousands of farmers at different 
trade shows that we attend, they bring up REAP, and they bring 
it up more and more all the time. So the momentum is growing, 
and to pull the rug out from under a program like this would be 
detrimental.
    Senator Heitkamp. Thank you. Thank you, Mr. Chairman.
    Chairman Roberts. Thank you, Senator. Senator Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman. Thanks to the 
witnesses for being here. Somewhat along the same lines. What 
are your priorities in the farm bill? I mean, as you look at 
small businesses, businesses throughout rural America, what are 
your priorities in the farm bill, like one, two three, for each 
of you?
    Ms. Botts. Certainly, the reauthorization of the Rural 
Cooperative Development Grant program is critical to providing 
resources for rural businesses, developing in rural areas, and 
North Dakota has some excellent rural co-ops that have 
developed through this program. So reauthorization of Rural 
Cooperative Development Grant.
    The reauthorization of the Value Added Producer Grant and 
maintaining a strong business focus for that program, having 
applicants put together strong applications that include 
financial projections and estimates of customer base, those are 
two key pieces for what would be necessary in the next farm 
bill.
    But certainly, looking at all the programs together to see 
how we can--how the programs work together to provide resources 
for rural development and how that can be done more 
cooperatively would be something that we would encourage. Thank 
you.
    Mr. Ronnebaum. Senator, I am not intimately familiar with 
all aspects of the farm bill, but I do know about the Rural 
Development's Water and Wastewater Loan and Grant Program, and 
there are many more applications and funding needs than funding 
is presently available, and that is a critical component to 
making water and wastewater services available in underserved 
and low-income, particularly, rural communities.
    Mr. Stephens. Senator, I think for us it is definitely 
continuing to meet the growth of our communities and providing 
funds to meet their electric service needs. Also, providing 
innovative solutions like we have utilized for AMI and making a 
smarter grid, which could include some form of broadband, and 
continuing to promote economic development by reauthorizing 
REDLG.
    Mr. Law. Senator, we would strongly support continued full 
authorization for the Broadband Loan Program and the 
Traditional Telecom Loan opportunities that rural 
telecommunications providers can take advantage of for 
affordable financing of expensive broadband networks in very 
rural areas, and as many dollars are available for those types 
of applications to further that mission would be our number 
one, number two, and number three.
    Mr. Shanks. I certainly cannot claim the expertise on the 
broad aspects of the farm bill, as a number of these experts, 
but I would say that I think an important aspect of a strategy 
for farm security and rural investment is making sure that we 
actually have products that are valuable. We think that 
biomass-derived products are tremendously important in the mix 
of how to help rural economy.
    Senator Hoeven. What is most helpful to you there?
    Mr. Shanks. Pardon me?
    Senator Hoeven. What is most helpful to you in developing 
those biomass products?
    Mr. Shanks. I think the key process there is to make sure 
we synergistically use our federal dollars. The Department of 
Energy has a very clear mission on energy. USDA, I think, has a 
much more of a mission on rural infrastructure, value to the 
rural society. I think that does not require that energy be the 
main feature of it. It means how do we create value from the 
biomass. I think it is important that those programs complement 
each other rather than just reinforce one direction.
    Senator Hoeven. It is still a little arcane for me.
    Mr. Shanks. Okay. So a lot of what we do in the biomass 
area is absolutely related to making advanced biofuels, and 
that is a view across----
    Senator Hoeven. Are you talking about the biofuel 
programs----
    Mr. Shanks. --across multiple agencies, yes, yes, and I 
think those are important. However, USDA, in the farm bill, I 
think has a unique niche in there that what we care most about 
is how do we create value from the biomass products. Energy is 
not the absolute only end game that we would be interested in. 
We are interested in value-added products, and I think value-
added products are a shorter-term advantage and success story 
potential than advanced biofuels.
    Senator Hoeven. So like making a biomass coffee cup for the 
Chairman of the Ag Committee?
    Mr. Shanks. Yes.
    Mr. Olinyk. I guess I would suggest jobs be one of the--my 
biggest concerns. Our young people are leaving the communities. 
They are coming to big cities. In order to create some of those 
jobs I am back to renewable energy. Renewable energy produces 
jobs in those small communities. It reduces the cost of 
electricity for the farmer, allowing them to expand their 
business and potentially hire more people, as well as the 
guaranteed loan program.
    But there is something here that I am learning today that I 
am certainly not equipped to speak on, and that is the opioid 
condition we have in our rural communities. I think we all need 
to pay a lot of attention to that. It is real, and it is a big 
concern. Thank you.
    Senator Hoeven. Thank you.
    Chairman Roberts. Senator Stabenow.
    Senator Stabenow. Thank you very much, Mr. Chairman. Thank 
you to each of you for your excellent testimony. Mr. Olinyk, it 
is wonderful to see you again and I appreciate the great work 
that you are doing. I wondered if you could talk a little bit 
more about the REAP program, and the fact that it is 
consistently oversubscribed. There is more interest than there 
is funding, to be able to move these opportunities forward for 
farmers and others. We fought hard in the 2014 farm bill to 
secure permanent funding for the program.
    I wonder if you might talk broadly about the demand for 
rural renewable energy projects, what you are seeing in the 
field, and what would happen in terms of jobs, jobs for your 
business, as one example, if we were to increase the funding 
for REAP.
    Mr. Olinyk. Thank you, Senator, for the question. The more 
available REAP money, the more benefit to farmers and 
businesses, period. It produces jobs. I will talk--I will be 
greedy for a second and talk about my company. I mentioned that 
25 or 30 percent of our growth has been directly related to the 
REAP grant. We not only sell and design and install solar 
panels, but we have a manufacturing sector. We manufacture the 
structure beneath the solar panels. So there would be increase 
in manufacturing, design, installation, sales, administrative, 
and these are professional jobs. They are not minimum wage 
jobs.
    Also, on the agricultural side, as we educate these 
farmers, one at a time, it seems like, and they invest in 
renewables, it frees up money for them to expand their 
business. When they expand their business, more jobs are had.
    Our business has doubled in about the last three years. I 
expect it to double again in the next three years, or faster, 
certainly with an enhanced REAP program.
    I have got a quick story. It has to do with Kentucky. About 
six years ago, I wanted to show that somebody from Michigan can 
go sell someone from Kentucky a product, so I, myself, went 
down there and I was introduced to a young farmer, and we hit 
it off, and he ended up buying a solar array from us. During 
that conversation, his neighbor was there. I thought I gave the 
first guy a really good deal, but we found out that that good 
deal spread and spread and spread, and they all got a pretty 
good deal.
    Long story short, they almost all applied for a REAP grant. 
Within five or six counties, we sold approximately 100 
installations of solar. In those five or six counties, almost 
all applied for a REAP grant, and I would say half got the REAP 
grant and half did not. But I would say that we could have had 
another 50 sales or so, meaning more employment there, more 
employment for us, had we had more funding for REAP.
    Senator Heitkamp. Thank you very much. Mr. Ronnebaum, I 
want to talk a bit more about rural water. You highlighted the 
affordability of drinking water and the importance of USDA's 
Rural Development Water and Wastewater Loan and Grant Program, 
in Kansas as well as across the country. We have certainly had 
a lot of challenges in Michigan, from Flint, Michigan, with the 
lead in water, to McCone County, where there was a big sinkhole 
where the road just collapsed, and underneath it we saw pipes 
that--I do not know what you call a pipe made out of wood, but 
that is what we saw, just extraordinarily old infrastructure.
    According to the EPA's most recent Drinking Water 
Infrastructure Needs Survey, $64.5 billion is needed to 
maintain and upgrade small water systems around the country. As 
our nation's infrastructure continues to age, can you describe 
the role that USDA Rural Development Programs have in ensuring 
communities--I know you have talked about this, but I wonder if 
you would talk about what is being done to provide access to 
clean, affordable drinking water, and any suggestions that you 
have in terms of USDA being able to help finance more drinking 
water projects or provide technical assistance in a more robust 
way?
    Mr. Ronnebaum. Thank you, Senator Stabenow. The EPA-funded 
water supply loan funds and programs in various states focus 
primarily on compliance. In Kansas, as an example, when the 
state ranks the projects for funding by the regulatory agency, 
they apply 35 points to compliance or consolidation. 
Affordability gets 5 points. Affordability is at the bottom of 
their list, whereas the USDA program puts affordability very 
much to the top. So those programs are not duplicitous.
    Simply put, the focus is completely different. The USDA 
program replaces, expands, and extends services into unserved 
areas. The EPA program cannot do that.
    Senator Stabenow. Thank you much. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Klobuchar, we have a vote at 
12:15 and another one at 1:45. I am going to try to make this 
as brief as I can because I know that you have pertinent 
questions.
    Ms. Botts, in your testimony--we had a new arrangement 
here, Amy, where the last shall be first----
    Senator Klobuchar. No problem.
    Chairman Roberts. --and the first shall be last. But, at 
any rate, in your testimony, ma'am, you highlighted important 
requirements of the Value Added Producer Grant Program, 
specifically that applicants provide a business plan and basic 
financial statements. Do you believe it makes sense to consider 
requiring this type of financial information for all USDA grant 
and loan business-based programs to ensure that projects being 
funded are actually viable?
    Ms. Botts. I do. I think if the program is delivered to 
recipients who are private businesses, it only makes sense to 
have documentation that the business has thought through the 
very difficult questions they have to think through to do a 
business plan, and that they do have basic financial 
statements, such as a good profit-loss statement, so that the 
agency and the reviewers for the grant program can look at that 
and see that it is a viable, going business.
    Chairman Roberts. Thank you for that. If you see Earl 
Pomeroy in the near future, tell the loquacious Mr. Pomeroy 
that I miss the dialog back and forth between he and I when we 
were on the House Ag Committee.
    Ms. Botts. I will do that.
    Chairman Roberts. This is for Denny. As you noted in your 
testimony, Rural Development administers a number of different 
loan and grant programs to encourage deployment of broadband 
all throughout rural America. These programs have various 
definitions of what speeds actually constitute broadband. Do 
you think it makes sense to have a common definition of 
broadband, and, if so, what speeds would you recommend a 
borrower commits to build out in order to qualify for a grant 
or loan?
    Mr. Law. Thank you for your chair--or your question, 
Chairman Roberts. I do believe that there should be some type 
of coalescence around a consistent speed designation for what 
constitutes broadband, not just in rural America, but, quite 
frankly, America in general. In terms of speed standards, there 
are a variety in place today. In terms of the rural utility 
service there are also a variety of speed standards used by the 
Federal Communications Commission as well.
    I would strongly urge, if at all possible, there be some 
type of meeting of the minds, so to speak, between those two 
entities to try to see what type of agreement or broad 
guidelines could be put in place for a consistent broadband 
speed standard.
    In regards to a specific speed, Mr. Chairman, it is 
difficult--I will answer your question but I would like to 
preface it first by saying that will be an ever-evolving 
question that I am confident this Committee and others will ask 
for many years to come. The needs or desires of a particular 
network capability will evolve in years to come. Whatever 
number I tell you today, by the next month, next year, or five 
years, while we are all still building network, that number 
could be sub-performance.
    From a company perspective in my organization, and I think 
many in the rural telecommunications, I think a minimum 
broadband speed should start in the 25/3 territory, so 25 meg 
broadband downloads and 3 meg up minimums, would be my personal 
recommendation, but that is written in sand, because a year 
from now it should be higher, and so on.
    Chairman Roberts. I appreciate that. A lot of things are 
written in sand around here.
    Elmer, in your written testimony you include a number of 
policy recommendations for the 2018 farm bill. One 
recommendation includes removing water and waste disposal 
technical assistance and training grants from the strategic 
economic community development set-aside. Can you expand on why 
you think this recommendation is the right way to go, why it 
makes sense, whether you believe there are other grant or loan 
programs where the multi-jurisdictional approach is not working 
as intended?
    Mr. Ronnebaum. Senator, that program, as I understand, 
takes 10 percent--a 10 percent set-aside, at the national 
level. Whether or not that makes sense in the program, it would 
seem that each state could take its allocation and deal with 
the full 100 percent. But as it is presently written, it 
reduces the wastewater tech assistance program by 10 percent.
    We have one staff member who covers the entire state of 
Kansas. He measures lots of sludge in lagoons. I could give you 
some harrowing stories about getting high-centered in a lagoon 
in a sludge boat, but we do not need that now.
    It would curtail services if those programs were reduced by 
10 percent to many communities who need that assistance.
    Chairman Roberts. I appreciate it. Thank you. If we have 
time afterwards here, and I do not have to go to vote, I will 
ask you about the governor stating that there is evidence now 
that the recharge for the Ogallala Reservoir actually is in a 
better situation than we thought, and I know you are from the 
eastern part of Kansas but we have that reservoir out there. 
Thank you very much.
    Mark, have any of the REAP awardees you have worked with 
over years been agriculture producers located in non-rural 
areas? I am asking this because the program currently allows 
urban farmers--sounds like the movie--to qualify for funding? 
But as you noted in your testimony, this program is highly 
over-subscribed every year. This might be a little 
controversial but what are your thoughts regarding tightening 
eligibility requirements for Rural Energy for America Program 
awards to focus these dollars on providing benefits directly to 
agriculture producers in our rural communities?
    Mr. Olinyk. I guess I am not sure I totally understand the 
question.
    Chairman Roberts. Well, there is money, or funding, going 
to urban producers under a program that is for Rural Energy for 
American Program awards, to focus dollars on rural.
    Mr. Olinyk. Okay. I understand. It is my understand--and 
let me make sure I understand the question--it is for farmers 
and small businesses in rural communities. But when they 
describe a farmer, they also--that farmer can also be closer to 
the urban area. That is my understanding of the rule. So if 
someone is farming tobacco outside of Murray, Kentucky, and 
they are very close to the city, then I--well, that is not a 
very good example because Murray is not that big--Louisville, 
and it is closer to the city, and encompassed in an area that 
is too large or larger than a 50,000 population, the farmers 
are exempt from that and they can still get a loan or a grant. 
That is my understanding.
    Chairman Roberts. Or just keep them outside of the city 
limits.
    Mr. Olinyk. I am good with that too.
    Chairman Roberts. All right. I appreciate that very much. 
Let us see if I--Senator Klobuchar, why do not you close out.
    Senator Klobuchar. Okay. Very good. Thank you, all of you, 
and I am co-chair of the Senate Broadband Caucus so I am going 
to start with that, and I focused on, of course, our rural 
connectivity and what is going on, and we still, in this day 
and age, have way too many people that cannot get broadband, 
including farmers, business people, who go to the McDonald's 
parking lot to do their work.
    So, Mr. Stephens and Mr. Law, what steps do we need to take 
to help deploy broadband, and how can we overcome the unique 
challenges that we have there?
    Mr. Stephens. Thank you for the question, Senator, and I 
will start. At Coweta-Fayette EMC we are currently in the 
process of completing a feasibility study to determine the 
benefit of building out a broadband network specifically for 
operational needs first. But our idea and our focus is to see 
how we can potentially partner with others to expand that to 
the unserved areas. We see that it is not necessarily one size 
fits all. There are some co-ops who are building that last 
mile, and there are some who are not really focused on that and 
do not have any interest at this time.
    But what we see and what we believe is making sure there is 
ample funding for those co-ops, and electric co-ops who are 
serving and building these networks.
    Senator Klobuchar. Okay. Thanks.
    Mr. Law. Thank you, Senator Klobuchar, for your question. I 
think it is a combination of a couple of things. First is for 
the rural telecommunications providers that are already in the 
business of providing broadband, or trying to provide broadband 
across rural expanses, is an effort to stabilize both the forms 
of revenue sources that rural carriers rely on, specifically 
the Universal Service Fund. In the first panel, Acting 
Administrator McLean referenced the stability of the fund 
impacts our ability to make investments, our ability to keeps 
rates affordable, our ability to provide comparable services, 
our ability to get loan funds from your rural utility services. 
All of those things cascade into impacting our ability to 
provide these services in a very difficult economic situation 
in rural America.
    The second thing I would briefly say is to ensure that we 
create the proper incentives to focus broadband providers to 
invest in rural America with the economic challenges.
    Senator Klobuchar. Okay. Thank you. Mr. Olinyk, I know that 
Senator Stabenow asked you about the rural energy part of the 
farm bill, and I am going to ask a related question. You talked 
about how REAP allows your clients to save electricity and 
money while making their operations more stable and profitable. 
How do you take advantage of the opportunities of the energy 
program, and as someone who works with REAP, what improvements 
do you think we could make so that it is more effective for 
rural users?
    Mr. Olinyk. Thank you for the question, Senator. One of the 
things that we have noticed with this--with the reprogram--and 
I am going to give an example--is that the maximum REAP loan, 
or REAP grant is up to $500,000. Most all of the sates 
typically do not even have REAP opportunity of $500,000.
    I will give you an example again. The state of Michigan, in 
2017, we had an allocation of $909,000. Well, one award was 
$500,000. That leaves $409,000 for all the other applicants. I 
suggest, maybe, that we should consider maybe a 20 percent 
maximum of the total allocation for the state, so this $500,000 
recipient, who took 55 percent of the total, would have 
received $181,000--still a nice grant--but leaving $727,000 to 
be shared by smaller projects.
    In addition to that, the current legislation calls for a 20 
percent funding for projects of less than $20,000. This is 
called restricted funding. I would increase the set-aside to 40 
percent for those smaller farmers and small businesses, 
therefore spreading the wealth over more people and more 
farmers.
    Senator Klobuchar. Okay. Very good. Well, I thank all of 
you. I will put some other questions on the record, so, I know 
we have to go to the vote, and the Chairman has been very 
patient, so I am going to end. Thank you.
    Chairman Roberts. Well, Coop, it is high noon.
    Senator Thune. It is high noon. I almost missed my window, 
Mr. Chairman.
    Chairman Roberts. Yes, sir.
    Senator Thune. Thank you. I appreciate the input from all 
of you. Thank you for your participation. As I said earlier, 
when we look at farm bills we look not only at, obviously, the 
programs that benefit directly production agriculture, but also 
those things that can enhance quality of life in our rural 
communities, and the discussion today certainly contributes to 
that.
    So, Mr. Law, you--we talked a little bit about this, but 
what can be provided by rural development agencies or other 
that would enable your co-op to provide broadband to your very 
widely dispersed customers, at competitive rates?
    Mr. Law. Thank you, Senator Thune, for the question. The 
funding sources for any rural telecommunications provider is 
really kind of, I will say, a three-legged mechanism. There are 
the revenues we receive from customers, there are the revenues 
we receive from those who use our network, in other words, 
other carriers who may desire capacity or need to use our 
network to transport their services. Then the third item, for 
rural telecommunications providers, is the support received 
from the federal Universal Service Fund.
    Customer revenues, and comparable and affordable, certainly 
I think we pushed the upper bounds of that today for most rural 
subscribers, who are paying more for broadband and related 
telecommunications services than their urban counterparts. In 
terms of the prices charged or the ability to generate revenue 
from third parties who use our network, that has been greatly 
diminished over the last years. So now you are left with 
customer revenues and Universal Service funding. With Universal 
Service funding being dramatically reduced and cut for many 
companies, including my own, it does not leave many choices for 
where are the future funds for the deployment of broadband 
networks. So it will be a combination of customer increases, 
hopefully stabilization of the Universal Service Fund, and 
potentially restoral of amounts that have been cut over the 
last 18 months.
    Senator Thune. How do your rates for the services you 
provide your customers compare to those in, say, for example, 
Rapid City or Sioux Falls?
    Mr. Law. Sure. For a Golden West customer, in order to--
because we operate in a high-cost market--in order for Golden 
West to even receive Universal Service support at the present 
time, our customers not only have to subscribe to--for 
broadband, they also have to subscribe for voice telephone 
service, and it is not optional, because if we forego the voice 
telephone service, there is a revenue from the voice service 
itself. But, more importantly, we also, at this point, Golden 
West would forfeit any Universal Service funding. So it is 
really kind of a double edge from the funding side.
    To answer your question, Senator, what happens is, for our 
customers to receive broadband they have to subscribe to voice 
service and broadband service, and so that is a $100 charge, 
plus we still receive some USF for that. Customers in a more 
urban market, in the surrounding areas and I think probably for 
most of the Committee members, in your urban markets, I think a 
standalone broadband rate is probably much closer to $50 to 
$75. Ours begins at $100 and goes up from there.
    Senator Thune. Yes, and issues that we need to litigate 
with the FCC, in addition to the other the agencies we are 
talking about today.
    You spoke of farm bill considerations for this Committee. 
Is it fair to say that in your opinion the programs directly--
that rural broadband, that benefit rural broadband need 
increased funding rather than any major modifications? I mean, 
what is the----
    Mr. Law. I would strongly support that, Senator. I think 
that, as the Committee has heard, there is a demand for rural 
broadband. There is a willingness by rural broadband providers 
to deploy more, and I believe if there was more funding 
mechanisms available, whether that was in the form of low-
interest loans, in the form of various grants, or perhaps 
grant-loan combinations, I believe there would be business 
cases that could be made for further expansion of broadband.
    Senator Thune. Yes. Mr. Chairman, I think that is--well, I 
have got one here. Let me ask this of Ms. Botts.
    In your testimony, you spoke highly of the Value Added 
Producer Grant Program, that you indicated that the planning 
grants are too long a turnaround time for many businesses, and 
you recommended a rolling application process for those 
planning grants, with approval done on an expedited basis. Is 
this expedited process, in your opinion, something that Rural 
Development can enact administratively, or is there something 
this Committee needs to do to clear the path for Rural 
Development to do this?
    Ms. Botts. I thank you for the question. My thoughts would 
be that you would probably need to make a statutory change to 
allow them to consider planning grants separately from working 
capital applications. I do not know that for a fact but I think 
that would probably be necessary, because it would be a 
fundamental change to how they consider these applications.
    The reason I include it, though, even though it will be a 
challenge for them, administratively, is because if you are a 
business and you are wanting to do a feasibility study on a 
project, you do not want to wait for a full grant cycle. So we 
have many businesses that are agriculture-producer started, 
businesses owned by ag producers, that would be excellent Value 
Added Producer Grant candidates for planning grants. They want 
to get started on their feasibility study as soon as possible, 
and so we would be able to do a lot more of those if we were 
able to do it on a rolling basis. I do think you would probably 
have to consider some sort of change.
    Senator Thune. What is a fair turnaround time for an 
expedited approval process?
    Ms. Botts. I think it would have to be two to three months.
    Senator Thune. Okay, good. Mr. Chairman, thank you. Panel, 
thank you very much for your input.
    Chairman Roberts. Thank you. We are going to conclude here 
pretty quick, but Mr. Olinyk, Mark, you tweaked my interest on 
jobs, jobs, jobs for our rural areas, opportunities for our 
young people. Everybody knows here, on the Committee, and all 
of you know that is a serious problem.
    In southeast Kansas I was able, during the recent break, to 
visit three manufacturing plants. All three are similar from 
the standpoint that these jobs are somewhat technical but they 
have a training program. The pay is significant. Very quickly, 
any applicant that is accepted and works on the job can get 
over $20 an hour. Plants range in size 100 to 500. They 
actually go out and try to recruit workers. Elmer talked about 
this a little bit with regards to people who change or leave 
and you have to come in with a substitute here, with regard to 
all that you are involved with.
    What I am trying to get at is that they tell me that in 
recruiting the whole area--high schools, community colleges, et 
cetera, et cetera--one in five actually they can accept, one in 
five. I asked, ``What is going on here?'' Well, you have to 
fill out a written form, number one; number two, you have to 
have a personal interview; and number three, you have to take a 
drug test. If you are only accepting one in five because of 
what I would think to be a basic requirement here, we are in a 
world of trouble.
    I am asking about the work ethic. They also indicate that 
they may pass--they go through the training, they are on the 
job for maybe a month or two, and then they quit. I think that 
is very troubling. You can also apply that to the United States 
Marine Corps. It is one in ten that walk through a recruiter's 
office door who are actually--fit the requirement eye, would 
admit that the criteria, or I am very proud to say the criteria 
is pretty high there.
    I am worried about this generation's work ethic, with 
regards to jobs that are available but the people simply do not 
want to do that. There is a health program here. There is a 
retirement program here. You get to stay in your hometown, or--
and I would think if you can find a job you like and you can 
make a living, well, you are in a small town area it is the 
best place you can do, or be.
    Would you like to comment on that?
    Mr. Olinyk. Your sentiments are exactly the same as mine. 
We have, between my wife and myself we have six kids. One lives 
in Ann Arbor, one lives in New York City, one lives in San 
Francisco, one lives in North Carolina, and two are local, and 
they are all educated. But the people that we hire and that we 
try to hire are from all over the area. You are right--I would 
say one in five, for our area, might be doing well.
    Part of our company, we are afraid to even drug test. We 
might lose half the people. That is common. That is common in 
our area. It is probably common in your area, even thought you 
might not know it. So it is a serious problem. As far as the 
work ethic goes, it is tough. I do not see the generation 
wanting to come in on weekends. But sometimes we will offer a 
day off without pay, and they will take it, as opposed to 
working over the weekend.
    So it is very difficult and we are all involved at the 
rural community, but it is a serious problem. They are leaving 
if they are educated, and they are struggling to want to work 
if they are less educated.
    Chairman Roberts. Elmer, do you want to comment on that?
    Mr. Ronnebaum. My wife taught gifted education in school 
for 30-some years. There are many societal pressures on 
families. I am not familiar with the drug issues personally. I 
know that it is a real problem. There are local manufacturers, 
local hometown boys like Don Landoll in Marysville who have 
done very well, and manufacturing companies in Sabetha, Kansas, 
and Seneca, Kansas. They struggle to have manufacturing-type 
jobs that pay and can attract a quality work force. But I agree 
with the sentiments that there is a less-and-less worth ethic.
    The Community Facilities Programs that we have operated use 
self-help. They were volunteer services to just build a new 
community building or a library, a fire station, and in some 
cases we repaired water systems. We used local volunteers. It 
was a sweat equity program. We supervised the projects.
    There has to be more stakeholder involvement in local 
communities so that they feel that they have an ownership and 
that they have a value and that they have contributed to 
something to maintain and improve their local quality of life.
    Chairman Roberts. My staff is informing me that this vote 
will be over with at 12:15. We do not want to--I do not want to 
miss that.
    Anybody else would like to contribute? I raised that issue 
simply because Mark brought up jobs, and I got to thinking 
about it. I did not realize--I knew we had a problem but I did 
not realize we had that big a problem with regards to one in 
five. For jobs that are good jobs, and it was not so much that 
the jobs were not available. This goes from county to county. 
You mentioned Sabetha. I am always amazed we have a traffic jam 
in Sabetha, Kansas, because of the manufacturing there. Home of 
the Fighting Blue Jays, as you know.
    Anybody else want to comment on this?
    Senator Brown. Just to echo what has been said. The 
businesses with whom we work are constantly struggling to find 
labor. It is a constant struggle. We answer more questions on 
that, and how to deal with labor issues, than probably any 
other issue.
    Chairman Roberts. So now we have to find a way.
    That is going to conclude our hearing. I did not mean to 
end it on a down note, but I think it is a very serious 
problem.
    Thanks to each of our witnesses for taking time to share 
your views on the rural development programs under the farm 
bill.
    Your testimony was extremely valuable to use and it was 
certainly necessary for the Committee to hear firsthand. For 
those in the audience who want to provide additional thoughts 
on the farm bill and these subjects, we have set up an address 
on the Senate Ag Committee's website to collect your input. 
Please go to ag.senate.gov, click on the Farm Bill Hearing Box 
on the left-hand side of the screen. That link will be open for 
five business days following today's hearing.
    To my fellow members we would ask that any additional 
questions you may have for the record be submitted to the 
Committee Clerk no later than five business days from today, or 
5:00 p.m. next Thursday, on October 5th.
    The Committee stands adjourned. Thank you.
    [Whereupon, at 12:24 p.m., the committee was adjourned.]

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


                            A P P E N D I X

                           SEPTEMBER 28, 2018



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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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


                         QUESTIONS AND ANSWERS

                           SEPTEMBER 28, 2018



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


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               [all]