[Senate Hearing 117-289]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-289

                   AN ECONOMY THAT WORKS FOR EVERYONE: 
                      INVESTING IN RURAL COMMUNITIES

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

               EXAMINING INVESTMENT IN RURAL COMMUNITIES

                               __________

                             APRIL 20, 2021

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                               

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-903 PDF                 WASHINGTON : 2022                     
          
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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                         Tanya Otsuka, Counsel

                 Beth Cooper, Professional Staff Member

                 Dan Sullivan, Republican Chief Counsel

                  Alexander LePore, Republican Detail

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                        TUESDAY, APRIL 20, 2021

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    38

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     4
        Prepared statement.......................................    39

                               WITNESSES

William J. (Bill) Bynum, Chief Executive Officer, Hope Enterprise 
  Corporation, Hope Credit Union, Hope Policy Institute..........     6
    Prepared statement...........................................    41
    Responses to written questions of:
        Senator Warren...........................................    86
        Senator Sinema...........................................    89
        Senator Warnock..........................................    90
Stacy Mitchell, Coexecutive Director, Institute for Local Self-
  Reliance.......................................................     8
    Prepared statement...........................................    59
    Responses to written questions of:
        Senator Warren...........................................    95
        Senator Warnock..........................................    97
Marcia Erickson, Chief Executive Officer, GROW South Dakota......    10
    Prepared statement...........................................    75
    Responses to written questions of:
        Senator Warnock..........................................    98
Affie Ellis, Wyoming State Senator, District 8...................    11
    Prepared statement...........................................    78
Kathleen Sgamma, President, Western Energy Alliance..............    13
    Prepared statement...........................................    82

              Additional Material Supplied for the Record

Declaration of Mark N. Fox, Chairman of the Mandan, Hidatsa, and 
  Arikara Nation, also known as the Three Affiliated Tribes......   105
Letter From State Education Leaders..............................   111

                                 (iii)

 
   AN ECONOMY THAT WORKS FOR EVERYONE: INVESTING IN RURAL COMMUNITIES

                              ----------                              


                        TUESDAY, APRIL 20, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., via Webex, Hon. Sherrod 
Brown, Chairman of the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Committee on Banking, Housing, 
and Urban Affairs will come to order. Thank you all for joining 
us. The hearing is in the virtual format. A few reminders as we 
begin.
    Once you start speaking, there will be a slight delay 
before you are displayed on the screen. To minimize background 
noise, please click the mute button until it is your turn to 
speak or ask questions.
    You should all have one box on your screens labeled 
``Clock'' that will show how much time is remaining. For 
witnesses, you will have 5 minutes for your opening statements. 
For all Senators, the 5-minute clock still applies to your 
questions.
    At 30 seconds remaining, you will hear a bell ring to 
remind you your time has almost expired. It will ring again 
when it has expired.
    If there is a technology issue, we will move to the next 
witness or Senator until it is resolved. To simplify the 
speaking order process, Senator Toomey and I have agreed to go 
by seniority for this hearing.
    For years, the work of the Committee on Banking, Housing, 
and Urban Affairs has been far too much about Wall Street, far 
too little about housing, and almost nothing about people's 
everyday lives in urban and rural communities.
    ``Urban Affairs'' may be in our Committee's title, but we 
have jurisdiction over matters integral to the economic health 
and vibrancy of all communities--including rural America. 
Whether you live in Philadelphia or Cleveland or Atlanta, Perry 
County, Pennsylvania, or Perry County, Ohio, the work of this 
Committee is vital to the shared prosperity of all Americans, 
urban and rural.
    This is the first full Committee hearing dedicated to rural 
America, believe it or not, in nearly a decade. Senator Toomey 
to his credit held a Subcommittee hearing on rural banking in 
2015, and I thank him for that. I am sure he will agree that it 
has been too long since we focused on the issues facing rural 
America.
    The hopes and dreams of all Americans are pretty similar. 
We want jobs with dignity. We want to be valued for the work we 
do. We want a community where our families can grow and 
flourish. And we want the opportunity to join with friends and 
family and neighbors to leave the world better than we found 
it.
    The 46 million Americans who live in rural communities 
share these dreams. They reflect the vibrant diversity of our 
country. From the foothills of Appalachia in Pennsylvania and 
Ohio, to Native American tribal lands on the Great Plains, from 
Black communities in the Deep South, to Hispanic and Asian 
communities in the West, we find resilient, hard-working men 
and women trying to make a better life for themselves, their 
families, and their communities.
    I know the pride people have in their hometowns, like I 
have in my hometown of Mansfield, Ohio. They want these places 
to be successful. They do not want to be told to pick up and 
leave to find better opportunity. Crumbling infrastructure, 
high unemployment rates, low wages, and gaps in access to 
banking and housing and transit make rural areas especially 
vulnerable in an economic downturn. Workers and families and 
community leaders pour their hearts and their resources into 
these communities, trying to preserve the legacy and grow more 
new businesses and attract new investment.
    But these same communities have watched for decades as 
investment dries up, plants are shuttered, storefronts are 
boarded over. University economists, CEOs, and conservative 
Washington politicians make public pronouncements about 
capitalism's ``creative destruction''--dismissing workers' 
anger, informing us that these actions are the inevitable 
result of free and unfettered markets.
    Corporations close down factories; they move good-paying 
union jobs abroad where they can pay lower wages and exploit 
workers. Ohio workers from Bucyrus to Lordstown know what this 
feels like. Big corporate agriculture has made it harder for 
small family farms to compete. Local, independent businesses 
close shop because they cannot compete with Amazon. Big banks 
buy up their smaller competition and close local branches, 
leaving communities 30, 40, sometimes 50 miles from a place to 
deposit a check or build crucial relationships at their bank. 
The banks claim people can just use online banking, but that 
does not help if your community does not even have reliable 
broadband.
    As the banking sector gets more concentrated, it is harder 
for small businesses and farms and families to get loans to 
hire more workers or expand their operation or to buy a home.
    The biggest banks and the largest corporations look at 
quarterly profits, oftentimes not considering the long-term 
economic impact on these communities and small businesses.
    And despite the simplistic picture we often see in the 
national media, these communities are not only made up of 
people who look like--they are no longer made up of people who 
just look like me. Rural America is as diverse and culturally 
vibrant as the rest of the country. Centuries of violence and 
displacement and structural racism have pushed rural 
communities of color even further behind.
    Native communities have some of the highest levels of 
poverty. Many families suffer from overcrowded housing without 
plumbing, without heat. The same is true for Black families and 
farmers that have faced decades of discrimination, including 
lending discrimination.
    Many rural families of all backgrounds do not have a safe, 
affordable home. If there is not affordable housing, 
communities cannot attract new business because there is 
nowhere for workers to live.
    Last month, I was talking to the CEO of a credit union in 
southeast Ohio who knows the housing needs in his Appalachian 
community. He wanted to do something about it. He meets lots of 
well-qualified families who could pay a mortgage, but they 
cannot afford a 20-percent downpayment. So his credit union 
created a new mortgage program for members of his community to 
have that pathway to home ownership. That is the kind of 
ingenuity we see all over the country from lenders who actually 
live in and understand these places. We learn from them.
    Our witnesses today know what it means for the local 
economy when the big banks abandon rural towns or when a big-
box chain store forces out small businesses. They know how 
working low-wage jobs makes it impossible to make the rent, let 
alone save for a downpayment. And they know that homegrown, 
local businesses understand better than anyone what their 
communities need.
    Anyone who has raised a family or started a business in 
Appalachia or Indian Country or the Carson Valley knows these 
places cannot rely on Wall Street banks and corporations to 
help them. People in rural towns and counties remember how the 
biggest firms recovered after the last financial crisis, and 
they were left behind. They saw history repeat itself over the 
past year--when big franchises got help from big banks, small 
businesses were shuttled to the back of the line, and Black and 
Hispanic businesses were far less likely than White businesses 
to get loans at all.
    Over and over, I hear the same thing from communities large 
and small, rural and urban: They need more resources. They have 
tried to make it on their own because they have to--not because 
they do not want investment or do not want their fair share of 
our country's prosperity.
    To recover from this crisis and rebuild a stronger economy, 
rural communities need direct investment in infrastructure and 
economic development. We have made a good start with the 
American Rescue Plan. Now we look forward to the American Jobs 
Plan to help us invest in our rural communities--in central 
Pennsylvania, in southeast and northwest Ohio--for the long 
term.
    We will invest in broadband and rural buses and affordable 
housing and the next generation of American manufacturing. We 
will invest in new energy technology to address climate change 
and create good-paying jobs in communities of all sizes. And if 
we make these investments, these local communities will be 
strong and resilient in the face of the extreme weather 
events--wildfires, flooding, and hurricanes--that threaten our 
rural communities, as they do all of this Earth, more and more 
each day.
    When we put communities, not corporations, at the center of 
our policy, when we invest in local people and businesses who 
make up our rural communities, we will get an economy that 
works for everyone.
    Senator Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman.
    You know, I think what we are going to hear today are two 
competing visions for how we help rural America. On the one 
hand, we are going to hear that the Federal Government must 
play the central role. Just expand the size of Government, 
increase spending, put more people on welfare, have more 
Government programs, and that will solve the problems.
    But there is another vision, and that is one in which we 
implement policies that allow rural areas to thrive. And we 
know Americans can succeed if we just give them the chance.
    One of the many spectacular examples of this was the U.S. 
energy renaissance of recent years. It has been a game changer 
for so many rural communities. My home State of Pennsylvania 
has a lot of rural areas, and some are certainly struggling and 
others are thriving. I do not know any of them that want to be 
long-term dependents on the Government. The goal should be to 
have thriving communities of self-reliant people.
    As we consider the state of the rural economy, it is 
important to remember where we were just a little over 1 year 
ago, because before COVID came along, we were experiencing an 
almost unprecedented economic boom, including in rural America. 
We had the lowest unemployment rate in 50 years. In rural 
America, unemployment had dropped to 3.5 percent in 2019--its 
lowest level in a decade. Nationally, including in rural 
America, Black and Hispanic unemployment rates hit all-time 
lows in 2019. We had more jobs than people looking for jobs. We 
had a record-low poverty rate. We had wage growth across the 
board, and wages were growing fastest for workers of the lowest 
income. So we were narrowing the income gap. These are all 
objectives that my Democratic colleagues say they support. But 
we were achieving them just over a year ago. My suggestion is 
let us get back to the best economy of my lifetime.
    And we know how we got there. It was a combination of 
reform to our Tax Code that made America much more competitive, 
rolling roll back excessive regulation. We ran an experiment in 
economic freedom, and lo and behold, once again it worked, 
especially for low-income workers.
    An important part of that whole story was America's energy 
renaissance. In 2019, the U.S. became a net energy exporter for 
first time since 1952. We did it in large part by becoming the 
third-largest exporter of liquefied natural gas. And as gas 
replaced coal as the fuel for America's power plants, CO2 
emissions actually declined--not relative to projections. They 
actually declined in absolute terms. In fact, in 2019, the U.S. 
led the world in reducing energy-related CO2 emissions. In 
2019, we had the lowest CO2 emissions since 1992, the lowest 
per capita CO2 emissions since 1950.
    Across the country, the oil and gas industry was supporting 
more than 10 million jobs, very often in rural communities. In 
Pennsylvania--which is the second-largest producer of natural 
gas--the oil and gas industry has supported 300,000 jobs up and 
down the supply chain. A majority of gas production in 
Pennsylvania occurs in rural areas, like Susquehanna County. It 
is our largest natural gas-producing county; it is also one of 
our least densely populated counties.
    But as we know, last March, our powerful economy was roiled 
by COVID-19, and we were facing the very real threat of a full-
blown depression. No question about it. In 2020, Congress in a 
bipartisan fashion repeatedly stepped up to prevent a full-
blown depression, providing almost $4 trillion in relief. And, 
fortunately, our economy is now in a very robust recovery mode, 
as it has been for months. The unemployment rate has dropped 
from almost 15 percent last April to 6 percent this March. 
Twenty-three States have unemployment rates at or below 5 
percent, and many of these are rural States. Real GDP growth is 
expected to be extremely strong this year.
    My point is we can and should continue this robust 
recovery, and we can recapture the best economy of my lifetime, 
which was only a year ago, as long as the Federal Government 
policies do not undermine our ability to do it. Unfortunately, 
that is exactly what some of our Democratic colleagues and this 
Administration are threatening to do.
    For example, the spending bill that our Democratic 
colleagues passed on a party-line vote actually pays people 
more not to work than they can make working, so it is not a big 
surprise that in March the NFIB monthly survey found 42 
percent--almost half--of small businesses had job openings they 
could not fill. That is a record high.
    The Biden administration has proposed massive tax increases 
and regulatory burden increases that will undo the tremendous 
success we had just achieved. Some of these are going to hit 
rural America particularly hard. Some already have. Take, for 
example, President Biden's termination of the construction of 
the Keystone oil pipeline. He has indefinitely banned new oil 
and gas leases on Federal lands. The Biden administration is 
also seeking to coerce banks and investors to stop providing 
capital to fossil fuel companies and stifling U.S. agricultural 
exports by maintaining tariffs on Chinese goods and materials.
    Today we are going to hear from two witnesses about the 
harm that has been caused by the attack on the energy industry, 
and particularly the harm to rural communities.
    Kathleen Sgamma is the president of the Western Energy 
Alliance. She will testify that these policies cause 
significant job losses.
    And Senator Affie Ellis is a member of the Wyoming Senate. 
Her State ranks first in the Nation for natural gas production 
on Federal lands and second in oil production on Federal lands. 
She will describe how the leasing ban harms Wyoming's economy 
and education budget, which receives substantial funding from 
Federal energy royalties.
    I wish we could all agree that it would be a worthy goal to 
get back to the best economy my lifetime. We can do that 
without wasting more taxpayer dollars, without imposing massive 
tax hikes, and without increasing regulatory burdens on 
businesses. We should be rolling back the harmful Biden 
administration policies that are threatening the U.S. energy 
renaissance, and if we did, we would be doing a lot of good for 
the rural economy.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    I will introduce today's witnesses, and they will begin 
their testimony.
    Mr. William Bynum is the CEO and founder of Hope Enterprise 
Corporation, Hope Credit Union, and the Hope Policy Institute, 
collectively known as HOPE, which serves communities in 
Alabama, Arkansas, Louisiana, Mississippi, and Tennessee. He 
has served in a number of nonprofit and Government leadership 
roles, including the Treasury Department's Community 
Development Advisory Board.
    Ms. Stacy Mitchell is the codirector of the Institute--I am 
sorry. I just lost that. I do not quite know what I did there.
    She is the author of the books ``Big-Box Swindle'' and 
``The Home Town Advantage''.
    Ms. Marcia Erickson is Chief Executive Officer of GROW 
South Dakota, which advances housing, education, and economic 
opportunities throughout South Dakota. She serves on the Rural 
Advisory Council for the Rural Local Initiative Support 
Corporation as part of the New Markets Tax Credit Advisory 
Board for the Midwest Minnesota Community Development 
Corporation. She recently became president of the board of 
directors for the National NeighborWorks Association.
    The Honorable Affie Ellis is a State Senator in Wyoming 
representing southwest Laramie County. Senator Ellis was first 
elected in 2016. She is the first Navajo, the first Native 
American woman to serve in the Wyoming Senate. She currently 
serves as the chairwoman of the Wyoming Senate Travel, 
Recreation, Wildlife, and Cultural Resources Committee and is 
an attorney with the law firm Holland & Hart.
    Ms. Kathleen Sgamma is the founder of Western Energy 
Alliance, which engages in public lands, environmental and 
regulatory issues on behalf of the Western oil and natural gas 
industry. Prior to joining the alliance 15 years ago, she spent 
11 years in the information technology sector and 3 years as a 
military intelligence officer in the U.S. Army.
    Welcome to all of you. Mr. Bynum, if you would begin.

STATEMENT OF WILLIAM J. (BILL) BYNUM, CHIEF EXECUTIVE OFFICER, 
  HOPE ENTERPRISE CORPORATION, HOPE CREDIT UNION, HOPE POLICY 
                           INSTITUTE

    Mr. Bynum. Thank you. Good morning, Chairman Brown, Ranking 
Member Toomey, and Members of the Committee. Thank you for 
holding this hearing and for inviting me to speak today.
    My organization, HOPE, provides financial services and 
engages in policy advocacy to help ensure that people, 
regardless of where they live, their gender, race, or place of 
birth, have the opportunity to support their families and 
realize the American dream. The majority of HOPE's 36,000 
owners are Black families and women. This is significant 
because it speaks to whom we are accountable. But I also 
represent thousands of White, Latino, and other families across 
the Deep South who are too often on the wrong side of the 
economy.
    I would like to underscore a few points. One is that rural 
regions of persistent poverty suffer from systemic 
underinvestment, particularly those where a large share of the 
population is people of color. Persistent poverty is a 
predominantly rural phenomenon. Of the country's 395 
persistent-poverty counties that have been over 20 percent for 
three decades in a row, eight out of ten are nonmetro. A third 
of these are in Alabama, Louisiana, and Mississippi. Housing 
conditions, health conditions, education, and employment 
outcomes are all worse in rural persistent-poverty counties, 
and not coincidentally, some of the highest rates of unbanked 
and underbanked households are also in these counties.
    Mississippi, where my organization is headquartered, is 
only one of four States where half the population lives in 
rural areas. Mississippi also has the highest poverty rate in 
the Nation, the highest percentage of Black residents; 60 
percent of people who live in persistent-poverty counties in 
Mississippi are people of color.
    The Library of Congress has a map that illustrates the 
concentration of slave holding on the eve of the Civil War in 
the United States. If you fast-forward 400 years and overlay 
that map with one of today where the poverty rate has exceeded 
20 percent for more than half a century--not the Federal 
definition, but for half a century--you will see that 
Mississippi and the Louisiana Delta and the Alabama Black Belt 
stand out on both maps.
    It takes me to my second point. Creating rural communities 
that work for all must include strategies for building wealth 
through home ownership and small business ownership. The 
primary source of wealth on America's balance sheet is the 
home. Downpayment assistance for first-time homebuyers is one 
of the most effective tools for increasing economic mobility in 
rural communities and communities of color. We should replicate 
and expand programs like NeighborWorks' LIFT program that 
provides downpayment assistance for low-income homebuyers, 
teachers, servicemembers, and first responders who get special 
provisions.
    Also small business ownership reduces the Black-White 
wealth gap, which is 10:1, 100:1 for families with children, to 
3:1--not equal ratio but from 3:1. Minority-owned businesses 
are more likely to hire people of color, and increasing access 
to this capital is critically important. This was made evident 
during COVID-19 where so many small businesses and 
entrepreneurs of color did not have access to PPP financing.
    Third, to close these gaps, banks have to do more. As I 
mentioned earlier, these persistent-poverty areas are products 
of systemic underinvestment. Black families in Mississippi 
making $150,000 are more likely to be denied a mortgage loan 
than a White family that makes $50,000. Similar circumstances 
for Black entrepreneurs. In Arkansas, where 16 percent of the 
population is Black, only 1.5 percent of SBA 7(a) loans went to 
Black businesses. CRA is one important way to address this.
    My fourth point is that CDFIs, community development 
financial institutions, are vital to closing these gaps. Over 
the past year, we increased our business loan output from 40 in 
a year to 4,000 PPP loans, most of them to small mom-and-pop 
businesses in rural areas. Also, we were about to route funds 
to poor rural municipalities that could not get CARES Act funds 
from their local governments. We are thankful that Congress 
realized the important role played by CDFIs and increased 
funding to CDFIs.
    That brings me to my last point. Future investments have to 
go to those institutions that have a record of deploying these 
funds where it makes the biggest difference. Just like any 
business, CDFIs vary. In Mississippi, an analysis of HMDA data 
show that CDFI banks in Mississippi actually had a lower rate 
of mortgage lending to African-Americans than the overall 
banking sector in the State. So we have to make sure that those 
investments target those entities that have the greatest track 
record of closing gaps, prioritize investments in CDFIs that 
have a track record, and hold State governments accountable for 
achieving the result intended by Congress. The outcomes are 
very different in rural Deep South States than they are in Ohio 
or California or Massachusetts. Accountability with the use of 
Federal funds is absolutely vital.
    Thank you, Mr. Chairman, Ranking Member Toomey.
    Chairman Brown. Thank you, Mr. Bynum.
    Ms. Mitchell, you are recognized for 5 minutes. I am sorry 
to bungle your introduction there. Welcome.

 STATEMENT OF STACY MITCHELL, COEXECUTIVE DIRECTOR, INSTITUTE 
                    FOR LOCAL SELF-RELIANCE

    Ms. Mitchell. Thank you so much, and good morning, Chairman 
Brown, Ranking Member Toomey, and Members of the Committee. 
Thank you for inviting me to participate today. My name is 
Stacy Mitchell. I am the codirector of the Institute for Local 
Self-Reliance, a research and advocacy organization focused on 
strengthening local communities.
    One of the most troubling trends we have seen in recent 
years is widening regional inequality. We have a few 
``superstar'' cities, mostly on the coasts, that are 
prospering. Meanwhile, much of rural America, on the other 
hand, is falling further and further behind. Good jobs are 
rare. Poverty is high. Grocery stores and banks are closing. 
Black and Native American communities have been especially hard 
hit.
    At the root of much of rural America's distress is the 
concentration of economic and financial power. Corporate 
concentration has harmed rural communities in multiple ways. It 
has allowed a few dominant agribusiness giants to drive down 
the prices that farmers, ranchers, and food production workers 
are paid. It has led to plant closings and layoffs. The town of 
Eden, North Carolina, for example, lost its two main employers, 
Anheuser Busch and Ball Corp., after each acquired a rival and 
then shuttered its local operations.
    Concentration has also led to a sharp decline in small 
businesses. These losses are happening everywhere, but they are 
especially damaging in rural communities where small businesses 
play an outsize role in the social fabric and in creating jobs. 
We have long assumed that small businesses are closing because 
they cannot compete. But, in fact, the real culprit is more 
often the brute exercise of market power by dominant 
corporations.
    Take the case of independent pharmacies. Research shows 
they provide lower prices and provide better service, yet many 
are closing. Ohio alone has lost more than 400 pharmacies since 
2013.
    Why are local pharmacies disappearing? The problem is that 
giant, vertically integrated health care corporations, 
including CVS Health, not only compete with local pharmacies, 
they also control how much they are reimbursed by insurers. 
These companies have been slashing reimbursements to local 
pharmacies and steering the business to themselves.
    Similarly, local grocery stores are closing across rural 
America. They are being driven out on the one hand by the 
predatory tactics of Dollar Store chains in States like Georgia 
and Kansas, and at the same time, as a recent study documented, 
by the fact that big chains like Walmart are using their buyer 
power--their dominant power as buyers to demand that suppliers 
give them better prices and terms while charging higher prices 
to independent grocers.
    Amazon's stranglehold over the online market has been 
another major blow to independent businesses. While 
corporations are cutting off small businesses' access to 
markets, our concentrated banking system is starving them of 
capital. Since 2010, bank lending to small businesses has 
fallen dramatically. Many businesses, especially Black-owned 
businesses, are struggling to obtain capital. In rural 
communities, small business lending peaked in 2004 and is now 
half of what it was then.
    This problem is structural. Big banks do very little small 
business lending. Most small business loans come from community 
banks, but community banks are fast disappearing. Between 2006 
and 2018, we lost a staggering 41 percent of our community 
banks. Today more than one-third of rural counties lack a 
community bank. This is a national crisis.
    People say that the problem of big banks is that they are 
too big to fail. But the deeper issue is that these banks are 
too big to succeed. They are too big to succeed at doing 
exactly what we need banks to do, which is to provide 
productive loans. Their scale is fundamentally mismatched to 
the needs of local economies. This was dramatically illustrated 
last year with the Paycheck Protection Program. In States like 
North Dakota, where, owing to an unusual State policy, 
community banks are numerous, more than twice as many small 
businesses were able to get a PPP loan than in States like 
Nevada, where community banks are rare and big businesses 
dominate.
    This matters all the time, of course. Research has found 
that places that lack community banks have fewer startups, 
fewer businesses, and fewer new jobs. Today's extreme levels of 
market concentration are the result of deliberate policy 
choices. This includes, most notably, the systematic weakening 
of antitrust policies since the 1980s and the dismantling of 
our banking institutions in the 1990s.
    To bring life and hope back to rural communities, we must 
restore the vigor of our antitrust policies and break up 
concentrated power. Small businesses are not asking for 
handouts. They are asking for a level playing field. My 
organization has been deeply engaged in the crucial work to do 
this. It is now happening in the House and Senate Judiciary 
Committees, and we are also eager to engage with this Committee 
in thinking about how to restructure the banking system and 
rebuild financial institutions.
    My written testimony offers several policy approaches for 
doing this, including capping bank market shares, strengthening 
bank merger reviews, creating more public banks and postal 
banks, as well as other ideas.
    Thank you so much.
    Chairman Brown. Thank you, Ms. Mitchell.
    Ms. Erickson is recognized for 5 minutes. Welcome.

  STATEMENT OF MARCIA ERICKSON, CHIEF EXECUTIVE OFFICER, GROW 
                          SOUTH DAKOTA

    Ms. Erickson. Thank you Chairman Brown, Ranking Member 
Toomey, Senator Rounds from my home State of South Dakota, and 
Members of the Committee, for the opportunity to provide 
testimony today.
    As a lifetime of rural South Dakota, CEO of GROW South 
Dakota, and the president of the board of the National 
NeighborWorks Association, I am very passionate about 
addressing the needs of rural communities. One of the needs 
that I work to address is housing.
    Housing is the foundation of success for our rural 
communities across the country. During the pandemic, housing 
became even more sacred than ever before. Rural communities 
across our State and country continue to express a variety of 
housing needs. However, rural and Native communities are both 
challenged to secure flexible capital to meet those needs.
    One source of flexible capital is NeighborWorks America, 
but the need is much greater than what one organization can 
address alone. Gap financing for home ownership is needed as 
the cost to build is higher in rural areas. Along with that, 
there is a difference between the appraised value and actual 
costs. Lumber and material prices have also increased, further 
impacting this challenge.
    This complicates addressing the current housing shortages. 
Homes that are available may be in the higher price range or 
need substantial renovation, and then when it comes to selling 
a home, the number of appraisers available are very limited. 
Appraise and construction internships may be part of the 
solution.
    To further address home ownership rates on Native lands, a 
loss mitigation pool should be considered. A capital pool that 
sets aside funds to mitigate the risks that a lender may 
encounter would be helpful.
    Another solution to the housing challenges in rural America 
would be to find accountable national entities in order to 
provide capital to meet the unique needs of rural areas. This 
funding could then be used to support mission-based lenders. 
Mission-based play a critical role in reaching underserved 
markets. These organizations are the frontline servicers that 
already have established a presence in rural communities. 
Mission lenders are not governed by banking regulations and can 
provide financing where traditional lenders cannot. Along with 
making capital accessible to underserved populations, these 
organizations often pair loans with technical assistance to 
coach businesses or provide housing counseling to prepare 
homebuyers.
    Homebuyers and rural businesses could both benefit from 
changes in program regulations. For instance, the Community 
Development Financial Institution Fund provides access to 
lending capital for both housing and business loans. One 
challenge of the CDFI funding is the requirement of nonFederal 
match. Match is especially difficult to secure in rural markets 
that lack access to private funding sources. We would recommend 
the CDFI Fund lift the match requirement.
    The USDA Rural Development Intermediary Relending Program 
is also an excellent source of loan capital to relend to 
businesses. This loan also has a non-Federal match requirement. 
Match funds are currently restricted until the rural 
development loan is paid in full. We recommend match funds are 
released pro rata with the debt that is paid down to rural 
development. IRP funds should also be considered for first 
mortgage lending.
    The Small Business Administration Microloan Program assists 
businesses needing financing in the amount of $50,000 or less 
and provides for technical assistance. Currently, SBA has 
waived the requirement on the percentage of preloan technical 
assistance versus postloan. This is the type of flexibility 
that is needed to better assist businesses seeking to startup 
or expand. This waiver should be implemented permanently.
    Consideration should also be given to simplify HOME funding 
and the Department of Energy Weatherization Assistance Program 
through regulation reform. These are greatly needed sources of 
capital for our housing needs, and with small regulation 
changes, these funding sources could be much more efficient and 
effective.
    In closing, I strongly support needed funding sources into 
housing and mission-based community lenders. Effective 
organizations like those that are members of NeighborWorks 
America, the CDFI Fund, and other accountable organizations 
should be allocated increased funding. Let us build, rebuild, 
and address the lack of quality housing and access to capital. 
Investments like this are essential to revitalizing our rural 
economy. I urge you to make large-scale investments to help our 
rural communities and economy grow for decades to come.
    Thank you for the opportunity to testify on the needs of 
the rural communities.
    Chairman Brown. Thank you, Ms. Erickson.
    Senator Ellis is recognized for 5 minutes. Welcome.

  STATEMENT OF AFFIE ELLIS, WYOMING STATE SENATOR, DISTRICT 8

    Ms. Ellis. Good morning, Chairman Brown, Ranking Member 
Toomey, and Members of the Committee. My name is Affie Ellis, 
and I am State Senator from Wyoming. It is an honor to appear 
before you today.
    Wyoming is one of the largest land-based States, though we 
are the least populated State in the country with fewer than 
600,000 people. Though we are small, we are mighty in the sense 
that we power America. Wyoming produces 14 times more energy 
than it consumes, and it is the biggest net energy supplier 
among the States. Wyoming has ranked first in the Nation for 
natural gas production and second in oil production on Federal 
lands. In 2019, the oil and gas industry delivered $1.67 
billion to State and local governments in Wyoming, and it 
employed nearly 20,000 people.
    I grew up in Wyoming, and I am thankful for all the 
opportunities it provided me. My parents are both Navajo, and 
they grew up on the Navajo Reservation. They attended boarding 
schools where my dad was taught to weld. When they graduated in 
the mid-1950s, my dad found a job working as a welder in 
Jackson Hole, and they started our family there. As the 
youngest of four kids, I was the first in my family to attend 
college and eventually earned my law degree.
    I decided to run for the Wyoming Senate in 2016 to give 
back to the State which has given me so much. At the time we 
could see on our horizon a downturn in energy production, which 
would impact almost all the services Wyoming provides to its 
citizenry. Wyoming has among the most volatile year-over-year 
revenue collection in the Nation, which has forced us to 
recognize boom years for what they are and plan accordingly.
    As a result, we have saved and we continue to save a 
significant portion of the revenue derived from mineral 
production to offset years when development is not as robust. 
We have worked to support our other top industries, which are 
tourism and agriculture, and to develop new industries, 
particularly in the field of technology. Despite these efforts, 
there is no other sector that produces the kind of revenue for 
Wyoming that energy provides.
    With declines in energy production, Wyoming has cut its 
budget significantly in the last several years, which has 
impacted things like health care services, support for our 
seniors, and the developmentally disabled. With continued 
assaults on domestic energy production, we are now working to 
resolve a $300 million per year projected structural deficit in 
K-12 education. Wyoming leaders recognize the precariousness of 
revenues derived from energy production. We know we cannot 
control global markets, and we know we cannot predict the price 
of oil. However, we have significant concerns when leaders 
within our own country attack and undermine our energy economy. 
Nearly half of the surface lands in Wyoming are managed by the 
Federal Government. The Bureau of Land Management, for example, 
has lands that significantly support oil and gas leasing, 
including BLM lands that are intermixed with private lands and 
State lands in what we refer to as ``the checkerboard.''
    Because Federal land management decisions impact the 
livelihood of our citizens and the strength of our State so 
heavily, we commissioned a study to understand the potential 
impacts of an oil and gas lease moratorium and drilling ban on 
Federal lands. A link to that study is included in my written 
testimony.
    For Wyoming, the study found that ``either a moratorium or 
an outright drilling ban would constitute a significant shock 
to the Wyoming economy, reducing tax revenues, income, and 
employment.'' By the end of President Biden's first term, a 
moratorium would cause Wyoming to lose an average of 15,269 
jobs annually, lose cumulatively $8.3 billion in gross domestic 
product, $3.8 billion in personal income, and $1.8 billion in 
State tax revenues. An outright ban would be even more 
devastating.
    You can imagine how we felt on January 20, 2021, when the 
U.S. Department of the Interior called for an immediate 60-day 
suspension of new oil and gas leases and drilling permits on 
Federal lands. I want you to think of your State's number one 
priority. This order is akin to banning rubber and plastic 
manufacturing in Ohio or banning gaming in Nevada. The 
moratorium has been extended, and our State is gravely 
concerned it will be extended indefinitely or that an outright 
ban is soon to follow.
    Accordingly, our Governor has filed a lawsuit which 
explains how this halt on new oil and gas leases violates 
several existing Federal laws, and it asks the court to require 
the Bureau of Land Management to resume quarterly oil and gas 
lease sales.
    Additionally, one of Wyoming's two tribes expressed its 
opposition to the leading moratorium because, although Indian 
tribes themselves are exempt from the moratorium, the adverse 
impact on Wyoming also adversely impacts tribal members, who 
are also citizens of our State. I hope we can reverse course.
    As Wyoming continues to navigate its way out of these 
incredibly challenging economic times, we appreciate your 
willingness to support policies that support economic recovery 
in rural places like Wyoming. As the U.S. Senate considers not 
only what the Federal Government should do, it should also 
discuss what the Federal Government should not do. Wyoming 
needs you to understand how Executive orders, signed with a 
stroke of a pen without congressional approval, can literally 
devastate our State's economy. We want the freedom, stability, 
and support from our Federal leaders to be able to invest in 
ourselves.
    Thank you for this opportunity to provide written 
testimony. I am happy to answer any questions.
    Chairman Brown. Thank you, Senator Ellis.
    Ms. Sgamma is recognized for 5 minutes. Welcome to the 
Committee.

    STATEMENT OF KATHLEEN SGAMMA, PRESIDENT, WESTERN ENERGY 
                            ALLIANCE

    Ms. Sgamma. Thank you, Mr. Chairman, and thank you, Ranking 
Member Toomey and Members of the Committee. I really appreciate 
the opportunity to talk today about how the oil and natural gas 
industry is part of an economy that works for everyone and 
invests in rural communities. I think Senator Toomey summed it 
up well in that most of oil and natural gas development in this 
country takes place in rural areas, so we are definitely a 
solution in rural areas, and we invest billions of dollars in 
rural areas.
    Western Energy Alliance represents about 200 companies 
engaged in all aspects of environmentally responsible oil and 
natural gas development in the Western States. Because we are 
in the West where it is predominated by public lands, our 
members operate on public lands, and they are independents who 
are those small businesses with an average of 14 employees. So 
we are definitely those small businesses that some of the 
panelists talked about earlier, investing in rural communities.
    You know, our impact goes well beyond the States like 
Wyoming and Pennsylvania where there is a lot of natural gas 
and oil development. We provide $1.3 trillion in economic 
impact across the entire country, and we employ 10.3 million 
people, indirectly, directly, and induce jobs that are 
supported by the wealth that we create here in the United 
States.
    We also invest in rural communities through our royalty 
returns to individual royalty owners. I would like to highlight 
that individual Native American royalty owners also receive 
billions of dollars--are also part of those royalty owners that 
receive billions of dollars every year. For example, Navajo 
Indian allottees receive--about 21,000 Navajo allottees receive 
about $96 million in royalties every year, and that is 
investment and sustenance of families that otherwise are in a 
rural area that definitely suffers from unemployment and 
poverty. So we help sustain that community in the Four Corners 
region of New Mexico, Colorado, Arizona, and Utah.
    So we are proud of that investment, but as Senator Ellis 
mentioned, you know, when you look at some of the policies 
coming out of the Biden administration and their impacts in 
rural communities, it is definitely at odds with the goals that 
we have heard expressed from other panelists today. The 
investment that would be lost from the leading ban that 
President Biden announced within a week of taking office would 
kill 32,000 jobs this year alone, and most of those are in--
well, all of those would be in eight States in the West that 
provide 97 percent of Federal oil and natural gas production. 
So that is very contrary to those goals of investing in rural 
communities.
    Likewise, the cancellation of the Keystone Pipeline 
immediately killed 1,000 union jobs in Montana, Nebraska, and 
South Dakota. And, you know, another 10,000 jobs will not be 
created from contracts that the company would have moved 
forward with if they were allowed to continue building the 
Keystone Pipeline. So that is a total of 11,000 jobs that will 
not be created this year or actually killed, those 1,000 union 
jobs.
    Likewise, the offshore ban, although I represent a 
landlocked region, we are talking about rural communities all 
across the country, and coastal communities on the Gulf of 
Mexico will see about 102,000 jobs killed if that leasing ban 
persists. So the job loss is just contrary to the goals of this 
Committee.
    I would also like to point out something that is often 
forgotten, which is that oil and natural gas is about the sole 
source of funding for conservation on public lands. The Land 
and Water Conservation Fund is 100 percent sourced from 
offshore oil and natural gas. The Great American Outdoors Act 
enabled about $1.9 billion a year to go directly from oil and 
natural gas royalty revenue into national parks conservation 
and infrastructure. So President Biden's order banning leasing 
on Federal lands puts at risk $2.8 billion every year in 
conservation funding, with no other source of revenue to 
support that.
    So thank you very much for the opportunity to appear before 
you today. I look forward to questions.
    Chairman Brown. Thank you, Ms. Sgamma.
    The questioning will begin with Senator Tester. He has an 
Appropriations Subcommittee he needs to chair, and he played a 
major role with Laura and Tonya and others on my staff in 
putting together this hearing. So, Senator Tester, you are 
recognized for 5 minutes.
    Senator Tester. You are very kind, Mr. Chairman. I want to 
thank you for that opportunity.
    I have listened to most of the testimony, and I could tell 
you that I am more than a little bit displeased at the 
politicization of this hearing. I have been around since 1956. 
I have watched through the 1960s, the 1970s, the 1980s, the 
1990s, the 2000s, the teens as rural America has dried up and 
continues to dry up. And the folks who were testifying, the 
ones that I heard just lately, want to pin this on energy.
    Let me tell you what the biggest industry in Montana is. It 
is agriculture--grain, pulse crops, cattle. And I have watched 
through the 1960s, the 1970s, the 1980s, the 1990s, the aughts, 
and the teens. Our markets get consolidated and consolidated 
and consolidated. And, quite frankly, in the private sector, 
there is no capitalism when you go sell your grain or your 
cattle or your pulses on the market, because you have four 
companies that control 80 percent of the food supply--not in 
the United States--in the world. And we have watched schools 
like the one I graduated from go from 160 kids in the 1970s to 
less than 50 kids today. And we are just going to focus on 
energy.
    I got news for you, folks. This is a hell of a lot bigger 
issue than energy. This is about rural America that has been 
drying up for decades, and there has been one person that I 
have heard talk about what the real problem is, and it is 
consolidation. And, by the way that consolidation occurs in 
energy also.
    And so my question is for Stacy Mitchell, and that is, as I 
look at my small town of now 500 people when it used to be 
1,100 people, where we used to have five grain elevators to buy 
our grain and now we have none, can you tell me what the 
Federal Government should be doing to encourage capitalism, to 
encourage competition, to encourage the private sector to play 
by the rules and not consolidate and beat the hell out of folks 
that are in production agriculture.
    Ms. Mitchell. Thank you, Senator Tester, for that question. 
I really appreciate your comment and very much agree with it. 
You know, we are just--we do not have a market anymore. We do 
not have markets. We have allowed a few big corporations to 
effectively regulate our markets. We are being governed by 
private entities when we go out into the marketplace, these 
giant corporation things that are harming farmers, that are 
harming small businesses, pharmacies, grocers, and working 
people across the country. And what we need to do about that is 
resurrect our antitrust laws. You know, we became really 
captivated by this idea beginning in the 1970s and 1980s that 
bigger is better, and we turned our antitrust laws on their 
head, and we effectively changed how we interpret them and, 
thus, their enforcement. And the result is that we have allowed 
a few companies to grow dominant across the economy.
    You know, I am really encouraged that there is growing 
attention to this problem and that we are in the process 
hopefully of having legislation come through Congress to 
restore the vitality of our antitrust laws and to break up some 
of the biggest concentrations in the market, including Amazon. 
I think this is really critical to restore what it means to 
live in an equitable society, to restore liberty, to restore 
democracy, and to really restore the power of communities to 
direct their own future.
    I think that is a lot of what is going on in rural America, 
certainly in my State of Maine, is this incredible sense of 
powerlessness that people have, because more and more we are 
beholden to Wall Street banks, to giant corporations like 
Walmart who run our lives and control our future.
    Senator Tester. I want to thank you for that, Stacy, for 
those comments.
    Marcia, I would like to get your perspective on this also.
    Ms. Erickson. Thank you, Senator. I am from a five-
generation farm, and my two sons will be taking over our 
farming operation. Ag is our primary economic driver in South 
Dakota. It really is. We continue to have the population losses 
that you spoke to. I am from a community of 100, and I just say 
please continue to invest in and support our farmers. They need 
it. They are at the mercy of the markets, and I thank you for 
bringing this to our attention.
    Senator Tester. Well, I want to thank you both for that 
comment. I will tell you that Senator Rounds, your great 
Senator from South Dakota, is concerned about this issue, too, 
and it is just about what we can do about it to really get our 
arms around it because, quite frankly, if we do not have good 
old-fashioned capitalism in our marketplaces, then we are in 
trouble.
    So I just want to thank the Chairman for allowing me to go 
first. I appreciate it, because I do have conflicts. I owe you 
one, Sherrod. Thank you.
    Chairman Brown. Thank you, Senator Tester.
    Senator Toomey is recognized for 5 minutes.
    Senator Toomey. Thank you, Mr. Chairman. And let me just 
follow up with an observation. The consolidation that we have 
seen in agriculture, that has happened all across the country. 
In my State of Pennsylvania, which has been dominated by small 
family owned farms, it is much more difficult to make ends 
meet. We have a lot of dairy farms. In most years they lose 
money.
    The truth of this whole situation that we have got to weigh 
and think about is the reason this has happened is because more 
efficient farming systems and approaches and companies deliver 
lower-cost food for consumers. And that is going to mean that 
the folks who have a hard time competing with that, those 
communities are going to be hurt. But how much more do we want 
to force low-income people to have to pay for their food so 
that we can preserve a status quo that we remember from decades 
ago? I think we have got to be honest about the whole picture 
here.
    Ms. Mitchell, you made, I thought, a very salient point 
about the lack of community banks, the consolidation in 
banking, and it is not just consolidation. It is an almost 
complete absence of new community banks. Up through 2007, it 
used to be very typical for the FDIC to approve over 100 new 
charters for community banks, which exclusively serve their 
community. They are aptly named. In 2007 itself, there were 190 
applications that were approved. But from 2009 through 2019, 
the average annual number of new community banks approved in 
this country was 5\1/2\ single digits.
    Why is that? I will tell you a big part of the reason is 
because we have a Fed that has engineered zero interest rates, 
and at the same time we have dramatically increased the 
regulatory requirements. The zero interest rates makes it very 
hard for a bank to have any net income margin, and the added 
expense of compliance with regulation has simply meant nobody 
can figure out how to launch a community bank that can survive. 
Not nobody, but almost nobody. And I think that is a real 
problem.
    I want to get to a couple of--go back to energy because I 
know that the Senator from Montana thinks this is a diversion, 
I guess, but the fact is rural communities that are able to 
evolve and find new industries, that is a part of the success 
of those areas, and that has totally been the story in energy. 
And I am wondering if Ms. Sgamma--you know, in Pennsylvania not 
only has it been hundreds of thousands of jobs, but there has 
also been tremendous savings for consumers. Gas prices in 
Pennsylvania dropped 65 percent when our rural communities 
started producing gas. And I guess my question for you is: If 
the Biden administration continues this policy of banning new 
leases and maybe goes even further, what is the impact going to 
be on rural communities for the cost of the energy that they 
need?
    Ms. Sgamma. Well, that is absolutely correct. We have saved 
consumers hundreds of billions of dollars over the last decade 
in lower energy prices, both natural gas and oil. I do feel a 
little bit attacked by Senator Tester. I mean, I am not here to 
represent agriculture. I think if the Committee wanted more 
agriculture representatives, they could have. But the point is: 
Why kill other jobs just because this--you know, I am not here 
representing agriculture, but certainly the Administration 
should not be attacking energy jobs as a way to solve 
agriculture jobs. They both can be mutually supportive.
    Senator Toomey. Thank you.
    Senator Ellis, one of the things I was wondering if you 
could share with us is what will the impact be on Wyoming's 
schools, and including rural schools? Most of Wyoming, as you 
point out, is rural. These schools, my understanding is they 
depend significantly on royalties from oil and gas, and if this 
Administration's ban on new leases remains in effect, is that 
going to have a significant adverse impact on the rural schools 
of Wyoming?
    Ms. Ellis. Thank you, Senator Toomey. The answer is yes. 
You know, Wyoming is very blessed in that we have an abundance 
of natural resources, including robust minerals. And we have 
relied on that mineral industry to provide for significant 
revenues in our State's budget. And so it is not just about 
severance taxes and ad valorem. It really is a trickle-down of 
other industries, you know, that supports local welders and 
other related businesses.
    So when we see a tax on our energy economy, it really does 
hurt rural America, because as we see students move out, then, 
you know, declining enrollment. But as we look at declines in 
production and the cost of, you know, things like the price of 
oil, we are looking at a $300 million annual structural deficit 
out of a $1.5 billion statewide K-12 education budget.
    We are working through those issues, and we are happy to do 
that, knowing that our economy is very reliant on a volatile 
industry that depends on commodity prices. However, when our 
Government leaders start attacking our economy directly, that 
is where we have significant concerns. And I would echo Ms. 
Sgamma's sentiment that, you know, I am happy to talk about 
some effects that we have in our agricultural industry in 
Wyoming. It is important for us to support our ag producers. We 
have large cattle ranching opportunities. Our State legislature 
often has tried to take aggressive stands to provide more 
opportunities for our ag producers in kind of breaking up some 
of that consolidation that was mentioned. However, when we look 
at our forecast for the future, it really depends on our energy 
economy for how we are going to fund all of our essential 
services.
    Senator Toomey. Thanks very much.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    Ms. Mitchell, let me start with you. I understand that you 
have a degree in labor history. We have seen the links that 
corporations like Amazon will go to stop its workers from 
organizing a union and gaining power on the job over wages and 
benefits and scheduling. We all witnessed how Amazon unleashed 
all its power to fight its own Alabama workers, the people who 
make its company successful.
    How can supporting workers and strengthening unions improve 
local rural economies and communities?
    Ms. Mitchell. Thank you, Senator, for that question. You 
know, I think it is important to note Amazon just incredibly 
dominates just a core infrastructure of our economy. They 
capture two-thirds of online shopping traffic. They are a major 
provider of web services. They increasingly dominate the 
logistics industry, and the list goes on and on and on.
    Amazon attained this level of dominance in large part by 
exploiting shifts in public policy. They exploited tax 
advantages that were not available to their competitors. They 
exploited lax labor laws. And they exploited the weakening of 
our antitrust laws to engage in tactics like predatory pricing 
to seize market power and to push other companies out of 
business.
    You know, I think we are fooling ourselves if we imagine 
that people can organize against Amazon's incredible market 
power and succeed if democratic Government is not doing its job 
to attack that power directly. In the 1940s, 1950s, 1960s, when 
we had the highest rates of unionization, when we had the 
broadest prosperity and the gap between working people and the 
wealthy was shrinking, in that period we not only had strong 
labor laws, but the Federal Government was aggressive in its 
antimonopoly policies. Companies like A&P, we broke them up. We 
prevented them from engaging in abusive market practices, and 
that is what opened the way for working people to actually be 
able to unionize those companies.
    And so I think it is really critical we think about how 
these things work together, and it would be--you know, breaking 
up Amazon's power, restoring the rights of unions and small 
businesses to thrive in this country would be one of the best 
things we can do for rural America.
    Chairman Brown. Thank you, Ms. Mitchell.
    Mr. Bynum, a couple years ago, Hope Credit Union reported 
that almost all of its mortgage loans were to first-time 
homebuyers and people of color in the Deep South. Two 
questions. Why do you think so many families of color cannot 
get a mortgage from other lenders? And what should Congress and 
the Biden administration do to close the racial home ownership 
gap and allow more families of all backgrounds to join the 
middle class?
    Mr. Bynum. Thank you, Mr. Chairman. We have seen that 
barriers in our region include encountering banks that do not 
have the products or service or interest to serve low-income 
people and people of color. High levels of discrimination exist 
at every stage. As I mentioned earlier, for example, in 
Mississippi, a Black family making $150,000 a year is more 
likely to be denied a mortgage than a White family making 
$50,000 a year. These are data reported by the Mississippi 
Housing Finance Authority to the Federal Government.
    It is clear that systemic discrimination in our banking 
system needs to be addressed. The Community Reinvestment Act is 
one way to do that. I am encouraged by some of the movement 
that the Federal Reserve Bank has taken to mitigate the 
devastating rules put in place by the OCC, and hopefully that 
will improve conditions. But as importantly is preserving home 
ownership among families of color who already have it.
    The Treasury Department's Homeownership Assistance Fund is 
a critical way to reach those families that have been affected 
by the pandemic. For example, we saw after Hurricane Katrina a 
housing crisis, and we are seeing it again during COVID, those 
families who are most vulnerable or at risk of losing their 
primary asset. Fannie Mae and Freddie Mac also need to do more 
to support home ownership, if not through the banks then for 
CDFIs like HOPE and other credit unions that are closing the 
gaps that traditional banks will not and have not served.
    Chairman Brown. Thank you, Mr. Bynum.
    Ms. Erickson, and be brief, if you can. As you said, rural 
communities like other communities in this country have a lack 
of safe, affordable housing options for both renters and 
homeowners. What do we need to do to preserve the homes we have 
to make sure that low-income families can afford them?
    Ms. Erickson. Thank you, Senator. There are a number of 
things that we need to do in the rural economy to preserve our 
housing stock, and some of that starts with regulation reforms 
in some of our programs that are currently out there working. 
They are great programs; they just need some amendments. Thank 
you.
    Chairman Brown. Thank you very much. That really was brief. 
Thank you.
    Senator Rounds from South Dakota, Ms. Erickson's home 
State, is recognized for 5 minutes.
    Senator Rounds. Thank you, Mr. Chairman.
    Let me just begin, and I want to in particular thank all 
the witnesses for participating in today's hearing, and I want 
to thank you in particular, Marcia, Marcia Erickson from GROW 
South Dakota, for representing our State before the Committee 
today.
    Marcia, in your written testimony, you talk about the 
number of challenges that you have seen in the housing sector. 
Can you tell us to what extent these challenges have been 
exacerbated by COVID-19?
    Ms. Erickson. Thank you, Senator. Yes, COVID-19 has really 
brought to light how important housing is for rural America. 
There is overcrowding many times and substandard housing on 
Native American lands, and they were having difficulty social 
distancing during that time, because often they are living in 
the same households. So we need additional housing for our 
Native lands and for our rural communities because things like 
COVID just make these problems more difficult to deal with.
    Senator Rounds. Yes, that is kind of a good lead-in because 
it is exactly the--I guess my next series of questions would 
have to do with housing in particular, and there was recently 
an article in the Wall Street Journal just this last week that 
found that the U.S. housing market is nearly 4 million homes 
short of the current buyer demand. This significant deficit is 
making it especially challenging for first-time buyers to gain 
access to home ownership. Among the reasons for the gap the 
article cited, it cited shortages of labor, materials, and 
suitable land.
    Can you speak to some of the specific reasons for housing 
shortages in South Dakota and rural America more broadly? And I 
am thinking in particular, you know, when we talk about Native 
American reservations and so forth, we see real shortages 
there. And you talked about COVID-19 and about the impact and 
what it really focused on. We have got lots of homes in rural 
South Dakota on Native lands that basically will have two, 
three, four different generations or members of different 
families living together because of the shortages there. And 
yet reservations not only because they are on trust land, which 
makes it more difficult for many lenders to be able to get an 
appropriate mortgage, because they are not used to dealing with 
trust land issues, but also because so many of those areas are 
poverty-stricken, but there are other issues as well in terms 
of those rural and Native American locations.
    Can you talk a little bit--because you are right in the 
middle of it. Can you talk a little bit about the challenges 
that are there?
    Ms. Erickson. Yes, there are many barriers to creating 
affordable housing in rural communities and Native lands. Lack 
of contractors is one of them, the cost of development, and 
many of the homes that are there need substantial renovations. 
There is a general lack of lots to build. Those are just some 
of the barriers.
    Other barriers on Native lands are the HUD Section 184, for 
example. I have not worked directly with that, but in order for 
our Native members to get home ownership, this is a great tool. 
However, I understand the guidelines from the program have been 
lagging for years behind the rest of the industry, and I have 
heard from experts in industry that say it is actually harder 
for Native Americans to get a loan through that program than 
other programs. So there are opportunities for those guidelines 
to be revised or maybe removed.
    One thing that was pointed out was the environmental review 
process, and currently there are two environmental reviews done 
for a tribal member to get a loan. First, the BIA does an 
approval of the Environmental Assessment during the recording 
of the lease, and then it is my understanding that HUD requires 
another one after that.
    One way to address some of the housing shortages and needs 
is to invest in community development financial institutions, 
community action programs, CDFIs, members of other entities 
across the U.S. that work daily, day in and day out, to address 
the dire needs. There are so many. Every community has needs. 
It is just how do we address them best and to the greatest 
extent. Thank you.
    Senator Rounds. Thank you.
    Mr. Chairman, I really appreciate Marcia participating, and 
before I wrap up, I just have to take a moment to respond to 
Ms. Mitchell's remarks about the large financial institutions. 
Her comments about mega banks leaving rural America really 
could not be further from the truth, at least with regard to 
South Dakota. Two of the eight U.S. G-SIBs are chartered in my 
State and are among South Dakota's largest private employers. 
Another, JPMorgan, offers credit cards to one in eight South 
Dakotans, and a fourth, BNY Mellon, provides treasury services 
to our State government and helps local jurisdictions in South 
Dakota access their bond markets.
    A full and a quick rollout of the PPP would not have been 
as successful in our State without the back-end work that these 
same institutions undertook. So, look, I just want to say those 
banks really have provided services, and for those of us in 
South Dakota, we have appreciated what they have brought in. 
All of those different tools cannot all be done by just the 
smaller banks. Larger banks also have tools that are available 
and that do help us in our rural communities as well.
    Thanks, Mr. Chairman.
    Chairman Brown. Thank you.
    Senator Van Hollen is recognized for 5 minutes.
    Senator Van Hollen. Thank you, Mr. Chairman, and thank you 
to all the witnesses.
    Mr. Chairman, thank you for mentioning in your opening 
comments the importance of 100 percent broadband connectivity 
in our country, and this, of course, is an important issue to 
all parts of our States and country, but is very important in 
rural areas. The pandemic has shone a harsh light on the 
digital divide. I remember even before the pandemic I had 
introduced a bill to close what we called the ``homework gap,'' 
kids who could not access the internet to do their homework. 
That has become a full-blown learning gap, and I was very 
pleased to see that the American Jobs Plan proposed by 
President Biden allocates $100 billion to make sure we have 100 
percent connectivity in our country, making small businesses in 
rural areas better able to compete to connect our students and 
to help connect more people with banking services. And I would 
also point out that in rural areas we have twice the rate of 
households being unbanked than in suburban areas.
    Mr. Bynum, you have spoken about how many small businesses 
without financing fall prey to predatory lending institutions 
and payday lenders, and you have spoken about how CDFIs are so 
important in these communities to help provide some access to 
capital. As you know--and you mentioned this in your 
testimony--the Treasury's $9 billion Emergency Capital 
Investment Program flowing from the December legislation is 
being set up. What are some of the things you think we should 
keep an eye on and need to happen to make sure those funds get 
to where they are most needed?
    Mr. Bynum. Thank you, Senator. I appreciate your question. 
The Congress has made historic levels of investment in CDFIs in 
your recent actions, but it is critical that we do not repeat 
some of the mistakes that have actually resulted in a widening 
of opportunity gaps in areas. As I mentioned in my testimony 
earlier, CDFIs play a critical role, but all CDFIs are not the 
same, just as any organization types have differences.
    CDFIs banks in Mississippi proliferated after TARP. Many 
got resources that stabilized their balance sheets. Some of 
them do great work. But the mortgage lending by CDFI banks in 
Mississippi to Black homeowners is a lower rate than non-CDFI 
banks in Mississippi, by all mortgage lenders in Mississippi, 
so you cannot have Federal resources widening the gap, and that 
is a terrible unintended consequence. So the $9 billion in the 
Emergency Capital Improvement Program should prioritize 
institutions that have a track record of lending to communities 
and people who need it most. That is absolutely essential. We 
should incentivize deep investments in places that have the 
highest levels of need.
    Senator Van Hollen. I appreciate your flagging those issues 
as we work on the implementation of that program.
    I also saw what I think is an important article that you 
wrote back in November of last year called, ``The Wolf Is Back 
at the Door'', you know, and it goes to the issue of predatory 
lending. You pointed out that, ``In Arkansas, the wolf is back 
at the door, this time wearing sheep's clothing.'' A Federal 
regulatory rule finalized on October 27th of last year 
``undermines our State's constitutional provisions against 
usurious interest and once again makes thousands of our 
neighbors vulnerable to predatory payday'' lending. This is a 
rule that has a nice-sounding name, like a lot of these, the 
true lender rule. But I agree with you, this just opens the 
door for more predatory lending, and Congress is going to be 
looking into this. I hope we will roll back the rule.
    Can you speak to that and the dangers of that rule?
    Mr. Bynum. Absolutely. OCC finalized the rule essentially 
on rent-a-banks, and rent-a-banks--the OCC's rule must be 
nullified. We have seen the devastation of how high-cost loans 
cost people in our region and undermine some of the strongest 
protections in the country. Arkansas' 17 percent rate cap 
should eliminate this, but these rent-a-banks, these many 
fintech lenders, find a loophole. We have seen members 
experience how these loans are piling on top of existing credit 
loans, and they are struggling to repay. So it is critical that 
these rent-a-bank lenders and the rules be nullified. They do 
not make a real assessment of a borrower's ability to pay.
    Senator Van Hollen. Thank you.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Van Hollen. Next week, 
as you know, we are doing a hearing on the rules that you 
brought up, so thank you for that.
    Senator Tillis from North Carolina is recognized for 5 
minutes.
    Senator Tillis. Thank you, Mr. Chairman, and thank you to 
all of the witnesses for being here.
    You know, we consistently hear energy-producing rural areas 
need to diversify and find other industries to support their 
economies, and I think a lot of policymakers use this to brush 
off the criticism of the decisions that have gutted economic 
opportunities for rural areas.
    How can you, on the one hand, be expected to diversify in 
the rural areas? It is largely agriculture and for many States 
like Senator Toomey mentioned, Pennsylvania, where energy 
opportunities there, natural gas, are great opportunities that 
are being shut down. So, Senator Ellis, I was kind of curious 
if you could speak to the challenges Wyoming has faced with 
these policies that seem to be incongruent--on the one hand, 
diversify; on the other hand, take out all the opportunities 
that you may have to do just that.
    Ms. Ellis. Thank you, Mr. Chairman and Senator Tillis. In 
my testimony, I go to some great lengths to talk a little bit 
about how Wyoming in recent years has worked to diversify its 
tech economy. Certainly living in a rural area, we have had to 
think outside the box in how we deliver some of our services, 
and I think COVID-19 has really kind of amplified our ability 
to look at how we deliver education remotely, utilizing 
telehealth better and just kind of digging deeper in some of 
those areas.
    Over the last several years, we have invested significantly 
in trying to expand the number of data centers that we have in 
our State, making sure our kids are being exposed to computer 
science at all grade levels. And so some of this does take 
time. But at the end of the day, no matter what we do, you 
know, I think we do need to realize that we play to our 
strengths, and our greatest strength when it comes to revenue 
production and job production is through energy.
    In addition to the traditional forms of revenue generation 
of severance tax, ad valorem tax, whenever we look at sales 
tax, for example, the cost of energy companies when they buy 
that kind of equipment in our State certainly is a contributor 
to things like sales tax. Assaults on our domestic energy 
production in Wyoming, it hits us in a lot of different levels, 
and so, you know, we are happy to continue to diversify our 
economy. You know, tourism is our second largest industry, and 
we welcome people to come to Wyoming. But at the end of the 
day, energy is our strongest strength, and we are proud to 
power America. And, you know, how these things weave together, 
I think it is also important to recognize that as our 
technology needs grow, every picture you take, every video you 
record that is sent up to a cloud requires that information and 
data to be housed in a data center. And so we do need to kind 
of have a better understanding of just our carbon footprint and 
our energy demands as technology becomes more prevalent in our 
society.
    Senator Tillis. Thank you, Senator Ellis.
    Ms. Sgamma, you have spoken about the lost economic 
opportunity related to the pause, President Biden's pause on 
the XL Pipeline and Federal leasing. We had something similar 
occur in North Carolina. We are not extracting energy, but we 
were going to be a host to the Atlantic Coast Pipeline that was 
going to create 17,000 construction jobs and about 22,000 
ongoing in operations.
    This happens to be--it was mapped through some of our most 
challenged areas, both in terms of just job growth, but also 
for an agriculture community that could greatly reduce its 
energy cost if they had access to natural gas.
    So in your experience, you frequently see jobs like the 
often-promised energy jobs, green energy jobs materialize when 
projects like the Atlantic Coast Pipeline and the XL Pipeline 
are canceled? Do you see them make up, that they net out?
    Ms. Sgamma. Thank you, Senator. It points to the fact that 
they are not mutually exclusive. The fact that there are wind 
and solar jobs today does not mean that if we kill oil and 
natural gas development we create more wind and solar jobs. In 
fact, when we kill oil and natural gas production here in the 
United States, we send it overseas. So we are sending those 
jobs overseas, but we are not replacing that energy because 
over 70 percent of our energy comes from oil and natural gas.
    So until there is an alternative that does everything that 
oil and natural gas do, all we do is ship those jobs overseas. 
So it is much better to have those jobs, create those jobs in 
rural areas. And I like the way you put that about the 
arrogance of telling rural areas to diversify their economies. 
It is like telling Northern Virginia and the D.C. area to 
diversify its economy away from the Federal Government. If you 
are in Rio Blanco, northwestern Colorado, an extremely rural 
area, you have got 75 percent of Federal lands and 85 percent 
of your revenue comes from oil and natural gas development. Do 
not take away their economic base and make that rural community 
disadvantaged.
    So I appreciate your framing that question that way.
    Senator Tillis. Well, thank you, and, you know, I for one 
think that there is a place for solar and renewable. I 
supported a renewable portfolio standard when I was Speaker of 
the House. We benefited famously from that. But this all-or-
nothing approach I think is dangerous, and if we really are 
having this hearing to focus on what we can do for rural 
communities, we need to stop handcuffing them on the great 
opportunities that they already have and that they were 
benefiting from.
    Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Tillis.
    Senator Smith from Minnesota is recognized for 5 minutes.
    Senator Smith. Thank you, Mr. Chair.
    Mr. Chair, I would like to take a moment to acknowledge the 
passing of Walter Mondale, a dear friend whom we lost 
yesterday. Fritz Mondale exemplified decency and strength and 
compassion in his six decades in public life. His memoir was 
entitled, ``The Good Fight: A Life in Liberal Politics'', and 
really that title captures who he was. And here in the Banking 
Committee, I want to just take a moment to recognize his 
leadership as a young Senator who helped to pass the Fair 
Housing Act.
    So the Fair Housing Act prohibits discrimination around the 
sale or rental or financing of housing on the basis of race, 
religion, national origin, or sex. And back in the 1960s, even 
though the Supreme Court decisions had declared housing 
discrimination unconstitutional, the historic impacts of 
housing discrimination were rampant in segregated neighborhoods 
and the lack of access to home ownership and financing for 
Black families.
    In fact, Black and Hispanic servicemembers were returning 
from risking their lives in Vietnam in the 1960s and then 
struggling to buy a home, and their return really laid bare 
these deep and systems inequities.
    So Mondale, who had only been in the Senate a few years and 
was a member of the Banking, Housing Committee, went about the 
work with other Senators of righting this wrong. And on April 
4th, the day of the Senate vote, Dr. Martin Luther King was 
shot and killed in Memphis, Tennessee. This tragedy galvanized 
members of both parties to come together to pass this historic 
legislation, which Lyndon Johnson signed into law.
    Now, I know from my many conversations with Mr. Mondale 
that this was one of his proudest accomplishments in the 
Senate. And I also know that he reminded us that the tenets of 
the Fair Housing Act have never been fully enforced, leaving us 
all to keep up the fight and to fulfill the promise of his 
landmark legislation. So thank you, Mr. Chair, for giving me a 
moment to appreciate our friend, Vice President Walter Mondale.
    I also really appreciate this hearing. This testimony is 
showing us both the challenges as well as the assets that we 
find in small towns and rural areas. This is certainly true in 
Minnesota and all across this country. You know, I have seen in 
small-town Minnesota the incredible innovation and community 
spirit and collaboration and kind of ``let us just figure it 
out'' mentality in so many communities, like Luverne and 
Bemidji and New London and all the rural spaces in between 
those communities. And I have also seen in these communities--
and I have seen families that have struggled with chronic 
racism and disinvestments in housing and broadband and so many 
other issues.
    Ms. Mitchell, I really appreciate so much how you laid out 
these challenges in rural communities. So I just have a minute, 
a couple of minutes, but I want to focus in a little bit on 
this question of access to financing and capital, focus the 
value of community-based organizations, community banks, credit 
unions, CDFIs.
    You know, my grandmother was the president of a small 
community bank in northern Indiana, so she was born in 1898, 
and I saw through her eyes the power of having local 
institutions who know their customers provide the services to 
those customers because they know them and they trust them. And 
I am sorry to say that that bank no longer exists. It has been 
gobbled up by another big bank.
    So, Ms. Mitchell, is this consolidation that we have been 
talking about today, is this consolidation just sort of the 
natural result of economies of scale? Or is there something 
else going on here? And what is the impact of this 
consolidation on access to capital and credit and financing in 
small communities?
    Ms. Mitchell. Thank you so much for that question, and my 
organization has our headquarters in Minnesota, in Minneapolis, 
and so I just wanted to acknowledge the connection. And I also 
really appreciate the story about your grandmother and want to 
learn more about that bank and her life.
    You know, this consolidation is not a result of simply 
market forces. You know, we know that community banks charge 
lower fees than big banks, that they in many measures operate 
more efficiently, and they also just do a better job of making 
the kinds of productive loans that we need.
    Community banks are able to access--and by ``community 
banks,'' I also mean credit unions and CDFIs. They are able to 
access this rich trove of soft information. They get to know 
their borrowers. They get to know their communities. And what 
that enables them to do is to make a much broader range of 
loans to small businesses and do so successfully.
    The structural problem with those banks is that they just 
do not have eyes on the ground, and they are not able really to 
take advantage of that kind of soft information at their scale, 
and so they are just not as successful at making small business 
loans, and they shy away from it. So we really need to tackle 
that directly.
    I know that we are coming to the end of the time, but just 
to say that consolidation of banking is, a lot of research 
shows, the direct result of changes that we made to our banking 
policies in the 1990s. We really tipped the scales in favor of 
the big banks, and we undermined the local institutions.
    Senator Smith. Thank you so much.
    Senator Toomey [presiding]. So my understanding is the 
Chairman had to step out, and he has asked me to moderate this. 
So next I think we have Senator Hagerty.
    Senator Hagerty. Thank you, Ranking Member Toomey. I 
appreciate your holding this important meeting today, and I am 
sorry the Chairman is not here, but I wanted to thank him for 
mentioning his own Perry County, because we have a Perry County 
in Tennessee, and Perry County is exemplary of rural life in 
Tennessee, the finest that Tennessee has to offer. And it is 
our rural counties that have suffered tremendously through this 
pandemic.
    You know, rural communities like Lobelville, which is the 
county seat of Perry County, are really, again, the lifeblood 
of America and the essence of Tennessee. And as they have 
suffered through this pandemic, I am very pleased that we are 
looking at ways to help our rural communities navigate this. 
That means supporting important efforts like rural broadband, 
like rural workforce development, supporting our community 
banks, our farm credit institutions, and other rural lenders 
who, in fact, did a tremendous job in Tennessee administering 
the PPP program to help our rural communities and our rural 
small businesses navigate their way through the economic 
shutdown that was associated with the pandemic. It also means 
avoiding one-size-fits-all policies that have harmed our [audio 
disruption] burdened job creators at a time when we can least 
afford to do it.
    This hearing is also a great opportunity to encourage our 
bank regulators to continue to work together to expeditiously 
modernize and improve outdated Community Reinvestment Act 
provisions. They have also got to promote market stability, 
increase transparency, and ultimately enhance our banks' 
ability to help underserved areas in a safe and sound manner. 
And this Congress and the Administration should continue the 
great work of the last Congress and Administration to focus on 
underserved communities, from designating opportunity zones, 
that has spurred private sector investment, that has spurred 
job creation, that have really created self-sufficiency in 
economically distressed communities, to maximizing access to 
the Payroll Protection Program, to help our small businesses 
and rural communities navigate the economic shutdown, again, 
that accompanied this pandemic.
    I would like to ask my first question of Mr. Bynum, please. 
Mr. Bynum, thank you for your testimony, and thank you for your 
work to advance economic opportunity in rural areas. I know 
that since 1994 HOPE has generated more than $2 billion of 
financing that has benefited some 1.7 million people in States 
like Alabama, Arkansas, Louisiana, Mississippi, and, of course, 
my home State of Tennessee. I want to thank you, and I look 
forward to continuing to working together with you in your 
efforts.
    I want to thank you for your unprecedented effort in this 
public-private partnership.
    What I would like to do is ask you, in addition to quickly 
deploying the Emergency Capital Investment Program's funding 
into CDFIs, what more can the Treasury Department and its CDIF 
Program do to support rural areas?
    Mr. Bynum. Thank you, Senator, and I appreciate the 
question. CDFIs are uniquely effective because they are closest 
to the ground. They are financial first responders in so many 
communities that are disproportionately on the outside of the 
economy. Even with community banks that do a good job, CDFIs 
are uber-focused on closing gaps in historically underserved 
communities, such as rural small towns like the one you 
reference.
    Through the PPP program, we saw that CDFIs in Louisiana 
made seven times more loans to businesses below $150,000 than 
the largest banks, five largest banks in the country combined. 
So that illustrates the unique power and focus of CDFIs.
    So, again, targeting the precious and rare resources that 
Congress has allocated CDFIs to institutions that have a track 
record of serving those underserved rural communities, Native 
communities, communities of color, low-income mom-and-pop 
businesses is vital. It is also critical that CDFIs be equipped 
to access home ownership assistance programs. One of the 
speakers mentioned NeighborWorks America. They provide critical 
downpayment assistance that helps close the gaps.
    We bring in resources from the Wall Street banks and target 
them to the communities that do not have access to those banks, 
where banks closed in record numbers after the financial 
crisis. Without CDFIs, rural communities will continue to be on 
the outside looking in.
    Senator Hagerty. Thank you for your great work, Mr. Bynum, 
and thank you, Ranking Member Toomey.
    Senator Toomey. Thank you, Senator Hagerty.
    Senator Ossoff.
    [No response.]
    Senator Toomey. Is Senator Ossoff with us?
    [No response.]
    Senator Toomey. If not, Senator Lummis.
    [No response.]
    Senator Toomey. OK. Senator Cramer.
    [No response.]
    Senator Toomey. Senator Daines?
    [No response.]
    Senator Toomey. Is there any Senator who is present and has 
not yet had a chance to ask questions?
    [No response.]
    Senator Toomey. OK. In that case, Cameron, do you happen to 
know whether the Chairman is expected to be back momentarily, 
or are we basically finished here?
    Mr. Ricker. It sounds like he is finishing up, but Senator 
Lummis just signed on.
    Senator Toomey. OK, terrific. Senator Lummis, if you can 
hear me, you are recognized.
    We can see you, Senator Lummis. You are recognized.
    Senator Lummis. Thank you, Senator Toomey. Can you hear me? 
We are having some difficulties here.
    Senator Toomey. We can see and hear you.
    Senator Lummis. Thank you so much. I appreciate this 
opportunity, and I particularly want to thank State Senator 
Affie Ellis for joining us today from Wyoming. She is deeply 
involved in these issues, and the fact that she is willing to 
provide testimony today is deeply appreciated, as are our other 
Western witnesses, because the West experiences so many of the 
issues that are the subject of this hearing today.
    So my first question is for Senator Ellis. What percentage 
of natural gas and oil development comes from Federal lands in 
Wyoming?
    Ms. Ellis. Mr. Chairman, Senator Lummis, I believe that 
about 90-plus percent from Federal lands' natural gas, that is 
the origin, and then more than half, 50 percent of oil.
    Senator Lummis. And I am so glad that you had those numbers 
at the ready because I do not think people understand how 
significant mineral production is on Federal lands in Wyoming. 
So when there is a moratorium or a prohibition on producing 
minerals on Federal land in Wyoming, that essentially removes 
90 percent of our production. And since we are the largest 
exporter, net exporter of energy in the Nation, it puts a 
tremendous burden on our education system, because such an 
important component of education funding in Wyoming comes from 
oil, gas, and coal development on Federal lands.
    So, again, Senator Ellis, according to the Wyoming 
Department of Education, how much did the oil and gas industry 
contribute to Wyoming K-12 education in 2019?
    Ms. Ellis. Mr. Chairman, Mr. Ranking Member, and Senator 
Lummis, thank you. In 2019, the oil and gas industry delivered 
$1.67 billion to State and local governments. Of that, 
approximately $740 million went to our K-12 budget. As I 
mentioned in my written testimony, that is about half of our 
entire expenditure for K-12 education alone. We have about 
90,000 students in Wyoming, and we finance our education system 
well. But it is more expensive to educate kids in rural areas. 
You know, if you look at our larger cities, places like 
Cheyenne, we do see some efficiencies of economy. But when it 
comes to rural areas, there is no other substitute, so those 
dollars are critical for supporting rural America through our 
rural schools.
    Senator Lummis. Well, thank you. And as you know, the oil 
and gas industries can move. They can go to the Permian Basin 
where it is private land, and the only one that gets hurt is 
the State of Wyoming and our school kids. It does not hurt the 
oil and gas companies. It does not stop them from producing oil 
and gas. It only hurts Wyoming and the people who live there.
    Mr. Chairman, I ask unanimous consent that a letter to 
President Biden from Wyoming Superintendent of Public 
Instruction Jillian Balow regarding the fiscal impact on 
Wyoming students and schools be entered into the hearing 
record.
    Chairman Brown [presiding]. Without objection, so ordered.
    Senator Lummis. Thank you, Mr. Chairman.
    Senator Ellis, how difficult has it been for the Wyoming 
Legislature to adequately fund education over the last decade?
    Ms. Ellis. Funding education remains probably the biggest 
challenge that I am working on our horizon. As I mentioned, we 
have a $1.5 billion annual budget for K-12 operations, and we 
are looking at a $300 million structural deficit. You know, 
certainly the Federal Government has passed things like the 
American Recovery Plan Act. We have received that funding, but 
a lot of that comes with some strings. So, unfortunately, as we 
have been studying that issue and how to allocate that to our 
school districts to maintain equity and maintain our effort, 
you know, I think at the end of the day my biggest concern is 
that we are going to see our cliff actually grow because we are 
really limited in our ability to rein in some of the spending 
on K-12 education.
    So we are looking at that act and trying to understand some 
of those challenges that are there, but that is the number one 
issue that I have been working on and that many of my 
colleagues are focused on going forward.
    Senator Lummis. And how much of the State's tax revenue, 
including education funding, is projected to be lost from 
President Biden's moratorium?
    Ms. Ellis. So the Wyoming Legislature is very concerned 
about any moratoriums or drilling bans that affect our Federal 
lands. Several years ago, we appropriated some dollars to 
commission a study. The University of Wyoming was selected, and 
a UW economist produced a report in December of 2020. The 
report statistics were sobering. Over the next 4 years, it 
looks like Wyoming will lose about $1.8 billion with the 
moratorium on new drilling leases, lease activity. A full ban 
would be even more devastating. And to put that, again, in 
perspective, our annual operations for just the general fund of 
our government is $1.3 billion. This removal would really take 
out an entire year of us being able to fund our State 
government operations and more if the moratorium were to 
continue indefinitely or if more dramatic steps occur in the 
future which would ban drilling on Federal lands outright.
    Senator Lummis. I have so many more questions, Senator 
Ellis, but, unfortunately, my time is up. Thank you so much for 
your testimony.
    Mr. Chairman, I yield back.
    Chairman Brown. Thank you, Senator Lummis.
    Senator Ossoff from Georgia is recognized for 5 minutes.
    Senator Ossoff. Thank you, Mr. Chairman. And thank you to 
our diagnosis panelists for this opportunity to discuss issues 
of particular concern to rural Georgians, particularly as we 
debate this upcoming infrastructure initiative.
    Mr. Bynum, thank you for your work at HOPE. You note in 
your testimony that in the Deep South ``this longstanding trend 
of disinvestment, racial and economic inequality, and then a 
pandemic and economic downturn mean that rural communities 
continue to lose funding, resources, population, and 
hospitals.'' And I want to highlight in particular the closure 
of rural hospitals. We have lost nine rural hospitals in the 
last 10 years in the State of Georgia.
    For example, Southwest Georgia Regional Hospital in 
Cuthbert, Georgia, closed last October in the middle of a 
pandemic, and it served a patient population that was largely 
uninsured or underinsured, and the people of Cuthbert and the 
surrounding areas now have to drive an hour and a half or 2 
hours just to get to an emergency room.
    The State of Georgia has also refused to expand Medicaid, 
although I and many hope that State leaders will now move to 
expand Medicaid since Senator Reverend Warnock and I secured $2 
billion in incentives in the recent American Rescue Plan.
    Mr. Bynum, can you please discuss the importance of 
hospitals like Southwest Georgia Regional Hospital in Cuthbert 
to rural communities and Medicaid expansion?
    Mr. Bynum. Thank you, Senator Ossoff. Absolutely. Rural 
Georgia has a great deal in common with rural Alabama, 
Louisiana, and Mississippi. HOPE has financed rural health 
centers and hospitals in persistent-poverty counties such as 
the county where Cuthbert is located, and so we are familiar 
with the importance and challenges.
    These hospitals are critical sources of jobs and health, as 
we have seen during the pandemic, and you do not find 
traditional banks running to these projects, largely in part 
due to their dependence on Federal support, because so many 
low-income patients who are underinsured, again, in the absence 
of Medicaid expansion. So the only way we would have been able 
to finance these hospitals is because of access to CDFI 
resources like the New Market Tax Credit Program, which is hard 
to come by, particularly in persistent-poverty areas. Our 
analysis shows that only 5 percent of new market tax credit 
allocations have gone to rural persistent-poverty counties from 
2003 to 2017. So there is significant access to resource gaps 
that limit opportunity and limit these rural communities from 
getting access to these critical lifesaving resources.
    Senator Ossoff. Thank you, Mr. Bynum, and I would like to 
discuss as well the importance of rural broadband internet 
access as we build this interference bill. Georgia's Department 
of Community Affairs has reported that approximately 70 percent 
of the locations lacking high-speed internet access are in 
rural Georgia. There is particular need in the rural areas 
around Augusta and in rural areas of south Georgia south of 
Savannah and around Valdosta, for example. Can you please 
discuss the economic impact and the importance of expanding 
rural broadband internet access particularly in south Georgia 
and rural Georgia?
    Mr. Bynum. Certainly, and, again, it is very similar 
conditions as we find across the rest of the Deep South. It 
will be critical for the Administration to connect 
infrastructure resources with CDFIs who make sure that those 
funds reach the most vulnerable areas. As we have seen during 
the pandemic, the lack of broadband has limited access to 
educational opportunities for low-income and rural communities. 
Telehealth is limited because of the lack of access to rural 
broadband. We cannot provide adequate mobile banking services 
in the absence of adequate broadband infrastructure.
    So to get these needs to the communities that are so 
vitally underserved without being subject to the whims of 
Southern State policymakers that have unfortunately a 
deplorable track record of directing resources to the most 
vulnerable communities, particularly communities of color, it 
is critical that resources be directed--be refunneled directly 
to grass-roots, on-the-ground organizations such as community 
development financial institutions.
    Senator Ossoff. Thank you, Mr. Bynum.
    With my brief remaining time, rural transit, the Chairman 
has admirably focused us on the importance of rural transit in 
the upcoming infrastructure bill. Could you just comment on the 
importance of rural transit to expand economic opportunity and 
access to basic services, particularly in communities like the 
Chattahoochie River Valley of west Georgia, which you know 
well, in and around surrounding Muscogee County along the 
Alabama line. How can investment in rural transit improve 
quality of life in the Chattahoochie River Valley?
    Mr. Bynum. If you do not have access to adequate transit, 
then you may as well be unemployed in rural areas because you 
just have so much territory to cover. If you do not have a car 
or truck in rural areas, you may as well be unemployed. Low-
income people and people of color in rural communities are more 
likely to be preyed upon and receive access to high-cost 
predatory financing to get access to mobile car loans and truck 
loans. And so transit solutions are vitally important.
    Again, CDFIs have a history track record of addressing 
transit-related needs and financing to help close 
infrastructure gaps such as transit and health care and 
education.
    Senator Ossoff. Thank you, Mr. Bynum.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Ossoff.
    Senator Cramer from North Dakota is recognized for 5 
minutes.
    Senator Cramer. Thank you, Mr. Chairman. Thank you. And 
thanks to all of our witnesses. I have followed this as closely 
as I can from two committees. They are both really important, 
and I thank you. It is good stuff.
    I think, Mr. Chairman, just as a note of some encouragement 
up front, I wanted to talk about a bill that Senator Luj n and 
I just introduced. It is called the ``Revive Economic Growth 
and Reclaim Orphaned Wells Act of 2021'', and the reason this 
is good for rural economies and why it has got both a 
Republican and a Democrat introducing it is because it helps 
clean up--provide jobs cleaning up old orphaned oil and gas 
wells that were, you know, drilled and made long before there 
were reclamation laws and regulations. And there are about 
56,000 of them around the country, and, you know, Ben Ray and I 
just feel like this is a good opportunity for the two parties 
to come together and do something constructive that enhances 
the economies of local communities and States where there has 
been obviously some dropoff in workers in the oil patch because 
of demand. I am not even talking about the current 
Administration's policy, but because of a drop in demand. It is 
a good opportunity to put people to work in a field that 
obviously they know something about, good-paying jobs as well 
as cleaning up the environment.
    With that, I want to stay on the topic of energy policy in 
rural America because, of course, we know a thing or two about 
that in North Dakota, and get real specific here and real 
current. Yesterday--and I will not go through all the history, 
but yesterday was an important day in Washington, DC, in the 
district court because Judge Boasberg had set yesterday as the 
deadline for supplementing the record as it relates to the 
decision ultimately whether or not to shut down the Dakota 
Access Pipeline, which moves about 570,000 barrels of North 
Dakota per day to market and has been doing that now safely for 
about 4 years. And it is being litigated, and I will not go 
through all those details.
    But yesterday was an important day, and I wanted to offer 
just a couple of words from a filing yesterday in the district 
court here in D.C. by Mark Fox, the chairman of the Mandan, 
Hidatsa, and Arikara Nation, also known as ``Three Affiliated 
Tribes.'' The Fort Berthold Reservation is sort of in the heart 
of the Bakken, and I will just give you a couple of things from 
his statement. Then I am going to ask unanimous consent to 
insert it into the record, Mr. Chairman. But he says that the 
MHA Nation's cost of health insurance alone exceeds $40 million 
per year. Just think about that. They spend $40 million a year 
for health care for the members of the Mandan, Hidatsa, and 
Arikara Nation.
    Now, what about the shutting down of the Dakota Access 
Pipeline, which is being litigated? And it has become important 
because, of course, we are talking about Federal lands; we are 
talking about rural economies. But he says here--there is this 
short paragraph. He said, ``I directed MHA Nation staff and 
consultant experts to provide a study of the financial harm 
that could be done to the MHA Nation in the event DAPL was shut 
down. They have estimated that the losses will exceed $160 
million over the first year, exceed $250 million over 2 
years,'' and, of course, that goes on forever if that pipeline 
gets shut down, and I will not go through all the other issues, 
but I would just ask unanimous consent to put this into the 
record.
    Chairman Brown. Sorry. My mic was off. Without objection, 
so ordered. Sorry, Senator Cramer.
    Senator Cramer. No problem. Thank you, Mr. Chairman.
    What has this all got to do with Banking? Well, obviously, 
we are also facing serious discrimination in certain aspects of 
our economy, certain industries within our economy, by 
particularly large banks. Obviously, the oil and gas industry 
as well as the coal industry and the utilities that generate 
the electricity, that generates more electricity, and that 
captures the carbon and pipes it to locations, all of the 
opportunity for not only job creation, wealth creation, but--
and I might ask Ms. Sgamma about this. I do not really see 
global demand shrinking a great deal real fast. Perhaps over 
time that will happen. Somebody is going to meet that demand. I 
do believe that climate change is global. We hear that a lot, 
that it is global. What I worry about is, first of all, Mandan, 
Hidatsa, and Arikara Nation, they are going to produce that 
oil. And if it does not move by a pipeline and if there are 
banks--if the banks and financial institutions stop financing 
things like pipelines because of pressure from advocates, it is 
going to be trucked; it is going to be railed. It is going to 
go to the coasts and get on barges, all of which is many, many 
more greenhouse gases than does a pipeline. Or worse than that, 
it is going to be produced in Russia or Venezuela or Nigeria. 
And I might just ask, Ms. Sgamma, do any of these other 
countries or, for that matter, any major oil-producing country, 
do they have cleaner environmental protections or better 
environmental protections than the United States?
    Ms. Sgamma. Not those countries you mentioned, Senator, but 
certainly Canada and Norway I would say are the only ones who 
are comparable to the United States.
    Senator Cramer. So that brings us to the Keystone XL 
Pipeline. Isn't that ironic? You know, I sited the first 
Keystone Pipeline through North Dakota, 600 landowners' land. 
Not one inch of it had to be condemned. It is ironic, isn't it, 
that oil from Canada displaces oil from Venezuela. We have not 
even talked about the national security implications. My point 
is if we are going to have a serious discussion about rural 
economies, we have to talk about certainly agriculture and we 
have to talk about energy production. And I would just plead 
with my friends--and this is why I started by talking about the 
bill that Senator Luj n and I have introduced together. Let us 
look for real solutions to the climate crisis, regardless of 
what people might believe about it, whose fault it is, how fast 
it is coming, all of those things. If the goal is to reduce 
emissions, let us work with our banking friends or financial 
friends. Somebody is going to invest in these things, and most 
likely the investment will be more expensive and less insured 
than our banking communities.
    Could I just ask you, Ms. Sgamma, are you familiar with any 
of the challenges and have you seen any specific examples of 
the financial industry, you know, discriminating against----
    Chairman Brown. Ms. Sgamma, we are way over time, so be 
brief, if you can, on that answer. Thank you.
    Ms. Sgamma. Certainly we have seen activists try to deny 
the industry of banking and financial resources, and that would 
definitely mean less investment in rural areas.
    Senator Cramer. Thank you.
    Thank you, Mr. Chairman.
    Chairman Brown. Thanks, Senator Cramer. I appreciate it.
    Senator Daines just popped up, so the Senator from Montana, 
Senator Daines, is recognized for 5 minutes.
    Senator Daines. Just in time, Mr. Chairman. Thank you. We 
are all doing the quick Zoom shuffle here. Thanks.
    So I just spent some time in eastern Montana. I was hearing 
from our community leaders, businesses, Montanans, about the 
impact of President Biden's decision on day one to kill the 
Keystone XL Pipeline. Today's hearing is about investing in 
rural communities. I tell you, I wish we could take President 
Biden and many Members of this Committee to go out to eastern 
Montana to these rural communities and hear firsthand what is 
needed. I can tell you what is needed is the Keystone XL 
Pipeline.
    Instead of investing in rural communities through common-
sense, extensively studied, privately funded projects like the 
Keystone Pipeline, the Administration plans to rip away jobs 
and leave these communities literally in the dust. This is 
infrastructure paid for by private sources. It generates tax 
revenues, like $80 million. This goes directly to our schools. 
There is a beautiful gymnasium that was built out in eastern 
Montana in a small community that had six kids in their 
graduating class. I said, ``How did you afford the gymnasium?'' 
They said, ``Pipeline tax revenues.''
    So it generates tax revenues, and, third, of course, the 
Keystone Pipeline, it generates less carbon emissions than the 
alternative of either rail or truck to transport the oil. So it 
has kind of left us scratching our heads about why this project 
was killed when it is positive on every front here for these 
rural communities. That is real investment.
    Ms. Sgamma, the Biden administration is saying they 
canceled the Keystone XL Pipeline to protect the environment 
despite the fact we know the Keystone XL Pipeline would reduce 
transportation emissions, and the company planned to run the 
pipeline at a net-zero emission standard. Could you speak to 
how these heavy-handed, top-down decisions from President 
Biden, frankly, ideologically based, not based on science, like 
killing the Keystone XL Pipeline, stopping oil and gas leases 
on Federal lands, they only hurt communities, kill jobs, and 
actually have a negative impact on the environment?
    Ms. Sgamma. Absolutely. Since natural gas is the No. 1 
reason the United States has reduced more greenhouse gas 
emissions than any other country since 2000, it is largely 
because of displacement in the electricity sector, more natural 
gas electricity generation has reduced greenhouse gas 
emissions, more emissions than have wind and solar combined. So 
we are very proud of that record. I cannot really add anything 
to what you just said about Keystone operating at zero 
emissions. But I would add that immediately that decision 
killed $1.6 billion of investment in Montana, South Dakota, and 
Nebraska along that pipeline route and killed 11,000 jobs that 
would have come from that investment.
    Senator Daines. Thank you, Ms. Sgamma. The $80 million a 
year of tax revenues in perpetuity was a huge windfall, 
frankly, for these impoverished eastern Montana counties that 
need those dollars for schools, teachers, law enforcement, 
basic taking care of infrastructure like plowing roads in the 
wintertime, as an example.
    Senator Ellis, you know firsthand how important energy and 
pipeline revenues are for local communities. Can you speak 
about how we can support our rural communities by investing in 
our energy economy?
    Ms. Ellis. Thank you, Mr. Chairman and Senator. You know, 
first and foremost from Wyoming, the purpose for me to be here 
today is to urge Members of Congress and the Presidential 
Administration to remove this halt and moratorium on oil and 
gas leasing on Federal lands. You know, certainly over the 
years we have invested a lot in developing not only our energy 
resources but other natural resources as well. And Wyoming and 
our country have a lot to be proud of. We do regulate these 
activities very fairly and do our best to make sure that we are 
conserving our natural resources. And so I think, you know, any 
effort and movement that we can to recognize that we are 
protecting our natural resources and conserving them while 
having robust domestic energy production, that those two 
activities coexist certainly are appreciated in my neck of the 
woods.
    Senator Daines. Thank you. We talked about natural gas and 
oil and so forth. I want to talk a little bit about forestry. 
The timber sector in Montana was once a major economic driver 
for our rural communities across our State. In fact, when I was 
growing up, we had over 30 sawmills in Montana. Now that number 
has dwindled to seven. It has been devastating to our rural 
economy not only through job loss but through the financial 
hardships that accompany an increase in catastrophic wildfires. 
And, remember, when timber harvest was higher, Montana forests 
functioned as a carbon sink. Forests absorb carbon. Wildfires 
emit carbon. Montana forests now yield net positive carbon 
emissions, and this will only increase unless we dramatically 
improve forest management.
    Senator Ellis, I understand over time Wyoming has lost all 
timber processing capacity, and now your forests are in the 
same boat as Montana, operating as a carbon source rather than 
a carbon sink. Could you speak to the job opportunities and 
environmental benefits of forest management and what needs to 
happen in order to restore a healthy wood product sector in our 
communities?
    Ms. Ellis. Yes, over the last 100 years, I think we have 
seen a dramatic shift in how we manage our forests in this 
country. Usually, occasional fires that would go through the 
area were healthy and natural events that helped sustain 
forests. But, obviously, we started using our forests--you 
know, they are housed in the Department of Agriculture at the 
Federal level, so I think they were always viewed as a crop or 
a product that we would utilize in providing timber sources for 
our country. Over the years we have started limiting and 
putting out wildfires when we see them, and now we are starting 
to see forests that are more and more condensed and clogged and 
creating really unhealthy conditions. So certainly in Wyoming, 
you would think that that would be a great opportunity for 
private sector activity to go in and clear out some of those 
dead trees and harvest trees, but we have seen declines in that 
because of how we manage our forests, and it really is this 
kind of assault on overall health forest management. It has 
created a situation where I am greatly concerned about the 
number of dead trees as I drive through the national forests in 
Wyoming. I think it is just a tinderbox, and, you know, one 
unfortunate thunderstorm or campfire that gets out of hand will 
not only devastate the environment, but just the activity 
overall really hinders our ability to utilize that resource for 
good jobs in the West.
    Senator Daines. Thanks, Senator Ellis. I am out of time. It 
is remarkable that we cannot even get in and cut down dead 
trees because of radical environmentalists who litigate a lot 
of these timber projects. Thanks, Senator Ellis. I appreciate 
your comments.
    Chairman Brown. Thank you, Senator Daines.
    I have one last question, and then we will close. For you, 
Mr. Bynum, we have heard a lot about how we should rely on big 
energy companies to save our rural economies. We have not heard 
much from panelists about the devastating environmental impacts 
they have. Communities of color, as you know, are particularly 
vulnerable to climate change. Rural communities are no 
exception.
    My question for you, Mr. Bynum: How do we increase 
accountability of corporations and banks as well as State and 
local governments to ensure that we invest Federal resources in 
a way that protects all communities from flooding and wildfire 
and other natural disasters made worse by climate change?
    Mr. Bynum. Thank you, Senator. It is only prudent that we 
invest in strategies that mitigate the long-term environmental 
distress that has been put on rural communities, particularly 
communities of color. The best way to do this, again, is to get 
resources to the people and organizations closest to the 
ground, closest to the problems that we are trying to resolve. 
When they go through State government and legislatures here in 
the Deep South, often resources do not get directly to the 
communities that are most distressed.
    One example is the State Small Business Credit Initiative. 
We saw that during the previous round some States got it right 
and made more direct investments; whereas, some in our part of 
the country did not, and the results were not beneficial to 
those mostly underserved communities. And so I really 
appreciate that Congress did put some safeguards in the most 
recent legislation that put requirements on States and ensure 
more accountability in how these funds are deployed. I really 
think that is important, as the infrastructure resources go 
forward, as more recovery resources go forward, that 
accountability and safeguards are in place to ensure that the 
intent of Congress and that those most vulnerable communities 
are the ultimate recipients and are able to climb the economic 
ladder.
    Chairman Brown. Thank you, Mr. Bynum, for saying that. I 
have heard in zillions of--we all do--Zoom calls over the last 
year, I have heard from so many local officials, as many 
Republican mayors as Democratic mayors, as many Republican 
county commissioners as Democratic county Commissioners, to 
focus directly on local governments to help, not run it through 
a State government--that is no insult, of course, to Senator 
Ellis in the State Senate, but State governments tend to grab 
too much of that for themselves. So thank you all.
    For anyone who could not be at today's hearing, I am going 
to encourage them to go back and listen to Senator Tester's 
words talking about how this is a hell of a lot bigger than 
energy. It is about rural America that has been drying up for 
decades, the words he used. I know Senator Tester is tired of 
lectures, as I am, about the rural economy from people in this 
town who oppose any effort to actually invest in these 
communities or to foster real competition or stop the corporate 
consolidation, particularly in the ag sector, that is hollowing 
out our towns. They give corporations tax breaks to ship jobs 
in my State overseas. They have spent years pushing a trade 
policy that leaves workers behind. They do nothing-- nothing--
to position rural communities to lead in the industries of the 
future, and then they leave workers on their own when these 
local economies are devastated. The people I talk to in rural 
Ohio and small cities and towns all over my State are tired of 
politicians selling them empty promises that coal mines, for 
instance, will reopen. Ohioans know that, as Senator Toomey has 
noted and Ms. Sgamma suggested, it is natural gas, not 
Government regulation, that pushed out coal. There is no war on 
coal. To suggest otherwise is to deceive and disrespect 
communities seeking a better future. We welcome domestic energy 
production. We know the boom-and-bust cycle that extractive 
industries create and that it creates economic uncertainty. 
That is why, while we support domestic energy production, we 
must treat communities with respect and honesty and help them 
plan for our futures and their futures. It is time for all 
communities to have the resources and the respect for the 
dignity of work and the respect they need to be successful.
    Thank you to the five witnesses today for being here. Your 
testimony was incisive and helpful.
    For Senators who wish to submit questions for the record, 
those questions are due 1 week from today, on April 27th. For 
witnesses, we ask you within 45 days to respond to any of these 
written questions. Thank you again.
    With that, the hearing is adjourned.
    [Whereupon, at 12 p.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    For years, the work of the Committee on Banking, Housing, and Urban 
Affairs has been far too much about Wall Street, far too little about 
housing, and almost nothing about people's everyday lives in urban and 
rural communities.
    ``Urban Affairs'' may be in our Committee's title, but we have 
jurisdiction over matters integral to the economic health and vibrancy 
of all communities--including rural America. Whether you live in 
Philadelphia or Cleveland, Perry County, Pennsylvania, or Perry County, 
Ohio--the work of this Committee is vital to the shared prosperity of 
all Americans, urban and rural.
    This is the first Full Committee hearing dedicated to rural America 
in nearly a decade. Senator Toomey held a subcommittee hearing on rural 
banking in 2015 and I thank him for that. I'm sure he will agree that 
it has been too long since we focused on the issues facing rural 
America.
    The hopes and dreams of all Americans are pretty similar. We want a 
job with dignity and to be valued for the work we do. We want a 
community where our families can grow and flourish. And we want the 
opportunity to join with friends, family, and neighbors to leave the 
world better than we found it.
    The 46 million people who live in rural communities share these 
dreams, and they reflect the vibrant diversity of our country.
    From the foothills of Appalachia in Pennsylvania and Ohio, to 
Native American tribal lands on the Great Plains; from Black 
communities in the Deep South, to Hispanic and Asian communities in the 
West, we find resilient, hard-working men and women trying to make a 
better life for themselves, their families, and their communities.
    I know the pride people have in their hometowns--like I have in my 
hometown of Mansfield, Ohio. They want these places to be successful. 
They don't want to be told to pick up and leave to find better 
opportunities.
    Crumbling infrastructure, high unemployment rates, low wages, and 
gaps in access to banking, housing, and transit make rural areas 
especially vulnerable in an economic downturn.
    Workers and families and community leaders pour their hearts and 
their resources into their communities, trying to preserve their 
legacies and grow new businesses and attract new investment.
    But these same communities have watched for decades as investment 
dried up, plants were shuttered, and storefronts were boarded over. 
University economists, CEOs, and conservative Washington politicians 
make public pronouncements about capitalism's ``creative 
destruction''--dismissing workers' anger, informing us that these 
actions are the inevitable result of free and unfettered markets.
    Corporations close down factories, and move good-paying union jobs 
abroad where they can pay lower wages and exploit workers. Ohio workers 
from Bucyrus to Lordstown know what this does to communities.
    Big corporate agriculture has made it harder for small family farms 
to compete. Local, independent businesses close shop because they can't 
compete with Amazon.
    Big banks buy up their smaller competition and then close local 
branches, leaving communities 30, 40, even 50 miles from a place to 
deposit a check or build crucial relationships at their bank.
    The banks claim people can just use online banking--but that 
doesn't help if your community doesn't even have reliable broadband.
    As the banking sector gets more concentrated, it's harder for small 
businesses, farms, and families to get loans to hire more workers or 
expand their operation or to buy a home.
    The biggest banks and the largest corporations only look at 
quarterly profits, without considering the long-term economic impact on 
these communities and small businesses.
    And despite the simplistic picture we often see in the national 
media, these communities are not only made up of people who look like 
me. Rural America is as diverse and culturally vibrant as the rest of 
the country. But centuries of violence and displacement and structural 
racism have pushed rural communities of color even further behind.
    Native communities have some of the highest levels of poverty and 
many families suffer from overcrowded housing without plumbing or heat. 
The same is true for Black families and farmers that have faced decades 
of discrimination, including lending discrimination.
    Many rural families of all backgrounds don't have a safe, 
affordable home. And if there isn't affordable housing, communities 
can't attract new business because there's nowhere for workers to live.
    Last month, I was talking to the CEO of a credit union in southeast 
Ohio who knows the housing needs in his Appalachian community, and 
wanted to do something about it. He meets lots of well-qualified 
families who could pay a mortgage, but just can't afford a 20 percent 
downpayment. So his credit union created a new mortgage program for 
members of his community to have a pathway to home ownership.
    That's the kind of ingenuity we see all over the country from 
leaders who actually live in and understand these places. And we can 
learn from them.
    Our witnesses today know what it means for the local economy when 
the big banks abandon rural towns, or when a big-box chain store forces 
out small businesses. They know how working low-wage jobs makes it 
impossible to make the rent, let alone save for a downpayment.
    They know that homegrown, local businesses understand what their 
communities need.
    Anyone who's raised a family or started a business in Appalachia or 
Indian Country or the Carson Valley knows these places can't rely on 
Wall Street banks and corporations to help them out.
    People in rural towns and counties remember how the biggest firms 
recovered after the last financial crisis, while they were left behind. 
And they saw history repeat itself over the past year--when big 
franchises got help from big banks, small businesses went to the back 
of the line, and Black and Hispanic businesses were far less likely 
than White-owned businesses to get loans at all.
    Over and over, I hear the same thing from communities large and 
small, rural and urban: they need more resources. They've tried to make 
it on their own because they have to--not because they don't want 
investment, or don't want their fair share of our country's prosperity.
    To recover from this crisis and rebuild a stronger economy, rural 
communities need direct investment in infrastructure and economic 
development.
    We've made a good start with the American Rescue Plan. Now we can 
look forward to the American Jobs Plan to help us invest in our rural 
communities for the long term.
    We will invest in broadband and rural buses and affordable housing 
and the next generation of American manufacturing. We will invest in 
new energy technology to address climate change and create good paying 
jobs in communities of all sizes.
    If we make these investments, these local communities will be 
strong and resilient in the face of the extreme weather events--like 
wildfires, flooding, and hurricanes--that threaten our rural 
communities more and more each day.
    When we put communities, not corporations, at the center of our 
policy--when we invest in local people and businesses who make up our 
rural communities--we will get an economy that works for everyone.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Thank you, Chairman Brown. What we have here are two competing 
visions for how to help rural America.
    One vision is that we should implement policies that allow rural 
areas to thrive. We know Americans can succeed if we give them a 
chance. Our recent U.S. energy renaissance shows this. It's been game 
changer for many rural communities.
    Another vision--shared by some Democrats--is to provide Government 
welfare to these communities. They do it through different vehicles, 
but at the end of the day, it's welfare.
    My home State of Pennsylvania has a lot of rural areas. Some 
struggle, some thrive, but I don't know any that want to be long-term 
dependents of the Government. Our goal should be thriving communities 
of self-reliant people.
    As we consider the state of the rural economy, it's important to 
remember where we were a little over a year ago. Before COVID, we were 
experiencing an economic boom. We had the lowest unemployment rate in 
50 years. In rural America, unemployment dropped to 3.5 percent in 
2019--its lowest level in a decade. Nationally, including in rural 
America, Black and Hispanic unemployment rates hit all-time lows in 
2019.
    We had more jobs than people looking for work, a record low poverty 
rate, wage growth across the board with wages growing fastest for the 
lowest income earners, and ultimately a narrowing of the income gap. 
These are all objectives that Democrats support, and that we had 
achieved. All of this was spurred on by the steps Republicans took to 
reform our tax code and roll back excessive regulations.
    An important part of that strong economy was America's energy 
renaissance. In 2019, the U.S. became a net energy exporter for first 
time since 1952. We did it in part by becoming the third-largest 
exporter of liquefied natural gas. As gas replaced coal as the fuel for 
America's power plants, CO2 emissions actually declined. In fact, in 
2019, the U.S. led the world in reducing energy-related CO2 emissions.
    Across the country, the oil and gas industry has supported more 
than 10 million jobs, often in rural communities. In Pennsylvania--
which is the second-largest producer of natural gas--the oil and gas 
industry has supported 300,000 jobs up and down the supply chain. A 
majority of gas production in Pennsylvania occurs in rural areas, like 
Susquehanna County. It's our largest natural gas producing county and 
one of our least densely populated counties.
    Last March, our strong economy was roiled by COVID-19. We were 
facing the very real threat of a full-blown depression. In 2020, a 
bipartisan Congress helped to prevent that from happening by providing 
almost $4 trillion in relief.
    Fortunately, our economy is now in full recovery mode, and has been 
for months. The unemployment rate has dropped from almost 15 percent 
last April to 6 percent this March. Twenty-three States have 
unemployment rates at or below 5 percent--many of them are rural 
States. Real GDP growth is expected to be extremely strong this year.
    We should continue to have a robust economic recovery, unless the 
Federal Government undermines it. Unfortunately, that's exactly what 
Democratic policies are threatening to do. For example, the Democrat 
spending bill pays people more not to work than to work, so it's little 
surprise that in March's NFIB monthly survey, 42 percent of small 
businesses had job openings they could not fill--a record high.
    The Biden administration has also proposed massive tax increases 
and imposed burdensome regulatory policies. All of these policies will 
harm workers and slow economic growth. But some Biden administration 
policies will hit rural America particularly hard--some already have. 
For example, President Biden has terminated construction of the 
Keystone XL oil pipeline and indefinitely banned new oil and gas leases 
on Federal lands. The Biden administration is also seeking to coerce 
banks and investors to stop lending to fossil fuel companies and 
stifling U.S. agricultural exports by maintaining tariffs on Chinese 
goods and materials.
    Today, we will hear from two witnesses about the harm caused by 
these attacks on the energy industry, particularly in rural 
communities.
    Kathleen Sgamma is the President of the Western Energy Alliance. 
She will testify that these policies cause significant job losses. For 
example, President Biden's termination of the Keystone XL pipeline, 
according to the pipeline's developer, caused more 1,000 union workers 
to immediately lose their jobs, and ended a project that was expected 
to employ more than 11,000 Americans in 2021--the majority of them 
union workers--and create $1.6 billion in wages. By the end President 
Biden's first term, his ban on new oil and gas leases on Federal land--
according to one study--would destroy an average of 58,676 jobs 
annually.
    Senator Affie Ellis is a member of the Wyoming Senate. Her State 
ranks first in the Nation for natural gas production on Federal lands 
and second in oil production on Federal lands. She will describe how 
the leasing ban harms Wyoming's economy and education budget, which 
receives substantial funding from Federal energy royalties.
    I wish I understood why Democrats are so determined to prevent us 
from getting back to the best economy my lifetime. Instead of wasting 
more taxpayer dollars, imposing massive tax hikes, and increasing 
regulatory burdens on businesses, we should be rolling back the harmful 
Biden administration policies that are threatening the U.S. energy 
renaissance, which has done so much good for the rural economy.
                                 ______
                                 
             PREPARED STATEMENT OF WILLIAM J. (BILL) BYNUM
   Chief Executive Officer, Hope Enterprise Corporation, Hope Credit 
                      Union, Hope Policy Institute
                             April 20, 2021
                             
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                  PREPARED STATEMENT OF STACY MITCHELL
        Coexecutive Director, Institute for Local Self-Reliance
                             April 20, 2021
                             
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                 PREPARED STATEMENT OF MARCIA ERICKSON
               Chief Executive Officer, GROW South Dakota
                             April 20, 2021
    Thank you Chairman Brown, Ranking Member Toomey, Senator Rounds 
from South Dakota, and Members of the Committee. My name is Marcia 
Erickson, Chief Executive Officer for GROW South Dakota. I started my 
career over 30 years ago working at GROW South Dakota and have been the 
Chief Executive Officer for more than half of that time. I carry a 
Master of Science Degree in Community Economic Development from 
Southern New Hampshire University. I'm also a graduate of Achieving 
Excellence in Community Development from Harvard's Kennedy School of 
Government. Some of my current affiliations are: National NeighborWorks 
Association Board President, Rural Local Initiative Support Corporation 
Rural Advisory Committee, Small Business Development Center Advisory 
Board (South Dakota), South Dakota Community Action Partnership, and 
NeighborWorks America Rural Advisory Committee. Past affiliations 
include Chair of the Federal Home Loan Bank Advisory Council, Langford 
Area Community Foundation Advisory Board Member and Founder, and 
Marshall County Healthcare Board Chair.
    My testimony draws on all of these experiences and a diverse set of 
programs delivered by GROW South Dakota. GROW South Dakota is a 
statewide organization that provides several Federal, State, and local 
programs through three separate private nonprofit organizations under 
our branding umbrella. We assist South Dakota residents and communities 
in the areas of community, housing, and economic development. GROW 
South Dakota is a certified Community Development Financial Institution 
(CDFI), Community Action Agency, an exemplary rated member of 
NeighborWorks America, a member of the Rural Local Initiatives Support 
Corporation, an Opportunity Finance Network member, and we administer a 
Small Business Development Center.
    I provide my testimony today on the state of the rural economy 
including challenges of rural communities with regards to housing, 
access to capital, community development, the role of mission-based 
community lenders, and challenges in underserved communities. I would 
like to share with the Committee some of the issues that are critical 
to our agency and the rural economy.
Housing
    Housing is the foundation of success and is an essential and vital 
part of our rural communities across the country. During the pandemic, 
housing became even more sacred than ever before. People in rural 
communities, across our very rural State and this country, continue to 
express a need for housing. Housing needs that are requested from 
residents regularly are home improvements for the aging housing, 
infrastructure, senior housing, long-term care facilities, rental 
development and renovation, single-family development, downpayment 
assistance programs, and removal of blighted property.
    Rural America has an aging housing stock that is in desperate need 
of repair and rehabilitation. As an example, GROW SD provides home 
improvement programs in eastern South Dakota. We currently have a 
waiting list with over 140 nonpriority households waiting for home 
repair or rehabilitation. If we continue with the current priority 
categories identified by program regulations as seniors or disabled 
households, at best, we will only able to reach approximately 14 
nonpriority households per year. This translates into a wait time 
approaching 10 years to address deteriorating housing stock, adversely 
affecting the housing market for low-income households and the 
community in general.
    Rural and Native American communities are both challenged to secure 
flexible capital to meet the needs for affordable, quality, and safe 
housing stock. Gap financing for home ownership is needed as the cost 
to build is higher, and continues to rise, and Native lands and rural 
areas are negatively affected by the difference between the appraised 
value and the actual costs. Higher costs are partially due to the fact 
that contractors often need to travel to rural and tribal areas due to 
the lack of contractors in these areas. To further impact this issue, 
the cost to construct, repair or renovate properties is approximately 
10 percent-30 percent higher, or more, than last year for the same 
construction materials and supplies. Local lumber yards have further 
indicated lumber is approximately double, sheet goods have tripled, and 
material availability is very tight on many products. Materials are 
also being delayed due to supply chain issues, adding to the increased 
costs of construction and renovation According to the Board of 
Governors of the Federal Reserve System, 2021, there are widespread 
supply chain disruptions. The report further cited, ``Sustained high 
demand and tight supply of single-family homes further pushed up 
prices, and builders noted ongoing production challenges, including 
rising costs. Cost increases were partly attributed to ongoing supply 
chain disruptions, temporarily exacerbated in some cases by winter 
weather events. Contacts generally expect continued price increases in 
the near term.''
    Across rural communities there is a shortage of housing stock and 
increased costs and material availability making it even more difficult 
to address this challenge. Homes that are available either need 
substantial renovation or are increasingly more expensive and out of 
reach for many in our community. The needed repairs and renovations 
include electrical, plumbing, energy efficiencies, shingles, and 
addressing issues of safety. The costs to provide these updates often 
exceed the valuation of the property leading lenders to deny loan funds 
to address these issues. As a result, housing stock is often left 
vacant or remains severely deteriorated. The lack of housing and 
affordable reliable broadband contributes to the lack of workforce for 
our small communities. The shortage of housing stock cannot be 
addressed without an injection of capital to construct housing that is 
affordable or to complete needed repairs and renovations on the homes 
that do exist. Home ownership on Native lands and in rural areas is 
also challenging. The COVID-19 pandemic has brought to light many 
underlying housing issues especially in South Dakota's Native 
communities. Overcrowded and substandard conditions have exacerbated 
the impact of the virus. The number of appraisers available, especially 
in Native American areas, is also very limited. Promoting housing 
stability through appraisal apprenticeships and construction 
internships may be part of the solution.
    To further address home ownership rates on Native lands, a loss 
mitigation risk pool needs to be considered. Most tribal ordinances in 
South Dakota provide the right of first refusal to tribes to purchase 
units with mortgages that are in default or otherwise at risk of 
foreclosure. This early intervention strategy is underutilized by 
tribes due to a lack of resources to finance the purchase of the unit 
at risk. One model utilized by the Sisseton Wahpeton Oyate tribe is a 
risk pool of funds to mitigate the property disposition risk that 
lenders encounter with tribal borrowers.
    Another solution to the housing challenges in rural America would 
be to provide funding to proven, reliable, and accountable nonprofits 
such as NeighborWorks America, the Community Development Financial 
Institutions Fund, and other national established and proven entities 
in order to provide access to capital through their established 
networks. The key is to provide the capital with flexibility in mind to 
get the funds working in our communities as quickly and efficiently as 
possible in order to better address the unique needs of the rural 
economy.
Mission-Based Lenders
    Mission-based community lenders, such as Community Development 
Financial Institutions, play a critical role in reaching underserved 
and rural markets. These organizations are the frontline servicers that 
already have established a presence in rural communities. Because of 
the vast amount of programming that mission-based lenders have, they 
are a known resource in rural areas. Mission lenders are flexible in 
meeting communities' needs and providing financing where traditional 
lenders are unable. Along with making capital accessible to underserved 
populations and persistent poverty areas, mission lenders often pair 
capital loans with technical assistance, counseling to coach 
individuals on their small business, and provide needed housing 
counseling.
Policy Recommendations Mission-Based Lenders
    Policy change is needed to shape the course for housing, rural 
business development, and access to capital for our rural communities.
    The Community Development Financial Institution Fund provides 
opportunities to access lending capital for both housing and business. 
One challenge of CDFI funding, especially in rural markets that lack 
access to private funding sources, is the requirement of non-Fderal 
match. Currently, there is not a match requirement for Native CDFIs 
which we fully support and hope will continue into the future. However, 
it remains a challenge for all organizations in rural markets to meet 
the non-Federal match. We recommend that CDFI temporarily, if not 
permanently, lift the match requirement or reduce the match 
requirements to 50 percent for all CDFIs, especially in rural markets. 
Additionally, the $1 million maximum Financial Assistance award should 
be increased to $2 million or greater with additional flexibility in 
the CDFI objectives described as an increase in the volume of financial 
products or services, expansion into a new geographic area, new 
financial product or service, new development service, or new targeted 
area. These changes will lead to increased impact in our communities 
and communities across the country.
    The USDA Rural Development Intermediary Relending Program (IRP) is 
an excellent resource for low-interest loan capital to relend to 
businesses throughout rural America. This program also has non-Federal 
match requirements in order to have a successful scoring application. 
These match funds continue to be restricted until the full loan is 
repaid to USDA Rural Development (30-year term). Even though regular 
principal and interest payments are made to Rural Development by the 
intermediary, the full match must remain restricted. Match funds should 
be released pro-rata with the debt as it is paid down with Rural 
Development consistent with loan amortization schedules. By keeping 
non-Federal match funds restricted for 30 years, it limits the 
leveraging power for rural agencies to access additional flexible 
capital.
    The IRP program also restricts the maximum dollar amount per 
business loan. We support the proposed change of the maximum dollar 
amount per loan that an intermediary may lend to a project be increased 
to $400,000. The costs to start up or purchase a business in rural 
America has increased over time but the maximum loan limitation using 
IRP funding has not increased for several years. IRP funds should also 
be considered for intermediary lending of first mortgage loans. 
Mission-based lenders in rural America need long-term capital to 
address financing gaps in first mortgage lending..
    The Small Business Administration (SBA) Microloan Program assists 
women, people who are low-income, veterans, minority entrepreneurs, and 
other small businesses in need of financing in amounts of $50,000 or 
less in conjunction with business technical assistance. This program 
provides low-interest loans to organizations to relend to businesses. 
It also provides a technical assistance grant to the intermediary to 
help businesses both pre and post-loan. Currently, SBA has waived the 
requirement on the percentage of preloan training and technical 
assistance (not more than 50 percent of grant funds) versus postloan 
training and technical assistance provided to borrowers. This is the 
type of flexibility that is needed to better assist businesses seeking 
to start up or expand. This waiver should be implemented permanently in 
regulations.
    Due to the pandemic, SBA provided existing borrowers funded with 
SBA loan capital payment assistance. The first round included all 
borrowers, but the second round of CARES Act Section 1112 debt relief 
payments is confusing as borrowers with microloans were categorized for 
payments based on when their loans were closed. Loans closed before 
March 27, 2020, received up to a certain number of payments; loans made 
from March 28, 2020, through January 31, 2021, received no payment 
assistance; and those loans made after February 1, 2021, receive a 
different amount of payment assistance. It would have reduced 
administrative costs if it would have included all borrowers regardless 
of the date closed. Loans that are made under USDA Rural Development 
Intermediary Relending Program or the Rural Microentrepreneur 
Assistance Program did not receive any payment assistance although 
these, too, are federally funded loan programs.
Policy Recommendations Housing
    Consideration should be given to modify or simplify the HOME 
Investment Partnership Program funding regulations. The costs to bring 
a home to HUD quality standards often exceeds the maximum limits. 
Additionally, the contractor requirements of the Davis-Bacon Act are 
challenging. Most small contractors do not have the administrative 
staff to track the reporting requirements on these jobs. Payroll needs 
to be certified by job and county prevailing wage every week. HOME also 
requires SAM.gov registration. Contractors, especially smaller 
contractors, have difficulty navigating the system and getting 
registered. We understand this requirement will not go away, however, 
we recommend that SAM.gov improve the registration process.
    HOME multifamily compliance requirements are not aligned with other 
programs. Consistency across the board would be beneficial. For 
instance, USDA uses adjusted income for individuals and HOME uses gross 
income. Approval for rent level changes, even if they are within the 
HUD limits, is required.
    The Department of Energy Weatherization Assistance Program is 
needed to improve energy efficiency and safety concerns in homes. 
However, regulations have again made it difficult to administer. A few 
examples with recommendations include:

  1.  Currently, there is a separate certification required for DOE 
        Weatherization Auditor and Quality Control Inspector (QCI) 
        certifications. The Auditor/QCI should be one certification as 
        the trainings and tests are very similar. We also recommend 
        that testing for an inspector to remain certified be increased 
        from 3 years to 5 years as long as staff remain current with 
        Continuing Education Units.

  2.  If the home is in need of electrical wiring replacement, it 
        limits the weatherization measures that can be installed on the 
        home. We recommend allowing electrical wiring replacement and 
        other essential home repairs under DOE if it prevents 
        weatherization from being completed.

  3.  Department of Energy Weatherization Assistance Program does not 
        allow a change of fuel sources for heating systems. Often 
        homeowners ask to change to a different heating source/system. 
        Oil furnaces are currently difficult to purchase and not many 
        HVAC contractors service or install them anymore. A change to 
        allow a new fuel source for heating systems is recommended.

    As a provider of programs and services addressing Native and rural 
needs, I strongly support needed increases of funding and regulatory 
changes to address the needs of housing and access to capital in our 
communities, in South Dakota and across our country. Let's build, 
rebuild, and address the lack of quality housing for all. Housing is 
infrastructure. Access to capital for both housing and mission-based 
lending through flexible and accountable entities is needed. I urge 
this Committee to initiate and support large-scale investments into 
housing and support mission-based lenders to help our communities and 
economy grow for decades to come.
    Thank you for the opportunity to testify on the needs and 
challenges we face in rural communities.
Work Cited
Federal Reserve District. ``The Beige Book: Summary of Commentary on 
    Current Economic Conditions''. Board of Governors of the Federal 
    Reserve System, 14 Apr. 2021, www.federalreserve.gov/
    monetarypolicy/beigebook202104.htm.
                                 ______
                                 
                   PREPARED STATEMENT OF AFFIE ELLIS
                   Wyoming State Senator, District 8
                             April 20, 2021
Introduction
    Good morning, Mr. Chairman and Members of the Committee. My name is 
Affie Ellis and I am State Senator from Laramie County, Wyoming. It is 
a pleasure and honor to appear before you today. Thank you for inviting 
me to testify on the topic of our country's economy and the importance 
of investing in rural communities.
    Wyoming is one of the largest land-based States, though we are the 
least populated State in the country with fewer than 600,000 residents. 
As you talk about rural, even frontier, communities, it's more than 
appropriate to focus on a place like Wyoming. Though we are small, we 
are mighty in the sense that we power America. According to the U.S. 
Energy Information Administration, \1\ Wyoming produces 14 times more 
energy than it consumes, and it is the biggest net energy supplier 
among the States. Wyoming has been the top coal-producing State since 
1986, accounting for about 39 percent of all coal mined in the United 
States in 2019, and the State holds more than one-third of U.S. coal 
reserves at producing mines. In 2018 Wyoming's coal mining industry 
provided 5,534 jobs and delivered nearly $680 million to State and 
local governments. \2\ Wyoming was the eighth-largest crude oil-
producing State in the Nation in 2020, accounting for slightly more 
than 2 percent of U.S. total crude oil output. The State was the ninth-
largest natural gas producer and accounted for almost 4 percent of U.S. 
marketed gas production. Of particular note, in 2020 and numerous 
preceding years, Wyoming has ranked first in the Nation for natural gas 
production on Federal lands and second in oil production on Federal 
lands. \3\ In 2019, the oil and gas industry delivered $1.67 billion to 
State and local governments and employed 19,416 people. Additionally, 
wind power in Wyoming has more than doubled in the last 20 years and 
accounted for 12 percent of the State's electricity net generation in 
2020. The State installed the third-largest amount of wind power 
generating capacity in 2020, after Texas and Iowa. As I said, we are a 
small, but mighty State powering America.
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     \1\ U.S. Energy Information Administration.
     \2\ Wyoming Infrastructure Authority.
     \3\ U.S. Department of Agriculture, Office of Natural Resources 
Revenue.
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    Before I talk in greater detail about Wyoming's energy economy and 
how it supports the services Wyoming provides to its citizens, 
including funding K-12 education, let me introduce myself. I grew up in 
Wyoming. I'm proud of my State and thankful for all the opportunities 
it provided me. My parents are both Navajo and they grew up on the 
Navajo Reservation located in the Four Corners area of Arizona, New 
Mexico, Colorado, and Utah. Starting in the late 1800s and through much 
of the 1900s, our country developed policies to assimilate native 
children into the dominant non-Indian culture. Both of my parents, for 
example, attended boarding schools on the Reservation and eventually 
they were sent to the Intermountain Indian School in Brigham City, UT. 
My dad's father was a renowned Navajo silversmith, so my dad was taught 
to weld. My mom learned general home economics. When they graduated in 
the mid-1950s, my dad found a job working as a welder in Jackson Hole, 
Wyoming, where he and my mom started our family. My dad eventually 
started his own welding shop, which he continues to run today in his 
80s, and my mom, who passed at the age of 83 just a few years ago, 
worked in a drycleaner Monday through Friday and cleaned motel rooms on 
the weekends. I am the youngest of four children and much of my 
childhood involved enjoying the beautiful outdoors of this special 
place and working with my mom cleaning motel rooms.
    Wyoming provided me with so many opportunities. I was the first in 
my family to attend college through a substantial scholarship from the 
University of Wyoming. I eventually earned my law degree and I 
currently practice in the area of energy, natural resources, and 
Federal Indian law. My husband and I have three children who all attend 
public schools in Cheyenne. I don't know how it is in other States, but 
I appreciate that Wyoming affords people like me, who come from humble 
and hardworking families, the chance to serve in our Legislature and 
testify before all of you today.
Wyoming Is an Energy Producing State
    I decided to run for the Wyoming Senate in 2016 to give back to a 
State that has given me so much and ensure that such opportunities are 
available for current and future generations. At the time, Wyoming 
could see on its horizon a downturn in energy production, which in 
turn, would impact almost all services Wyoming provides to its 
citizenry. Development of oil, natural gas, coal, trona, and uranium 
are our primary revenue raising mechanisms. Wyoming taxes and generates 
revenue from the mineral industry in a variety of ways, including 
severance tax, ad valorem tax, property tax, sales tax, personal 
property tax, Federal mineral royalties, and lease bonus payments. 
Indeed, significant revenue derived from lease bonus payments allowed 
Wyoming to build new schools across our State these last two decades. 
Unlike most States which rely on local bond revenues for such capital 
construction, Wyoming's K-12 education system is highly centralized. 
Further, counties with mineral wealth provide what we call ``recapture 
payments'' to fund school operations statewide to ensure our financing 
system is equitable.
    Declines in mineral production have significant effects on 
statewide budgets as well as county and city budgets. Consequently, 
Wyoming has among the most volatile year-over-year revenue collection 
in the Nation. That revenue volatility has forced us to recognize boom 
years for what they are and plan accordingly for nonboom years. Wyoming 
saves a significant portion of the revenues derived from mineral 
production. For example, our constitution directs a percentage of 
severance tax revenue to be deposited in our Permanent Mineral Trust 
Fund (PMTF). Income earned from the PMTF--not the corpus of the fund 
itself--supports our State's General Fund. Wyoming also established a 
Legislative Stabilization Reserve Account (LSRA), which we often refer 
to as our ``rainy day fund.'' Wyoming has one of the Nation's largest 
rainy-day reserves. \4\ Our reserves could support operating costs of 
our government for more than a year. By contrast, other States only 
have the capability to operate a few months, some a few weeks, others a 
few days, and in more dire examples, only several hours, on their 
reserves.
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     \4\ ``Budget Surpluses Are Helping Many States Boost Their 
Savings'', Pew Trusts (March 11, 2019).
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    Wyoming recognizes its reliance on energy production. We often hear 
that Wyoming ``needs to diversify its economy.'' I agree with the need 
to diversify, but it's easier said than done. Tourism is our second 
largest industry, followed by agriculture. In recent years, we've 
worked to grow our technology sector. The rural nature of Wyoming 
provides a perfect laboratory to see how we can improve things like 
remote work, telehealth, and virtual learning, to name a few. Wyoming's 
dry cool climate, coupled with tax incentives, has made our State a 
destination for data centers. Too often we forget that every picture we 
take or video we record on our cell phones requires electronic storage 
space for that data. And data centers consume energy. A lot of energy. 
Everything we send to ``the cloud'' has a carbon footprint. 
Additionally, Wyoming has been a leader in passing blockchain 
legislation. We recently created Special Purpose Depositary 
Institutions (SPDI) (also referred to as ``speedy banks'') to accept 
digital asset deposits, or ``crypto currency.'' On the education front, 
we were the first State to require our schools to provide computer 
science for all grade levels because we want our children to not only 
understand how to consume technology but have the skill set to create 
technology. We are trying to prepare our children for jobs that don't 
even exist yet, recognizing that technology will continue to advance 
and play an increasing role in all sectors, including Wyoming's legacy 
industries of energy, tourism, and agriculture. Despite these advances 
in diversifying our economy, there is no other sector that produces the 
kind of revenue for Wyoming that energy provides.
Restrictions and Bans on Leasing on Lands Federally Managed Lands
    Wyoming is a citizen legislature and budgets on a biennial basis. 
In rough numbers, we appropriate approximately $1.3 billion each year 
for the operation of general government and another $1.5 billion for 
our K-12 education budget, with more than half of that amount coming 
from State appropriations. With declines in energy production, Wyoming 
has cut departments and programs supported by our General Fund, which 
has impacted health care services, support for our senior citizens, and 
the developmentally disabled. This year alone, we just completed our 
legislative General Session, cutting more than $300 million from 
General Fund supported expenditures. Our K-12 budget has remained 
largely intact, but with continued assaults on domestic energy 
production, we are now working to resolve a $300 million per year 
projected structural deficit in K-12 education.
    Wyoming leaders recognize the volatility of revenues derived from 
energy production. We know that we cannot control global markets or 
predict the price of oil. However, we have significant concerns when 
leaders within our own country attack and undermine our energy economy.
    Nearly half of the surface lands in Wyoming are managed by the 
Federal Government through agencies such as the Bureau of Land 
Management (BLM), U.S. Forest Service, and National Parks Service. 
These lands, including the Wind River Indian Reservation and other 
Federal enclaves, are not subject to State property taxation, though we 
receive modest compensation through the Federal Payment in Lieu of 
Taxes (PILT) program. BLM lands support significant oil and gas 
leasing, including BLM lands that are intermixed with private lands in 
the ``checkerboard,'' primarily located along the southern portion of 
our State. Below is a BLM Land Status Map.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Federal land management decisions are an ongoing source of concern 
for elected leaders in Wyoming because those Federal decisions impact 
the livelihood of our citizens and the strength of our State. 
Accordingly, the Legislature commissioned a study a few years ago to 
understand the potential impacts of an oil and gas lease moratorium and 
drilling ban on Federal lands. In December of 2020, a University of 
Wyoming energy economist released this study exploring potential 
scenarios that affect nine Western States, including Wyoming, New 
Mexico, Colorado, Utah, North Dakota, Montana, California, and Alaska. 
\5\
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     \5\ ``The Fiscal and Economic Impacts of Federal Onshore Oil and 
Gas Lease Moratorium and Drilling Bank Policies'', Dr. Timothy J. 
Considine, Professor of Energy Economics, School of Energy Resources, 
University of Wyoming (Dec. 14, 2020).
---------------------------------------------------------------------------
    For Wyoming, the study found that ``either a moratorium on new 
Federal leases or an outright drilling ban would constitute a 
significant shock to the Wyoming economy, reducing tax revenues, 
income, and employment.'' \6\ The study concluded that in Wyoming, by 
the end of President Biden's first term, a moratorium would cause 
Wyoming to lose an average of 15,269 jobs annually and lose 
cumulatively $8.3 billion in gross domestic product (GDP), $3.8 billion 
in personal income, and $1.8 billion in State tax revenue. \7\ The 
study's conclusions regarding an outright ban were even more 
devastating for Wyoming's economy, as we would lose an average of 
18,228 jobs annually and lose cumulatively $10.3 billion in GDP, $4.7 
billion in personal income, and $2 billion in State tax revenue. \8\ If 
the ban continued for the next twenty years until 2040, Wyoming would 
lose cumulatively $132.9 billion in GDP, $60.1 billion in personal 
income, and $30.5 billion in State tax revenue and lose an average of 
75,475 jobs annually from 2036 through 2040. \9\
---------------------------------------------------------------------------
     \6\ Id. at 17-18.
     \7\ Id. at 16-17, 44.
     \8\ Id.
     \9\ Id. at 16-17.
---------------------------------------------------------------------------
    The study also explained that a moratorium or ban on leasing would 
not only limit production on public lands, but would affect potential 
production on State, private, and Indian lands because of the 
checkerboard of surface lands and minerals rights across the West. In 
other words, adjacent lands not directly covered by a Federal 
moratorium or ban can become isolated and non-Federal oil and natural 
gas resources may be stranded when Federal access is denied.
    In addition to examining the financial impacts, the report also 
shed light on the relative costs of achieving reductions in greenhouse 
gas emissions with a moratorium on Federal oil and gas leases. The 
report stated, ``Even if in the unlikely event a leasing moratorium or 
a drilling ban were to reduce emissions, they would be achieved at 
great cost. There are many cost effective technologies and strategies 
to reduce greenhouse gas emissions. Restricting development of oil and 
gas on Federal lands is not one of them.'' \10\ Indeed, Wyoming has 
invested and continues to invest in alternatives to offset carbon 
emissions. We opened the Wyoming Integrated Test Center in May of 2018 
to provide a space for researchers to test carbon capture, utilization, 
and sequestration. \11\ Further, Wyoming Governor Mark Gordon recently 
joined other governors in sending a letter to Members of Congress 
urging support for the SCALE Act which would provide low-income loans 
and grants to build out a transportation network for carbon, similar to 
Government support for water or highway infrastructure development. 
\12\
---------------------------------------------------------------------------
     \10\ Id. at xi.
     \11\ Wyoming Integrated Test Center.
     \12\ ``Wyoming Governor Calls for Federal Support for Carbon 
Capture'', Casper Star Tribune (Apr. 6, 2020) (access to the letter 
included in the link).
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    Wyoming cares deeply about out natural resources. As the Chairwoman 
of the Senate's Travel, Recreation, Wildlife and Cultural Resources 
Committee, I can tell you that Wyoming works to find the right balance 
of supporting our energy industry with conserving our natural 
resources. For example, Wyoming was a leader among Western States in 
developing a Sage-Grouse Conservation Strategy to ensure energy and 
other development projects avoid and minimize impacts in core and 
noncore sage grouse habitat areas to protect these species well in 
advance of an Endangered Species Act listing.
    Wyoming established a Wildlife and Natural Resource Trust Fund 
(Trust) which set aside more than $115 million in its corpus to support 
projects that enhance wildlife, such as building wildlife overpasses 
and underpasses to prevent and reduce vehicle collisions. This effort 
brings industry, conservation groups and other stakeholders together. 
Since 2006, the Trust has funded 538 proposals and allocated $59 
million in on-the-ground projects. \13\
---------------------------------------------------------------------------
     \13\ Wyoming Conservation Legacy.
---------------------------------------------------------------------------
    We care about our wildlife and our environment. We hunt, fish, 
mountain bike, hike, camp, kayak, and paddle board. We snowmobile, ski, 
and snowshoe. We gaze at stars that city folks cannot see because of 
light pollution. We breathe the cleanest air and we can spend days 
exploring Wyoming's wilderness without seeing another soul. We not only 
enjoy these natural wonders on our own but recognize that people from 
all over the world travel to experience our beautiful State, home of 
Yellowstone, the country's first national park, and Devil's Tower, the 
country's first national monument. During the widespread closures due 
to COVID-19 last year, Wyoming saw dramatic increases in places like 
our State parks. People across this country were reconnecting with 
nature and we were proud that they came to Wyoming. Our State is a 
wonderful example of how conservation of our natural resources can and 
does coexist with robust domestic energy production.
    You can imagine how we felt on January 20, 2021, when the U.S. 
Department of Interior (DOI) announced Secretarial Order No. 3395, a 
two-page document which called for an immediate 60-day suspension of 
new oil and gas leases and drilling permits for U.S. lands and waters. 
\14\ Think of your State's number one industry and imagine receiving an 
undebated Executive order that contradicts numerus Federal statute 
coming from Washington, DC, which would hurt not only that industry and 
the men and women employed in that sector, but the revenues it provides 
to fund your schools, roads, and health care programs. The Order is 
akin to banning corn growth in Iowa, banning rubber and plastic 
manufacturing in Ohio, or banning gaming in Nevada. Although the 
initial 60 days have passed, the moratorium has been extended by the 
Department of the Interior pending a ``review and reconsideration'' of 
leasing practices. \15\ Our State is gravely concerned that this 
moratorium will be extended indefinitely and that the current 
Presidential Administration will also impose an outright ban on all oil 
and gas drilling on Federal lands.
---------------------------------------------------------------------------
     \14\ U.S. Department of the Interior Secretarial Order no. 3395 
(Jan. 20, 2021).
     \15\ U.S. Department of the Interior Memorandum (Mar. 19, 2021); 
Executive Order 14008, Tackling the Climate Crisis at Home and Abroad, 
at Section 2078 (Jan. 27, 2021).
---------------------------------------------------------------------------
    Our Governor filed a lawsuit in the Federal District Court of 
Wyoming which explains how the halt on new oil and gas leases on 
Federal lands violates the National Environmental Policy Act, the 
Administrative Procedure Act, the Mineral Leasing Act and the Federal 
Land Policy Management Act. \16\ The lawsuit asks the court to require 
the BLM to resume quarterly oil and gas lease sales, which have been 
suspended since the order was signed. Our Governor has rightly pointed 
out that our world will continue to need and use oil and gas for the 
foreseeable future. The question is whether those resources will be 
produced under the environmental safeguards in place on Federal lands 
in Wyoming, or in other countries which do not have strong 
environmental regulations.
---------------------------------------------------------------------------
     \16\ Wyoming v. Haaland, CV 21-00056, Petition for Review of Final 
Agency Action (March 24, 2021).
---------------------------------------------------------------------------
    As I mentioned, the Wind River Indian Reservation, home to the 
Eastern Shoshone Tribe and Northern Arapaho Tribe, is located in 
central Wyoming. On February 22, 2021, the Northern Arapaho governing 
body sent a letter to the Department of the Interior to express its 
opposition to leasing moratorium because although tribes themselves are 
exempt from the moratorium, the impact on Wyoming impacts tribal 
members who are also citizens of our State. Reductions in State 
services affect tribal members, including native children attending 
Wyoming public schools funded by the State. The Northern Arapaho also 
expressed support for the nomination of Secretary Deb Haaland, who is 
the first American Indian to serve at the secretarial level of a 
Presidential Administration. As a Navajo woman, it is inspiring to see 
a native sister serving in this capacity. Unfortunately, this 
remarkable milestone of having an indigenous woman serve as an 
Executive cabinet official has been clouded by the moratorium because 
it threatens the livelihood of thousands of hardworking families in 
Wyoming and in New Mexico, Secretary Haaland's home State. I hope we 
can reverse course.
    As Wyoming continues to navigate its way out of these incredibly 
challenging economic times, we appreciate your willingness to support 
policies to promote economic recovery in rural places like Wyoming. As 
the U.S. Senate considers not only what the Federal Government should 
do to help rural America, it should discuss what the Federal Government 
should not do. Wyoming needs you to understand how Executive orders, 
signed with a stroke of a pen without congressional approval, can 
literally devastate our State's economy. We want the freedom, 
stability, and support from our Federal leaders to invest in ourselves.
    Thank you for the opportunity to present this testimony to you 
today.
                                 ______
                                 
                 PREPARED STATEMENT OF KATHLEEN SGAMMA
                   President, Western Energy Alliance
                             April 20, 2021
    Chairman Brown and Ranking Member Toomey, thank you for the 
opportunity to testify today. I'm delighted to appear before the 
Committee to talk about how the oil and natural gas industry is part of 
an economy that works for everyone and invests in rural communities, 
particularly in the West.
    Western Energy Alliance represents about 200 companies engaged in 
all aspects of environmentally responsible exploration and production 
of oil and natural gas in the Rocky Mountain West. Alliance members are 
independents, the majority of which are small businesses with an 
average of 14 employees.
    Because the West is predominated by Federal lands and lacks any 
major oil and natural gas production areas that do not contain some 
Federal mineral estate, we are the leading trade association on public 
lands issues for the industry. With few exceptions Federal oil and 
natural gas activities take place in rural areas. Ours is the primary 
industry supporting rural areas such as the Permian Basin in eastern 
New Mexico, the Uinta-Piceance Basin straddling the Utah/Colorado 
border, the Powder River Basin in northeastern Wyoming, and the 
Williston in western North Dakota.
    The American oil and natural gas industry is proud to be an 
integral part of an economy that works for everyone. We generate $1.3 
trillion in economic activity annually, and sustain 10.3 million 
American jobs, both directly and indirectly. \1\ A large portion of the 
direct jobs are in rural communities. We have saved consumers hundreds 
of billions of dollars by increasing production and making energy more 
affordable. \2\
---------------------------------------------------------------------------
     \1\ ``Impacts of the Oil and Natural Gas Industry on the U.S. 
Economy in 2015'', PWC on behalf of the American Petroleum Institute 
(API), 2017.
     \2\ ``The Impacts of Horizontal Multi-Stage Hydraulic Fracturing 
Technologies on Historical Oil Production'', International Oil Costs, 
and Consumer Petroleum Product Costs, ICF International on behalf of 
API, Oct. 30, 2014.
---------------------------------------------------------------------------
    Besides investing in rural communities and creating jobs, we also 
develop the mineral resources of rural land and mineral owners, who are 
ordinary citizens mostly of otherwise modest means. The industry 
generates over $21 billion in royalties to individual mineral owners, 
further stimulating the economies of rural communities. \3\ The Bureau 
of Indian Affairs reports that Navajo mineral owners receive about $96 
million annually in royalties. \4\ These royalties sustain 21,000 
mineral owners and their families in an impoverished region plagued by 
high unemployment. As such, the oil and natural gas industry furthers 
environmental justice goals in otherwise disadvantaged rural areas.
---------------------------------------------------------------------------
     \3\ ``Billions in Gas Drilling Royalties Transform Lives'', AP, 
January 27, 2013.
     \4\ Final Audit Report: Bureau of Indian Affairs' Federal Mineral 
Office, Office of the Inspector General, U.S. Department of the 
Interior, February 3, 2017.
---------------------------------------------------------------------------
    Conversely, President Biden in just the first week of his term 
destroyed thousands of jobs and economic opportunity in rural areas. I 
provide details below regarding the revocation of the Keystone XL 
pipeline permit and the ban on Federal leasing, which together will 
kill up to 145,700 jobs and $15.8 billion in economic activity this 
year alone, mostly in rural areas. Further, these two policies will 
deprive rural communities of their share of $3.1 billion in government 
revenues for vital services this year such as education, 
infrastructure, public health, safety, and COVID recovery. The policies 
also put at risk $2.8 billion in conservation funding sourced almost 
exclusively from the oil and natural gas industry. This committee could 
ensure investment in rural communities that works for everyone simply 
by urging President Biden to reverse these policies.
Keystone XL Pipeline
    The cancelation of the Keystone pipeline elicited this statement 
from North America's Building Trades Unions (NABTU) President Sean 
McGarvey: ``Environmental ideologues have now prevailed, and over a 
thousand union men and women have been terminated from employment on 
the project.'' \5\ The environmental lobby indeed has compelled another 
decision that is bad for the environment and public safety, as 
transporting oil by pipeline is safer and has fewer greenhouse gas 
emissions than transporting by rail and truck.
---------------------------------------------------------------------------
     \5\ North America's Building Trades Unions Statement on KXL 
Pipeline Cancellation Announcement, January 21, 2021.
---------------------------------------------------------------------------
    Besides the immediate loss of 1,000 union jobs, indirect jobs in 
hotels, restaurants, supply stores, and other small businesses in rural 
areas along the route through Montana, South Dakota, and Nebraska will 
be lost. TC Energy signed $1.6 billion in contracts with suppliers that 
would have supported up to 11,000 jobs in 2021 had it not been for 
President Biden's action. \6\ That investment will not be easily 
replaced in these States, and certainly not with vague promises of 
green jobs that have yet to materialize.
---------------------------------------------------------------------------
     \6\ TC Energy Awards More Than $1.6 billion in American Contracts 
to Build Keystone XL, Project to Create Over 8,000 Union Jobs in 2021
---------------------------------------------------------------------------
Federal Onshore Leasing Ban
    Likewise, the leasing ban on Federal lands and waters signed on 
January 27th will kill jobs and economic opportunity in rural areas of 
the West and coastal communities along the Gulf of Mexico. \7\ Many 
rural counties with majority Federal land ownership would be devastated 
by a complete ban on Federal oil and natural gas. By losing their 
economic base, previously sustainable rural communities become newly 
disadvantaged. And the jobs lost would impact blue-collar jobs held by 
a diverse workforce.
---------------------------------------------------------------------------
     \7\ Executive Order 14008 on Tackling the Climate Crisis at Home 
and Abroad, January 27, 2021.
---------------------------------------------------------------------------
    The ban on onshore leasing alone will kill 32,700 jobs this year, 
growing to 58,676 jobs destroyed annually by the end of President 
Biden's term. \8\ Similarly, $4.95 billion in Gross Domestic Product 
(GDP) and $1.3 billion in tax revenue lost in the first year will grow 
to $33.5 billion and $8.3 billion lost, respectively, by the end of his 
term. The economic impact will be felt primarily in rural communities 
in the eight Western States that represent over 97 percent of Federal 
onshore oil and natural gas production.
---------------------------------------------------------------------------
     \8\ ``The Fiscal and Economic Impacts of Federal Onshore Oil and 
Gas Lease Moratorium and Drilling Ban Policies'', Dr. Timothy J. 
Considine, University of Wyoming on behalf of the Wyoming Energy 
Authority, December 14, 2020.
---------------------------------------------------------------------------
    Although the ban is characterized as a ``pause'' on just new 
leasing, the Executive order directs a wide-ranging analysis of all 
Federal oil and natural gas exploration and production activities, not 
just leasing.
    The comprehensive review will be a years-long analysis with the 
ultimate goal of stopping or at least severely curtailing all oil and 
natural gas development on new and existing leases. If taken to the 
ultimate goal of banning all Federal onshore oil and natural gas, by 
2040 annual job losses would be 351,554 and the cumulative losses over 
20 years would total $300 billion in wages, $670.5 in GDP and $159 
billion in State tax revenues. Rural communities in the West will bear 
the brunt as funding for education, roads, public safety, and other 
vital services dries up.
    The impacts of the President's leasing ban accumulate quickly in 
the first year because of the complex nature of Federal development and 
the interlocking land and mineral ownership of the West. The leasing 
ban is already affecting existing projects awaiting adjacent leases. It 
will affect Indian, State, and private horizontal wells that cannot 
avoid Federal minerals that lie along their laterals. New Federal 
leases are necessary to move forward with projects on existing leases 
in both these common situations. By isolating adjacent lands, a blanket 
Federal leasing ban affects development of tribal and Indian allottee 
lands, despite the reassuring statement that the ``order does not 
restrict energy activities on lands that the United States holds in 
trust for Tribes.'' Companies cannot efficiently develop pockets of 
tribal and Indian minerals isolated amongst Federal lands, and the 
energy tribes that wish to develop their oil and natural gas resources 
will be negatively impacted. Depriving the energy tribes of their 
primary source of economic activity is contrary to environmental 
justice goals and ensuring a fair economy that works for everyone.
    Duchesne County, Utah, is a good example of a western rural 
community that will be adversely affected. The county is the size of 
Rhode Island and home to 20,000 people. Its land surface is comprised 
of 65 percent Federal and 18 percent Uintah and Ouray Indian 
Reservation. \9\ The county and Ute Indian Tribe rely heavily on oil 
and natural gas development, which is why both came out strongly in 
support of oil and natural gas development on Federal and tribal lands. 
\10\
---------------------------------------------------------------------------
     \9\ ``Duchesne County Resource Assessment'', USDA Natural 
Resources Conservation Service, August 2005.
     \10\ See the Duchesne County Commission resolution and Ute Indian 
Tribe letter available on our Western Voices page.
---------------------------------------------------------------------------
    There are similar rural counties across the West that have a 
majority of public lands and a similar reliance on oil and natural gas, 
such as Rio Blanco, Colorado (75 percent Federal lands, 85 percent 
county revenue from oil and natural gas), \11\ and Sweetwater County, 
Wyoming (90 percent of the budget comes from fossil fuel taxes.) \12\ 
Rural communities in the Permian Basin of eastern New Mexico and the 
San Juan Basin in the northwest will likewise bear a heavy economic 
cost if the leasing ban remains in place. Because 63 percent of New 
Mexico's production is Federal and the State stands to lose $709 
million in education funding from just a 10 percent decline in 
production, Governor Michelle Lujan Grisham has opposed the leasing 
ban. \13\
---------------------------------------------------------------------------
     \11\ Testimony of Rio Blanco County Commissioner Shawn Bolton 
before the House Committee on Natural Resources, April 20, 2016.
     \12\ ``Facing a Reckoning, Wyoming Wrestles With a Transition From 
Fossil Fuels'', NPR, February 10, 2021.
     \13\ Governor Lujan Grisham's letter to President Biden, March 15, 
2021.
---------------------------------------------------------------------------
Federal Offshore Leasing Ban
    Although Western Energy Alliance represents the landlocked Rocky 
Mountain West, I point the Committee to a study by the National Ocean 
Industry Association (NOIA) that finds the offshore leasing ban will 
kill 102,000 jobs, $9.2 billion in GDP, and $1.8 billion in government 
revenue annually. \14\ Further, $300 million that would otherwise go in 
the Land and Water Conservation Fund (LWCF) will be lost. Offshore oil 
and natural gas royalty and leasing revenue is the sole source of 
revenue for the LWCF.
---------------------------------------------------------------------------
     \14\ ``The Economic Impacts of the Gulf of Mexico Oil and Natural 
Gas Industry5'', Energy & Industrial Advisory Partners on behalf of 
NOIA.
---------------------------------------------------------------------------
Conservation Funding
    Conservation is an impact that I do not believe President Biden was 
advised of before he signed the order banning Federal leasing. Under 
the Great American Outdoors Act (GAOA) passed by Congress in an 
overwhelming bipartisan fashion last summer, $1.9 billion annually, 
predominantly from Federal oil and natural gas leasing and royalty 
revenue, is available for conservation and infrastructure in national 
parks, national wildlife refuges, Bureau of Land Management lands, and 
Bureau of Indian Affairs schools. The act also permanently funds the 
LWCF to the tune of $900 million annually for the first time in its 56-
year history.
    Since the Federal oil and natural gas program is almost exclusively 
the source of this funding, President Biden is risking $2.8 billion 
annually for national park and public lands conservation and 
infrastructure. That funding could support 108,364 jobs in rural 
communities near national parks and other public lands across the 
entire country. \15\ Interior Secretary Haaland just announced the 
distribution of $1.6 billion this year from GAOA funds, \16\ including 
to State recipients that do not contribute oil and natural gas royalty 
revenue: \17\
---------------------------------------------------------------------------
     \15\ ``Restoring Parks, Creating Jobs'', The Cadmus Group on 
behalf of Pew Charitable Trusts, June 2019.
     \16\ ``Interior Invests $1.6 Billion To Improve Infrastructure on 
Public Lands and Tribal Schools'', Department of the Interior Press 
Release, April 2, 2021.
     \17\ ``National Park Deferred Maintenance Needs'', The Pew 
Charitable Trusts, November 11, 2020.

---------------------------------------------------------------------------
    Virginia--$247.5 million

    North Carolina--$153.8 million

    New York--$50.5 million

    Washington--$50.3 million

    New Jersey--$28.3 million

    Massachusetts--$25.4 million

    Oregon--$12.5 million

    Western Energy Alliance urges the Committee to help us convince the 
President to overturn these policies that disproportionately impact 
rural communities in the West. We ask that you also consider the 
conservation impact across the entire country. Thank you.
        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                  FROM WILLIAM J. (BILL) BYNUM

Q.1. In your written testimony, you noted your support of the 
Congressional Review Act resolution to reverse the OCC's ``True 
Lender'' rule. Can you please describe the ways in which that 
rule, if allowed to go into effect, would impact the 
communities your institution serves?

A.1. Given the experiences of our members, the OCC ``true 
lender'' rule if allowed to go into effect would add to the 
burdens of high-cost lending in our region. In all five Deep 
South States, high-cost lenders, such as payday and car title 
lenders, are already saturating our communities. For example, 
in 2017 in Tennessee, there were over 1,200 payday loan 
storefronts, more than McDonald's and Walmart locations 
combined. \1\ In terms of fees drained by payday and car title 
lenders, Mississippi, Alabama, Louisiana, and Tennessee are in 
the top 10 States, and high-cost lenders drain more than $1.6 
billion every year from low-income borrowers in these four 
States. \2\
---------------------------------------------------------------------------
     \1\ Metro Ideas Project, ``Fighting Predatory Lending in 
Tennessee'', 2017 https://metroideas.org/projects/fighting-predatory-
lending-in-tennessee/.
     \2\ Center for Responsible Lending, ``Payday and Car-Title Lenders 
Drain Nearly $8 Billion in Fees Every Year'', April 2019, https://
www.responsiblelending.org/sites/default/files/nodes/files/research-
publication/crl-statebystate-fee-drain-apr2019.pdf.
---------------------------------------------------------------------------
    The rule would facilitate lenders' evasion of Arkansas' 
voter-affirmed Constitutional interest rate limits of 17 
percent, a protection which saves over $137 million in year in 
fees otherwise drained by high-cost lenders. \3\ The benefits 
of Arkansas's law are documented in a recent report about how 
borrowers are faring several years after the enforcement of the 
rate cap. As one person said, they are doing ``[m]uch better 
financially. \4\ You don't continue to repeat the vicious 
cycle.'' \5\ Beyond Arkansas, other State law protections in 
our region are at risk, such as but not limited to, Louisiana's 
rate cap for consumer installment loans. In recent years, 
payday lenders and high-cost lenders have made attempts to move 
legislation that would undue these caps in Arkansas and 
Louisiana, but thankfully, these efforts have failed to gather 
the support needed by the respective State legislatures to come 
to fruition. The OCC must not override the policy decisions of 
the States as it is doing with this rule.
---------------------------------------------------------------------------
     \3\ Arkansas Constitution of 1874 Amendment 89, 3. Maximum 
interest rate on other loans. https://codes.findlaw.com/ar/arkansas-
constitution-of-1874/ar-const-amend-89-sect-3.htm.
     \4\ Center for Responsible Lending, ``Shark-Free Waters: States 
Are Better Off Without Payday Lending'', April 2019, https://
www.responsiblelending.org/research-publication/shark-free-waters-
states-are-better-without-payday-lending.
     \5\ Southern Bancorp, ``Into the Light: A Survey of Arkansas 
Borrowers Seven Years After State Supreme Court Bans Usurious Payday 
Lending Rates'', May 2, 2016, https://banksouthern.com/sbcp/into-the-
light/.
---------------------------------------------------------------------------
    HOPE's concerns about the harms of these loans are not 
hypothetical. HOPE members have been trapped by loans 
facilitated by rent-a-bank partnerships, putting their economic 
success in jeopardy and thus frustrating our mission to build 
wealth among low-income communities and communities of color in 
the Deep South. From our members' experiences, at least three 
key themes of harmful lending practices emerge:

    Despite claims to the contrary, rent-a-bank loans 
        are going to people who already have credit.

    Rent-a-bank loans are deepening people's financial 
        burdens, not relieving them.

    There is a clear disregard for borrowers' ability 
        to repay, evidenced either by making new loans when 
        someone is already struggling with another and repeat 
        relending or refinances.

    These harms are neither exclusive nor exhaustive. We hear 
first-hand from our members and people in the communities where 
our branches are located about the troubles caused by 
unaffordable high-cost loans, such as difficulty paying other 
bills, the psychological stress caused by unaffordable debt, 
and the subsequent inability to build wealth in the future.
    The devastating financial consequences of loans made via 
the rent-a-bank arrangements would be troubling for anyone, but 
they are particularly pronounced in the Deep South, where 
economic inequality is deeply entrenched and persistent poverty 
is prevalent. The five States of our region all have higher 
rates of unbanked and underbanked populations than the national 
average. The high-cost loans that will occur through the OCC 
``true lender'' rule will only serve to increase these rates as 
people are exposed to practices that ultimately damage their 
financial standing.

Q.2. In response to questioning from Chairman Brown, you spoke 
of the ``devastating rules put in place by the OCC'' related to 
the Community Reinvestment Act. Please describe how this 
current rule would impact access to credit for families of 
color and what improvements can be made as the agencies revisit 
the CRA rulemaking in the coming months.

A.2. The Community Reinvestment Act (CRA) has long been a 
vital, though imperfect, tool for lessening financial service 
gaps in low-income communities, rural communities, and 
communities of color in the Deep South. The ability to attract 
and leverage CRA-accountable investment has been critical to 
HOPE's work on behalf of to support underbanked people and 
communities. Building on this experience, HOPE's 
recommendations focus on significantly increasing lending, 
services, investment and accountability by banks in meeting the 
financial service needs of rural, high poverty areas.
    The OCC's final CRA rule in the totality of its parts, 
essentially moves the CRA--and economic opportunity for our 
communities--further out of reach in the Deep South communities 
we serve. The change to dollar value rather than number for 
measuring community development activities will incentivize 
fewer, larger projects potentially reducing the smaller, more 
intensive investments that Deep South communities so often 
need. This, combined with a multiplier and a low threshold for 
Community Development Activities would actually result in fewer 
CDFI investments. A proposed balance sheet evaluation, would 
allow banks to count investments that are already on their 
books, year after year, with little regard to recent or new 
investments over time.
    A reduction of bank investments will result in a 
significant reduction of capacity for CDFI credit unions, loan 
funds, and banks to lend in low-income communities and 
communities of color, particularly those not reached by banks. 
CRA-motivated bank investments are a significant source of CDFI 
capital. To understand the importance of bank investments in 
CDFI capitalization, HOPE analyzed information reported by CDFI 
Fund awardees to the U.S. Treasury. Based on HOPE's analysis of 
CDFI Fund Awardees from 2015 to 2017, bank investments 
accounted for nearly 20 percent of total capitalization--
essentially $1 out of every $5 dollars of capital--compared to 
philanthropy which accounted for about 2 percent. \6\ CRA-
motivated investments by banks into CDFIs are vital; however, 
the benefit of this capital is not evenly or equitably shared. 
In FY2017, there were 315 CDFI Fund awardees. Even though 
minority-owned CDFIs accounted for 27 percent of these CDFIs, 
they held only 11 percent of the total $34 billion in bank-
infused capital held. White-led CDFIs, accounted for 66 percent 
of CDFI Fund awardees, and held 89 percent of that bank-infused 
capital. \7\
---------------------------------------------------------------------------
     \6\ Bill Bynum and Diane Standaert, Comments to the OCC, Notice of 
Proposed Rulemaking, Community Reinvestment Act Regulations, Docket ID 
OCC-2018-0008, RIN 3064-.AF22, April 8, 2020, available at http://
hopepolicy.org/blog/hope-opposes-proposed-changes-to-the-community-
reinvestment-act/.
     \7\ Capital held, as required to be reported to the CDFI Fund for 
CDFI Fund awardees, represents the amount of investment capital 
received from the CDFI Fund at reporting end. Investment capital 
includes idle capital that is available to lend and invest, deployed 
capital, and capital only reflected on the organization's balance 
sheet. CDFIs are required to designate the capital investments by 
source, and in this analysis, we use ``cap-Bank'' designation, which is 
capital ``received by banks or other regulated financial institution.'' 
Community Development Financial Institutions Fund. ``CDFI Institution 
Level Report Instructions CIIS 15.0''. Pp. 9-11.
---------------------------------------------------------------------------
    Another troubling element of the OCC rule is the use of 
deposit-only thresholds to determine new assessments areas 
beyond the banks' physical location. HOPE's analysis has shown 
that the deposit-only metric will bypass already underserved 
communities, such as persistent poverty communities and 
communities of color, thereby, again, reducing bank incentive 
for investment in these areas. By their very nature, low-income 
communities have very little money and therefore very few 
deposits. The small Delta town of Itta Bena, Mississippi, where 
HOPE is the only depository institution, provides a good 
example. Itta Bena has a 42 percent poverty rate, median income 
of about $20,000, and 91 percent of its residents are Black. 
HOPE estimates the total deposit potential in Itta Bena is 
approximately $1.1 million. It will be nearly impossible for 
such areas to meet a deposit-based threshold to qualify as a 
new assessment area under the OCC's rule.
    Ultimately, the OCC's overhaul of the CRA will move this 
tool for incentivizing bank investment in distressed 
communities further out of reach of the most financially 
distressed places in the Deep South, ultimately widening 
existing racial and economic inequality. HOPE supports the 
Congressional Review Act and other efforts to roll back the 
OCC's CRA rule.
    By contrast, as described further in HOPE's comments to the 
Federal Reserve Board of Governor regarding its CRA proposal, a 
reformed CRA should explicitly state and work towards an 
objective of significantly expanding--as much as three fold--
bank lending, services and investment in low-income communities 
and communities of color. \8\ In addition to increasing the 
amount of bank activity, a reformed CRA must also ensure these 
investments actually reach people and communities that have 
both been historically underserved and divested of their 
resources. A key way the CRA can help do this is to expand 
assessment areas beyond banks' physical locations, and to 
delineate those assessment areas based on both deposit and 
lending activity. Another strategy incentivizes investments 
into designated areas of need, based on low levels of per 
capita mortgage and small business lending. These designated 
areas of need could be both inside and outside of a bank's 
assessment area. And, finally, the CRA should incent and guide 
investments into CDFIs and MDIs with strong, demonstrated track 
records of reaching underserved communities, particularly rural 
persistent poverty communities and communities of color. One 
way the CRA can do this is to adopt into its framework, the 
definition of ``minority lending institutions,'' as defined by 
the Consolidated Appropriations Act of 2021.
---------------------------------------------------------------------------
     \8\ Bill Bynum, Diane Standaert, and Sara Miller, Comments to the 
Federal Reserve Board of Governors, Advance Notice of Proposed 
Rulemaking, Community Reinvestment Act Regulations, Docket No. R-1723 
and RIN 7100-AF94, Fed. 16, 2021, available at http://hopepolicy.org/
blog/hope-submits-comment-to-federal-reserves-proposed-changes-to-the-
community-reinvestment-act/.
---------------------------------------------------------------------------
    Race should be included in the specific metrics by which 
banks are evaluated for CRA purposes. Race is inextricable from 
the CRA's history, purpose, and the ``ongoing systemic inequity 
in credit access for minority individuals and communities.'' 
Currently, more than 98 percent of banks pass their CRA exam, 
despite the glaring racial and economic inequities in the 
banking system.
    The racial wealth gap is deep, and the economic and social 
benefits of closing it are vast. The financial system, 
particularly banks' lending practices, has been a driving 
factor in this gap, and must play a significant role in closing 
it. Closing the gap in access to capital for people and 
communities of color is a critical pathway to closing the 
racial wealth gap. Lenders and communities alike will benefit 
from the resulting economic activity from a fairer, more robust 
marketplace. The CRA can be a helpful tool in guiding banks' 
actions to ensure they repair, rather than repeat, centuries of 
racial and economic inequality.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                  FROM WILLIAM J. (BILL) BYNUM

Q.1. In your testimony, you advise the Small Business 
Administration and banks to increase the accessibility of their 
programs and products to historically underserved businesses. 
In addition to your recommendation of increasing investment in 
CDFIs and MDIs, what other specific strategies and practices 
would you recommend to ensure SBA and bank products have more 
equitable reach and serve the underserved?

A.1. There are a number of things SBA and banks can to increase 
access to historically underserved businesses.
    A few of these options include:

    Ensure redress for small businesses that did not 
        receive the full benefit of Paycheck Protection Loans, 
        namely Schedule C filers. As described in my written 
        testimony, microbusinesses in which the owner is the 
        only employer were both locked out of the PPP program 
        during its first full week, and even once provided 
        access received unnecessarily small loans due to 
        underwriting guidelines requiring the use of net profit 
        rather than gross income. This exclusion these 
        microbusinesses in accessing PPP relief efforts 
        disproportionately affected small businesses owned by 
        people of color. For example, 96 percent of Black and 
        Latino-owned businesses in the Deep South fall into 
        this category, compared to 84 percent of White-owned 
        businesses. \1\ SBA should implement efforts to assess 
        the scope of this inequity and seek to deploy a grant 
        program available to these microbusinesses.
---------------------------------------------------------------------------
     \1\ ``Hope Policy Institute Analysis of Statistics for Non-
Employer Firms by Industry, Sex, Ethnicity, Race, and Veteran Status 
for the U.S. States, and Metro Areas: 2017'', Annual Business Survey 
Program.

    SBA should, across all of its grant and loan 
        programs, establish goals to ensure at least 10 percent 
        of its capital flows to persistent poverty communities, 
        and at a minimum evaluate the amount of loans and 
        grants are flowing to these communities, disaggregated 
---------------------------------------------------------------------------
        by rural and metro persistent poverty counties.

    SBA must do must to ensure its programs reach Black 
        businesses, the level of lending to which is currently 
        unacceptable. For example, in Arkansas, for example, 
        from 2017 to 2020, just 1.5 percent in SBA 7(a) loans 
        went to Black businesses, even though Black-owned 
        businesses comprise 9 percent of businesses in the 
        State. \2\ Nationally, between 2015 and 2020, 28 
        percent of approved 7(a) loans went to minority-owned 
        businesses. \3\ However, when looking at Black 
        businesses alone just 2.5 percent of approved SBA 7(a) 
        loan capital went to Black borrowers ($3.7 billion out 
        of $144 billion). These levels are woefully in adequate 
        in light of a long-history of discriminatory and 
        exclusionary lending practices effecting Black 
        borrowers, communities, and businesses.
---------------------------------------------------------------------------
     \2\ Precise Data Consulting, LLC, ``Arkansas Small Business Access 
to Capital Study'', prepared for Winthrop Rockefeller Foundation and 
Winrock International, June 2019, https://
d2yzrxf02jgvo7.cloudfront.net/files/capital?access-report-final-146-
7ecf.pdf.
     \3\ SBA, ``Weekly Approvals Report With Data as of 09/30 for Each 
FY'', https://www.sba.gov/sites/default/files/2020-10/WebsiteReport-
asof-20200930-508.pdf.

    Banks should commit to tripling their current 
        levels of small business lending, services, and 
        investments into historically underserved businesses, 
        such as those owned by people of color and small 
---------------------------------------------------------------------------
        businesses located in persistent poverty communities.

    Banks, and other lenders, should support the 
        expedient implementation of the Consumer Financial 
        Protection Bureau's rulemaking under Section 1071 of 
        the Dodd-Frank Wall Street Reform and Consumer 
        Protection Act. Robust and transparent data reporting 
        by lenders about the their small business lending 
        practices, particularly by race and gender, are 
        critical to ensuring a fair marketplace and closing 
        existing capital gaps for historically underserved 
        businesses.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                  FROM WILLIAM J. (BILL) BYNUM

Q.1. Thank you, Chairman Brown, for holding this important 
hearing focused on our rural communities. I recently did a tour 
across rural Southwest Georgia with Congressman Sanford Bishop 
to visit with my farmers. At every stop, I asked these farmers 
about their broadband connectivity. Many attendees on this tour 
said their connection was either spotty or too expensive. 
Considering the State overall, approximately 10 percent of 
Georgians live in areas where there is no broadband connection 
and almost 39 percent of Georgians live in an area where there 
is only one internet provider. Issues with broadband access and 
affordability prevent rural communities from fully accessing 
telehealth services, participating in virtual learning, and 
connecting to e-commerce opportunities.
    Mr. Bynum you also mentioned broadband in your written 
testimony, referring to it as ``critical infrastructure'' that 
is connected to economic mobility. How can access to a reliable 
and affordable broadband connection affect the economic 
mobility of families in rural communities? If Congress were to 
make significant investments in the expansion of rural 
broadband, how would this impact the economic mobility of 
families in rural communities?

A.1. Substantial investments in broadband infrastructure will 
increase the financial inclusion of rural communities, both in 
increasing access to basic financial needs for individuals and 
small businesses, but also in the opportunity to create jobs 
and attract additional investments in to these areas.
    Even before COVID, affordable high-speed internet was rural 
communities' lifeline to basic needs, such as education or 
online bill paying. This became even more essential during the 
pandemic. Deep South rural communities have less access than 
rural areas in the U.S. as a whole, thus disproportionately 
hindering their access to life saving services or basic 
infrastructure to grow their business. Table 1. Roughly 40 
percent of rural residents of Arkansans, Louisiana, and 
Mississippi, lack the most basic level of broadband access, 
compared to 25 percent of rural residents nationally.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    This broadband gap matters for understanding the reach of 
financial services into these communities, underscoring the 
importance of bank branches and recognizing that online 
technology alone will not close the gaps in financial access. 
It also matters for assessing whether and how COVID-19 relief 
dollars will reach these communities, as many assistance 
programs, from rent relief to small business relief, require 
internet access to both apply for and receive the funds. 
Finally, given the proliferation of e-commerce and other 
digital enterprises, the absence of high-speed internet limits 
the full participation of rural communities in both the U.S. 
and global economy.
---------------------------------------------------------------------------
     \4\ https://crsreports.congress.gov/product/pdf/RL/RL30719/101 
(December 2017 data, minimum speed of 25 Mbps/3 Mbps).
---------------------------------------------------------------------------
    Many low-income and rural communities have been caught in 
generations-long cycles of poverty and have little equity on 
which to build. More communities need access to prime market 
lending in order to sustain and build wealth.

Q.2. Please highlight some of the challenges unbanked and 
underbanked face as it relates to building wealth and a solid 
financial foundation for growth, in the absence of equity. 
Please include any legislative reforms that could help these 
communities accrue equity and a foundation for financial 
success.
    For a host of reasons, including online and technology-
enabled banking, we have seen an apparent acceleration of 
banking sector consolidation, and retrenchment of bank 
branches, leaving what is commonly referred to as banking 
deserts. What can we learn as we grapple with the emergence of 
banking deserts today, from your research into the 
circumstances and outcomes of those who live lived in banking 
deserts decades ago, enabled by Jim Crow laws?

A.2. Much of the Deep South is considered a banking desert. For 
example, of the 20 largest banks in the Southeast, analysis 
conducted by the Federal Reserve Bank of Atlanta, found that 
only one bank has branches in the Mississippi Delta. \5\ In the 
absence of branches, large bank Community Reinvestment Act 
assessment areas fail to reach into rural communities--limiting 
another source of capital for redevelopment. \6\ As currently 
structured, absent a physical location in the community, a bank 
has no obligation to lend or invest there. This means 
communities in banking deserts, such as those in the Deep 
South, have harder time attracting the resources needed to 
finance community needs such as affordable housing, hospitals, 
museums, or other job-creating activities. Analysis conducted 
by the Opportunity Finance Network underscores this phenomenon 
with Community Development Financial Institutions. In looking 
specifically at rural Community Development Financial 
Institutions (CDFIs), only 31 cents of every dollar borrowed by 
rural CDFIs came from a bank. In contrast, over half of 
borrowed funds from urban CDFIs came from banks. \7\ Rural 
communities also bear the heaviest burden of bank closures and 
within rural communities those bank closures most likely to 
occur in communities with a higher share of Black residents. 
\8\
---------------------------------------------------------------------------
     \5\ Federal Reserve Board of Atlanta, ``Community Reinvestment 
Act: Geographies and Strategies in the Southeast'', Aug. 2015, https://
www.atlantafed.org/community-development/publications/partners-update/
2015/04/150824-cra-geographies-and-strategies-in-southeast (accessed 
Apr. 18, 2021).
     \6\ Housing Assistance Council, CRA in Rural America, ``CRA in 
Rural America'', 2015, http://www.ruralhome.org/sct-information/mn-hac-
research/mn-rrr/1090-rrr-cra-in-rural-america.
     \7\ Opportunity Finance Network, ``Bank Investment Falls Short in 
Rural America'', Feb. 2020, available at https://ofn.org/advocacy-
tools-and-fact-sheets.
     \8\ Board of Governors of the Federal Reserve System, 
``Perspectives From Main Street: Bank Branch Access in Rural 
Communities'', Nov. 2019, https://www.federalreserve.gov/publications/
files/bank-branch-access-in-rural-communities.pdf.
---------------------------------------------------------------------------
    One natural consequence of this trend is that the Deep 
South is home to the highest rates of unbanked households in 
the country. Even though nationally, the unbanked rate is the 
lowest it has been since the Great Recession (5 percent), for 
Black households in Mississippi and Louisiana, the rate is over 
20 percent. \9\ Likewise, for rural communities the Deep South 
rate is higher than rates nationally (Table 1). Notably, over 
40 percent of the population in Louisiana and Mississippi's 
rural counties are people of color. \10\
---------------------------------------------------------------------------
     \9\ FDIC, ``2019 How America Banks: Household Use of Banking and 
Financial Services'', available at www.economicinclusion.gov.
     \10\ U.S. Census Bureau, American Community Survey, 2017.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Finally, mass incarceration plays a role here too. As 
explored further in HOPE's recent paper, ``Examining the 
Intersection Between Criminal Justice and Financial Services in 
the Deep South'', four out five Deep South States are in the 
top 10 States with the highest incarceration rates in the 
county. \11\ Many of these same communities already experience 
high rates of unbanked and underbanked households. See Map 1. 
As just one example of the intersection of these two systems 
which contribute to financial exclusion: people reentering 
society often do not have even the basic identification in 
order to open a bank account. This is either because they are 
not provided one upon reentry or because that identification, 
such as a driver's license, is taken away as a penalty for 
unpaid criminal justice debt.
---------------------------------------------------------------------------
     \11\ Calandra Davis, ``Examining the Intersection Between Criminal 
Justice and Financial Services in the Deep South'', Hope Policy 
Institute, Jan. 13, 2021, http://hopepolicy.org/manage/wp-content/
uploads/Criminal-JusticePaper.pdf.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    These communities face not just an absence of financial 
capital, but also contend with predatory lending practices, 
which extract it. Payday and car title lenders extract over 
$1.6 billion in fees annually from Deep South residents trapped 
in loans with annual interest rates region as high as 500 
percent. \12\ Rent-a-bank arrangements in which online lenders 
partner with out-of-State banks to subvert State consumer 
protection laws to make high-cost loans in the region also 
impose high costs on the region's residents. \13\ Strong 
consumer protections a such as a Federal 36 percent rate-cap, 
repealing the OCC's true lender rule, and strong rules by the 
Consumer Financial Protection Bureau, will ensure support 
people's financial stability by halting this billion-dollar fee 
drain from already economically distressed communities.
---------------------------------------------------------------------------
     \12\ Asset Center for Responsible Lending, ``Payday and Car-Title 
Lenders Drain Nearly $8 Billion in Fees Every Year'', April 2019, 
https://www.responsiblelending.org/sites/default/files/nodes/files/
research-publication/crl-statebystatefee-drain-apr2019.pdf.
     \13\ Hope Policy Institute, ``HOPE Submits Comments Opposing OCC 
True Lender Rule'', Sept. 2, 2020, http://hopepolicy.org/blog/hope-
submits-comments-opposing-occ-true-lender/.
---------------------------------------------------------------------------
    As described further in my coauthored paper, ``Opening 
Mobility Pathways by Closing the Financial Services Gap'', 
strengthening investments into community development financial 
institutions (CDFIs) and establishing universal basic accounts 
for all Americans are cornerstones of a national strategy to 
ensure economic opportunity. \14\ As noted in the paper,
---------------------------------------------------------------------------
     \14\ Bill Bynum, Ed Sivak, and Diana Elliot, ``Opening Mobility 
Pathways by Closing the Financial Services Gap'', U.S. Partnership from 
Mobility to Prosperity, Feb. 2018, https://www.mobilitypartnership.org/
opening-mobilitypathways-closing-financial-services-gap.

        encouraging or requiring all financial institutions 
        that receive Federal deposit insurance to offer all 
        customers a ``universal basic account,'' a free account 
        that is simple, transparent, and does not charge 
        overdraft or other hidden fees. The accounts would 
        ensure that all low-income Americans have access to the 
        financial tools and consumer protections inherent in 
        the banking system, and they would mitigate the impact 
        of high-cost and abusive financial practices. These 
        safe, affordable bank accounts could save the 15.6 
        million Americans adults who currently lack access to 
        such a service hundreds of dollars a year and tens of 
        thousands of dollars over their lifetimes. This money 
        could go toward food, housing, and other basic needs. 
        The savings would help millions of Americans better 
        serve as their own safety net, potentially decreasing 
---------------------------------------------------------------------------
        the need for public assistance.

    In short, these unbanked/underbanked rates represent 
opportunity gaps that, if closed can provide a pathway for 
economic mobility and resiliency. They signal the opportunity 
to savings billions in dollars of fees, and greater control of 
finances, and importantly a pathway for building wealth and 
economic opportunity in the region.
    One final solution for building equity includes the 
expansion of Down Payment Assistance programs. Given the well-
documented extent of the racial wealth gap, the widening of the 
gap through disparate intergenerational wealth transfers and 
the role of home ownership in building wealth for most 
Americans, downpayment assistance grants represent a proven 
strategy for overcoming barriers to home ownership when the 
structural absence of savings prevents a person of color from 
obtaining a mortgage. \15\
---------------------------------------------------------------------------
     \15\ Urban Institute ``An Essential Role for Down Payment 
Assistance in Closing America's Racial Homeownership and Wealth Gaps'', 
April 2021, An Essential Role for Down Payment Assistance in Closing 
America's Racial Homeownership and Wealth Gaps (urban.org).
---------------------------------------------------------------------------
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                      FROM STACY MITCHELL

Q.1. Your written testimony mentioned the role of financial 
consolidation in depriving rural communities of capital and 
investment. Last year, the Department of Justice solicited 
comments on updating its Bank Merger Review Guidelines and 
suggested that it intended to weaken those guidelines even 
further by loosening the existing concentration thresholds that 
are used to determine whether a merger would have an 
anticompetitive effect in a certain geographic market.
    Do you believe the current DOJ Bank Merger review process 
has sufficiently protected rural communities from the negative 
effects of financial sector concentration?

A.1. Rural communities have suffered as the financial industry 
has undergone seismic consolidation over the past 40 years. 
Consolidation has had outsized impacts in low- to moderate-
income communities, including many rural communities, 
increasing the cost and reducing the availability of credit to 
farmers, small businesses, and other borrowers, exacerbating 
existing inequality. \1\
---------------------------------------------------------------------------
     \1\ See, e.g., Comment of FTC Commissioner Rohit Chopra and 
Professor Jeremy C. Kress to the U.S. Department of Justice, November 
4, 2020.
---------------------------------------------------------------------------
    Survey data from the Board of Governors of the Federal 
Reserve System suggests that ``banking customers in rural areas 
may be harmed if mergers in rural areas are treated more 
leniently,'' and that rural communities have reported higher 
costs to access financial services in part because branch 
closures ``reduce rural consumers' choice alternatives and 
increase rural banks' market power.'' \2\ The DOJ's permissive 
approach to bank mergers has exacerbated the loss of bank 
branches in rural areas and around the country.
---------------------------------------------------------------------------
     \2\ ``How Do Rural and Urban Retail Banking Customers Differ?'' 
David Benson, Serafin Grundl, and Richard Windle, FEDS Notes, June 12, 
2020.
---------------------------------------------------------------------------
    For example, regulators including the DOJ's Antitrust 
Division approved the merger between SunTrust and BB&T in 2019. 
The merger was conditioned on the sale of 28 branches. As of 
2020, however, the merged company had closed 175 branches and 
planned to close at least 800 branches in the coming years. \3\ 
In March, the DOJ and bank regulators approved the merger of 
TCF Financial and Huntington Bancshares, conditioned on the 
divestment of 14 branches; those companies say they will 
shutter nearly 200 branches postmerger. \4\
---------------------------------------------------------------------------
     \3\ ``Back to Basics: The Principles of Bank Merger Review'', 
Christopher E. Rhodes Jr., North Carolina Banking Institute 273 (2020)
     \4\ ``Huntington, TCF To Close 198 Branches for Planned Merger'', 
J.C. Reindl, Detroit Free Press, January 26, 2021

Q.2. I agree with FTC Commissioner Chopra and Professor Kress 
that the current DOJ Bank Merger review processes ``are 
woefully inadequate to protect consumers and the broader 
economy,'' particularly in rural and low-income areas, and that 
the current guidelines ``have failed to protect U.S. consumers 
and businesses from the negative consequences of bank 
consolidation.'' \5\
---------------------------------------------------------------------------
     \5\ Comment of FTC Commissioner Rohit Chopra and Professor Jeremy 
C. Kress to the U.S. Department of Justice, November 4, 2020.
---------------------------------------------------------------------------
    Do you believe that the merger review process can be 
strengthened so that bank mergers occur only when they are in 
the public interest? If so, do you have any specific 
recommendations for ways these guidelines can be improved.

A.2. Reviews of bank mergers can and should be strengthened to 
ensure they serve the interest of depositors, borrowers, and 
the overall public. One way to help eliminate harmful mergers 
and slow further industry consolidation would be to lower the 
current deposit share cap for bank mergers. Under current law, 
a bank merger is barred if the combined bank would hold more 
than 10 percent of the country's deposits. This current cap has 
already allowed banks to expand to dangerous proportions. This 
threshold could be lowered or changed to a significantly 
smaller portion of GDP in order to prevent further 
consolidation.
    The current Herfindahl-Hirschman Index screen of 1800/200 
concentration ratio has not prevented banking mergers that have 
led to significant consumer and economic harm. This threshold 
could be lowered to better screen for harmful mergers, 
particularly in rural communities and elsewhere without access 
to robust banking competition.
    Another, stronger approach would be for the DOJ should 
implement bright-line structural thresholds for rural banking 
mergers to prevent communities from losing access to financial 
resources through mergers.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                      FROM STACY MITCHELL

Q.1. Many low-income and rural communities have been caught in 
generations-long cycles of poverty and have little equity on 
which to build. More communities need access to prime market 
lending in order to sustain and build wealth.
    Please highlight some of the challenges unbanked and 
underbanked face as it relates to building wealth and a solid 
financial foundation for growth, in the absence of equity. 
Please include any legislative reforms that could help these 
communities accrue equity and a foundation for financial 
success.

A.1. People who are unbanked or underbanked often must rely on 
high-cost, predatory alternatives, such as check-cashing 
outlets and high-cost online lenders. This further exacerbates 
poverty, and makes it impossible to build the savings and 
credit needed to purchase a home, obtain financing for a small 
business startup, or invest in education.
    Policy approaches that would help communities that lack 
financial institutions include postal banking, more capital and 
support for community development financial institutions 
(CDFIs), and program to help more communities create credit 
unions. In addition, lawmakers should crack down on predatory 
lenders.

Q.2. For a host of reasons, including online and technology-
enabled banking, we have seen an apparent acceleration of 
banking sector consolidation, and retrenchment of bank 
branches, leaving what is commonly referred to as banking 
deserts. What can we learn as we grapple with the emergence of 
banking deserts today, from your research into the 
circumstances and outcomes of those who live lived in banking 
deserts decades ago, enabled by Jim Crow laws?

A.2. While technology-enabled banking has contributed to the 
growth of ``banking deserts,'' my read of the data is that the 
more significant driver of this trend is the decline of locally 
owned, community-based financial institutions, which has 
disproportionately affected rural, low-income, and Black and 
Brown communities.
    Between 2006 and 2018, the U.S. lost a staggering 41 
percent of its community banks. Today, there are just over 
5,000 community banks and their market share stands at 17 
percent. \1\ According to FDIC data, nearly 1,100 counties, 
more than one-third of the total, now lack a community bank, up 
from about 650 counties in 2006. Most of these counties are 
rural, and the data show that counties with a larger share of 
African-Americans have been especially hard hit by these 
losses. \2\
---------------------------------------------------------------------------
     \1\ Institute for Local Self-Reliance analysis of data from the 
Federal Deposit Insurance Corporation (FDIC) and the National Credit 
Union Administration (NCUA).
     \2\ Ibid.
---------------------------------------------------------------------------
    In my view, the key to solving the problem of banking 
deserts is not to try to prod or cajole the big banks into 
serving communities that they clearly have no interest or 
motivation to serve. Instead, we should adopt policies that 
dramatically reduce the size and market dominance of these big 
banks and create a regulatory environment in which community 
based financial institutions can thrive.
    To this end, we should reconsider the Federal policy 
changes in the 1980s and 1990s (including the Riegle Neal 
Interstate Banking and Branching Efficiency Act and the Gramm-
Leach-Bliley Act) that led to consolidation and the decline of 
community banks.
    While the Dodd-Frank Act of 2010 purported to curb the 
excesses of an outsized financial industry, the law in many 
ways did the opposite. Dodd-Frank had important regulatory 
successes, including the Consumer Financial Protection Bureau, 
but it essentially doubled-down on the policy status quo. It 
failed to seriously challenge big bank power. It also created 
new compliance burdens for community banks, credit unions, and 
bank startups, including lengthy quarterly regulatory filings. 
Since the passage of Dodd-Frank, the market share of the 
megabanks has swelled.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                      FROM MARCIA ERICKSON

Q.1. Thank you, Chairman Brown, for holding this important 
hearing focused on our rural communities. I recently did a tour 
across rural Southwest Georgia with Congressman Sanford Bishop 
to visit with my farmers. At every stop, I asked these farmers 
about their broadband connectivity. Many attendees on this tour 
said their connection was either spotty or too expensive. 
Considering the State overall, approximately 10 percent of 
Georgians live in areas where there is no broadband connection 
and almost 39 percent of Georgians live in an area where there 
is only one internet provider. Issues with broadband access and 
affordability prevent rural communities from fully accessing 
telehealth services, participating in virtual learning, and 
connecting to e-commerce opportunities.
    You noted in your testimony, ``The lack of housing and 
affordable, reliable broadband contributes to the lack of 
workforce for our small communities.'' How would our rural 
workforce be strengthened by ensuring that reliable broadband 
is both accessible and affordable? What would this connectivity 
mean for the prosperity of our rural communities?

A.1. Reliable and affordable broadband is critical to our rural 
communities. Our family farming operation depends on broadband 
for a successful season. Broadband is essential to follow and 
evaluate commodity markets, make production decisions, and 
become more efficient. Access to reliable internet is also 
essential for field imagery to reduce pesticide and insecticide 
use. Broadband helps farmers achieve optimal yield and maximize 
their profits.
    Broadband is also critical to the success of our businesses 
in rural America. My daughter-in-law opened an online boutique 
that has allowed her to be at home with her young children 
rather than commute one hour to work. This business would not 
have been possible without broadband. All sales, marketing, and 
accounts receivable are fully based on the internet. She does 
not have a physical storefront. In a community with a 
population of 300, this would not have been possible without 
access to internet. Yet, many communities and individuals in 
rural America do not have this opportunity due to the absence 
of broadband.
    As the Chief Executive Officer of GROW South Dakota, a 
statewide nonprofit, that provides community, housing, and 
economic development across the State, our company also relies 
on broadband to serve our customers. For instance, when 
NeighborWorks America provided us downpayment assistance funds, 
our organization was able to provide assistance to over 200 
individuals throughout the State in a very short time period 
via online applications. When a customer did not have access to 
broadband, we provided an alternative method of applying for 
assistance. This gap in access needs to be closed to give every 
person fair access to opportunities.
    Many of today's value-added agricultural industries prefer 
to locate in our segments of Rural America, due to the 
availability of livestock or crops, as well as quality land. In 
most cases, such value-added industries are located in wide-
open geographic areas, which may lie within gaps of broadband 
service, or in difficult to serve topography. This also 
exacerbates the housing challenges of our region in addition to 
technology challenges. The areas that still need available and 
reliable broadband infrastructure are the most difficult to 
install and serve.
    South Dakota Governor Noem reported that ``half of South 
Dakota's counties have rural areas where one in four people do 
not have adequate internet access. Some counties consist of 
rural areas where half the residents don't have reliable 
access'' (Yost, 2021, para. 2). Not having reliable internet 
access affects businesses greatly. Governor Noem stated that we 
must ``close the broadband gap to ensure South Dakotans can 
work and hire locally while selling globally'' (para. 2). This 
is true across the United States. We must invest in broadband 
to further our workforce opportunities and to remain 
competitive as a Nation.
    In a written comment to the Federal Communications 
Commission, Marietta Rodriguez, President and CEO of 
NeighborWorks America noted that the NeighborWorks network have 
focused together on broadband needs in affordable multifamily 
homes and in communities lacking broadband access--particularly 
through our network's Rural Initiative. Large swaths of rural 
areas, tribal areas, and areas of persistent poverty lack 
access to reliable high-speed internet (Rodiguez, NeighborWorks 
America President and CEO, 2021). As part of the advisory 
committee for the NeighborWorks Rural Initiative, I am fully 
aware of the challenges of broadband access throughout rural 
areas of America.
    Federal sources are needed to help close the broadband gaps 
and provide fully accessible and affordable means for farm 
operations, business growth and success, nonprofits, and also 
areas of telehealth, and education. For our communities to be 
fully competitive, advancements in broadband are needed. 
Broadband is necessary to all, and high speed access that is 
affordable is critical to providing services in rural America. 
Now is the time to make broadband investments.

Q.2. Please highlight some of the challenges unbanked and 
underbanked face as it relates to building wealth and a solid 
financial foundation for growth, in the absence of equity. 
Please include any legislative reforms that could help these 
communities accrue equity and a foundation for financial 
success.

A.2. Rural and minority communities face challenges as it 
relates to building wealth for all residents but especially for 
the unbanked or underbanked. Unbanked individuals need access 
to affordable and mainstream financial systems to build wealth. 
One area that is directly related to building wealth is home 
ownership. However, current market conditions have put home 
ownership out of reach for many.
    In a May 14, 2021, article on SDnewswatch.org, Danielle 
Ferguson reported, ``First-time homebuyers or those looking for 
properties at an affordable price have found themselves in 
bidding wars with others willing to pay $20,000 to $60,000 
above list price. Everyone is competing for a smaller pool of 
homes on the market, and some South Dakota homes are selling in 
less than two days'' (Ferguson, 2021, para. 3). This frenzy has 
created frustration for many would-be homeowners, but 
especially for those that lack access to traditional lending 
institutions.
    Without prior banking relationships, low to moderate income 
individuals seeking home ownership have even less of a chance 
for home ownership with the current housing market.
    Ferguson further states, ``The frenzied market is pushing 
up home prices and making it more difficult for low- to medium-
income residents to achieve home ownership. The $45,000 average 
yearly income in South Dakota cannot compete with the 
purchasing power of a six-figure, out-of-State salary. Those 
longtime residents who normally would be able to purchase a 
home are forced to remain in rental properties, further putting 
a limit to the available rental units for families in need of 
affordable housing'' (para. 5).
    The proposed Neighborhood Homes Investment Act (NHIA) would 
help address some of the gaps. However, as much flexibility as 
possible is necessary with the implementation of this 
initiative. The areas that are eligible for assistance need to 
be widened and available to individuals with low to moderate 
income regardless of location or census tract. The NHIA 
information states, ``In markets where the `numbers don't 
work'--e.g., it costs more to build or rehab a house than the 
property can be sold for--owners will walk away from homes that 
are no longer habitable and can't be refinanced or sold. 
Without a financing tool to close the value gap, even the most 
resourceful housing developers cannot (and will not) be able to 
address the thousands of vacant R-1 zoned properties that 
burden distressed neighborhoods'' (Neighborhood Homes 
Coalition, n.d., para. 4). This is exactly what South Dakota is 
experiencing across the State and in every community.
    Another recommendation is to continue support of 
accountable Community Development Financial Institutions 
(CDFIs) by providing continued and greater access to low-cost 
and longterm capital or grants. CDFIs are often the first stop 
for unbanked or underbanked. These investments revolve, with 
mission at the forefront, to provide a means for affordable, 
quality, and safe housing. Access to mission-based lenders is 
even more critical as the current market has caused an even 
greater gap between the appraised value and sale cost. Costs to 
build are also higher in rural and tribal areas of South Dakota 
due to delivery costs and lack of local contractors. This gap 
is widened further with the current housing markets. Many 
communities lack the capacity to complete projects related to 
workforce and housing efforts, and they are unable to support 
economic development staff. CDFI's in these communities are 
able to help build the capacity of the local economic 
development staff and assist them in finding key resources for 
their needs.
    A second recommendation is to provide additional access to 
capital to assist small businesses in rural, persistent poverty 
areas, and minority areas so essential capital is available to 
community residents. Currently, residents may need to travel 
long distances to purchase basic necessities. Mission based 
lenders, such as CDFI's, can help meet this need for access to 
capital, but most Federal programs require a non-Federal match 
which is difficult to obtain in these areas. Waiving or 
eliminating the match requirement for CDFIs and other nonprofit 
lenders would enhance the availability of lending products to 
those that need the capital the most. Nonprofit lenders also 
often pair their lending serves with free one-to-one coaching 
and financial education which also can help to build credit 
scores and promote individual financial health.
    CDFI's play an important role in providing mortgage credit, 
small business lending, and other services to minority and low 
and moderate-income communities and individuals. Funding should 
be allocated with a focus on both rural and minority areas to 
help reach the underbanked. This funding should be partnered 
with individual financial coaching. One of the best avenues for 
this approach is through CDFI's that have a proven history.

Q.3. For a host of reasons, including online and technology-
enabled banking, we have seen an apparent acceleration of 
banking sector consolidation, and retrenchment of bank 
branches, leaving what is commonly referred to as banking 
deserts. What can we learn as we grapple with the emergence of 
banking deserts today, from your research into the 
circumstances and outcomes of those who live lived in banking 
deserts decades ago, enabled by Jim Crow laws?

A.3. As a practitioner in the field, delivering community, 
housing, and economic development services, I have seen rural 
community lending institutions struggle to keep their doors 
open. Online banking is bringing change to our communities, 
often creating intense competition for small banks. National 
banks are gaining the market share from smaller banks and 
credit unions. There is also a growing preference for digital 
banking. Customers are moving their business to larger banks 
due to their online capabilities. Many small banks are 
disappearing. Part of the challenge of the disappearance of 
community banks is the increasing costs to technology and 
security, the minimum scale required for banking to be 
competitive, along with increasing regulation.
    These challenges are creating bank deserts. These deserts 
are often found in areas of low-income, minority, and rural 
populated areas. These banking deserts, where no banks are 
located, are increasing. According to a Federal Deposit 
Insurance Corporation survey, 8.4 million households in the 
United States were unbanked. An additional ``24.2 million were 
underbanked, meaning that the household had a checking or 
savings account but also obtained financial products and 
services outside of the banking system'' (Federal Deposit 
Insurance Corporation, 2020, para. 3).
    South Dakota is fortunate to be served by a system of high-
quality independent community banks and a few national banks. 
Many are locally or regionally owned and known in our 
communities. Supporting our independent community banks in 
their roles to serve our small, remote, and geographically 
isolated areas is the challenge.
    Losing local banking institutions creates disadvantages 
especially for minorities, persistent poverty areas, and rural 
communities. There is also lost community and personal benefit. 
Banking deserts limit adequate access to essential banking 
services similar to what Jim Crow laws brought about. Banking 
deserts create the same type of diminished or unequal access to 
essential banking and financial services. Examples of lost 
services are access to safety deposit boxes, making deposits or 
cash withdrawals, and cashing checks. There is also lost 
opportunities for mortgage loans and small business lending.
    Marietta Rodriguez, NeighborWorks America President and 
CEO, noted in a written comment to the Federal Communications 
Commission, ``To the extent that a bank has branches, they 
should be accessible to LMI area residents on an equitable 
basis. Particularly in LMI communities, the physical presence 
of a bank, and by extension the safe, regulated financial 
products that it offers, is a necessary counteroffering to the 
title lenders, payday lenders, and other similar enterprises 
that frequently appear in these neighborhoods that offer unsafe 
or predatory products. Personal interactions, such as the 
chance to ask questions about unfamiliar lending or banking 
procedures, cannot be duplicated by mobile banking or ATMs'' 
(Rodriguez, 2018, p. 9).
    The personal connection with bank tellers remains prevalent 
in South Dakota where individuals, especially low-income and 
elderly, are often seen cashing their paycheck or Economic 
Impact Payment Coronavirus Aid checks, or securing important 
documents or items in safety deposit boxes. Without the local 
banking institution, these individuals may resort to other 
means of high cost services. Elderly and low-income individuals 
often do not have access to internet or do not have the skills 
needed to access online banking.
    The FDIC reported, ``Households may rely on bank branches 
not only to access an account but also for a variety of other 
activities, such as individuals eligible for an Economic Impact 
Payment authorized by the Coronavirus Aid, Relief, and Economic 
Security Act (CARES Act) but without direct deposit information 
on file with the Internal Revenue Service may have received 
their payment by paper check or prepaid card. Some individuals 
that received a paper check may have used a nonbank check 
casher to get the funds'' (Federal Deposit Insurance 
Corporation (FDIC), 2019, p. 55). The FDIC survey further notes 
that the use of cash for paying bills in a typical month was 
also higher among lower-income households, less-educated 
households, younger households, Black households, Hispanic 
households, American Indian or Alaska Native households, 
working-age disabled households, and households with volatile 
income (pp. 1-2).
    The need for community banks remains; however, there 
continues to be a decrease in banking institutions which leads 
to further inequality of services. A November 2019 report of 
the Federal Reserve System, Perspectives From Main Street: Bank 
Branch Access in Rural Communities, found that between 2012 and 
2017, there was a substantial increase in the number of 
communities with no bank headquarters, the majority of which 
were rural. Over the same 5-year period, over 40 percent of 
rural counties lost branches, with some rural counties 
experiencing considerable declines (Board of Governors of the 
Federal Reserve System, 2019, p. 3).
    According to the 2019 FDIC Survey, ``Physical access to 
bank branches remains important despite the increase in the use 
of mobile banking and the decline in the use of bank tellers 
for account access. Households may rely on bank branches not 
only to access an account but also for a variety of other 
activities'' (FDIC, 2019, p. 55).
    In a report from the National Community Reinvestment 
Corporation, they compared data from 80 years ago with more 
current economic and demographic information in areas of low-
to-moderate income (LMI), middle-to-upper income (MUI), or 
majority-minority. ``To a startling degree, the results reveal 
a persistent pattern of both economic and racial residential 
exclusion. This is evidence that the segregated and 
exclusionary structures of the past still exist in many U.S. 
cities'' (Mitchell, 2018, para. 10).
    To combat the decreasing numbers of community banks, 
regulations should be reviewed and amended. Regulations have 
made it increasingly difficult for community banks to operate 
their business. Community banks are disproportionately affected 
by increased regulation and are less able to absorb the 
additional cost or may not have the staffing levels required to 
oversee the regulation. For instance, many of our rural small 
banks do not offer mortgage lending due to the complexity in 
this service. The regulatory burden contributes to the loss of 
local banking institutions and unequal access to needed 
services. Equitable access to banking services, home mortgages, 
and small business loans is needed for equitable inclusion and 
wealth building.

References

Board of Governors of the Federal Reserve System. (2019, 
    November). ``Perspectives from Main Street: Bank Branch 
    Access in Rural Communities''. Washington, DC. Retrieved 
    May 18, 2021, from https://www.federalreserve.gov/
    publications/files/bank-branch-access-inrural-
    communities.pdf.
Federal Deposit Insurance Corporation (FDIC). (2019). How 
    America Banks: Household Use of Banking and Financial 
    Services, 2019 FDIC Survey. Retrieved from https://
    www.fdic.gov/analysis/household-survey/2019report.pdf.
Federal Deposit Insurance Corporation. (2020, October 19). 
    FDIC. Retrieved May 18, 2021, from 2017 FDIC National 
    Survey of Unbanked and Underbanked Households: https://
    www.fdic.gov/analysis/household-survey/2017/index.html.
Ferguson, D. (2021, May 14). South Dakota News Watch. Retrieved 
    from Frenzied housing market putting home ownership out of 
    reach for some South Dakotans: https://www.sdnewswatch.org/
    stories/frenzied-housing-market-putting-homeownership-
    further-out-of-reach-for-some-south-dakotans/.
Mitchell, B. (2018, March 20). NCRC National Community 
    Reinvestment Corporation. Retrieved from HOLC ``Redlining'' 
    Maps: The Persistent Structure of Segregation And Economic 
    Inequality: https://ncrc.org/holc/.
Neighborhood Homes Coalition. (n.d.). Neighborhood Homes 
    Investment Act. Retrieved May 18, 2021, from Investing in 
    America's Neighborhoods: https://
    neighborhoodhomesinvestmentact.org/.
Rodiguez, M. (2020, April 6). Community Reinvestment Act 
    Regulations, Notice of Proposed Rulemaking (OCC Docket ID 
    OCC-2018-0008, FDIC Docket ID RIN 3064-AF22). Washington, 
    DC, USA. Retrieved from https://www.neighborworks.org/
    Documents/.
Rodiguez, M. (2021, January 21). NeighborWorks America 
    President and CEO..
Rodriguez, M. (2018, November 19). Docket ID OCC-2018-0008. 
    Washington, DC. Retrieved from https://
    www.neighborworks.org/Documents/AboutUs-Docs/PublicPolicy-
    Docs/CommentLetters-Docs/CommentLetter-
    CommunityReinvestmentAct-ReformingRegulatoryFramework.aspx.
Yost, R. (2021, May 4). Keloland.com Original. Retrieved May 9, 
    2021, from $100 million to help us catch up on internet 
    speed, quality: https://www.keloland.com/keloland-
    comoriginal/100-million-to-help-us-catch-up-on-internet-
    speed-quality/.
              Additional Material Supplied for the Record
   DECLARATION OF MARK N. FOX, CHAIRMAN OF THE MANDAN, HIDATSA, AND 
       ARIKARA NATION, ALSO KNOWN AS THE THREE AFFILIATED TRIBES
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                  LETTER FROM STATE EDUCATION LEADERS
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