Transcripts For CSPAN3 Hearing Focuses On Rural Development And Energy Programs 20170929

I call the committee back to order. Thanks to the first panel and we appreciate your testimony. We welcome the second panel that is with us. Fir, we have mr. Ms. Botts, she is a executive director for the kentucky she was named in 2013, has over 15 years of experience working in agriculture and World Development policy issues and helping individuals in rural areas understand issues related to policy and financing. You could be of help to individual senators i would imagine. Before returning to kentucky to work for kcard, she spent ten areas working on agriculture ask a policy staffer in the house of on representatives, grew up on a farm in kentucky and received a ms and bs in rural economics in kentucky and lives on a small farm right now, with her husband and two children, welcome to you, maam. We look forward to your testimony. Second witness is mr. Elmer general manager, Water Association and kansas america. He is the general manager of the kansas rural Water Association. His career has spanned five decades, has been focused on working to ensure all of kansass Rural Communities have access to safe and affordable water. First, as a Program Director and then as general manager of the kansas rural Water Association, he has been critical to the development and facilitatation of water leadership. He has started a statewide water gps Mapping Program and the construction of 90 Community Facilities using local volunteer labor services. He and his wife had hale from baileyville, kansas i am elmer im glad you are here to join us today. Our next witness, christopher stephens. He is president and ceo of Fayette Electric membership in fwa ga. He graduated in 1987 and attended the georgia snaut of technology where he graduated with a bachelor of electric engineering degree in 91 and earned the certification in 1998. Once out of college, he worked as a design engineer for rich Instrument Transformers in georgia and then utility consultants in atlanta, before becoming supervisor of engineering at fayette emc in 1986. He is a native of newman, georgia. We look forward to your testimony, sir. Senator thune has given a marvelous introduction to you, and so we will let that stand for the record. But welcome. And we really appreciate your coming and we look forward to your testimony. Our next witness is mr. Brent shanks, who is the director of the nsf engineering Reference Center for bio renewable chemicals, home of the fighting say clones, now, i turn to senator grassly for the introduction. It is my honor and i had a chance to just have a short conversation with dr. Shanks. He is a chair of chemical and biological engineering at iowa state university, dr. Shanks is the director of the engineering reefrp cen research center, and a professor in engineering. He has been on the faculty of iowa state since 1999 where he focused on converging feed stocks in to chemicals and fuels. We welcome you, dr. Shanks. I was going to turn to the Ranking Member to introduce our final witness, but again in the spurt of bipartisanship, im delighted to bruintroduce you s. He is the chief executive officer of the Harvest Energy solutions and one of the cofounders, he is responsible for developing Harvest Operating strategies and adviser relationships. He holds a bba degree from Michigan State university. Obviously why the Ranking Member wanted to introduce you with the green and white. The distinguished Ranking Member had me decorated in green and white when we had our hearing up there. So, just want you to know that. When you come to kansas, you can wear purple. And an mba from the university of michigan. I thank you for joining us today, ms. Botts, if you could start off with your testimony. Pardon me. Thank you, chairman roberts and Ranking Member and members of the committee. Thank you for the opportunity to testify here today on Rural Development issues and thank you for having this hearing. The programs being discussed today touch every person living in Rural America. The Kentucky Center forthwith Rural America known as kcard. Through the work we see the conditions facing ag producers as they start new businesses. Seek to add value to their commodities to capture their food dollar and face challenges in the bottom line. That means we help businesses developed by ag producers at all stages of development. This work would not be possible without the support of the federal Rural Cooperative Grant Program. This Program Provides the support for kcard to be the resource for the development of coops in the country. Cooperatives the wapaperwork challenges. The funds go to producers and they advance the goal of securing a greater percentage of the food dollar. Its a good investment for the federal government. It accomplishes it through the submission of financial plans, estimates of Customer Growth and pricing calculation. I have elaborated on ways to improve the program, but to summarize the Business Plans are important. We should consider our rolling application process for plan and grant, we need to main producer eligibility restrictions and recognize that Rural Development is uniquely suited to run the program due to the assets they have on the ground. We have two Rural Development programs that are critically important to foster iing progra. Rural Development Programs respond to need driven by the notion that economies of scale are harder to achieve in rural areas and services are harder to provide because of that and People Living in the rural areas deserve the same access to services and opportunity as those living in metro areas. Kcard staff works with farmers and Rural Businesses every day to help them survive and thrive, i use Rural Broadband to do my work. I by my electric from a rural coop and i can say, these programs are critical to the health of the rural areas. If we want the rur aral areas te strong, we have to support the programs working together to deliver needed infrastructure and foster job creation and provide a Higher Quality of life for our rural areas. We appreciate your testimony. Chairman, robertss and Ranking Members, and members of the committee. Im the general manager of the kansas rural Water Association and i appreciate the opportunity to speak to you today. My experience with rural water goes back to the early 1970s when i was elected to a committee and then served for 14 years on the board of directors as wes formed and developed and constructed a large Regional Water supply in marshal county. It went on to serve 700 rural residents and farmsteads. That first project was funded with a loan the then farmers home administration. About ten years later, we needed to expand the capacity due to the needs of that water system. We obtained a second loan from then farmers home administration, again another loan only. Im here today to ask you for your support to continue the funding for that program, which is today known as the water and Wastewater Loan Program operated under usda Rural Development. The public water supply systems in the United States number some 60,000. I represent the kansas rural Water Association, but also the other 44 state associations that make up the National Rural Water Association and their membership of some 31,000member utilities. 92 of those public water supply systems serve populations less than 10,000, and 80 of the wastewater utilities in the nation, some 16,000, serve populations less than 10,000. In kansas, there are 786 of the 855 public water supply systems that serve fewer than 3,000. The issue of affordability of Drinking Water is a major concern for those public water supply systems across the United States. The Rural Development program is critical to addressing that effort. The usda Program Provides help to citizens to have more affordable rates, because of the provision for longerterm financing than the epafunded state Revolving Loan funds or that commercial credit can offer. I try to put the issue of affordability into some perspective. In reviewing the costs that were incurred by a public wholesale district in Cottonwood Falls and the chase rural Water District in kansas, without usda Rural Development funding of loans and grants and a small portion from the Community Development block grant, the citizens in strong city, kansas, would have had their water rates quadruple, making 5,000 gallons of water cost 167. A 42. 50 minimum, and roughly 25 per thousand for a total of 167 for 5,000 gallons. That is absolutely not affordable in most communities. Strictly reliant on commercial credit and the epa loan and grant loan program, which addresses compliance, the usda Rural Development program varies from that, because it takes affordability as a primary fact factor into consideration of those compliment the agency for developing an online program, application process. It has helped borrowers and certainly has helped the agency. Thank you, chairman roberts, for the opportunity to comment. I would be happy to take any questions later. Thank you, elmer, for your long service on behalf of kansas. I dont know about stralia. They used to beat up on the holton wildcats all of the time. Didnt think that was right. Strong city. Has a great rodeo. And obviously, you cant afford water at those kinds of prices. Excellent example. Thank you so much. Mr. Stevens. Thank you, chairman roberts, Ranking Member stab know, and inviting me to testify. Im with the not for profit electric cooperation in georgia. We have 70,000 members, operate over 6,000 miles of line and employ around 200 people. The farm bill is essential to coops because it contains tools we use to keep the lights on in Rural America, generate and distribute electricity from renewable sources, modernize the grid, and promote Economic Development to the communities we serve. For decades, the rural utilities electric loan program has been our foundation. Providing lowcost financing to coops for installing or maintaining the grid. Its been the most important tool Rural Development tool in this countrys history. Today coops are adapting to changes in consumer demand, accommodating and evolving generation mix, and protecting against cyber threats. The farm bill helps us fund essential projects to make our systems more modern, efficient and secure. We have enjoyed strong support for our u. S. Funding, because were such a good investment for the government, providing valuable service to our communities and reliably paying back our loans. We ask that you help us maintain that support in the farm bill. In the 21st century, robust communications, infrastructure is just as important to our businesses as our traditional assets like poles, wire and power plants. My coops is conducting an economic study to determine the feasibility of building out a broad band network. Our main motivation is to take care of internal operational needs to make our system more efficient and secure. Once this foundation is in place, there are lots of things we can do with it. One option could be facilitating the connection of our members homes and businesses to Broadband Internet. Some people in our region dont have access to reliable internet. And that puts our consumers, schools, hospitals and employers at a disadvantage. Another part of modernizing the grid is deploying new Energy Sources for helping our customers save money while managing their own energy better. We have a Founding Member which sources Renewable Energy from lowimpact hydro plants, biomass, land field gas and solar. At the end of last year, green power emc projects were generating 270 megawatts of electricity, enough power to serve over 200,000 homes. And that will nearly double by the year 2020. We also sponsor efforts to bring solar installations to schools and save Home Energy Efficiency projects. We urge the committee to reauthorize programs like rural energy for America Program, and the Rural Energy Savings program to ensure that electric coops can continue to meet the evolving demands for our member owners. In addition to our electrification work, cooperatives play a vital Economic Development role in the communities we serve. Since 2009, georgia coops have funded around 10 million through the rural Economic Development loan and Grant Program, also known as red leg. These projects include the renovation of a hospital and construction of a new cattle feed operation to support local agri business. We believe the red leg program is a developable tool in offsetting population flight and job losses in Rural America and around the country. We urge the committee to work with us to ensure ample funding for red leg throughout the next farm bill and beyond. Lastly, allow me to mention an issue of vital importance to the health of electric coops in georgia specifically. A Nuclear Power plant partially owned by ogle thorp power. Currently construction is under way to add two reactors at plant vogel. However, the unforeseen bankruptcy of the projects general contractor has put this project in jeopardy. Congress must extend existing Nuclear Production tax credits in order to make this projects completion viable. Most of our countrys food, minerals, energy and manufactured goods still come from rural areas. Thats why the health of Rural America should be of interest to all members of congress and all americans. You have a great opportunity in the farm bill to make needed investments that will address our unique challenges. Again, thank you for the time to testify. Mr. Long. Thank you. Chairman roberts, Ranking Member, and members of the committee, good morning and thank you for this opportunity to testify on promoting the deployment and sustainability of broadband in Rural America. Im denny law, ceo of Golden West Communications in south dakota. My remarks today are on behalf of golden west and the Rural Broadband association, which represents approximately 850 communitybased providers of advanced Telecommunications Services in the very most rural parts of this country. Golden west began operations in 1916 and today provide Broadband Internet service, Cable Television and voice Telecommunications Services. Golden west serves customers across 24,500 square miles in south dakota. Thats an area larger than the states of maryland, new jersey, connecticut and delaware combined. Golden west has been in our u. S. Borrower since the early 1950s and just last week we received approval for our most recent loan. Usdas telecom lending programs have stimulated billions of dollars in private Capital Investment in Rural Telecommunications infrastructure around this country. Despite the tremendous success of the usda telecom programs, Rural Broadband deployment would not be possible without the universal service fund, highcost program, as well. The usf Program Helps rural carriers make the Business Case for Network Deployment through use of private capital and or securing loans from the Rural Utility Service and the limited number of other private lenders committed to, willing to finance broadbandcapable plant in Rural America. Unfortunately, while usda programs promote and the usf rules are designed to support robust networks, the highcost usf budget is not. A hard cap and resulting budget shortfall is now driving consumer rates higher, deterring Rural Broadband investment and even cutting usf support for investments that have already been made. In fact, in the nearly 40 of the u. S. Land mass served by rural carriers, the artificially low, highcost budget is now the greatest barrier to Rural Broadband investment that carriers face right now. Because of this limit, tens of thousands of rural consumers will see lower speeds or no broadband at all, precisely what recent reforms were intended to alleviate. We are requesting congress to help press for a fix to this program, and we urge the fcc to take action as promptly as possible to address this budget shortfall. The permitting approval and review process for deployment of networks across federal and state landowning agencies must also be addressed in any holistic plan to promote and sustain infrastructure investment. The best funded, bestplanned networks may never deliver fully on their promise if they are caught in regulatory red tape and needless delay. Robust broadband must be available, affordable and sustainable for Rural America to realize the Economic Health care, education and Public Safety benefits that advance connectivity offers. Therefore, the Rural Broadband industry is eager to close the Rural Broadband gap by working with congress and the administration on Public Policy that helps to build and sustain broadband in rural markets. Golden west and ntca Member Companies thank the company for its leadership and its interest on all of these issues and we look forward to working with you on behalf of the hundreds of small operator members of ntca and the millions of Rural Americans that we serve. Thank you for your time, and i look forward to your questions later. Thank you, mr. Law. Dr. Shanks. Chairman roberts and Ranking Member stab now and Committee Members, i thank you for this opportunity to testify, particularly about biomass utilization. Clearly, near and dear to this state of iowa, but also broadly to the country. But i think whats important about this area relative to some of the other testimonials that weve heard today is this is one that not only impacts Farm Security, Rural Infrastructure, but also broader impact on society. So its a case where we can see that Rural America really has a strong impact on the greater society. And i think thats an important thing to always keep front and center. Title 9 has a very important aspirational goal of producing advanced biofuels from biomass. And this is a wonderful aspirational goal. Underneath that, we have we have established the concept of a bio refinery, which would not only produce advanced biofuels, but also co products of biobased chemical or renewable chemicals and biobased products. Importantly, the way this title is constructed is it looks at the challenge of that aspirational goal which includes technological challenges, market challenges and infrastructure challenges, and says how do we build actions authorized actions underneath it to address those challenges. And thats a very important way to look at the problem. But i would argue, or i would suggest, theres another way, a complimentary way to look at it, which is how do we take advanced Bio Manufacturing and to judiciously produce renewable chemicals and biobased products that can actually enable us on the pathway to that grand vision that we have. What do i mean by judiciously . We can develop technologies that in the nearer term can produce renewable chemicals, but then as they mature, can be leveraged into advanced biofuels. We can develop markets in renewable chemicals that will then be in place for when were ready with all those pieces in the bio refinery to make it work. We can do incremental investment on existing infrastructure to make sure that when we come to the bio refinery, which will require a Large Capital infrastructure, we can lower that hurdle for that capital infrastructure. Its my opinion that if we utilize advanced Bio Manufacturing to produce renewable chemicals, what we can do is create successes on the way to the pathway of what we ultimately want. These advanced biofuels. The analogy i think of with this is when you think of nasa. Nasa creates a vision and says we are going to the to mars. And what we do is we establish technologies along the way to that. But those technologies have value in their own right. And nasa does a wonderful job of articulating the value of that. I think we need to do the same thing in biomass utilization. We have a wonderful objective to create advanced biofuels, but we also have the ability to create opportunities, successes, on the way to that ultimate success. Thank you very much for your time. Thank you very much. Thank you, chairman roberts, Ranking Member stab now and distinguished members for inviting me to speak with you today. Im the president and ceo of Harvest Energy solutions, were a solar energy design, sales and Installation Company based in jackson, michigan. I have been in and out of the Agricultural Sector most all of my life. I was raised on a farm. I farmed on my own for a while. I was the farm manager for the largest farm in the state of michigan, the early 1980s. I owned a grain elevator, where we warehoused over 11 million bushels of grain for the usda. After that, i got into manufacturing. But i missed the farmers and i missed the people of agriculture and i was looking for a way to reconnect with them. In 2006, i was approached to work in the renewable arena and thought this was my way back to working with farmers in the midwest. We started a Company Called Harvest Energy solutions. Over the past few years, weve grown from a two men and a truck operation to over 50 professionals and growing. Our main focus is farmers and rural customers in the states of iowa, illinois, indiana, michigan, ohio, kentucky, tennessee, missouri month, wisconsin and pennsylvania. Our agricultural customers include dairy, poultry, hog, grain, greenhouse, hop, fruit and vegetable farms, as well as wineries and breweries and food processors. We were pleased to be joined by you, Ranking Member stab now, in 2015 at a Ribbon Cutting ceremony for a solar installation at a winery in northern michigan. That project, like so many others in this space, was made possible by the usdas initiative. Grants are available through the usda to assist farmers and Rural Business owners to invest in Renewable Energy systems or make energyefficient improvements. Harvest energy has been successful in part because of the smart federal investments in Rural Communities like reap. Reap has been a component of 25 to 30 of our sales. Allow me to give you a quick example of the immediate effect that reap has on a solar investment. Typically, our customers will see a sevenyear pay back when they purchase solar for their farm or business after which the electricity from that investment is virtually free. With the reap grant award, the same farmer or Business Owner will see an approximately fouryear return on investment. Many times, the reap grant is the determining factor of their buying decision. There are typically three times more reap grant applications than available funding in a given year. I would strongly recommend to this panel not only to reauthorize the program in the upcoming farm bill, but consider increasing the mandatory funding associated with it. That means more clean, Renewable Energy, more jobs and Economic Growth in our struggling Rural Communities. I know that this committee has a lot of Big Decisions to make. But please know that harvest and others like us deal with reap conversations on a daily basis. I want to thank the committee again for inviting me to washington, d. C. , to share my perspective and the perspective of countless farmers and small Rural Business owners throughout the country. I look forward to your questions. Thank you, mark. Senator grassley. Thank you, mr. Chairman, for your courtesy, letting me go out of turn. Dr. Shanks, given your Research Experience in bio renewables, what Lessons Learned or specific effective practices do you feel should be included in the energy title, the farm bill, in order for the u. S. To continue being a Global Leader in bio renewables . Thank you for that question, senator grassley. I think always one of the challenges is how do you pose a problem and then when the agency carries out that, how they respond to the language. As i mentioned in my testimony, the way weve currently set up is a vision of a bio refinery. And so most of the opportunities are set up around how do we impact the production of advanced biofuels. I think theres opportunity to say, we need successes along the way, which lets consider technologies that maybe arent ready for advanced biofuels, but can produce renewable chemicals that have great value and get us on the path. These are things we need to consider in terms of how do we get from where we are to where we want to go. Yeah. Next, what are for you, dr. Shanks. What are the prospects for advanced biofuels, given the current crude oil price of about 50 a barrel . Because i think you indicated in what i read of your testimony that certainty of Petroleum Product pricing would be beneficial, but if youre in a free market environment, i dont think you can expect that to be Something Congress is going to be thats exactly right. So i worked for shell oil company, actually, before. So ive worked on both sides. Both the oil side and the renewable side. And thats absolutely correct. And so this is one of the challenges when the target is primarily just a fuel, which is going to be very tightly controlled relative to the price of crude oil. There is opportunities with the renewable chemicals biobased products that actually have advantaged and unique Performance Properties that create Value Proposition that are not that now you can decuple them to some degree from the price of fossil carbon. And thats a tremendously important part of the path forward, in my opinion. Why do you also for you, why do you characterize renewable chemicals as ancillary in the current bio refinery strategy . So, again, when we look at the objective of a bio refinery, which is to make advanced biofuels, there is now an acknowledgment that theres an Important Role for biobased products and renewable chemicals with that. However, the language that always comes out is how do we take the byproduct stream. How do we take the side streams that arent being used for advanced buy refuels. This is really limiting innovation and limiting our ability to make progress technologically on the way to that goal. Mr. Haslan i shouldnt say im sorry. Ive got one more question for you. In your testimony, you stated that u. S. Chemical market is over 200 billion in annual sales. What percent of the 200 billion do renewable chemicals currently account for . Additionally, are there any projections for where renewable chemicals might reasonably be in ten years . Yes. So this is always a challenging question. And theres complete there are chemical Consulting Companies that make their business to project what that is. And so im certainly not in the position to be as definitive or as forwardlooking as some of them. But we are we are less than 1 you can envision that 10 of that market is a reasonable capture strategy. Clearly, theres a number of things that have to be advanced to get to that point. To put it in a more concrete term, the state of iowa passed a renewable chemical production tax credit. This is the first year that thats in place. Its five cents per pound of produced Building Block chemical from renewable products. Already, there are 15 Companies Looking at applying for that credit, which would be for production for this year, that they will officially apply for in general. So the answer is, theres a lot of opportunity out there. Theres a lot of innovation out there. So i think theres that 10 is not an unreasonable objective. Thank you, mr. Chairman. Senator heitkamp. Thank you, mr. Chairman. This is an issue that is near and dear to my heart. My colleague, senator hole venue, and i, represent one of the most rural states in america. And we appreciate and understand how critically important the Rural Development piece of this is. In fact, i have two tests on whether i think a rural area will survive. First is do we have rural water. Which is absolutely critical Going Forward for many, many families, to make sure that the water is pure and clean. And the other test is, can they stream netflix. Right . Because if you cant if you cant stream netflix if you cant get access to broadband, its going to be increasingly more difficult, not only to keep our agricultural economy in these rural areas thriving, but to build out and develop valueadded opportunities that will keep our children at home. And so we are very, very interested in making sure that the historic commitment that the federal government has made to Rural Development, which has paid off you know, either repayment of loans, but absolutely producing the highestquality food source in the world, making it possible for us to continue to do what we do in Rural America. None of that would be possible if we hadnt electrified, now looking at broadband. If we hadnt made these investments. And so i want to thank you all for the roles that all of you play in doing exactly that. I want to talk a little bit about what would happen if, in fact, you probably all saw the budget that the administration advanced. What would well start down at the end and welcome. Its good to see you again. She used to work for palmer. I have to give her a shoutout. Lets just ask all of you, what you think the consequences would be if we adopted this administrations budget as it relates to Rural Development. Well start on that end. Thank you, senator. Well, certainly, a we have to recognize that the Rural Development programs that are in place have no rival in federal government. There are not they are not duplicative to other programs. And we have to dedicate enough resources for these programs to do what theyre designed to do. Which is help these Rural Communities survive and thrive. And so we would say that any effort to, you know, reduce the resources to these programs will be detrimental to rural areas. Senator, when it comes to rural water, if the funding for from usda Rural Development is not available, many of those projects will simply not be built. Well, if i can just take a minute, what will happen to operation and maintenance and the opportunity not only to build new facilities, but maintain what you currently have . The Rural Development finances circuit rider programs, and we provide through our association as a Technical Assistance provider daily Operation Maintenance and technical funding application assistance to those communities. The communities in kansas and many across the midwest are have a declining capital human capital. We typically have 25 turnover of operators annually in the state of kansas. These field techs are essential to maintaining critical services. Miltonvail, kansas yesterday lost two operators and they were helping the town maintain service. Thank you. Mr. Stephens . Thank you, senator. We certainly appreciate this. And we really want to continue supporting the electric utilities, of course, and building out the basic infrastructure. We also see a need in continuing to support the rural energy of america reap program in Energy Efficiency and the Rural Energy Savings program to help those. And also red leg in helping the Economic Development in our communities. Thank you. Thank you, senator. We would continue to support robust funding for broadband efforts, including the Rural Utility Services broadband Development Programs, as well as the various Grant Programs that are available, as well as the traditional infrastructure program. Its my understanding that the budget proposed for that is relatively stable at that time. But certainly as the process evolves, we will continue to advocate for strong funding. And if i can just make a point there, stable budget isnt is going to maintain and help us keep what weve got. Weve desperately need to expand Rural Broadband, which, along with shelly cap i toe, were working very hard in my office. If i can just get two more questions. Thank you, mr. Chairman. Theres no question that infrastructure is tremendously important, and even when we get into manufacturing of some of these products, we need to have that infrastructure. I would say whats also important is actually creating value in these communities. And a great example of that is three years ago, there was 148 million facility built in osage, iowa, to make biobased products. So there is great opportunity here, as well. Thank you. If the reap Grant Initiative was disbanded, for whatever reason, it would make it very difficult for many farmers to dip their toe into renewables. We sell to farmers, because typically they have space, and they have friendly townships. We look forward to working with this group, and as i talked to hundreds or maybe thousands of farmers at different trade shows that we attend, they bring up reap. And they bring it up more and more all of the time. So the momentum is growing, and to pull the rug out from under our program like this would be detrimental. Thank you. Thank you, mr. Chairman. Thank you, senator. Senator hoeven. Thank you, mr. Chairman. Thanks to the witnesses for being here. Someo somewhat along the same lines, what are your priorities in the farm bill . As you look at Small Businesses, businesses throughout Rural America, what are your priorities in the farm bill . One, two, three, for each of you . Certainly, the reauthorization of the Rural Cooperative Development Grant program is critical to providing resources for Rural Businesses developing in rural areas. And north dakota has some excellent rural coops that have developed through this program. So reauthorization of Rural Cooperative Development Grant. The reauthorization of the valueadded producer grant and maintaining a strong business focus for that program. Having applicants put together strong applications that include financial projections and estimates of customerbased. Those are two key pieces for what would be necessary in the next farm bill. But certainly, looking at all of these programs together, to see how we can how the programs Work Together to provide resources for Rural Development and how they can be done more cooperatively would be something that we would encourage. Thank you. Senator, im not intimately familiar with all aspects of the farm bill. But i do know about the Rural Developments, water and Wastewater Loan Program and there are many more applications and funding needs than funding is presently available. And that is a critical component to making water and Wastewater Services available. And underserved and lowincome, particularly Rural Communities. Senator, for us, its definitely continuing to meet the growth of our communities and providing funds to meet the electric service. Also to providing innovative solutions, like we have utilized for ami and making a smaller grid, which could include some farmer broadband, and also just continuing to promote Economic Development by reauthorizing red leg. Senator, we would strongly support continued full authorization for the Broadband Loan Program and the Traditional Telecom loan opportunities that Rural Telecommunications providers can take advantage of for affordable financing of expensive Broadband Networks in very rural areas, and as many dollars are available for those types of applications to further that mission would be our number one, number two and number three. I certainly cant claim the expertise and the broad aspects of the bill as a number of these experts. But i would say that i think an important aspect of this strategy for Farm Security and rural investment is making sure that we actually have products that are valuable. And so we think that biomassderived products are tremendously important in the mix of how to help rural economy. And whats most helpful to you there . Pardon me . What is most helpful to you in developing those biomass i think the key process there is to make sure we synergistically use our federal dollars. We have a very Clear Mission on energy. Usda, i think, has a much more of a mission on rural Rural Infrastructure value to the rural society. I think that doesnt require that energy be the main feature of it. It means how do we create value from the biomass. And so i think its important to that those programs complement each other, rather than just reinforce one direction. Still a little arcane for me. Okay. So a lot of what we do in the biomass area is absolutely related to making advanced biofuels. And thats a view across so youre talking about the biofuel programs . Across multiple agencies. Yes. Yes. And i think those are important. However, usda and the farm bill, i think, has a unique niche in there that what we care most about is how do we create value from the biomass products. Were energy isnt the absolute only end game that we would be interested in. Were interested in valueadded products. And i think valueadded products are a shorterterm advantage and Success Story potential than advanced biofuels. So like making a biomass coffee cup for the chairman of the ag committee. Yes. I guess i would suggest jobs i guess i would suggest jobs would be one of my biggest concerns. Our young people are leaving the communities. Theyre coming to big cities. And in order to create some of those jobs, im back to Renewable Energy. Renewable energy produces jobs in those small communities. It reduces the cost of electricity for the farmer, allowing them to expand their business and potentially hire more people. As well as the guaranteed loan program. But theres something here that im learning today that im certainly not equipped to speak on, and thats the opioid condition we have in our Rural Communities. I think we all need to pay a lot of attention to that. Its real. And its a big concern. Thank you. Thank you. Senator stabenow senator stab now. Thank you, very much, mr. Chairman. Thank you to each of you for your excellent testimony. Mr. Owe lynnic, its wonderful to see you again, and i appreciate the good work youre doing. I wonder if you could talk more about the reap program and the fact that its consistently over subscribed. Theres more interest than there is funding to be able to move these opportunities forward for farmers and others. We fought hard in the last farm bill to secure permanent funding for the program. And im wondering if you might talk broadly about the demand for rural Renewable Energy projects, what youre seeing in the field. What would happen in terms of jobs. Jobs for your business, as one example. If we were to increase the funding for reap. Thank you, senator, for the question. The more available reap money, the more benefit to farmers and businesses. Period. It produces jobs. Ill talk ill be greedy for a second and talk about my company. I mentioned that 25 or 30 of our growth has been directly related to the reap grant. We not only sell and design and install solar panels, but we have a manufacturing sector. We manufacture the structure beneath the solar panels. So there would be increase in manufacturing, design, installation, sales, administrative. And these are professional jobs. Theyre not minimum wage jobs. Also on the agricultural side, as we educate these farmers, one at a time, it seems like, and they invest in renewables, it frees up money for them to expand their business. When they expand their business, more jobs are had. Our business has doubled in about the last three years. I expect it to double again in the next three years or faster. Certainly with an enhanced reap program. The ive got a quick story. It has to do with kentucky. About six years ago, i wanted to show that somebody from michigan can go sell someone from kentucky a product. So i myself went down there, and i was introduced to a young farmer, and we hit it off. And he ended up buying a solar array from us. During that conversation, his neighbor was there. I thought i gave the first guy a really good deal. But we found out that that good deal spread and spread and spread. And they all got a pretty good deal. Long story short, they almost all applied for a reap. Within five or six counties, we sold approximately 100 installations of solar in those five or six counties almost all applied for a reap grant. Most i would say half got their reap grant, half did not. But i would say that we could have had another 50 sales or so, meaning more employment there, more employment for us, had we had more funding for reap. Thank you very much. Mr. Ronnenbomb, talk a little bit more about rural water. You highlighted the affordability of Drinking Water, the importance of the usdas Rural Development water and wastewater loan and Grant Program in kansas, as well as across the country. We have certainly had a lot of challenges in michigan from flint, michigan, with the lead in water to macomb county, where there was a big they call it sinkhole with this huge effort where the road just collapsed. And underneath it we saw pipes that i dont know what you call a pipe made out of wood. But thats what we saw. Just extraordinarily old infrastructure. According to the epas most recent Drinking Water infrastructure needs survey, 64. 5 billion is needed to maintain and upgrade small Water Systems around the country. As our nations infrastructure continues to age, can you describe the role that usda Rural Development programs have in ensuring communities i know you have talked about this, but i wonder if you would talk more on what is being done to provide access to clean, affordable Drinking Water. And any suggestions that you have in terms of usda, in terms of being able to finance Drinking Water projects or provide Technical Assistance in a more robust way. Thank you, senator stabenow. The epafunded public water supply loan funds and programs in various states focus primarily on compliance. In kansas, as an example, when the state ranks the projects for funding by the regulatory agency. They apply 35 points to compliance or consolidation. Affordability gets five points. Affordability is at the bottom of their list. Whereas the usda program puts affordability very much to the top. So those programs are not due politic tus. Simply put, the focus is completely different. The usda program replaces, expands and extends services into unserved areas, the epa program cannot do that. Thank you, very much. Thank you, mr. Chairman. Senator klobuchar, we have a vote at 12 15, another one at 1 45. Im going to try to mike this as brief as i can, because i know you have pertinent questions. Ms. Bots, we have a new arrangement here, amy, where the last shall be first. And the first no problem. Shall be last. But at any rate, in your testimony, maam, you highlight important requirements of the valueadded producer Grant Program. Specifically that applicants provide a Business Plan and basic Financial Statements. Do you believe it makes sense to consider requiring this type of Financial Information for all usda grant and loan businessbased programs to ensure that projects being funded are actually viable . I do. I think if the program is delivered to recipients who are private businesses, it only makes sense to have documentation that the business has thought through the very difficult questions they have to think through to do a Business Plan. And that they do have basic Financial Statements such as a good profit loss statement, so that the agency and the reviewers for the Grant Program can look at that and see that it is a viable going business. Thank you for that. If you see earl pomeroy in the near future, tell the low carqus mr. Pomeroy that i miss dialogue back and forth between he and i when we were on the house ag committee. I will do that. This is for denny. As you noted in your testimony, Rural Development and there are a number of different loan and Grant Programs to encourage deployment of broadband all throughout Rural America, these programs have various definition of what speeds actually constitute broad band. Do you think it makes sense to have a common definition of broad bant band, and if so, what speeds would you recommend borrowers commit in order to qualify for a grant or loan . Thank you for your question, chairman roberts. I do believe that there should be some type of co lessens around a consistent speed designation for what constitutes broadband, not just in Rural America, but quite frankly, america in general. In terms of speed standards, there are a variety in place today in terms of the rural utilities service. There are also a variety of speed standards used by the federal communications commission, as well. I would strongly urge, if at all possible, there be some type of meeting of the minds, so to speak, between those between those two entities to try to see what type of agreement or broad guidelines could be put in place for a consistent Broadband Speed standard. In regards to a specific speed, mr. Chairman, it is difficult i will answer your question, but i would like to preface it first by saying that will be an everevolving question that im confident this committee and others will ask for many years to come. The needs or desires of a particular Network Capabilities will evolve in years to come. And so whatever number i tell you today by the next month, next year or five years while were all still building network, that number could be sub performance. From a company perspective, and my organization, and i think many in the Rural Telecommunications, i think a minimum Broadband Speed should start in the 25. 3 territory. So 25 meg broadband and 3 meg minimums would be my personal recommendation. But thats written in sand. Because a year from now, it should be higher and so on. I appreciate that. A lot of things are written in sand around here. Elmer, in your written testimony, you include a number of policy recommendations for the 2018 farm bill. One recommendation includes removing water and Waste Disposal Technical Assistance and training grants from the strategic economic Community Development setaside. Can you expand on why you think this recommendation is the right way to go . Why it makes sense . Whether there are other grant or loan programs where the multijurisdictional approach is not working as intended . Senator, that program, as i understand, takes 10 10 setaside at the national level, whether or not that makes sense in the program, it would seem that each state could take its allocation and deal with a full 100 . But as its presently written, it reduces the Wastewater Program by 10 . We have one staff member who covers the entire state of kansas. He measures lots of sledge in lagoons. I can give you some harrowing stories about being in a sledge boat. But we dont need that now. The it would curtail services if those programs are reduced by 10 . To many communities who need that assistance. I appreciate it. Thank you. We have time ill ask you about the governor stating that there is evidence now that with the recharge for the ogalala reservoir actually is a better situation than we thought. And i know youre from the eastern part of kansas. But we have that reservoir out there. Thank you very much. Mark, have any of the reap awards youve worked with over the years been Agricultural Producers located in nonrural areas . And im asking this, because the program currently allows urban farmers sounds like the movie to qualify for funding. But as you note in your testimony, this program is highly oversubscribed every year. A little controversial. But what are your thoughts regarding tightening eligibility requirements for rural energy for America Program awards to focus these dollars on providing benefits directly to agriculture producers in approximate our Rural Communities . I guess im not sure. I totally understand the question. Well, theres money or funding going to urban producers under a program that is for rural energy for America Program that awards focus dollars on rural areas. Okay. I understand. Its my understanding, and let me make sure i understand the question. It is for farmers and Small Businesses in Rural Communities. But when they describe a farmer, they also that farmer can also be closer to the urban area. Thats my understanding of the rules. So if someone is farming tobacco outside of murray, kentucky, and theyre very close to the city, then its not a very good example, because its not that big. Louisville. And its closer to the city. And encompassed in an area that is too large or larger than 50,000 population. The farmers are exempt from that, and they can still get a loan or a grant. Thats my understanding. Better just keep them outside the city limits. Im good with that too. I appreciate that very much. Lets see if i senator klobuchar. Why dont you close out . Okay, very good. Thank you, all of you. And i am co chair of the Senate Broadband caucus. Im going to start with that. And i focused on Rural Connectivity and whats going on. And we still in this day and age have way too many people that cant get broadband, including farmers, business people, who, you know, go to the mcdonalds parking lot to do their work. So mr. Stephens and mr. Law, what steps do we need to take to help deploy broadband and how can we overcome the unique challenges that we have there . Thank you for the question, senator. And ill start. And in our coops, we currently are in the process of doing a Feasibility Study to determine the benefit of building out a broad band network, specifically for our operational needs first. But our idea and our focus is to see how we can potentially partner with others to expand that to the unserved areas. We see that its not necessarily onesizefitsall. I mean, there are some coops who are working electric coops who are building that last mile. There are some who are not really focused on that and dont have any interest at this time to do that. So but what we see and what we believe is making sure there is ample funding for those coops in electric who are serving and building these networks that theyre funding is available. Okay. Thanks. Thank you, senator klobuchar, for your question. I think its a combination of a couple of things. First is for the Rural Telecommunications providers that are already in the business of providing broadband and or trying to provide broadband across rural expanses is an effort to stabilize both the forms of Revenue Sources that rural carriers rely on, specifically the universal service fund. The first panel acting administrator mclean referenced the stability of the fund impacts our ability to make investments, our ability to keep rates affordable, our ability to provide comparable services. Our ability to get loan funds from your Rural Utility Services. All of those things cascade into impacting our ability to provide these services in a very difficult Economic Situation in Rural America. The second thing i would briefly say is to ensure that we create the proper incentives to focus broadband providers, to invest in Rural America, with the economic challenges. Okay. Thank you. Mr. Olinick, i know senator stabenow asked you about the rural energy part of the farm bill. This is a related question. You talked about how reap allows your clients to save electricity and money while making their operations more stable and profitable. How do you take advantage of the opportunities of the Energy Program and as someone who works with reap, what improvements do you think we could make so that its more effective for rural users . Thank you for the question, senator. One of the things that we have noticed with this with the reap program, and im going to give an example, is that the maximum reap loan or reap grant is up to 500,000. Most all of the states typically dont even have reap opportunity of 500,000. Ill give you an example again. The state of michigan in 2017, we had allocation of 909,000. Well, one award was 500,000. That leaves 490,000 for all of the other applicants. I suggest, maybe, that we should consider maybe a 20 maximum of the total allocation for the state. So this 500,000 recipient who took 55 of the total would have received 181,000, still a nice grant, but leaving 727,000 to be shared by smaller projects. In addition to that, the current legislation calls for a 20 funding for projects of less than 20,000. This is called restricted funding. I would increase the setaside to 40 for those smaller those smaller farmers and Small Businesses. Therefore, spreading the wealth over more people. And more farmers. Okay. Very good. Well, i thank you, all of you. Ill put some other questions on the record. So i know we have to go to the vote and the chairman has been very patient. So im going to end. Thank you. Well, its high noon. High noon. Almost missed my window, mr. Chairman. It is here. Thank you. I appreciate the input from all of you. Thank you for your participation and as i said earlier, when we look at farm bills, we look not only at obviously the programs and benefit directly production agriculture, but also those things that can enhance quality of life in our Rural Communities and the discussion today, certainly, contributes to that. So mr. Law, you we talked a little bit about this. But what can be provided by Rural Development agencies or others that would enable your coops to provide broadband to your very widely disbursed customers at competitive rates . Thank you, senator thune, for the question. The Funding Sources for any Rural Telecommunications provider is really kind of a ill say a threelegged mechanism. The revenues we receive from customers. There are the revenues we receive from those who use our network. In other words, other carriers who may desire capacity or need to use our network to transport their services. And then the third item for Rural Telecommunications providers is the support received from the federal universal service fund. Customer revenues and comparable and affordable certainly i think we push the upper bounds of that today for most rural subscribers. Paying more for broadband and related Telecommunications Services than air urban counsel per parts. In terms of being able to generate refer knew, that has been greatly diminished over the last years. And so now youre left with customer revenues and universal Service Funding. With universal Service Funding being dramatically reduced t doesnt leave many choices for where are the future funds for the deployment of Broadband Networks. And so it will be a combination of customer increases, hopefully stabilization of the universal service fund and potentially restoral of amounts that have been cut over the last 18 months. How do your rates for the services you provide your customers compare to those in, say, for example, rapid city or sioux falls . Sure. For a golden west customer, in order to because we operate in a highcost market, in order for golden west to even receive universal Service Support at the present time, our customers not only have to subscribe to a broad bad for broadband, they also have to subscribe for voice telephone service. And its not optional. If we forego the voice telephone service, there is a revenue for the Voice Service itself, but more importantly, we also at this point, golden west would forfeiture any universal Service Funding. So its really kind of a double edge from the funding side. To answer your question, senator, what happens is, for our customers to receive broadband, they have to subscribe to Voice Service and broadband service. And so thats 100 charge. Plus we still receive some usf for that. Customers in a more urban market in the surrounding areas, and i think probably for most of the Committee Members in your urban markets, i think a standalone broadband rate is probably much closer to 50 to 75. Our begins at 100 and goes up from there. Yeah. And issues that need to we need to litigate with the fcc in addition to the other, you know the agencies were talking about today. You spoke of farm bill considerations for this committee. Is it fair to say that in your opinion the programs directly that Rural Broadband that benefit Rural Broadband need increased funding, rather than any major modifications . I mean, whats the i would strongly support that, senator. I think that as the committee has heard, there is a demand for Rural Broadband. There is a willingness by Rural Broadband providers to deploy more. And i believe if there was more funding mechanisms available, whether that was in the form of lowinterest loans in the form of various grants or perhaps grant loan combinations, i believe there would be Business Cases that could be made for further expansion of broadband. Okay. Mr. Chairman, i think thats well, ive got one here. Let me ask of this ms. Bots. In your testimony, you spoke highly of the valueadded producer Grant Program that you indicated that the planning grants are too long turnaround time for many businesses and you recommended a rolling application process for those planning grants with approval done on an expedited basis. Is this expedited process, in your opinion, something that Rural Development can enact administratively, or is there something this committee needs to do to clear the path for Rural Development to do this . Thank you for the question. My thoughts would be that you would probably need to make a statutory change to allow them to consider planning grants separately from working capital applications. I dont know that for a fact. But i think that would probably be necessary, because it would be a fundamental change to how they consider these applications. The reason i include it, though, even though it will be a challenge for them administratively, is because if youre a business, and youre wanting to do a Feasibility Study on a project, you dont want to wait for a full grant cycle. So we have many businesses that are agricultureproducer started, businesses owned by ag producers, that would be excellent valueadded producer grant candidates for planning grants. They want to get started on their Feasibility Study as soon as possible. And so we would be able to do a lot more of those if we were able to do it on a rolling basis. I do think you would probably have to consider some sort of change. Whats a fair turnaround time for an expedited approval process . I think it would have to be two to three months. Okay. Okay, good. Mr. Chairman, thank you. Panel, thank you very much. Appreciate your input. All right, thank you. Ill get through here pretty quick. But mr. Olnick, mark, you tweaked my interest on jobs. Jobs, jobs, jobs for rural areas. Opportunities for our young people. Everybody knows here on the committee and all of you know thats a serious problem. In southeast kansas, i was able during the recent break an applicant that is accepted and works on the job can get over 20 an hour. Plants range incise 100 to 500. They actually go out and try to recruit workers. Helmer talked about this a little bit with regards to people who change or leave and you have to come in with a substitute here. With regard to all that youre involved with. What im trying to get at is they tell me that in recruiting the whole area, high schools, our community colleges, etc. , etc. One in five actually they the can accept. One in five and i ask whats going on here sn well, you have to fill out a written form, number one. Number two, you have to have a personal interview. And number three, you have to take a drug test. And if youre only accepting one in five because of what i would think to be a basic requirement here, were in a world of trouble. And im asking about the work ethic. They also indicate that they may pass. They go through the training. Theyre on the job for maybe a month or two and then they quit. I think thats very troubling. You can also apply that to the United States marine corps. Its one in 10 that walk through a recruiters office door who are actually fit the requirement. I would admit the criteria or im proud to say the criteria is pretty high there. Im worried about this generations work ethic with regard to jobs that are available but the people simply do not want to do that. Theres a health program, Retirement Program here. You get to stay in your own town and i would think if you can find a job you like and you can make a living, a small town area is best you can be. Would you like to comment about that . Your sentiments are exactly the same as mine. We have, between my wife and myself, we have six kids. One lives in ann arbor. One lives in new york city. One lives in san francisco. One lives in North Carolina and two are local. And theyre all educated. But the people that we hire and that we try to hire are from all over the area and youre right. I would say one in five for our area might be doing well. Part of our company, were afraid to even drug test. We might lose half the people. And thats common. Thats common in our area. Its probably common in your area, even though you may not know it. Its a serious problem. And as far as the work ethic goes its tough. I dont see the generation wanting to come in on weekends. But sometimes will offer a day off without pay and theyll take it. As opposed to working over the weekend. So its very difficult and were all involved at the Rural Community but its a serious problem. Theyre leaving if theyre educated and theyre struggling to want to work if theyre less educat educated. You want to comment on that . My wife taught gifted education in school for 30 some years. There are many societal pressures on families. I am not familiar with the drug issues that many of them are personally. I know thats a real problem. There are local manufacturers, local home town boys like in marysville whos done well. They struggle to have manufacturingtype jobs that pay and can attract a quality work force. But i agree with the sentiments that there is a less and less work ethic. We use self help to just build a new Community Building or a library, a fire station and in some cases we repaired nine Water Systems. We used local volunteers and it was a sweat equity program. There has to be more stake holder involvement in local communities so that they feel that they have an ownership and a value and that theyve contributed something to maintain and improve their local quality of life. My staff is informing me that this will be over 15. Anyone else would like to contribute. I raise that issue because mark brought up jobs. I didnt realize. I knew we had a problem but didnt realize we had that big a problem with regards to one in five and for jobs that are good jobs and it wasnt so much that they that the jobs were not available. This goes from county to county. You mentioned sebetha. Always amazed we have a traffic jam in sebetha, kansas. Home of the fighting blue jays as you know. Anybody else want to comment on this . Just to echo what has been said. The businesses are constantly struggling to find labor. We answer more questions on that and how to deal with labor issues than probably any other issue. Somehow we have to find a way. Thats going to conclude our hearing. I think its a very serious problem. Thanks for each of our witnesses to share you views under the farm bill. Your testimony was extremely valable to us and certainly necessary for the committee to hear first hand. And for those in the audience who want to provide additional thoughts on the farm bill and these subjects we have set up an address on the Senate Ag Committees website to collect your input. Please go to ag dot senate. Guv, click on the box on the lefthand side of the screen. That link will be open five Business Days following todays hearing and to my fellow members, we would ask any additional questions be submitted to committee cleric no later than five Business Days than today or 5 00 p. M. Next thursday on october fifth. The committee stands ajourned. 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