RURAL DEVELOPMENT ACT OF 1972 MONDAY, JUNE 16, 1975 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FAMILY FARMS AND RURAL DEVELOPMENT OF THE The subcommittee met, pursuant to notice, at 9:30 a.m., in room 1301, Longworth House Office Building, Hon. Charles Rose (chairman of the subcommittee) presiding. Present: Representatives Rose, Baldus, Bedell, Sebelius, and Grassley. Also present: Robert M. Bor, counsel; Hyde H. Murray counsel; John E. Hogan, associate counsel; Steve Allen and Nick Ashmore, staff consultants; L. T. Easley, press assistant; Perry Shaw, staff assistant; Frank Tsutras, executive director, Congressional Rural Caucus; Carol Forbes, legal counsel to Mr. Rose. Mr. ROSE. I would like to call together the hearing that we will be conducting today and tomorrow. We will be looking into the administration of and expenditures under the Rural Development Act of 1972. I welcome my colleagues here today and I welcome Assistant Secretary of Agriculture for Rural Development, Mr. William W. Erwin, and his staff, of the Department of Agricuture. Let me open by briefly stating that this Nation of ours is called upon more and more not only to feed our own people but to feed the world. I am convinced that we cannot leave rural America to develop completely all the systems and services that the people of rural America demand by their own initiative. In the complex society that we find ourselves today, many of our rural citizenry feel frustrated and completely helpless as they face the complex problems of this and of this age. year In hearings that were held by this subcommittee last week the president of Oregon State University testified that through the use of rural development funds and more particularly funds provided and assistance made possible by title V of the Rural Development Act of 1972, he had observed small towns and communities in the State of Oregon that before that time seemed destined to extinction. They revitalized themselves and provided new services for their people. Gentlemen, this morning's issue of the New York Times has on its front page a story about the out-migration now of an area of this country. In New York, Los Angeles, Philadelphia, and Chicago there is now out-migration. I think we all know where these people are going. They are going to the rural areas of America and they are expecting to find there a life and services that were not available to them in the urban areas of this country. I feel very strongly, gentlemen, that the Rural Development Act of 1972 was a clear statement from the Congress of the United States that we will provide for rural America. We will develop the services that the people who live there need so that they can resume an orderly and prosperous life. We are calling on rural America to lead the world. I feel that we have a tremendous responsibility to see that those who give themselves in agriculture to the feeding of the world and this country deserve the best in planning and development in services and assistance from the Congress and the U.S. Department of Agriculture. Mr. Secretary, we welcome you here this morning and we appreciate your responsiveness to the detailed questions that we had sent to you and we look forward to any opening statement that you may have. STATEMENT OF WILLIAM W. ERWIN, ASSISTANT SECRETARY FOR RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE Mr. ERWIN. Thank you, Mr. Chairman. I have on my right Dr. Bostic. To my immediate left is Dr. Walter Guntharp, who is the Administrator of the Rural Development Service, USDA. On his left is Mr. Frank Elliot, Administrator of the Farmers Home Administration. We also have the witnesses that you asked to be present. With your permission I would like to read a short statement. Mr. Chairman and distinguished members of the subcommittee: We are pleased to appear before you this morning to testify with respect to our implementation of the Rural Development Act, and to exchange views on our common interest in rural America. The array of questions contained in your two letters of May 22 and May 30 was comprehensive and detailed. I have accompanying me representatives from each agency of the Department, charged with the responsibility for implementing various sections of the act. In addition, the type of response required by many of your questions suggested that your purpose would best be served by written answers. These answers have been prepared and I hope that their insertion into the record will be helpful to the subcommittee. Recent data indicate that rural America has made great progress since 1970. Population statistics from the 1960 to 1970 decade showed a continuing migration of rural people to the cities. From 1970 to 1973, however, a strong reverse trend was indicated and we now estimate that about 350,000 people are leaving the cities and moving into rural America each year. As might be expected, the rural counties adjacent to metropolitan areas, are the fastest growing rural areas with a 4.7 percent increase in population in the 1970 to 1973 period. However, the rural counties that are not adjacent to a metropolitan area showed a 3.7 percent increase in population over this 4 year period while the increase in the metropolitan areas was only 2.9 percent. Along with this turnabout in population movement are other indicators of rural vigor and growth. Still using the 1970 to 1973 indicators we find that the rate of growth of new manufacturing jobs in rural America was twice the rate of the large cities and the rate of new construction jobs in rural areas was over 311⁄2 times the urban rate. During 1973 and 1974 the number of new housing units built per 1,000 households has been greater in nonmetro areas than in metro areas. Even with the decline nationally in housing construction in 1974, there were 30 new housing units built per 1,000 households in nonmetro areas compared to 28.8 new housing units in metro areas. The net of these observations is that rural America is a vigorous and progressive sector of our country today. There are pockets of development inertia where the pre-1970 condition persists, but nationwide rural development is a strong movement and one of gathering momentum. The Rural Development Act of 1972 has followed, rather than precipitated, in this development upsurge. The first appropriations for the act were approved by the Congress in October 1973. This was well into the 1970 to 1973 period of change which I have been discussing. However, the act has enabled us to provide essential support and assistance to the rural development movement and the programs implemented under the act are, we believe, contributing to the acceleration of this movement. The Department has obligated or will obligate all of the rural development funds authorized by the act and appropriated by the Congress. The assistance provided through rural development legislation in such essential areas as community facilities, housing, electric utilities, water and sewer, and business and industry is significant and is evidenced by the major program increases that have marked these activities over the 1969 to 1975 fiscal year span. For example, farmer credit loan programs increased from $669 million in 1969 to $1.7 billion in 1975, more than 250 percent of the 1969 level. Farmers Home Administration rural housing loans increased from $507 million to over $2.2 billion this year, some 400 percent over the 1969 level. Water and sewer loans and grants increased from $191 million in 1969 to $620 million this fiscal year, 325 percent over the 1969 level. Other essential community facility loans rose from $50 million in 1974 to $200 million in 1975, so 1975 is 400 percent of the earlier figure. Business and industrial loans and grants increased from $210 million last year to over $360 million this fiscal year, making 1975 170 percent of the 1974 figure. In the fields of electrical utilities and telephone programs, administered by the Rural Electrification Administration, the increase in levels of assistance is even more remarkable. For example: Total electric loans in 1969 were $329 million. In 1975, they totaled just short of $2 billion when the guaranteed loan program is included. Telephone loans, including those of the Rural Telephone Bank, which came into effect in 1973, increased from a 1969 level of $120 million to a 1975 level of $460 million. These program levels shows that despite understandable budgetary concerns within the Administration and the Congress, rural develop ment program have grown. There has been much said and written about the provisions in the Rural Development Act for which the Administration did not request funding but little has been said about the areas where the Congress has curtailed Administration requests. Currently, 76.5 percent or 65 provisions of the 85 provisions in the act have been implemented. Shortly, the 66th provision-relating to guaranteed rural housing loans-will be added. Many of the unimplemented provisions exist in that condition simply because assistance is provided through other channels within the Department of Agriculture programs or the Congress has failed to fund the program. I believe that we should salute the efforts of the various agencies within the Department of Agriculture for effectively obligating almost every dollar appropriated despite the fact that in each of the past 2 years for which funding was available, the appropriations were not approved and made available until almost midway through the fiscal year. In addition to the delivery of the programs stated above, there are other factors that are at least as important to rural development. These are the services which are essential to the improvement of the quality of rural life and the human development upon which all other progress is dependent. The coordination and leadership functions expressed in section 603 of the act enable us to address these needs on a comprehensive front. The coordination efforts of the Rural Development Service are devoted to increasing and improving the delivery of many Federal programs and services to the rural sector. While I have addressed only those programs and activities administered by the agencies for which I am directly responsible, the other agencies charged with various program aspects of the Rural Development Act of 1972 include the Soil Conservation Service; Forest Service; Extension Service; Cooperative State Research Service, and the Agriculture Stabilization and Conservation Service. Each of these agencies also administer other programs which contribute significantly to the development of rural America, and each agency has a representative here who can respond to the needs of the subcommittee. In closing, there is within the United States, a viable, dynamic rural development movement that is fundamentally controlled by the rural citizens in their rural communities. We welcome these hearings as an opportunity to work together with the Congress in order to determine how we can most effectively be of service to our rural citizens. We appreciate the efforts and concerns of this committee and the Congress as we all work toward the improvement of rural America through constructive rural development. We will be happy to answer any questions that the committee may have. Thank you. Mr. ROSE. Thank you, Mr. Secretary. In your testimony you very properly observed that there has been much written and much said about the proficiency of the Rural Development Act. Little has been said that the Congress has curtailed. Presidential requests. For the record, we want you to know that we hope that for today and tomorrow we can talk about not only those programs that have been carried out with appropriated funds, as you so well pointed out, but also some sections of the act that have been questioned. There is an equal responsibility here for both the Congress to provide the money but let me very clearly and properly point out that not all of the funds ever requested have been at all times provided. There is also another side of our responsibility to discuss with you. those areas where no funds have been requested. We would like to ask you, if you will, for a few minutes, to discuss with us the coordination efforts that the Rural Development Act of 1972 mandates to your Department. Can you discuss with us what mechanisms you have developed in your Department to insure inputs into your reporting requirements and to insure a distribution of completed reports out to the rural community? In other words, discuss with us for a few minutes your reporting requirements of this act and the coordination requirements of this act that have been placed on you by section 603 of the act, coordination of rural development. In section 603 the Secretary of Agriculture has authorized indirectly to provide leadership and coordination within the entire executive branch of the Government and shall assume responsibility for coordinating a nationwide rural development program. Will you discuss with us briefly what has taken place in those areas? Mr. ERWIN. Mr. Chairman, with your permission, I would like to get into the general problem of coordination as it is structured. One of the big problems that we have in the coordination responsibility of section 603 of the act is that this authorizes and directs the Secretary of Agriculture, in essence, to coordinate the rural development activities for the Federal Government. The real authority for coordination within the Federal Government continues to rest with the Office of Management and Budget. We really don't have anything that could be described as a coordinating license because we have no authority with which to impose coordination. This is not a protest that I am raising here. It just indicates the problem of coordination, when the authority rests one place in a statement and another place in legal actions. Mr. ROSE. May I ask you if you have indicated that you are responding to our letter with some written answers which we do not necessarily request to be in writing, but it is perfectly acceptable if they are. It was our understanding that written answers have to be approved by the Office of Management and Budget. Did you have to go through that procedure with the answers that you are submitting to us today? Mr. ERWIN. Yes, the answers were approved by OMB. Mr. ROSE. Go ahead please. Mr. ERWIN. I had made some requests for funding but the funds were not granted so we have had to cut the work force and I am not working with as many people as I would like to be to give the kind of leadership that I would like to give. Nevertheless, with personnel and the funds that we have and under the circumstances, working under the act and without the power to enforce, we have been very fortunate. Other agencies in the Federal Government have been receptive for the most part. They have been appreciative of the fact |