Thank you very much.

Mr. SISK. Thank you very much, Congressman Nelsen. We certainly do appreciate that very outstanding statement, particularly coming from a man with the great knowledge which you have.

That concludes the witnesses this morning. We have a series of statements from other colleagues and individuals that without objection will be made a part of the record.

By unanimous consent we will insert in the record statements submitted by Members of Congress.

[The statements referred to above follow:]

STATEMENT OF HON. JAMES ABDNOR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA

Mr. Chairman and distinguished Members of the House Agriculture Committee, I am pleased to be with you today to testify in behalf of legislation which would require the continuation of the 2% direct REA loan program which has been the heart of successful rural electrification for more than 35 years.

To those of us who represent farm and rural districts with a great need for this program, this move by the Administration to shift REA loan financing to the Rural Development Act at 5% instead of 2% shows an apparent disregard for the future needs of a healthy farm economy. Electrification of millions of farms at rates farmers could afford has meant the difference between farming as performed in some less developed countries, and American agriculture as a major industry in an expanding economy. American farm goods were exported at the rate of some $9 billion in 1973, and the projections for 1973 are $11 billion. This greatly aids our balance of payments deficit.

Without electrification of our farms, farm output could not grow fast enough to feed our booming population, nor the hungry of other nations who buy our food. Food prices would be much higher than they now are, and millions of Americans in rural America would not have entered into the Twentieth Century without the help of 2% REA loans. But the job is not done. To discontinue all 2% REA loans would thwart the future growth and well being of vast areas in rural America which still need this low interest rate to grow, develop, and expand. We must not ignore rural America, which is one of the nation's major consumers, exporters, taxpayers, suppliers and employers.

Mr. Chairman, in my own State of South Dakota, from 1935 to January of last year, nearly 92,000 consumers have benefited from electrification loans. Over 55,000 miles of lines have been provided for by the loans the Administration now proposes be raised to 5%. Nearly $162 million has been loaned to our State's 34 cooperatives to provide these services. Much of it could not have been, and will not be provided without the 2% interest rate.

In South Dakota we still have areas without electricity, and phone service. For example, a couple weeks ago I got a call from a constituent in Manderson, South Dakota who has been pleading for phone service. He lives in an isolated area and Bison State can't serve him because of the high cost involved in running the line 8 miles for 1 subscriber. In rural areas with low population bases, the continuance of the 2% loan is essential to the hope of any service at all.

In my state. 97.9 percent of our farms are receiving central station service. Thousands more are being served at the same time by initial and improved telephone service provided by the RTA. Therefore the continued healthy existence of rural telephone cooperatives is imperative in South Dakota.

When Mr. Weitzell, the Deputy Administrator of REA says that the impact of the proposed Administration change will be "limited", he is certainly not referring to the impact of higher rates in South Dakota. Our electric cooperatives, as others in other states, are geared to the 2% money. Many coops are borrowing their supplementary funds from the CFC's. The role and position of the CFC's has been growing. Eventually they will be able to provide maior portions of REA loans, but for this to happen, REA must stay alive and healthy. At the very minimum future compromises should provide for a transition period, or prorated 2% REA loans on the coop's ability to pay back interest loaned.

The initial Agriculture announcement referred to the "broad new authority" for loans for community development under the new Rural Development Act

of 1972. I was not here when this legislation was considered, but I have been over the law and conferred with those who worked for its passage. They assured me that there was never in anyone's mind the idea that REA would be financially supported under the Rural Development Act. Rather, in this instance the Administration seems to have read into the law what it wanted to see.

The other body has already reported out a bill to amend the Rural Development Act so that this misunderstanding will not continue. I support this action. Further, Mr. Chairman, the Administration has gone so far as to say REA loans at 2% are not longer needed. This is simply not true in much of South Dakota. There are at least eight cooperatives in my state which would not be able to expand without 2% direct loan money. These are: Butte, Nothern, Bon Homme, Ree, Kingsbury, Cam-Wahl, F.E.M., and the Grand Electric Cooperatives. Therefore, I hope that the Committee will respond, as the Senate Agriculture Committee has, to the needs of farmers throughout the United States by maintaining these 2% REA loans for the present. At the very least we should provide some special assurance that hardship cases in low population areas will receive service at the 2% loan rate.

Although I have co-sponsored the bill to completely restore 2% REA financing, Mr. Chairman, I have done so more on the principle that the Congress, and not the Administration, should be setting fiscal priorities for government spending. I am not adverse to compromise in the future, nor to a true evaluation of the situation at hand. For those cooperatives in South Dakota, and other states, which truly can't make it or grow on anything other than 2% loan money, then I firmly believe we should be providing it if for no other reason than to keep the farm economy growing. For the others, perhaps we should be looking at fair alternatives based on need and ability to pay.

Thank you, Mr. Chairman and Members of the Committee for you careful attention to these remarks.

STATEMENT OF HON. BROCK ADAMS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. Chairman, I am pleased to have the opportunity to express my position on the important rural electrification legislation now under consideration by the House Committee on Agriculture.

I strongly support the Rural Electrification Program and have, in fact, joined my distinguished colleague from South Dakota, Congressman Frank Denholm, in sponsoring legislation to reinstate the REA 2% direct loans, the backbone of the REA program. This bill would also direct the REA Administrator to spend yearly the amounts appropriated by the Congress for rural electrification.

The REA program has long performed vitally needed electrical and telephone services in thousands of rural areas across the United States. With the termination of the REA 2% direct loans, the Nixon Administration has seriously crippled the operations of countless rural electrification cooperatives, virtually slapping them in the face for establishing and performing these vital electrical and telephone services in areas which were too remote to be of economic interest to large commercial electrical companies.

Thus, the Administration has again demonstrated its disregard for the needs of the people of this country. Not only has the Administration thwarted the rural electrification cooperatives' efforts to meet the electrical needs of rural areas during the present energy shortage, but it has also taken a "Robin Hood in Reverse" attitude by robbing the poor of important financial assistance and giving to the rich. The REA serves those who use relatively small amounts of electrical power and for the necessities of life. Without REA, this power will go to those who use large amounts of power and often for the luxuries of life such as air-conditioning.

The REA loan termination is one of the many examples of the Executive's flouting of the will of the Congress and the people of the United States. We cannot allow such edicts to be sustained, or else we expose every vital agricultural and social program to possible extinction.

We also expose ourselves, the Members of the United States Congress, to Presidential usurpation of our Constitutional responsibilities to make laws and to control federal expenditures. Our founding fathers refused to concentrate too many powers in one office, and we, as the elected representatives in this American

democracy, must check the executive's attempts to legislate, or in the REA case,. to repeal a law by ordering zero funding.

The passage of legislation to reinstate REA direct loans and to require the annual expenditure of the funds appropriated by the Congress for REA is essential to the preservation of the effective performance of our country's rural electrification cooperatives. This legislation is also very important as a test of the ability of Congress to reassert its will and to exert its authority, under the separation of powers doctrine, to legislate and then appropriate, so as to establish. priorities. This is vital as a check on the powers of the executive branch of the federal government which will otherwise both legislate and appropriate by simply refusing to spend any funds for programs it does not like.

I urge the Agriculture Committee to give immediate approval to REA legislation and to expedite the bill's passage through the House of Representatives.. Let us demonstrate that the Congress can act, and will act to serve the needs and to protect the rights of all the people of the United States.

STATEMENT OF HON. BILL ALEXANDER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARKANSAS

That the Committee on Agriculture must consider legislation to make the operation of the Rural Electrification Administration programs mandatory, is further evidence of the contortions through which the Executive Branch is: attempting to usurp the legislative powers of the Congress.

In announcing its intention to convert the REA electric and telephone twopercent direct loan program to an insured and guaranteed loan program at higher costs to citizens of the Nation's countryside, USDA claimed it had authority to do so under the Rural Development Act of 1972. The Executive Branch is using a shell game to deal with the real and critical problems of our small communities. The REA program has helped hundreds of small communities in 46 states develop the energy resources that are essential to revitalized economies. Rural telephone systems, through REA programs, were becoming more readily available to the countryside. Power resources and communications systems are essential to progress in small communities.

It was the intent of the Congress that the Rural Development Act should provide additional development resources for rural areas-not be the basis cancelling small communities' chances for survival and growth. At no time during their appearances before this committee did USDA representatives propose that this act be used to smash the hopes of the countryside.

The USDA has clearly distorted the authority which Congress provided it in the passage of the REA legislation.

In its news release and in its adverse report to the committee on H.R. 2276, USDA claimed that its program change authority is derived from the Rural Development Act of 1972. But, it makes no such claim in the February 5, 1973, memorandum from the USDA Office of the General Counsel to Secretary Earl L. Butz titled "Recent Termination of Certain Programs of the Department."

A copy of the memorandum was provided to me on February 23, in response to my letters of January 10 and 23, 1973, asking for specific statutory authority for the changes which USDA is attempting to make in the REA program. Pages five (5) through nine (9) of that memo discuss the "REA Electric and Telephone 2% Loan Program." At no place in this discussion is there reference made to the Rural Development Act of 1972.

The General Counsel's opinion on the actions against REA begins with the flat statement that, "The substantive legislation with respect to rural electrification and telephone loans is discretionary and not mandatory."

As I read this memorandum, I got the feeling that the Secretary said to the General Counsel, "We've decided we are not going to operate this program that Congress had told us to carry-out. Now, you tell me how to justify failing to abide by the laws of the United States and thumbing our noses at Congress." The memorandum quotes from four (4) sections of the Rural Electrification Act of 1936 as amended. In each case the phrase, ". . . authorized and empowered. ." is underscored as if to prove that Congress did not really intend for the program to be operated.

It is unreasonable to contend that the Congress, an institution with many and varied problems to deal with, would have fritted away its time passing laws

which it did not intend to be administered for the benefit of the Nation. The Executive Branch argument that the Congress did not want the REA programs carried out as specified by law is a weak and unsound one. By acting in this monarchial and undemocratic manner, the USDA has left the Congress no choice but to enact legislation explicitly and unequivocally mandating the rural electrification and telephone programs to be operated as provided by law.

STATEMENT OF HON. TOM BEVILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA

Mr. Chairman and distinguished Members of the Committee, I appreciate this opportunity you have given me to express my support for legislation which would direct the Administrator of REA to reinstate the low-cost loan program.

In an era when so much emphasis has been placed on the need to reverse the trend which sees so many people migrating to the large metropolitan areas of our nation, it is inconceivable to me that such a worthwhile program as the REA loan program could be discontinued.

On December 29, 1972 the Department of Agriculture announced that REA electric and telephone 2 percent direct loan programs were being converted to insured and guaranteed loan programs at a 5 percent interest rate, effective January 1, 1973.

I am strongly opposed to this move.

Aside from the constitutional questions involved, I believe it represents a giant step backwards in our efforts to develop the rural areas of our nation.

The discontinuation of this low-cost loan program to cooperatives will restrict present services and hold back the development of future services.

I have consistently supported and worked for programs to develop the rural areas of our great nation.

Since the end of World War II, the United States has seen the greatest population migration within one nation that mankind has ever known.

This migration has resulted in the concentration of more and more people on less and less land. Today, 70 percent of the American people live on 2 percent of our land.

This increasing concentration of people has produced many of our current problems, including traffic jams, polution, housing shortages and crime.

In my judgment, Mr. Chairman, this change in the REA loan program is a retreat from our objectives to achieve a sound rural-urban balance.

We have just come to realize that pouring millions of dollars into our unlivable cities is not the answer to the problem. We know now that to get peopleback into the rural areas we must provide them with jobs and economic opportunities.

The REA program is one of the best things that has happened to rural America and is desperately needed. Its discontinuation is a severe blow to the progress we have made.

I am all in favor of cutting government spending. But I do not believe this is wise economy.

Mr. Chairman, the REA loan program is needed. I favor immediate passage of legislation requiring reinstatement of this vital program.

Thank you.

STATEMENT OF HON. BILL CHAPPELL, A REPRESENTATIVE IN CONGRESS FROM THE. STATE OF FLORIDA

Mr. Chairman, like so many programs in this country, it looks as if we sometimes absolutely try to condemn the successful and reward the failures.

We have launched one give-away program on top of another—most of them complete drains on the economy with never a chance to get a nickel back. One of the few really successful and helpful programs has been the Rural Electrification Act. It has brought countless citizens needed services and has helped immeasureably in the development of our rural areas of America.

The R.E.A. Program has been one of our most successful economically. These groups were not asking-or demanding, as the phrase so often goes now-that we give them handouts. They are self-sustaining businesses who are repaying the

loans and the interest while expanding to bring these badly needed services to more areas. Of course, the interest at 2% is very low, but is not a loan better than a handout . . . and is not a low interest rate at least some gain to our shaky economy?

The rural coops in my area have been most successful and they are highly respected. Sumter Coop reaches into the southern part of my District and they have done an outstanding job. Clay Coop, in the northern section of my District, was begun in 1938 and had financing of $163,000 which was borrowed, not given as a handout. They started with 143 miles of electric line strung along the country trails, serving some 651 subscribers. Since those days, they have turned to the government for help, borrowing some $22 million. They have paid it back, are still paying it back, and indeed, at one time managed to pay back $2 million ahead of time.

This is the kind of free enterprise we should be encouraging. Clay Electric Coop now serves more than 47,525 subscribers. They have contributed to the growth of the area and to the State. Because of the automation brought about by electric power, a farmer can feed himself and 42 others. People work because of Clay Coop; they pay taxes because of it; and they live in comfort because of it. This program was born through recognition of the fact that rural America would not have access to electrical power. The Congress, therefore, authorized the Rural Electric Coops and they have done an outstanding job in providing what we acknowledge now as an indispensable service. The public utility companies at that time were unable to meet these needs due to the extremely high cost of constructing power lines to remote areas, serving very few people per mile (I also draw your attention to the fact that these coops must pay ad valorem taxes in the various states for right-of-way for their power lines and substations).

In the case of Clay Electric Coop, there is an average of 71⁄2 customers per mile, whereas public utility companies serve from 50-100 customers per mile, yet the cooperatives have kept the charge to the individuals comparable to that of the public utility company.

Mr. Chairman, it is obvious that to do anything other than continue this program would only increase the costs to the individual consumer and would fan the flames of inflation to one segment of our nation which can least afford it-rural AMERICA.

The Administration and the Congress have avowed they will combat inflationary trends. Continuing to make funds available for the Rural Electric Corps is one sure way of checking inflation to a great segment of our nation.

Congress has witnessed the success of coops all over the country and it has recognized the need for appropriating more funds for loan programs. It is inconceivable to me that we could possibly allow a program like this to be scuttled by the Administration. The Congress must assert its constitutional powers by adopting H.R. 2276 or a similar bill. This legislation would reaffirm that the funds the Congress has authorized will be available to the rural cooperatives.

Mr. Chairman, I thank you for this opportunity to be heard by your Committee and I will appreciate any deliberation you might give to the favorable consideration of this bill.

STATEMENT OF HON. JOHN C. CULVER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IOWA

Mr. Chairman, I welcome the opportunity to express my views on the REA electric and telephone cooperatives two percent direct loan program. I am a cosponsor of H.R. 4615 which has been referred to this committee. Like the other bills before you, H.R. 4615 seeks to reinstate the REA direct loan program terminated by the Administration at the beginning of this year. This action is critical to the future financing of the entire rural electric development program.

Rural electric cooperatives have had an outstanding record of service since the passage of the Rural Electrification Act in 1936. The REA has financed the constuction of over 1.7 million miles of electric lines, thousands of substations, and almost 200 generating plants in forty-six states. More than 7 million consumers receive power from REA lines. In 1936 about ten per cent of farms were being served by electric companies. Today over ninety-five per cent of rural Americans have electricity in their homes, in large measure due to the REA program.

With this record of success, the REA program has widespread public support. The public is alarmed at the termination of this and other farm programs. A