In the room is a gentleman who has appeared before this committee, Mr. Mark Bonner, the general manager of the Louisiana Statewide Association, who in addition is president of the Statewide Managers Association and who, though he is not a witness at the table, has told me that he is a witness and has come to lend his support in this cause. I do have a prepared statement. I think in the interest of time, since it is a brief statement, I will stick to my prepared statement in major part.

Mr. Chairman, our presence here today demonstrates the importance that we attach to the matter before you these next 2 or 3 days.

May I add Mr. Chairman, that the many thousands of rural people who spoke through the 9,000 delegates that attended our recent annual meeting in Dallas, Tex., are equally interested in the outcome of the committee's deliberations and related actions of the Congress.

We want to express our appreciation to the chairman of this committee and many of its members who were among the first to speak out in defense of the rural electrification program when it was canceled by the Department of Agriculture's press release back on De

cember 29.

We do appreciate the strong support you have given us, and we thank you for the opportunity to appear before you today.

We are here-not because we have a grievance with the Congress; not because we seek a political issue; not to oppose for the sake of opposition-we are here to urge this committee and the U.S. House of Representatives to reestablish its constitutional right to set policy through the legislative process.

We are here to ask that Congress act as expeditiously as possible to meet the growing financial pinch on rural electric systems that has been created as a result of the termination of the direct loans program with nothing ready to go into the REA.

My statement points out that recent Harris and Gallup polls indicate, we believe, that the American people did not mandate termination of the rural electrification program. Nor did rural electric people ask that it be ended. The strength of this program among rural people was never greater. I am sure that the rural people did not ask this program be ended.

Like the Congress, we are not even consulted on the decision before it was made! nor were we ever asked for alternative suggestions. We were simply notified by press release that the program was ended.

Our members are reasonable, hard-working people who pride themselves as good citizens and in their accomplishments in building rural America. And we have been moving, as you know, in this committee to develop our own supplemental source of capital as rapidly as possible, through the Cooperative Finance Corp. If I may say at this point, in this past year, almost half the money that went into the Rural Electric Association came not from REA but through private sources, through the Cooperative Finance Corp., and that money, at interest rates of 72 percent, more recently at 7 percent with much money for the generation and transmission program coming partly through CPC and through insurance companies, was sometimes as high as 712 percent. So we are not nor have we been for sometime depending on

the REA program for 2-percent money. We think we have been doing a great deal to help ourselves.

You will understand if all this has left many of our people somewhat resentful of the summary manner in which the rural electrification loan program was ended. And you will also understand that this experience has left us less than confident that the executive branch is interested in carrying out any meaningful rural electrification

program.

We have communicated this and other views to you in recent weeks, our most recent letter being that of March 5, 1973.

In each of these communications, including the last, we have indicated our firm support for H.R. 2276 introduced by Congressman Frank Denholm, by many others on the committee, and by others in the House of Representatives. We have feared, Mr. Chairman, that it would be an exercise in futility for the Congress to enact a new program for the Administration to simply ignore the REA Act of 1936-unless Congress made it clear that it would not yield its constitutional authorities to the executive branch.

On February 28, a compromise proposal was announced by Chairman Poage and Congressman Ancher Nelsen, which they indicated would be moved ahead if all interested parties could agree.

When we analyzed its provisions and compared them to the set of principles our membership was just then working on at our Dallas meeting, we did find that draft seriously deficient in a number of ways. Over this past weekend we were provided with a new draft of the Poage-Nelsen bill, marked as revision 1, and it is a vast improvement over the first draft. In fact, the March 9 draft, if enacted into law, would create a viable, ongoing REA electric loan program. As we understand the language, and we have studied it in depth so that we could before appearing here, we believe that this is good, acceptable legislation.

The resultant loan program would be, in major part, and with relatively minor exceptions, consistent with the principles our members agreed upon in our annual meeting at Dallas. I would of course point out that we cannot speak for our friends in the telephone program. They are here to speak for themselves. I do not really know whether it meets all their needs. I can and do address myself to what the association does as far as rural electrification is concerned.

If the committee wishes to report this legislation without amendment, we will support that action and we pledge our unqualified support toward its passage in the House. I think that is important, because it is not by coincidence that this language meets the needs. A great deal of work, a great deal of thought has gone into it, and it has taken time, I know, for Mr. Poage, Mr. Nelsen, and others of you who have been involved in it to work out. We would submit, since we know that this will work and since we cannot be sure what changes in it, particularly major changes, would do, we would strongly urge that if you are to report it, if you report it without amendments as far as the electric part is concerned, we would also respectfully urge that you seek a closed rule when it moves to the Floor. It is a complex proposal and I am sure it will be open to sharpshooting when it reaches the Floor, notwithstanding the, I hope, strong support of this committee.

If, on the other hand, the committee does not wish at this time to report this legislation, exactly as spelled out in the March 9 draft, we strongly urge you to report H.R. 2276 at once. If that should be your decision, we will support that bill with all of our resources, and in that event we will continue to work with the Agriculture Committee and the administration toward longer range amendment of the Rural Electrification Act, but we do want to make very clear that this draft is acceptable to us as it now is.

Since the precipitous action of December 29, we have talked to a number of administration officials including the director of the Office of Management and Budget, the Secretary of Agriculture, and others, and quite frankly those discussions were most inconclusive on issues of substances. We have indicated from the outset of this whole debacle that we would deal with anybody concerned in good faith and we will continue to do that until we can get this situation worked out and satisfactorily resolved. We are interested in a loan program, a permanent program that we can depend on today, tomorrow, and next year, a program that will meet our needs and rural America's needs, and that means both volume of capital and interest rates consistent with the basic needs for the people that are using it.

No other kind of program makes any sense, because the leadtime required between study, construction, and operation in the power business is such that management must know that the funds are there and can't be jerked away on some whim and without notice.

As we meet here today there has been better than a 2-month drought on REA loans-longest since the inception of the program, since any REA loans have been made under any statutory authority available to the REA since its amendment. That is the longest drought in the history of this program.

We know that REA has recently announced 8 or 10 loans to rural electric and rural telephone systems under the so-called new program. We are also aware that they are principally paper gestures, since they are all under stop order, and no money will be advanced unless and until all of the conditions under the Rural Development Act are

met.

This committee has been apprised of the financial state of affairs in the new program, since the Under Secretary of Agriculture addressed himself to your questions on this matter just a few days ago, I think, since I understand the Secretary of Agriculture addressed himself to your questions on this matter only a few days ago.

We would add to this that we have asked officials of the Rural Electrification Administration if there was any assurance that the new program would be continued beyond fiscal year 1973, and the answer was no-there is none. I do not know whether that situation has changed since our last discussions with them.

In concluding my statement, I want to reiterate our position that policy control and review of any rural electrification program must reside with the Congress, and this draft language that you are considering would bring that about. It certainly would leave with the Congress the prerogatives, and we think that is where they belong. Finally, I would add that if America is going to meet the energy crisis, which is no longer a threat but a grim reality, it cannot do so by allowing the Government to close down the Rural Electrification

Administration on which our many rural electric power systems are largely dependent. We need action now.

We need a loan program now.

Mr. Chairman, members of the committee, I do appreciate your kind attention. I will be glad to respond to questions.

The CHAIRMAN. We thank you so much, Mr. Partridge. Your associates did not intend to add to this?

Mr. PARTRIDGE. No sir. They will participate in the questioning. The CHAIRMAN. They give approval to your statement, I gather. We are trying to follow a procedure that gives us a little more time for consideration of these matters and that is to ask our friends who are here testifying to stand aside until after others have testified and then we will call you back in a group. That way we find we can proceed more rapidly and we will ask you to come back later.

The next witness is Mr. William Matson, general manager of the Pennsylvania Rural Electric Association, Harrisburg, Pa. Mr. Matson, we will be glad to hear from you.

STATEMENT OF WILLIAM MATSON, GENERAL MANAGER, PENNSYLVANIA RURAL ELECTRIC ASSOCIATION, HARRISBURG, PA.

Mr. MATSON. Mr. Chairman, I have a statement which has been circulated to the committee which, unfortunately, over 24 hours has changed significantly from what I thought it was on Friday when it was being prepared. I will read part of it, part of it I will leave out. The CHAIRMAN. It will all appear in the record.

Mr. MATSON. Mr. Chairman, my name is William F. Matson. I am general manager of the Pennsylvania Rural Electric Association, 127 Locust Street, Harrisburg, Pa. PREA is the statewide service organization of the 13 rural electric cooperatives which serve some 115,000 consumer-member in our State. I appear here today on behalf of these systems and their consumer-members.

I would like to make a few brief comments and then I would be happy to try to respond to any questions the members of the committee may have.

Mr. Chairman, as soon as possible after the Administration's abrupt announcement December 29 that it was terminating the direct-loan program of the Rural Electrification Administration, we in Pennsylvania began assembling information on this action and its impact on rural electric systems and their members.

Much of this information was disseminated in the February issue of Penn Lines, our statewide monthly consumer publication which is sent to the homes of some 80,000 electric co-op members.

On page 23 of that magazine, we included a coupon and asked our members for their views. We asked them simply to check one of the two boxes in that coupon. The choices were these:

Yes, I want my rural electric cooperatives leaders to fight vigorously to have the rural electric loan program restored, in accord with the rural electrification law.

No, I do not care. I consider that a clear choice.

What happened far surpassed anything we had imagined. Those of you who have had any experience with direct mail know that those who get 1 percent feel that they have done a great thing. I did not bring along the literally thousands and thousands of those we got

back. The two members of the committee from our State, we have given each one of them a package. We have tabulated them, sorted them, some of the most poignant letters and comments you can imagine.

The CHAIRMAN. We have got some we will swap with you.

Mr. MATSON. I must admit, Mr. Chairman, that I was delighted to know that several of them did write to the chairman and communicate as best they can.

More than 5,000 of our readers took the time to clip that coupon, stick it in an envelope, address it, stamp it, and mail it. We were literally inundated with mail. We still are, even yet, 2 months after this issue, we are still getting about 50 coupons every day from people.

And all but a dozen or so of these 5,000 readers told us: Yes, let's fight to restore the rural electrification law. In all honesty, I should say I brought every one of those antis. I guess they must be the little stack on the top down there. And I got, Mr. Chairman, some of the nastiest letters I have in some time, too, from that dirty dozen.

I cite this experience so that the members of this committee will know that the rural people of Pennsylvania-and I believe, the Nation-support your efforts to restore constitutional government.

Mr. Chairman, our State association and its member systems fully support the position taken by the NRECA board of directors and the NRECA membership at its recent annual meeting in Dallas. I was a voting delegate at that meeting and I can report that the resolution dealing with the restoration of the REA loan program was adopted without a dissenting vote.

We, along with practically all other rural electric systems, urge this committee to adopt, without amendment, the Denholm bill, H.R. 2276, which is pending before you.

We believe that the passage of this legislation is vital if we are to reestablish the Congress as the policy-determining branch of the Federal Government. Unless and until that issue is settled, it would be an exercise in futility for the Congress to revise or revamp the Rural Electrification Act-a law which the administration is now failing to faithfully execute and which it will continue to ignore unless the Congress makes its will known.

I understand that the purpose of these hearings today is to solicit views on proposed legislation submitted to the committee by the chairman and Congressman Ancher Nelsen of Minnesota.

Unfortunately, I have not had a chance to examine in detail the latest version of this legislation which I understand only became available on Saturday. As a parenthetical aside, I might say this was written about the last bill as opposed to the present one we are talking about today.

However, it is our position that major revisions of the Rural Electrification Act must be carefully studied and reviewed before they are enacted. I would remind the committee of the countless hours of hearings and testimony that went into developing the Rural Electrification Act of 1936 and the subsequent Pace Act of 1944. These were carefully thought out and fully debated pieces of legislation. The Rural Electrification Act turned out to be one of the most successful pieces of social legislation in our Nation's history, thus underscoring the wisdom of Congress in carefully considering all the ramifications of the program it was creating,