Find Federal Agency

• WHAT IS ITS MISSION?
• HOW IS IT STRUCTURED?
• PRIMARY FUNCTIONS
• PROGRAMS
• BUDGET INFORMATION
• HISTORY
• FAST FACTS
• CURRENT POLITICAL ISSUES
• SUCCESSES AND FAILURES
• FUTURE DIRECTIONS
• AGENCY RESOURCES
• AGENCY PUBLICATIONS
• BIBLIOGRAPHY

PARENT ORGANIZATION: Department of Agriculture
ESTABLISHED: 1936
EMPLOYEES: 415

Contact Information:
ADDRESS: 1400 Independence Ave. SW, Rm. 4051-S Washington, DC 20250
PHONE: (202) 720-1255
TDD (HEARING IMPAIRED): (202) 720-1127
FAX: (202) 205-9219
URL: http://www.usda.gov/rus
ADMINISTRATOR: Wally B. Beyer
DEPUTY ADMINISTRATOR: Adam M. Golodner
DEPUTY ADMINISTRATOR: John P. Romano

WHAT IS ITS MISSION?

The Rural Utilities Service (RUS) of the U.S. Department of Agriculture plays a key role in improving the quality of life in rural America; its means of doing this is through administering electrification, telecommunications, and water and waste programs in a manner that is forward looking, financially responsible, and oriented toward customer needs.

HOW IS IT STRUCTURED?

The RUS is one of three agencies (the other two are Rural Business-Cooperative Service and the Rural Housing Service) within the Rural Development Bureau of the U.S. Department of Agriculture (USDA). The administrators of these three agencies report to the undersecretary for rural development. The RUS administrator, who makes the primary policy and program decisions for the agency, is assisted by a borrower and program support staff that includes a financial services staff, an administrative liaison staff, and a program accounting services division. Because of the financial nature of the agency's work, the administrator and associated staff work closely with two other agencies that are not part of the USDA: the Federal Financing Bank (FFB) and the Rural Telephone Bank (RTB). These banks provide the funds for many of the loan programs administered by the RUS.

The program functions of the RUS are divided among three operating units—water and waste, electric, and telecommunications—each of which is led by an assistant administrator. The administrator and his support staff concentrate on the financial details of individual RUS projects, and these three operating units provide the engineering and technical personnel needed to plan and execute the projects.

BUDGET: Rural Utilities Service

PRIMARY FUNCTIONS

The RUS is a credit agency that helps rural electric and telephone utilities with financing needs and administers a nationwide water and waste loan and grant program to improve the quality of life and promote economic development in rural areas of the United States. Financial assistance from the RUS helps rural electric utilities to construct electric generating plants, transmission lines, and distribution lines for reliable electric service. The legislation authorizing RUS work, the Rural Electrification Act of 1936, requires that the agency give preference to nonprofit and cooperative associations and to public organizations.

Because of the way in which the telecommunications industry has developed, however, about 75 percent of telephone systems financed by the RUS are commercial companies, and only 25 percent are subscriber-owned cooperatives. The RUS supplies electric and telecommunications programs with either direct financing or guarantees of repayment of loans given by commercial creditors. Usually the RUS will guarantee up to 80 percent of a loan. When the RUS approves electric loans, it requires most borrowers to obtain 30 percent of their financing from a nonguaranteed, nonagency source.

Water and waste disposal programs involve more urgent, health-related community needs than electric or telephone service, and therefore are the only RUS programs that can be funded through grants. Water and waste loan and grant programs provide for the investment of funds in the most needy communities for critical water and waste facilities. In some cases, RUS grants are made for up to 75 percent of the cost of establishing a water supply or waste disposal system. If a community experiences a significant decline in quantity or quality of drinking water, the RUS is authorized to provide a grant of up to 100 percent of the cost. RUS programs also fund technical assistance and training by nonprofit organizations in these communities.

PROGRAMS

The three major program areas of the RUS—electric, telecommunications, and water and waste—are each broken down into a number of specific programs that are intended to fulfill specific needs. One water and waste program, for example, is the Rural Water Circuit Rider Technical Assistance Program, designed to provide technical assistance for the operation of rural water systems. Through contracting, the RUS assists rural water systems with day-to-day operational, financial, and management decision making. The program complements the RUS's loan-supervision responsibilities.

One of the RUS's most recent programs in the area of telecommunications is the Distance Learning and Telemedicine Program, authorized by the 1990 Farm Bill. The program provides grants and loans to rural schools and health care providers to invest in telecommunications facilities and equipment that will bring educational and medical resources that might otherwise be unavailable to these areas. Distance learning includes linking rural schools within regions to share limited teaching resources and using libraries or training centers as distance learning centers linked with on-line resources or regional institutions. Telemedicine links rural hospitals and clinics to major medical centers and provides clinical interactive video consultation and distance training of rural health care providers.

BUDGET INFORMATION

The RUS budget, a component of the USDA budget, is granted through congressional appropriations. Some financing for RUS programs comes from the Federal Financing Bank (FFB), which is budgeted within the Department of the Treasury. Of the total 1997 RUS budget of approximately $3 billion, electric loans and water and waste disposal loans each accounted for 27 percent. Grant programs within the RUS, most notably water and waste disposal grants, accounted for 18 percent of the budget. Another 15 percent of the budget was spent on telecommunications loans; 6 percent on operating the Rural Telephone Bank (RTB); and 5 percent on the Distance Learning and Telemedicine Program.

HISTORY

The Rural Utilities Service was known for 60 years as the Rural Electrification Administration (REA), until the secretary of agriculture's departmental reorganization in 1994. Like many agencies within the Department of Agriculture the REA was created in a time of dire economic need when Americans were suffering from the depths of the Great Depression. The distances that had to be covered by power transmission lines, the scarcity of potential consumers, and their low income combined to make most rural areas unprofitable ventures for private utilities.

In the $4 billion Emergency Relief Appropriation Act of 1935, Congress included rural electrification as one of eight funding categories. Initially, the REA was assumed to be an agency that would operate primarily to get people back to work and money into circulation. A later executive order removed work relief requirements, and in 1936, with the Rural Electrification Act, the REA was established as primarily a lending agency. Its operations were specifically confined to making loans to provide electricity to people in rural areas defined as, "any area of the United States not included in the boundaries of any city, village or borough having a population in excess of fifteen hundred inhabitants."

Originally an independent agency, the REA was transferred to the Department of Agriculture in 1939. Although it was originally designed to lend money to electrify farms not receiving central-station service, the REA gradually became an agency that tended to finance the development of integrated power systems that were organized and operated through cooperatives. The excitement of these early years, when power was first supplied to rural homes, is still felt by people who remember "the night the lights came on." Activities and luxuries that most Americans took for granted—listening to the radio, refrigerating food, heating water before it came out of the tap—were over time made available to the majority of American farm families.

The Rural Electrification Act was amended in 1949 to provide for a rural telephone program; further amendments in 1971 established the Rural Telephone Bank within the REA for financing these telephone system loans. In 1973, a Rural Electrification and Telephone Revolving Fund was established in the U.S. Treasury for REA loan funds. This fund replaced the direct-loan program. Although REA did make use of direct loans in the future, its emphasis for both telephone and electrification programs became loan guarantees. Its spending for largescale generation and transmission projects far surpasses its spending for local electric distribution.

The RUS's water and waste disposal programs were never a function of the REA; they were administrated by another USDA agency, the Farmer's Home Administration (FmHA), until 1994, when the secretary undertook a dramatic reorganization of the entire department. The REA was abolished, its functions were assumed by the newly created Rural Utilities Service, and the water and waste programs of the FHA were transferred to the new agency as well. RUS's name was intended to more fully reflect the scope of its activities.

With the 1996 Telecommunications Act, the emphasis of RUS programs turned from simple telephone service to the connection of rural communities with the national information infrastructure. Computer literacy and connectivity became a new focus of RUS telecommunications programs.

CURRENT POLITICAL ISSUES

The USDA reorganization of 1994 was in part a response to a perennial threat for the RUS. The issue is, simply, whether the RUS, created solely to run power lines into needy communities during the dark days of the Great Depression, should continue to exist, at the expense of taxpayers. The RUS itself was proud to point out that by the 1950s about 97 percent of all rural homes had been wired by the agency. Why, then, members of Congress asked, did it continue to make government-subsidized loans to not-so-poverty-stricken communities? (In recent years, one of the groups to receive RUS support was the wealthy resort community of Hilton Head, South Carolina.)

Over the years members of Congress have attempted to do away with the REA and the RUS. The attempts have failed, however; one of the agency's strongest advocates is the National Rural Electrical Cooperative Association (NRECA), a powerful Washington lobbying group. With a $43 million budget and an accomplished lobbying staff, the NRECA richly rewards politicians who vote for rural development programs and RUS lending authority continues to increase.

The RUS is aware of its need to remain up-to-date. Some of its new goals—to build an on-ramp to the information superhighway or Internet for rural America and to fulfill the mandates of the Water 2000 initiative, for example—are expressly designed to make the agency seem indispensable to the future of the United States. Secretary of Agriculture Dan Glickman's 1994 combination of rural development programs into a new agency, the RUS, was in part an effort to consolidate and strengthen the standing of rural development programs and to ensure the survival of the RUS against its political opponents in Washington.

SUCCESSES AND FAILURES

The RUS considers each of its funded projects to be a success, but among the most prominent is the Alaska Village Electric Cooperative (AVEC), headquartered in Anchorage. AVEC, funded by loans from the RUS, is a major electric utility in Alaska; it provides electrical service to approximately 5,300 consumers located in 50 remote, isolated villages scattered throughout western Alaska. Only one of these villages is accessible by road—the rest are separated by hundreds of miles of wilderness terrain or large bodies of water. AVEC's service area is the largest of any electric cooperative in the world, measuring approximately eight hundred miles across at its longest point.

The introduction of dependable electricity has brought about many changes in this part of rural Alaska, which is populated largely (95 percent) by native Alaskans. The electric infrastructure has meant better health care; improved housing, schools, and water and sewer systems; improved communications; and new or improved businesses.

FUTURE DIRECTIONS

To a large degree, the future of the Rural Utilities Service has been decided by two key sources external to the agency. The Telecommunications Act of 1996 provided the RUS with a new mandate—ensuring rural online access to the information superhighway. To many, the law marked a new era for rural telecommunications and new opportunities for rural Americans. The 1996 legislation provided for the establishment of the Universal Services Fund to finance the effort. The Distance Learning and Telemedicine Program is the RUS's flagship program in this initiative.

Another significant directive for the RUS is Water 2000, President Bill Clinton's initiative to improve the quality of drinking water in rural areas, launched in 1994. The president's goal for the program was to improve the quality of life, protect public health and safety, and promote economic development in regions without a safe, reliable drinking water supply. The initiative earmarked more than $70 million for 54 Water 2000 projects in 35 states. Currently the RUS faces a backlog of nearly one thousand additional applications for assistance, and its funding is drastically short—the Water 2000 project requests alone amount to approximately $2.7 billion. The USDA and the RUS are working to leverage additional funds from other sources, including other agencies, state programs, bond banks, and local organizations.

AGENCY RESOURCES

General inquiries about the work of the RUS should be directed to the Legislative and Public Affairs Staff, RUS, USDA, 1400 Independence Ave. SW, Washington, DC 20250; phone (202) 720-1255. Specific questions about electric and telecommunications programs can be directed to the deputy administrator for program operations at (202) 720-9542. Questions about the water and waste program or the Water 2000 initiative can be directed to the deputy administrator at (202) 720-0962.

AGENCY PUBLICATIONS

The publications of the RUS are primarily regulations and bulletins, some of which ("A Short Description of the Rural Utilities Service," "Rural Development") are likely to be of interest to the general public. Other publications ("Preparation and Use of the RUS Form 254, Construction Inventory," "Rural Telephone Bank Loan Policies") are intended to be technical or policy guides for those who are interested in making use of RUS programs. Most of these publications are available for downloading at the RUS Web site, http://www.usda.gov/rus. For further information about RUS publications, contact the legislative and public affairs staff.