A $12 billion question: What does ‘rural’ mean?

WASHINGTON–In 2009, Bolton and Vernon were moving full speed ahead on a vital $25 million sewer project to replace inadequate septic systems serving the area’s residents. But as construction was about to start, local officials got bad news from Washington: $2 million in federal aid was suddenly being yanked.

It wasn’t because federal officials questioned the need for the sewer system or the soundness of the plan, but because they had tweaked the definition of “rural” and the Bolton-Vernon project no longer qualified. So the initiative was abruptly declared ineligible for $2 million in already-promised funding from the U.S. Department of Agriculture’s rural development water and wastewater program.

Connecticut lawmakers quickly appealed that decision and got it reversed. But Rep. Joseph Courtney, D-2^nd District, said there’s now a fresh effort underway in Washington to rewrite the definition of rural in a way that could be devastating for Connecticut.

“The definition of what is rural is something that’s going to come up the in Farm Bill, which is due for rewrite this year,” Courtney said recently. “And frankly, there are people within the USDA who don’t think Connecticut is a rural state and [think] that we should be written out of access to that critical form of financing.”

At issue are three major federal programs that provide loans and grants for rural development-one to help fund water and waste facilities; a second for community-service facilities, such as libraries and hospitals; and a third to spur small business development.

Cheryl Cook, the USDA’s deputy undersecretary for rural development, recently estimated that her agency has about $12 billion annually at its disposal for these programs. And the definition of rural is key to how USDA doles out that money.

“It’s a gate if you will,” she testified at a Feb. 15 hearing before a House Agriculture subcommittee. “If you don’t meet the standard, we don’t even take your application. The gate does not open.”

Federal programs rely on a jumble of different definitions for rural. But the classifications at stake in these three programs are fairly simple. For sewer and other water projects, a community can’t be eligible for federal aid unless it has a population of less than 10,000. For community facilities, the population threshold is 20,000, and for small business development funds, it’s 50,000.

Courtney, a new member of the Agriculture Committee, and other New England lawmakers note that in the Northeast, these definitions can be uniquely problematic. In many other areas across the country, rural areas are not incorporated, so they may sit several miles outside a city or town limits.

In Connecticut, there are no unincorporated areas. Every area is defined, whether as a village or other municipality. So, for example, the village of Noank is its own entity, not part of Groton.

Right now, USDA looks at such villages separately-as they do an unincorporated area of, say, Texas or Alabama. But back in 2009, USDA officials tried to end that practice, saying small boroughs and villages, even if they had their own post office and other facilities, couldn’t be viewed as stand-alone localities but as part of the larger cities or towns.

In the case of the Bolton-Vernon project, officials from the two towns had created the Bolton Lakes Regional Water District, with elected leaders from both towns serving on that body and working to find funding. Vernon Mayor Jason McCoy said they were told that because the water district only covered about 400 people, it qualified for USDA rural development funds. They applied and were approved for a low-interest federal loan.

But when President Barack Obama took office, USDA staff came up with a different interpretation of rural, deciding that the district couldn’t be considered its own entity but was part of the larger two towns. Bolton was small enough to still qualify as rural, but Vernon was not, so the funding was pulled. Nearly a dozen other small municipalities similarly saw anticipated federal funding suddenly disappear.

The idea behind USDA’s action was to develop a more consistent national policy for rural development programs. Courtney and other New England lawmakers said that might seems like a “laudable” goal in theory. But such a “universal definition fails to account for the uniqueness of how communities have developed in the Northeast,” he and others wrote in a letter to Agriculture Secretary Tom Vilsack in appealing the 2009 change.

Vilsack eventually agreed, writing to Courtney that villages inside of incorporated towns “may be considered separate cities or towns” for the purposes of eligibility for rural development funds. Meanwhile, Courtney, DeLauro and others worked also worked to protect Connecticut’s tiny population centers through language inserted in the annual agriculture funding bills specifying that, for the purposes of water and waste disposal projects and community service facilities, USDA’s historical interpretation of stand-alone small villages and boroughs would apply.

Although Vilsack rescinded that 2009 decision, Congress is now preparing for a far-ranging debate over the federal farm policy. And the definition of rural is already coming under intense scrutiny, as lawmakers jockey to make sure their home-states are best positioned to get federal rural development funds.

The House Agriculture’s subcommittee on rural development recently held a hearing on exactly this issue. And lawmakers from Illinois to California expressed discontent with the current definition of rural. But there was little agreement on how to change it.

Democrat Rep. Jim Costa, for example, noted that his California district includes the nation’s two largest agricultural counties, in terms of farm output: Fresno and Kern.  “Yet none of those counties in the whole region qualify under the rural definition,” he said. “Having farmed there myself for three decades, I would submit we’re pretty rural. Our tax dollars come here to Washington, but they don’t’ come back.”

He asked whether policymakers should start from scratch to write a new definition, rather than trying to tweak what’s now on the books.

Other lawmakers cautioned against expanding the definition, saying that could draw scarce resources away from needy areas. “By broadening the definition I’m quite concerned money isn’t going to get to areas that are truly rural,” said Rep. Terri Sewell, a Democrat from Alabama.

Cook, the USDA official, called it one of the most “vexing” questions federal agriculture officials face, and suggested that Congress might want to give USDA more flexibility in defining rural.  She noted that population figures are now key to the definition, meaning USDA can’t take into account a broad array of other factors, from the kind of land use and zoning rules in effect to an area’s agricultural output.

“Relying almost solely on total population as the definition of rural leaves out other obvious characteristics of a rural area compared to a metropolitan area,” Cook stated in her written testimony. “Those characteristics might help direct USDA Rural Development’s resources to areas of greatest need and opportunity.”

Courtney said he will be monitoring the debate closely as it ramps up. “It is imperative that we protect Connecticut communities’ continued access to rural development programs,” he said. “Connecticut’s rural communities simply do not have the resources to fund new sewer projects, water projects or other facilities on their own.”

He noted that when the last farm bill was written in 2008, there were no members from New England on the Agriculture Committee. Now, he’s one of three, and they’ll be working together to “to protect this vital funding pipeline.”