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REA, Lawmakers Spar on Excess Cash Held by Rural Co-ops

June 21, 1991

WASHINGTON (AP) _ Lawmakers are sparring again with the Rural Electrification Administration, this time over the issue of whether some electric and telephone cooperatives are getting cheap federal loans even though they have excess cash.

″We do believe we need to keep an eye on what level of funding (rural cooperatives) really need,″ REA Administrator Gary C. Byrne told a House Agriculture subcommittee Thursday.

He said some cooperatives with hefty cash reserves are getting low-interest loans and loan guarantees from the REA, crowding out needier co-ops that are still waiting for their loan requests to be approved.

Byrne said 1,021 electric and phone co-ops have a total of nearly $2 billion in cash and liquid assets. But under the law, the REA cannot consider those funds when making loans, he testified to the subcommittee on conservation, credit and rural development.

Some of the federal loans and guarantees have gone to co-ops that are subsidiaries of big telephone holding companies, such as GTE Corp. and Alltel Corp.

And some of the phone co-ops, which are non-profit and owned by the people who use them, have used excess cash to diversify into cable television and cellular telephones - and to buy bonds and mutual funds.

But Rep. Glenn English, D-Okla., the subcommittee’s chairman, said he isn’t convinced there’s a problem. He and other members of the panel accused the Bush administration of using the issue to hide its real agenda: trying to gut the REA.

″REA has no credibility in terms of wanting to save the REA program,″ Rep. Steve Gunderson, R-Wis., told Byrne. ″The perception is you don’t want to reform it, you want to end it.″

The Agriculture Department agency suspended its telephone loan program last December and it remains frozen. Rural lawmakers have been wrestling over the REA for years with Republican administrations, which have tried to force rural cooperatives to borrow in the private market.

Pressure to cut the federal budget deficit has given the idea new momentum within the Bush administration.

Byrne said the cash issue is especially acute for telephone co-ops, whose cash reserves doubled from around $800 million to $1.6 billion between 1984 and 1990. ″The industry created enough cash to handle all their construction needs,″ he said.

Byrne, who took the reins at REA last year, was blunter in a speech he made in February to the National Telephone Cooperative Association, the industry’s lobbying group.

″It is very hard to defend a 5 percent loan to a giant corporation when they have hundreds of millions of dollars in their general funds and in 1989 made well over a billion dollars in profit after taxes,″ Byrne said. He also told the group, ″I think we have pockets of irresponsibility″ in the telephone loan program.

Byrne noted in the speech that last year, 33 percent of REA’s telephone funds, or $141 million, went to big holding companies that are traded on the New York Stock Exchange.

But he told the subcommittee Thursday that all that’s needed are ″a couple of modest changes in the program.″


WASHINGTON (AP) - The Bureau of Land Management is following the Forest Service’s lead in granting Bristol-Myers Squibb Co. the right to the bark of Pacific yew trees for cancer research.

The pharmaceutical company will pay the BLM an estimated $2 million to $10 million over five years to count, conserve, research and collect the bark containing the anti-cancer drug taxol, officials of the Interior Department agency said Thursday.

Agriculture Secretary Edward Madigan signed a similar agreement with Bristol-Myers Squibb on Wednesday for exclusive rights to the bark of an estimated 23 million yew trees on about 8 million acres of national forests in Oregon, Washington, California, Idaho, Montana and Alaska.

About 6.5 million yews, which until recently were discarded as waste in the process of logging more valuable trees, are scattered across about 3 million of the 50 million acres the BLM manages in the West, agency spokeswoman Suzanne Stevenson said.

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