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January 2008, Volume 14, Number 1

Rural Development, Doctors

USDA's Business and Industry Guaranteed Loan Program, which seeks to foster development by backing loans in rural areas, makes loans of up to $25 million available to businesses in areas with less than 50,000 people. Since the program began in 1974, the default rate is about 11 percent, double the default rate on the Small Business Administration's most popular loan-guarantee program and far higher than the rate for commercial lenders.

Applicants estimate how many jobs are created or preserved by the loan, and USDA says that 1.5 million jobs were created or preserved since 2001; 75 percent of these jobs were saved or preserved, meaning that most loans go to existing businesses that may be in trouble. In 2006, USDA guaranteed $766 million in private loans to businesses and made $75 million in grants to nonprofits, local governments and businesses.

USDA and its Congressional overseers are generally satisfied with the program; they attribute the high default rate to the tactics of several aggressive lenders. One such leader was Business Loan Express, which found rural businesses needing money and profited from making and servicing the loans; 20 percent of the BLX loans that went into default. USDA apparently did little checking of BLX documents, since it says the purpose of the program is to encourage banks to lend in rural areas. In one case, BLX made a USDA-guaranteed loan to the owner of gas stations who would have created minimum wage jobs, but soon went bankrupt because most of the stations were not able to operate.

On several occasions, USDA guaranteed loans that created or preserved jobs for guest or unauthorized workers. Bland Farms of Glennville, Georgia received a $17 million USDA loan in 1998, even though it hired 400 to 600 workers each year under the H-2A program to harvest its Vidalia onions. US workers in 2001 charged that Bland rejected them because of a preference for H-2A guest workers; Bland paid a $15,000 fine and $62,000 to the US workers. Bland went bankrupt, but recovered and eventually repaid the USDA loan.

A total of $1.6 million USDA loans went to Aztec Environmental Inc. in 2003-04, an asbestos-removal company in Panama City, Florida that said it would preserve 210 jobs and create eight. Minority- and female-owned Aztec bid on clean-up projects at government sites, eventually employing 125 workers in five states. Most were unauthorized, staying on the job 30 to 90 days, and Aztec was debarred by the Air Force for hiring and bringing onto its facilities unauthorized workers, prompting Aztec to go out of business in 2007.

The Washington Post also profiled USDA's Value-Added Producer Grants program, which distributed $130 million between 2001 and 2006, including grants to large companies and coops.

Doctors. A group of Bombay-educated doctors serves 110,000-resident St Mary's county in southern Maryland. There have been efforts to attract doctors to rural America since the 1970s. In 1994, foreign doctors with J-1 visas could earn an immigrant visa by working for at least three years in a medically underserved area; most J-1 visa holders must return to their countries of origin for at least two years.

By 2006, 23 percent of practicing doctors in the United States attended a foreign medical school. One obstacle to practicing medicine in the US is the need to have a US residency. In 2006, 46 percent of foreign applicants received US residencies, compared with 93 percent of graduates of US medical schools.

The J-1 visa waiver (allowing the transition from rural doctor to immigrant) has become less popular, with only 900 of the 1,620 waivers used in FY07. One reason is that nonprofits such as hospitals are exempt from limits on the H-1B program, which provides three-year renewable visas for foreign professionals in a process that is very easy for employers.

Public Lands. All-terrain vehicles are appearing on more federal lands in the western states. There are an estimated 28 million homes less than 30 miles from federally owned land across the US, and many residents view the federal land as their backyard.

ATVs and public lands have become a combustible mix, especially as the number of riders skyrockets and more elect to go off established trails. ATV proponents want trails they can use established in remote areas; environmentalists oppose them because the existence of trails may prevent the designation of wilderness area in the future.

Felicity Barringer and William Yardley, "Surge in Off-Roading Stirs Dust and Debate in West," New York Times, December 30, 2007. Jenna Johnson, "Born in India, Transforming Rural Maryland," Washington Post, December 7, 2007. Gilbert M. Gaul, "The USDA's Losing Effort," Washington Post, December 5, 2007.


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