No love was lost between President Richard Nixon and the Rural Electrification Administration (REA). He believed the federal agency gave more help to electric co-ops than they deserved, once claiming that 80 percent of REA’s loans aided “country clubs and dilettantes … and others who can afford living in the country.”
On December 29, 1972—dubbed co-ops’ “Black Friday”—he unceremoniously terminated the loan program that had been in place since REA’s beginning in 1936. Instead of co-ops being eligible for 2 percent loans under the Rural Electrification Act, future loans would be made under the recently passed Rural Development Act, and they would carry an interest rate of 5 percent.
The change—monumental for co-ops—was announced by the Department of Agriculture in a press release issued at 4 p.m., as official Washington was closing down for the long New Year’s weekend.
“When we got word of it that Friday afternoon, I felt as if April Fools’ Day had come three months early,” Bob Partridge, the late NRECA general manager, later recalled. “I couldn’t believe it.”
His first two calls were to Secretary of Agriculture Earl Butz and REA Administrator Dave Hamil, who told him that all REA loans were on hold until new rules and regulations were written. An immediate concern was that co-ops could not count on funding to rebuild lines after that winter’s ice storms.
Partridge believed Nixon’s action could starve rural electric co-ops—perhaps to death.
An NRECA analysis of the Rural Development Act concluded that it would disqualify as borrowers all but roughly 90 of the nearly 1,000 electric co-ops in 46 states.
“With all due respect for the administration’s right to make policy judgments,” Partridge wrote in RE Magazine, “I must candidly say that I do not think it is wise policy to hamstring the ability of rural electric systems to meet expanding needs and adequately serve their consumers in the face of a mounting energy crisis.”
He dubbed Nixon’s action “the most critical challenge” co-ops had ever faced.
NRECA’s legislative staff went into a full-court press, and the co-ops’ legendary grassroots base got ready for a fight. In late January 1973, more than 1,400 co-op managers and directors from across the country, wearing “We Protest” and “Save Rural Electrification” stickers, rallied at the Mayflower Hotel in downtown Washington, D.C., before marching up Capitol Hill to plead their case for restoring REA.
The rally bore fruit immediately. Members of Congress on both sides of the aisle stood up for co-ops.
“This is a clear subversion of the intent of Congress,” declared U.S. Sen. Herman Talmadge, the powerful Georgia Democrat who chaired the Senate Agriculture Committee.
NRECA and its member systems continued applying political pressure for 131 days, until the House of Representatives and the Senate passed, by veto-proof margins, legislation preserving the integrity of the REA. The bill, sponsored in the Senate by the great co-op champion Hubert Humphrey of Minnesota, created a revolving fund to replace the need for Congress to appropriate loan funds each year. Two percent loans were lost to all but “hardship” cases—co-ops serving remote areas—but the legislation protected REA from presidential overreach.
It is still considered one of the greatest legislative victories in electric co-op history.
“The outcome was a remarkable tribute to the cohesive power of the NRECA,” Marquis W. Childs wrote in his 1980 history of rural electrification, Yesterday, Today and Tomorrow: The Farmer Takes a Hand.
Partridge called it “a victory for the people who stood solidly against the capitulation to the administration’s edict of December 29th.”
Humphrey wasn’t the co-ops’ only political hero that winter and spring, but he provided the political passion, starting at the Mayflower Hotel rally. He said he could stop by for only a few minutes because he was at home in bed with the flu then spoke for more than an hour—without notes.
He compared the co-ops’ situation with that of the farmers who took up arms at the battles of Lexington and Concord in the American Revolution.
“You embattled farmers can do in the year 1973 for free government, representative government, what others almost 200 years before have done,” he said. “You can use this program, the REA program, as a test of the legitimacy of government. You can use what has been done to demonstrate whether or not one man, by executive order, can ignore the will of the American people through the Congress assembled.
“You can determine once and for all whether or not a president can continue to impound funds that have been appropriated by Congress.”