Legal Definitions - Rural Electrification Administration

The Rural Electrification Administration (REA) was a former agency within the U.S. Department of Agriculture. Its primary mission was to facilitate the expansion of essential utility services, specifically electricity and telephone lines, into underserved rural areas of the United States. The REA achieved this by providing or guaranteeing loans to local electric and telephone cooperatives and utilities, enabling them to build the necessary infrastructure where private companies often found it unprofitable to do so. The functions of the REA were absorbed by the Rural Utilities Service (RUS) in 1994.

Here are some examples illustrating the role of the Rural Electrification Administration:

• Example 1: Bringing Power to Farms
  In the 1940s, a small farming community in rural Iowa relied on kerosene lamps and hand-cranked water pumps. A group of local residents decided to form an electric cooperative to bring modern power to their homes and barns. They applied to the REA for a low-interest loan to fund the construction of power lines, substations, and other equipment. The REA's financial backing made this ambitious project possible, transforming daily life and agricultural practices across the region by providing reliable electricity.

  Explanation: This example illustrates the REA's core function of providing direct loans to rural electric utilities (in this case, a cooperative) to establish electricity infrastructure in areas that previously lacked it.

• Example 2: Expanding Telephone Access
  During the 1960s, a remote mountain town in West Virginia had limited telephone service, with many residents sharing party lines or having no access at all. A newly formed local telephone utility sought to modernize and expand its network, offering individual lines and more reliable service to a greater number of homes and businesses. The REA provided a loan guarantee, which assured private lenders that the utility's expansion project was financially sound. This enabled the utility to secure the necessary capital to lay new cables and install modern switching equipment, significantly improving communication for the community.

  Explanation: This demonstrates the REA's role in guaranteeing loans for rural telephone utilities, helping them secure funding from other sources to improve and expand communication services in underserved areas.

• Example 3: Regional Infrastructure Development
  Consider a multi-county region in the American South during the mid-20th century, where economic development was significantly hindered by a lack of modern utilities. Several small, independent utility companies and newly formed cooperatives collaborated on a regional plan to extend both power and telephone lines across vast distances. The REA played a crucial role by providing multiple loans and offering technical assistance, coordinating efforts to ensure that these vital services reached even the most isolated homesteads. This comprehensive approach fostered agricultural productivity and significantly improved the quality of life across the entire rural landscape.

  Explanation: This example highlights the REA's broader impact, providing financial and technical support for large-scale, coordinated infrastructure projects that brought both electricity and telephone services to extensive rural regions, demonstrating its comprehensive approach to rural development.