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Following the passage of the Renewable Fuels Standard in 2007, the Indiana biofuel industry entered into a period of rapid expansion, investment, and growth. Today it generates over $6.1 billion in economic activity and over 25000 jobs.  Behind the numbers are dozens of rural communities and economies that have seen growth and revitalization because of the renewable fuel production facilities that have located in these areas. In addition, over 360 million bushels of Hoosier corn that used to go on to the market now get turned into ethanol, DDGs, and other products.

This scenario has been repeated in many other states. In Ohio, the RFS has resulted in an industry that produces 38,000 jobs and over $7 billion in economic activity.  Many other states can tell a similar story. So why — with all this economic growth and job creation — would an administration that came to power on a platform of hope and change, decide to turn away from continued support of renewable energy? Politics, of course!

The Obama administration had a choice to support the continued growth and development of  renewable fuels or to protect the monopoly the oil industry has over the US fuel supply. Its decision to increase only slightly the amount of renewable fuel that can be blended into gasoline is a “compromise” says Wally Tyner, Energy Policy analyst at Purdue.  Tom Buis, with Growth Energy, sees it differently, “The EPA put the oil companies in charge of how much renewable fuel gets used.” Ironically, the fox is now guarding the hen house.

Another example of this also involves the EPA. The agency released its revised Waters of the United States (WOTUS) rule.  While claiming to provide “clarity” in regulations on water, it actually is very murky.  “Under the guise of clarifying the Clean Water Act, the EPA and the Army Corps added ambiguous language to the law that leaves regulation up to the subjectivity of individual regulators across the country,” according to Philip Ellis, National Cattlemen’s Beef Association President. He added that this is a clear indication there is no intention of considering the concerns of those most impacted by the rule. Again putting regulators, with no accountability to those they regulate, in charge of defining the regulations is like putting the fox in charge of the hen house.

This is a trend that has developed for issues outside of agriculture. Congress passes a big new program, but it is up to the nameless bureaucrats in those basement offices in Washington to interpret and set the rules for the administration of the programs. Many of the details on the Affordable Care Act, passed unread by most of Congress, were changed radically upon implementation by regulators. Former Secretary of Agriculture John Block once told me, “A G5 level employee in the basement of the USDA administration building has more power to set farm policy than the Secretary of Agriculture.”

The solution is for Congress to be more specific when passing legislation to provide less broad interpretation of new programs. The current administration in particular has shown a willingness to go beyond what the law intended and, in some cases, even violate the intent of what Congress passed. The RFS is a good example.

The RFS and the WOTUS represent two of the most significant regulatory challenges being faced by agriculture today. The ultimate determination of how these rules are interpreted and administered will have a significant and long term impact on the productivity and profitability of agriculture far into the future.  They also pose a very real threat to the future of the nation as a whole since whomever controls the fuel and the water wields considerable power.

 

By Gary Truitt