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WTO Ruling Forces the Repeal of Popular U.S. Law

‘Twas the night before Christmas in 2002 when I received notice the United States Department of Agriculture (USDA) had confirmed America’s first case of Bovine spongiform encephalopathy (BSE). At the time, I was an elected representative of the dairy industry in the Northwest, and random sampling found an infected slaughtered milk cow in Washington State.

More commonly known as mad-cow, BSE is a degenerative brain disease with 100% mortality rate. Although, not contagious it is transmittable through consumption of food containing ingredients from BSE-infected animals. An alarming linkage of BSE is the human variant, Creutzfeldt-Jacob disease (vCID), a horribly devastating and fatal illness that can have an incubation period of up to 8-years after consumption of meat from an infected animal.

Although confirmed BSE cases are world-wide, the greatest epidemic was in Great Britain. Incidentally, Britain also holds the distinction of having the highest number of human victims of vCID. During the British outbreak, BSE traveled to all regions of the world. Trade agreements facilitated the global spread of the disease as animals moved across borders with little to no inspection, quarantine, or tracking regulations. In fact, the 2002 Washington State BSE cow was shipped from Canada. Regardless, Japan, South Korea, Russia, Thailand and Hong Kong immediately banned imports of all U.S. beef and many countries followed. The trade embargos ultimately caused a near 80% drop in export sales.

Domestically, citizens had little confidence in the safety of their meat purchases. The USDA assured the public the risk was minimal, and the beef industry urged American’s to clear the inventory by eating more beef. But, unlike fruits, vegetables, nuts, fish, and seafood meat products did not carry labels identifying the country of origin. Shoppers understood the infected animal came from Canada, yet, they had no information on the origin of shelved meat. Had meat products been readily identified by its source country consumers could have made an informed choice. Likewise, merchants could have quickly pulled the Canadian-originated products from store shelves. Actions that would have assisted in assuring the public and reducing the market impact for beef producers.

It was the 2002 Canadian mad-cow case that triggered the push for meat products to carry a country-of-origin-label (COOL) as is required for other foods. The development of the meat version of COOL was not a hurried, or imprudent process. What began in 2002 became effective in 2009 after years of analysis, public comments, reviews, challenges, and extensions. The rule went through a rigorous legislative process, as well as legal challenges, and survived the daunting review of the Administrative Procedures Act.

With 90% public support according to USDA surveys, the reported “little economic benefit to consumers,” does nothing to hamper its popularity. After all, the demand for the labeling had little to do with food costs and everything to do with the right of a consumer to know where their food originates. When fully informed, the choice is then left to the buyer, a free-market principle.

Few laws or regulations are as publicly beneficial or as broadly popular as the COOL programs. Yet, on December 18th, nearly thirteen years after the Canadian mad-cow incident, Congress passed an omnibus bill that contained the repeal of COOL for beef and pork products.

The ultimatum to end the mandatory labeling came from the World Trade Organization (WTO) after Mexico and Canada argued the program discriminated against their imported meats. The WTO found the mandatory use of COOL violated three technical barriers to trade (TBT). Also, they ruled the U.S. Secretary of Agriculture, Tom Vilsack, violated General Agreements on Tariffs and Trade (GATT), Art. X:3(a), by sending an explanatory letter to only domestic meat producers, thereby giving special/unequal treatment. In its ruling against the U.S., the WTO approved retaliatory export tariffs $1 billion (Canadian) equivalent to 100% of U.S. export sales to Canada and Mexico if mandatory labeling continued.

Key considerations regarding this issue:

  • An unelected, international tribunal effectively dictated the U.S. must reverse part of a well processed, legitimate, and popular piece of domestic legislation.
  • COOL provided for quick identification and tracking of meats, facilitating efficient recall in the event of safety concerns.
  • Consumers’ right-to-know was not a consideration in the WTO decision.
  • Congress over-acted by repealing the entire labeling program as opposed to merely the mandatory aspect of labeling muscle meat.
  • Processors can continue to label their products as U.S., but only voluntarily. A practice the consumers should demand.
  • The ruling has the precedents setting potential to impact other origin labels for fruits, vegetables, nuts, fish and seafood?

“Green” Energy: The Color of Money

In light of the recent legal filing for creditor protection by Spain-based, Abengoa, Inc., the viability of the Renewable Fuel Standard (RFS) is getting appropriate scrutiny and reconsideration. Through that program, the giant green-energy company received billions of U.S. taxpayer dollars in grants, loans, and subsidies. Still, last week they were forced to close their cellulosic ethanol facility in Hugoton, Kansas. The court filing for creditor protection came the day before Thanksgiving and within a week, the Kansas employees received layoff notices while many creditors received nothing.

Economic predictions suggest taxpayer losses could amount to five-times that of the 2011 Solyndra collapse. For local farmers, $5 million in unpaid, delivered product prompted their cooperative (CHS, Inc.), to file a lawsuit just two days prior to Abengoa filing for protection in a Spanish court. While some articles and blogs appear to revel in an Obama administration failure, others denounce the fact-based reporting of Abengoa’s troubles as a hit-piece against green-energy. Neither position is accurate, valid or productive.

From a free-market, smaller government perspective, the issue is not green-energy versus traditional energy sources. There is no denying the world would be a better place if everyone had access to affordable, renewable clean energy. But, consider the financial sink-hole that is the Hugoton plant and contrast that with the stunning announcement that it has sold zero gallons of cellulosic ethanol, and it is apparent that to some the label of “green” energy denotes big money as opposed to an emphasis on low environmental impact.

It should be noted that Abengoa’s demise was not a shock to everyone. Various sources have been sounding the warning sirens for years.

  • A 2009 Government Accountability Office (GAO) report warned of multiple challenges to RFS’s increasing volumes of biofuels, particularly cellulosic.
  • November 2011: Senator Jeff Sessions of the Senate Budget Committee specifically requested all documents relating to Abengoa and other solar companies from the Department of Interior (DOI).
  • 2012 GAO letter to The Honorable Dianne Feinstein, and House & Senate members of the Subcommittee on Energy and Water Development, Committee on Appropriations stating it was the sixth time GAO had reported its concerns about (DOE) loan guarantees for biofuels.
  • March 2012 GAO report to Congress restating concerns about the lack of adequate review and oversight by DOE and its $30 billion loan program, detailing Abengoa as the recipient of $1.2 billion.
  • March 2012: U.S. House Oversight Committee report specifically finds loans and resources granted to Abengoa, created excessive risk. The report reveals that “Abengoa managed to obtain a DOE loan commitment for the lowest rated project across the entire DOE Junk portfolio — which received an extraordinarily low CCC rating and was still approved by DOE for a direct loan to the project. This overinvestment in this single firm will likely cause substantial harm to the taxpayer.”
  • May 29, 2012: Letter from the U.S. House Oversight Committee threatened the Department of Interior (DOI) with “compulsory action” if they failed to release requested documents related to Abengoa and other solar companies. The Committee stated appearance of preferential treatment in taxpayer-funded loan guarantees.
  • April 30, 2013: Office of Inspector General (OIG) reported Abengoa of received $2 million dollars through The American Recovery and Reinvestment Act of 2009 (Recovery Act) for a project completed before the passing of the law.
  • May 1, 2014: GAO warned a significant threat to taxpayers in the DOE biofuels loan programs due to poor oversight and deviation from monitoring and qualifying procedures that, “pose an unacceptable risk of default.”

Highlighted above are but a few examples of serious problems with the government’s renewable fuels program. So, as presented, critics are not opposed to the concept of green energy but see the RFS as a seriously flawed mechanism to that end. The wasting of billions of dollars on infrastructure for a product that is not market ready could be better served funding advancing research projects in laboratories. The simple concept of putting the cart before the horse comes to mind. It is not Capitalism when the Federal government, through sheer financial force develops unsustainable, artificial industries.

Even Abengoa knew the Kansas plant would not be self-sustainable. In a 2014 report to DOE, the company presented their risk mitigation plan. The list included a push for the development of “energy crops”, continued dependence on the RFS to maintain a premium for ethanol, and to encourage the USDA to allow farmers to produce cellulosic biofuel crops on Conservation Reserve Program (CRP) lands.

The Abengoa plan does not reflect the goal of eventual self-sufficiency, but instead, details what others may contribute to help restructure market fundamentals to suit Abengoa’s projected goals. That is not capitalism. We have limited lands for food production, and the thought of more farmland to biofuel production is alarming. Also, the move would defeat one of the RFS stated goals of developing renewable energy by utilizing material currently identified as low valued waste or by-products.

To be clear, green-energy, as in renewable, eco-friendly, sustainable, and affordable, is a national security and humanitarian issue. There is little debate about the need to pursue that end. But, the government mandates and financial handouts created extremely provocative incentives to abuse the U.S. taxpayers. Through big dollar, experimental programs that ignore market impact, economic viability, coupled with extremely lax oversight, the term “green-energy” takes on a different meaning.

New EPA Employee Bonuses Spark OIG Investigation

Back in the day, if you needed to relocate for a new job, you could elicit the aid of a few strapping young men for little more than the cost of a pizza and a six-pack of beer. Add the cost of a rental truck, and you could probably recoup your expenses after the first paycheck.

Today, the same could probably happen, unless you’re a newly hired Environmental Protection Agency (EPA) Director of Finance, in Research Triangle Park (RTP), North Carolina. As detailed in a November 30th investigative report by the Office of Inspector General (OIG), the OIG hotline received an anonymous call stating a new EPA Director in the RTP Finance Center requested a $250,000 reimbursement of relocation costs. The complainant alleged that on the new Director’s behalf, the Office of the Chief Financial Officer (OCFO) intended to award the funds.

The subsequent investigation found that the new Director had inquired about relocation reimbursement during the interview process and was informed the hiring package did not include such a benefit. However, shortly after she accepted the position, she approached the OCFO, again asking for relocation reimbursement. Thus began the tale of the North Carolina EPA Financial Director’s money chase.

Facts at a glance

10/2014

EPA posts job announcement for Director of Finance.

02/05/2015 The subject employee agrees to accept job with no relocation reimbursement per HR denial citing agency rules.
02/25/2015 OCFO contacts HR after being asked by subject employee to revisit the issue as a relocation “incentive” as opposed to relocation “reimbursement.”
03/09/2015 OCFO submitted request for a relocation incentive to HR for $15,000 representing estimated moving and storage costs.  Again, the request denied.
04/02/2015 HR denied two subsequent revised requests from the OCFO for the subject employee’s relocation incentive.
04/05/2015 Subject employee begins working as New Director with no reimbursement or incentive for relocation.
04/21/2015 Hotline call to OIG regarding OCGO’s intent to give new Director a total of $250,000 compensation for relocation.
05/13/2015 OCFO awarded new Director $4,500 bonus (6 weeks after start)
06/25/2015 OCFO awarded another $4,500 bonus (12 weeks after start)
07/07/2015 The OIG began its audit and investigation as a result of the hotline call. During the audit, OIG learned another bonus was forthcoming. That order was withdrawn as a result of the notice of the investigation.

The OIG concluded its financial audit on September 22, 2015, noting in the report the new Director never received the proposed $250,000 relocation reimbursement.  However, the two $4,500 bonuses within 3-months of her start date were unprecedented and represented approximately 25 percent of her salary for the 3-months covering the time period of her employment.

Upon conclusion of the investigation, the OIG recommended the EPA’s Deputy Administrator revisit the awards made to the new Director, RTP Finance Center, to determine whether the awards are reasonable and properly justified and, if needed, take appropriate action. In addition, for future awards, EPA should establish and require a proper level of management review for multiple awards that total in excess of $5,000 during a fiscal year to ensure that awards are reasonable and justified in comparison to other awards.

Renewable Fuel Standard Mandates, or Not?

The Renewable Fuels Standard (RFS) provisions of The Energy Independence and Security Act of 2007 (EISA), mandates an increasing blend of renewable products into our domestic fuel supply. The law amends the Clean Air Act, and allows for an initial blending of food-based ethanol (corn), beginning in 2008. In subsequent years, the blend was to transition towards satisfying the annually increasing volumes with non-food “second stage” cellulosic ethanol, referred to as RFS2. The cellulosic, or advanced biofuels, are derived from biological materials such as wood shavings, leaves, corn cobs and grasses. In addition to the blend provisions, the law requires the program to achieve a 20% reduction in greenhouse gas emissions. Unfortunately, the costly experiment has failed to meet several goals, including air quality and the defined blend requirements.

To explain, in 2008 Congress mandated the EPA to set the RFS at a 10% blend of corn ethanol. Drivers then began to see labels informing them of E10 in fuel pumps. By 2010, the law states we were to move towards the use of non-food products (the second-stage RFS2), to fill the increasing blend requirements. However, in 2010 and 2011, no cellulosic biofuel was available to fill the volume requirements. Similarly, in 2012 and 2013 the available production did not amount to 1% of the mandated levels. As a result, the EPA adjusted the blend formulas allowing for first stage corn-based ethanol to fill the void.

In 2011, the EPA approved the blend increase to E15 (15% ethanol). An increase mandated to include cellulosic renewables (non-food) as opposed to corn. Now, several years into the program, cellulosic biofuels are still not available. Nevertheless, the EPA should not continue to adjust the volumes between ethanol and biofuels. It was at the onset of the program in 2007 that the Department of Energy (DOE), assured the taxpayers cellulosic ethanol would be ready and cost competitive with gasoline by the year 2012. Again, yet another goal the program failed to meet. Incidentally, that promise accompanied an astounding $385 million federal investment in six privately owned plants.

Unfortunately, at this time technological realities and market fundamentals simply do not support large-scale production of cellulosic biofuels and the industry is not near capable of meeting the RFS2 mandates. The creation of a law does not guarantee that science and economics will cooperate. As we look at the legal requirements and limits of alternative fuels made from wood chips and corn cobs, one thing is wholly apparent. We can’t get there from here.

So then, where are we? In regards to the ethanol mandate, we are quite possibly near the end. It was a poorly drafted piece of legislation that is not sustainable without government backing. Aside from corn farmers and their lobbyist, there is little support for continuing the project. Unfortunately, and unavoidably, the same corn farmers who benefited from the program will suffer the greatest financial impact upon its demise.

Beneficiary of Billion Dollar Green Fuels Program Files for Creditor Protection

Today, the Environmental Protection Agency (EPA) released its final ruling on blend volumes of renewable fuels for the calendar years 2014, 2015 and 2016. The challenge for the EPA is the lack of advanced biofuels to meet obligated minimum levels. The Energy Independence and Security Act of 2007 (EISA), mandates an increasing blend of renewable products into our domestic fuel supply. The Renewable Fuel Standards (RFS) provisions require non-food based cellulosic biofuels to be increasingly introduced into commercial gasoline. Called “2nd generation”, cellulosic ethanol, unlike 1st generation corn-ethanol, is derived from wood chips, grasses, corn cobs and other biological material. The problem is the congressionally mandated product is simply nonexistent.

Industry discussions, analytical reviews, and organizational rationalizations toss out phrases such as immature technology, steep learning curve, and of course, more federal funding. The issue is complicated, yet, not complicated. Producing 1st generation ethanol is much simpler than taking a cellulosic material and transforming it into a viable fuel source suitable for commercial use. Of course, we all knew this going into the program. Unfortunately, after pouring billions of dollars into this boondoggle we have done nothing more than successfully proven cellulosic ethanol is not a practical endeavor.

Even more so, with one of only four cellulosic ethanol production plants possibly set to shut its doors, Abengoa, a Spain-based sustainable energy development company, has filed for creditor protection one day before Thanksgiving, and less than a week before the EPA is expected to release the blend levels of renewable fuels. After the U.S. taxpayers invested billions of dollars towards the building of a massive biofuel facility, not to mention the world’s largest solar farm and wind farms, the company is teetering like a giant, green energy Jenga tower.

Abengoa is an international, mega-corporation founded in 1941. Its near certain investment losses to taxpayers’ dwarfs those of the Solyndra fiasco. Aside from perks and discounts for federal land use, employment credits and special tax incentives a quick search discloses only some of the federal dollars pumped into Abengoa and yet we still have no 2nd stage biofuels to meet program goals.

  • $1.45 billion loan guarantee to Abengoa Solar, Inc. for construction and the start-up of solar energy plant in Solana, AZ — 2010
  • $1.2 billion loan guarantee to Mohave Solar, LLC. for the construction & start-up of Mohave Solar Project plant in San Bernardino County, CA. — 2011
  • $133.9 million loan guarantee for biofuel plant Hugoton, KS — Department of Energy – 2011
  • $97 million federal grant, Hugoton, KS — Department of Energy — 2011
  • $4.03 million in grants and federal contracts for 2015 alone

Beyond the amounts presented here, millions more U.S. dollars have rolled into Abengoa and its many subsidiaries. With its announcement in Spain yesterday and today being Thanksgiving, American stock values for the company have not yet reacted. The protection filing gives the company four months to find a solution before creditors can force a full bankruptcy. But, many employees of U.S.-based projects may still be unaware.

It is likely by the end of next week, Abengoa will be a household name. The failure of Abengoa, along with the failure of the Renewable Fuels Standard program, will hit jobs, stock values, the banks and the federal budget. All this, and we still have no cellulosic ethanol to meet the mandates of the Renewable Fuels Standard.

Tobacco: Top User of Agriculture Guest Worker (H-2A) Visa Program

With the run up to the 2016 presidential election, we have seen a growing debate on the need for border security versus the shortage of agriculture workers. Tales of apples rotting on trees and produce left in the field are offered as evidence of jobs Americans won’t do. Yet, according to the U.S. Department of Labor’s (DOL) Office of Foreign Labor Certification program, we have a record number of guest worker visa holders. In agriculture alone, the number of H-2A visa holders has risen nearly 35% in the past decade.

Visa Certifications

Considering the increase of H-2A visa holders, how is it those who grow our food are struggling to bring in their crops? Where are all the workers? Well, according to DOL reports, a majority are harvesting tobacco, working in landscape nurseries, and operating equipment. Annual reports show the tobacco industry is consistently the largest single sector employer of agriculture guest worker visa holders. In fact, a tobacco trade organization, the North Carolina Growers Association (NCGA), touts itself as the nation’s largest user of the H-2A agricultural “guest worker” program. And, though the Center for Disease Control (CDC) reports a steady decline in U.S. smokers, the industry is experiencing a growth in acres planted and yields.Visa Top 10

The resurgence comes after an initial dramatic decline in tobacco farming following the implementation of the Fair and Equitable Tobacco Reform Act of 2004 (FETRA). That legislation ended nearly 70 years of farm subsidies and marketing quotas. Then, beginning with the following year (2005), the feds stepped in with the Tobacco Transition Payment Program (TTPP). A program that paid nearly $9.6 billion to farmers for the lost value of their marketing quotas over a ten-year period. Also, with the low costs guest workers and the benefit of federal export assistance, the industry has gained a world of new consumers through exporting. For those health conscious consumers, tobacco now qualifies for certification under the USDA’s National Organic Program (NOP).

As well, according to a recent report by the Federal Trade Commission (FTC), in 2012, tobacco companies spent $9.6 billion marketing cigarettes and smokeless tobacco in the United States alone. An amount of about $26 million each day, or more than $1 million an hour. Not to mention federal funds at work to assist in identifying medicinal uses for tobacco.

It may appear the relationship between tobacco farming and the government makes no sense, but it actually makes an awful lot of cents. In 2014 alone, federal revenue from tobacco tax amounted to $15.56 billion dollars. Projections through 2020 show an anticipated $157.12 billion into government coffers (no pun intended). American tobacco farming is a windfall tax source for the federal government.

In summary, tens of thousands of agriculture guest workers are designated to work in tobacco while food products go unharvested. The government spends billions to burn food for fuel in its failed ethanol experiment. We have an unprecedented amount of illegal immigration due to a broken system. It goes to show, even a practical program, as is the H-2A visa, government involvement inevitably distorts the original intent.

Organics: Another Fine Government Mess

The Organic Foods Production Act (OFPA), as part of the 1990 Farm Bill, established the National Organic Program (NOP). The program, as administered by the United States Department of Agriculture (USDA), oversees uniform standards governing the marketing of organically produced products. The NOP’s mission is to assure consumers of consistent organic standards of production and to facilitate the interstate commerce of organically produced food.

At the time of the NOP’s inception, the organic market for farm products had an estimated annual value of $1 billion.  By 2012, U.S. certified organic sales were at $28.4 billion and according to the USDA’s Economic Research Service (ERS), the sales for 2014 are estimated at $35 billion. It is clear that organic sales are showing significant growth, but at what costs?

The current Chipotle E. coli outbreak offers an opportunity for shoppers to understand the true nature of the USDA’s organic certification program. Numerous studies and public opinion polls find consumers overwhelmingly believe the higher priced, organically certified food is a healthier, safer choice.  However, experts, consumer groups and scientific research does not support that view.

In one example, a 14-page letter dated October 8, 2015, by the Consumer Reports National Research Center details many of the failings of the NOP. The letter criticizes the National Organic Standards Board (NOSB) for approval of synthetic and non-organic nutrient additives and synthetic pesticide material, even in baby formulas. The letter states, “We support the proposal to remove nonylphenol ethoxylates (alkylphenol ethoxylates) or NPEs/APEs from the list of “inerts” allowed in organic production because of their toxic and endocrine-disrupting effects.”

The Consumer Reports letter demonstrates the discrepancy between what the NOP entails and what the public believes the program offers. The NOP outlines the rules and processes to create uniformity for organic labeling. Although there are restrictions and prohibitions of a variety of chemical applications, the program allows for many waivers and exemptions. Nowhere in the program does it suggest certification assures a safer or more nutritious food choice. In fact, Dr. Stuart Smyth, a food safety expert and agriculture biotechnology researcher calls the National Organic Standards, “an illusion of food safety.” As Smyth explains, “These organic standards pertain to seed, fertilizer, and chemicals that are allowed to be used to produce a crop that will be certifiably organic when it is ready to be harvested. These production standards have absolutely nothing to do with increasing food safety.”

Still, the organic industry, as a marketing ploy, perpetuates the myth to consumers that organic certification implies safer foods. Moreover, with the ever-growing market share, one would assume conscientious shoppers increasingly prefer organic foods. Do they or is that another false assumption? What has changed in the past 15 years to drive the annual market value of organic food products from $1 billion to $35 billion if not consumer preference? How about the huge increase in consumer prices for the organic products, the increased volume of the labeled products, and the massive increase in program funding? To explain, let’s consider just some of the taxpayer dollars pumped into the NOP by means of the most recent farm bill, the 2014 Farm Act.

  • $20,000,000 for each fiscal year 2014 through 2018 for program operation
  • $5,000,000 to the Secretary of Agriculture for data collection and distribution to National Agriculture Statistics Service (NASS) and Agricultural Marketing Service (AMS).
  • $15,000,000 for each fiscal year 2014 through 2018 for modernization and technology upgrade
  • $5,000,000 upgrade collaboration with Commodity Credit Corporation (CCC).
  • $11,500,000 for each fiscal year 2014 through 2018 for cost-share programs with CCC.
  • $7,000,000 for each of the fiscal years 2014 through 2018 for natural products research.

In the above designated funding commitments alone, the federal government will spend $277.5 million through the term of the current agriculture authorization bill. An astonishing amount, considering the original 1990 Organic Foods Production Act stipulated the program costs will be covered entirely by fees gleaned from the program’s participants.

The growth of the organic market follows the growth in federal dollars pumped into the program. Food safety is not improved. Consumers have no assurance they are purchasing a more nutritious product. Third party certifiers charge upwards of $3,000 to farmers for label use creating an incentive for fraud. Foreign products are certified outside of the U.S. by foreign agents with no USDA oversite. Contemporary farmers are at a competitive disadvantage as a result of the marketing, promotion, and price difference of organically labeled product. Organic foods can potentially be less safe than their uncertified counterpart. And, in the end, the taxpayers are again burdened with an unproductive, fraud-laden, market manipulating program that offers no demonstrative benefit.

USDA and States to Spend $210 Million on Fuel Pumps

On May 29th, the United States Department of Agriculture (USDA) announced $100 million in grants offered through their Biofuel Infrastructure Partnership (BIP) program. According to Secretary of Agriculture Tom Vilsack, the move is to make renewable fuel options more available to American consumers. The program is a 1:1 partnership with states to build fueling stations and purchase blender pumps for E15 and higher. The preliminary spending tally estimates $210 million for 5,000 pumps at 1,400 fueling stations in 21 states.

This latest money toss is yet another multi-million dollar outlay resulting from the Renewable Fuel Standard (RFS), as mandated by the 2007 Energy Independence and Security Act (EISA). The mandate requires gasoline to be blended with renewable fuel sources at incremental increasing levels.

The original RFS mandated level was 10% ethanol or E-10. The next mandated level, 15% ethanol or E-15, is a blend level the EPA labels to be used only in Flex-fuel passenger vehicles, model years 2001 and newer. The label goes on to state, “Do not use in other vehicles, boats, or gasoline-powered equipment. It may cause damage and is prohibited by Federal law”. Still, the EPA wants to make even higher blend levels available, even if that means taxpayers are to fund the necessary infrastructure.

Unlike the traditional pumps where a consumer makes the fuel choice of diesel, unleaded, or octane levels, the government has decided to fund blender pumps offering a choice between ethanol or even more ethanol. Even though the overwhelming preference of consumers, environmentalist, economists, most ag sectors and automakers is E-0, an option not found on the new pumps.

Though extensive studies with science-based evidence prove the damage ethanol contributes to the environment and engines, along with the real damage to a market-based economy, federal agencies continue to dig deeper into the ethanol quagmire. Even the Government Accountability Office (GAO) found the RFS costs outweighed its benefits and criticized the EPA’s economic analysis of the RFS as intentionally misleading. In a 2014 report to Congress, the GAO exposed the agency’s false reporting of the program’s costs stating, “EPA estimated net benefits of the mandated volumes ranging from $13 to $26 billion.” However, the EPA did not include the infrastructure costs (such as this latest $100 million) in their calculations. An expense the EPA estimates to total an astounding $90.5 billion.

 

OIG announces probe of EPA’s Reporting Practices on Biofuels Impact

The Office of Inspector General (OIG) has announced a probe into the Environmental Protection Agency’s (EPA) adherence to reporting requirements regarding biofuel’s impact on air quality. Under the Renewable Fuel Standards (RFS), the EPA is to submit to Congress a science-based triennial report on the effect of the controversial program.

As a result of the Energy Independence and Security Act of 2007 (EISA), changes were made to the Renewable Fuel Standard program (RFS), the program that mandates the blending of ethanol with petroleum-based fuels for domestic use. The law directs the Environmental Protection Agency (EPA) to analyze lifecycle greenhouse gas (GHG) emissions from the increased use of renewable fuels in comparison with petroleum-based fuels.

The Clean Air Act (CAA), defines the term “lifecycle greenhouse gas emissions” as the GHG impact from all emissions including land use changes and other activities. The law requires EPA’s report to include,

“…all stages of production of fuel and feedstock and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential.”

According to the OIG’s announcement, the goal of the review is to determine the following;

  1. Whether the EPA has complied with the law on reporting requirements of the Clean Air Act.
  2. If the EPA followed a mandate to amend its previous biofuel’s environmental impact reports to reflect the findings of a 2011 study by the National Academy of Sciences.
  3. If the EPA used the National Academy of Sciences data in subsequent reports.

In preparation for the review the OIG has asked EPA to provide:

  • Triennial Reports to Congress issued after the EPA’s first report in 2011, and any other reports to Congress on the environmental and resource conservation impacts of the RFS program.
  • RFS Antibacksliding Analysis required under Section 211(v) of the Clean Air Act.
  • Documentation of the EPA’s response to the 2011 National Academy of Sciences study and its recommendations.
  • Documented changes or planned future modifications to the RFS regulatory impact analysis or lifecycle analysis based on findings/recommendations from the 2011 National Academy of Sciences study, Triennial Reports to Congress and/or Antibacksliding Analysis (or documentation explaining why no changes were necessary).

The OIG’s investigation comes at a time when the call to cut corn-based ethanol is growing louder. Interestingly, the announcement came one day after the University of Tennessee released results of a comprehensive 10-year review which calls for a restructuring of the RFS program. The Tennessee study concludes, “We have had 10 years under the RFS and a commercially viable, next-generation biofuels technology has not emerged.”

Congressional Request leads to Scathing Review of the EPA

Businesses, landowners and farmers know the feeling of dread that comes with hearing the words “not in compliance” from the U.S. Environmental Protection Agency (EPA). The EPA has earned the reputation of delivering heavy-handed enforcement actions and exorbitant punitive penalties. The agency’s authoritarian over-reach is near legendary, earning them the moniker “rogue agency”. Even the U.S. Supreme Court gave the EPA a dressing-down stating they commonly strong-arm regulated parties into “voluntary compliance” without the opportunity for judicial review. The EPA has taken a firm stance that the rules are published, and therefore, noncompliance is not excusable.

Yet, a congressionally requested federal review of the EPA found the agency regularly ignores rules that pertain to its own operating procedures as dictated by law. In fact, a Government Accountability Office (GAO) report says the EPA disregards the law in its reporting to congressional inquiries. According to the GAO, the EPA’s Science Advisory Board (SAB) is not in compliance with the long-standing Environmental Research, Development and Demonstration Authorization Act of 1978 (ERDDAA). As well, the agency’s Clean Air Scientific Advisory Committee (CASAC) fails to follow legal requirements of the Clean Air Act.

The GAO investigation revealed agency staffers routinely judge whether a congressional request is a policy driven question or requires a science-based response. As a result, answers to lawmaker’s queries often have no scientific basis in fact. Also, the agency failed to perform regular five-year impact reviews of national ambient air quality standards (NAAQS). Under the Clean Air Act, CASAC is to review and report “any adverse public health, welfare, social, economic, or energy effects” resulting from regulations and strategies of NAAQS. According to the GAO, the EPA “has never” instructed CASAC to comply with the federal requirement to review and report.

Members of Congress and the GAO have voiced similar concerns regarding EPA conduct and manner of operational performance.

  • Regularly ignores epidemiological evidence that dispels, counters, or invalidates their decisions.
  • Ignores their own scientific panels to format or propel false alarms.
  • Uses federal law, such as the Clean Water Act, to regulate private lands through regulatory “takings” of rights.
  • Consistently exceeds its legislative authority forcing businesses, municipalities, and citizens to challenge regulations through the court system.
  • Abuses authority in “policing” of private property activity through notoriously heavy fines.
  • Habitually practices “moving the goal” tactics to hamper businesses and industries efforts to remain operationally compliant.

The agency’s standard operating procedures often are in defiance of the law. Also, the arbitrary use of selected and contrived science to establish environmental regulation is a serious threat to our national wellbeing and jeopardizes public health, general welfare, socio-economic conditions and our environment.