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.

Nov 11, 2015 | 2 comments | by

The Bargain Mass Transit Option

SkyTran is an aerial mass transit system with small cars that magnetically glides on elevated tracks 20 to 30 feet above the ground. The cars can hold up to four people and travel at 60mph.

SkyTran has been in development over the past five years and is just beginning to run a pilot program in Tel Aviv. Compared with most mass transit options, SkyTran is a bargain for cities planning mass transit or expanding their existing systems.

For instance, the city of Dallas has a large light rail system (DART) that was recently expanded to double in size to over 90 miles of track. The $2.5 billion expansion cost $56 million per mile ($35 million per kilometer). In addition, the $7.3 million cost for each rail car that holds 209 passengers gives a cost of $35,000 per passenger.

SkyTran, however, costs only $13 million per mile ($8 million per kilometer). The small cars only cost $30,000 at a price of $7,500 per passenger.

The city of Dallas could have saved almost $2 billion in light rail mass transit expansion if SkyTran had been an available choice in mass transit.

 

Nov 04, 2015 | 5 comments | by

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.

 

Nov 04, 2015 | 4 comments | by

Clean Power Plan Opposition Grows

A coalition of 24 states and a power company are suing to stop the Obama administration’s Clean Power Plan (CPP), calling it an unlawful federal bid to control state power grids.

As part of the lawsuit, the states seek to place a hold on the Clean Power Plan’s deadlines for meeting its carbon emission goals, which supporters have described as necessary to improve air quality but foes have criticized as arbitrary and unrealistically strict.

In addition to the lawsuit by the states, pro-business groups have also joined the fight against the Clean power Plan that mandates a massive reduction in carbon emissions in the next 15 years, arguing that it will jack up energy costs and slash jobs without making a dent in greenhouse gases.

U.S. Chamber of Commerce and 14 other business groups filed a lawsuit against the Environmental Protection Agency. Their lawsuit:

  • Claims the EPA has overstepped its authority by attempting a takeover of state power plants.
  • Seeks a hold on the rule’s implementation pending the legal challenge.
  • Parallels the lawsuit filed same day by 24 states.

The Rule requires a fundamental restructuring of the power sector, compelling States, utilities and suppliers to adopt EPA’s preferred sources of power and fuel and to redesign their electricity infrastructure in the process.

A preliminary analysis of the Clean Power Plan issued in October, 2014 by the NERA economic consulting calculated that the CPP could boost retail electricity prices 12 percent to 17 percent.

The Clean Power Plan would effectively shut down coal-fired power plants, which provide inexpensive and reliable electricity but cannot reduce their emissions to the required levels using current technology.

Thousands of businesses will stop providing support services to coal-fired plants and coal mines. Many coal mines will have to reduce operations or close entirely, laying off numerous employees in the process.

Oct 28, 2015 | 1 comment | by

War on Domestic Energy Supply

Anti-energy activists are planning to attack the oil and natural gas supply in the United States through a critical strategy. They want the federal government to stop new leases for oil and natural gas development. The damage to our domestic supply and energy output could:

  • Increase oil imports and greater dependence on foreign oil. As EIA projects, the United States will continue to use oil well into the future, and more imports would increase U.S. dependency on others for its energy needs.
  • Diminish U.S. energy security. At home and abroad, less domestic energy production and increased dependency would make the U.S. less secure in the world, more vulnerable to global energy pressures.
  • Weaken the economy. Oil and natural gas are the engines of our economy, and cutting domestic development will mean job losses, lower GDP, less revenue for government and higher household costs.
Oct 28, 2015 | Leave a Comment | by

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.”

Oct 26, 2015 | Leave a Comment | by

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.

Oct 21, 2015 | 1 comment | by

Federal Solar Energy Subsidy Expires 2016

The Solar Investment Tax Credit (ITC) is expected to expire in 2016. The solar energy industry is trying to get another extension to last until the year 2022. They believe that without this critical subsidy, then they will lose 80,000 jobs in just 2017 alone.

  • The ITC is a 30 percent tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties.
  • The multiple-year extension of the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006 — a compound annual growth rate of 76 percent.

CEO of solar developer Greenwood Energy calls for reducing the ITC to 10 in 2017 and letting it expire in 2018.

As of December 2013, the United States Treasury Department had awarded more than $4.4 billion to solar projects.

Once the ITC expires, the solar energy market will level out, losing the inflated strength it has been receiving from the ITC and become more competitive within the energy market.

Sep 28, 2015 | Leave a Comment | by

Close to Lifting the U.S. Crude Oil Export Ban

Congress is planning to vote on lifting the ban on U.S. crude oil exports by the end of this month. Across the aisle, most Republicans support the end of the export ban. In fact, the Republican-controlled House is scheduled to vote on legislation that would lift the restrictions. In the Senate, Majority Leader Mitch McConnell said for the first time he supports lifting the ban.

Congress passed the ban after the 1973 Arab oil embargo, which sent gas prices soaring. Now, the “shale revolution” has stimulated tremendous domestic oil and natural gas production, thanks mainly to hydraulic fracturing and horizontal drilling methods. The Obama administration has permitted exports of some exchanges of oil with Mexico and federal policies permit exports of crude oil to Canada.

The EIA projects the U.S. will eliminate net energy imports sometime between 2020 and 2030. Rising oil prices would mean the U.S. reaches this landmark turning point sooner, but even low prices are unlikely to stop the swing from importer to exporter. The U.S. has been a net importer of energy since the 1950s.

Opponents of lifting the ban include former Secretary of State and presidential hopeful Hillary Clinton who said she would only support lifting the U.S.’s 40-year-old ban on oil exports if it was part of a broader plan that included concessions from the oil and natural gas industry. The United Steelworkers, which represent workers at several Louisiana refineries, contends that lifting the ban would jeopardize U.S. energy security and adversely affect gas prices.

The controversy over whether or not to lift the ban centers around fears that no ban could mean higher gasoline prices held by some Democrats and consumer groups. Further, environmentalists worry lifting the ban would lead to more oil & gas exploration and development. Even, President Obama opposes such legislation.

However, a recent Government Accountability Office review noted wide agreement among analysts that allowing crude exports would tend to decrease international oil prices, which is the way to depress gasoline prices. That is why analysts predict that lifting the export ban would increase U.S. crude oil prices by $2 to $8 per barrel but reduce U.S. gasoline prices by 1.5 cents to 13 cents per gallon.

Another recent report by the United States Energy Information Administration says that although unrestricted exports of U.S. crude oil would either leave global crude prices unchanged or result in a small price reduction compared to parallel cases that maintain current restrictions on crude oil exports, other factors affecting global supply and demand will largely determine whether global crude prices remain close to their current level.

Sep 21, 2015 | 1 comment | by

The Failure of U.S. Biofuels Program

Ending a relationship is never easy, even one with a proven history of broken promises, twisted logic, weak justifications and financial exploitation. Such is the bond between the American taxpayer and the domestic ethanol industry. In the beginning, statements of common goals sparked hopeful enthusiasm. Many eagerly supported the romantic notion of growing our way to energy independence and an American-led green-based movement towards world prosperity. But, alas, the thrill is gone, and the truth exposed. The once proud, almost pompous, biofuels sector is struggling for justification.

The affair began in 2007 with the Energy Independence and Security Act (EISA). Contained within the act is the Renewable Fuel Standard (RFS) provisions that sets forth incentives for the development of biofuels such as plant-based ethanol and biodiesel. At the time, Bush had committed to the goal of ending American’s addiction to fossil fuel. The original promise was a reduced dependency on Middle Eastern oil, cleaner air, a boon to agriculture and reduced fuel costs for consumers.

Unfortunately, ethanol has failed to live up to its promised benefits. Recent low prices at the pump have exposed its life-support dependency on the government. Although direct subsidies have expired, ethanol producers continue to benefit from other financial incentives and federal mandates. A study by the NARC Consulting Group calls the program an economic death-spiral and discloses its many flaws. Yet, industry groups rally for maintaining, even increasing, RFS percentages in the face of mounting evidence of the program’s failure. Still, in a recent rule change proposal, the EPA published a plan to amend the mandates.

The statutory requirement to blend government-supported biofuels with free-market fuels is market manipulation. If the value of ethanol and other biofuels were legitimate, forced consumption, through the RFS, would not be necessary. Congress should end this failed relationship and costly experiment. Let the free market drive innovation and job development. Below, are but a few of the adverse effects of the RFS:

  • disruptive to agriculture markets
  • increases food costs
  • rife with fraud
  • lacks self-sustainability
  • burdens Taxpayers
  • environmental damage
  • violates free-market principles
Sep 14, 2015 | 2 comments | by
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