President Donald J. Trump campaigned on saving the forgotten men and women from the heavy hand of government. Trump won the presidency in a historic upset because of strong blue-collar support from states like Pennsylvania, Ohio, Wisconsin and Michigan.
Many of these workers earn their paychecks from small, local refineries, which provide thousands of jobs to ordinary Americans.
Although Trump has made significant progress with his economic growth agenda, a recent, seemingly unilateral assurance by Environmental Protection Agency Administrator Edward S. Pruitt is threatening to put his pro-jobs plan in jeopardy.
After receiving backlash from Midwestern lawmakers, Pruitt sent an Oct. 18 letter to them stating the EPA would hold off on reducing the Renewable Fuel Standard mandates and perhaps even increase the blending requirements.
Like many government programs, the RFS started small under the Bush administration, grew ever larger during eight years of President Barack H. Obama, and is now threatening to explode in size under the Trump administration.
The RFS’s ethanol mandate forces refineries to blend a set amount of ethanol into 15 billion gallons of fuel annually.
Because the ethanol lobbyists who advanced the regulation had the sole objective of forcing more people to buy their product, this bureaucratic decree does not specify that every refinery must mix the product into their fuel. All that matters is that the 15 billion minimum is met.
Accordingly, instead of blending the fuel at sky-high costs themselves, small plants can opt to buy transferrable credits, commonly referred to as Renewable Identification Numbers, from larger refineries to meet their share of the burden.
In doing so, these plants are essentially paying someone else to produce their required percentage of the 15 billion – a concept comparable to the healthcare individual mandate, only worse.
Unlike the individual mandate, RINs are bought and sold on a secondary market, where speculators have made millions through price gouging. Although the credits have become unaffordable for small, local refineries, this hard truth does not matter to the ethanol lobby, which made its money either way.
In this way, the RFS is nothing more than a backdoor, government-mandated transfer of wealth from Middle America to ethanol lobbyists, and it is one that threatens to derail a much-needed reform for America’s middle class.
To date, this draconian mandate has caused thousands of workers to lose their jobs, even after decades of working at the same plant. For all but the biggest and most powerful refineries, it has simply become too expensive to comply.
Scrapping the RFS altogether does not yet seem to be feasible given the current political climate; however, this year, the EPA has considered reforming the regulation to make it more tolerable.
For a time, the administration seemed poised to move the mandate’s “point of obligation” off the backs of every small refiner and exclusively onto the voluntary producers of the ethanol blend – the ones that the government allows to charge exorbitant costs for RINs credits.
To make the lift even easier on these manufacturers, they also deliberated allowing foreign purchases of the mix to count towards the quota, a move that was expected to produce 26,000 new jobs and 1.2 billion gallons of exports.
Unfortunately, it seems that Pruitt changed his tune on this policy switch once midwestern lawmakers threatened to hold up Trump’s EPA nominees unless the RFS is not only maintained but expanded.
Crony capitalist special interests are not simply demanding that the federal government continue giving them their handout; they want the EPA to provide them with even more than what they received during the Obama administration.
Thankfully, conservatives are not giving up without a fight. Nine GOP senators, including Texas’ R. Edward “Ted” Cruz , Utah’s Michael S. Lee, Oklahoma’s James N. Inhofe and Pennsylvania’s Patrick J. Toomey sent a letter to the president requesting a meeting so they can share their side of the Renewable Fuel Standard story.
Cruz and Lee have gone so far as to put Bill Northey’s nomination for a senior United States Department of Agriculture post on hold until they receive their meeting. Kudos to the GOP for trying to keep the White House honest.
Hopefully, the administration will take the senators’ up on their request, because the ethanol mandate is not just wrong on a fiscal level. It is wrong on a moral level and threatens the living standards of low and middle-income Americans.
Anyone who claims to want to “drain the swamp” would be wise to start with repealing, or at least amending, the Renewable Fuel Standard.
We are better than this.
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