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How Obama's EPA Is Making Life Difficult for Clinton

The agency's push and pull on ethanol policy has created a hurdle for the Democratic frontrunner.

DES MOINES—The biggest takeaways from the GOP-dominated Iowa Ag Summit here this weekend may be the opportunity that the Renewable Fuel Standard offers Hillary Clinton to address income inequality and the danger that the Obama administration's dithering management of the RFS may pose to her quest for the presidency.

Clinton is said to have identified income inequality as the defining issue for 2016 and to be looking for ways to reduce it.

Clinton wasn't in Iowa for the summit, of course. Only Republican candidates chose to participate in the day-long event organized by Bruce Rastetter, a wealthy Iowa agribusinessman, philanthropist and Republican donor. When Rastetter interviewed the candidates, there were no surprises. All the major candidates endorsed the RFS except Sen. Ted Cruz of Texas and former Texas Gov. Rick Perry.

But Rastetter and Iowa officials used the summit to make the case that the RFS brings higher paying jobs to remote areas of Iowa, allowing people to remain in their home towns and raise their families there.

Former Lt. Gov. Patty Judge, the only Democrat to speak at the event, said that since Congress passed the RFS in 2005 and expanded it in 2007 ethanol and other renewable fuel plants have been built "in every corner of the state." Today 73,000 Iowans work in renewable fuels, earning $5 million in wages in jobs that are superior to most in small towns, with a total economic impact of $13 million, Judge said.

All the arguments against the RFS—that it damages car engines, raises food prices and causes more harm to the environment than fossil fuels—are lies promoted by "Big Oil," said Judge, who now co-chairs America's Renewable Future, a group set up to promote the RFS in Iowa's 2016 presidential caucuses.

"Let's make certain whoever wins this Iowa caucus is going to be someone who sides with us," she concluded.

Iowa Republican Gov. Terry Branstad also presented a glowing account of the renewable fuels industry. But Branstad shifted the conversation to point out that Iowa and the renewable fuels industry have not felt well treated by the Obama administration since late 2013 when the Environmental Protection Agency initially proposed reducing the volumetric requirements for blending in 2014. Amidst industry protest, the EPA withdrew that proposal and said it would wait until 2015 to issue the requirements for 2014 and 2015, but those blending volumes still haven't come out.

This indecision has come as a shock to the renewable fuels industry because Obama supported the RFS as an Illinois senator and presidential candidate. In 2010 Obama's EPA thrilled the industry by authorizing the sale of E15, a fuel with more ethanol than the 10 percent contained in most gasoline. Then came the proposed pull back on blending.

In Branstad's words, "candidate Obama embraced renewable fuels," then "tried to gut the RFS" and now has "decided to punt on the issue."

Branstad said the uncertainty caused by the EPA and the Obama administration over the RFS "has caused the price of corn to plummet well below the cost of production." As a result, Branstad said, the value of farm land has dropped 9 percent, the largest decrease since 1986, and John Deere, an equipment manufacturer, is laying off workers.

Branstad exaggerates the case. Lower gasoline use and rising food prices led the administration to rethink the volumetric requirements, and the EPA's conclusion won't be known until the final rule is out. Big crops and decreased Chinese exports also played a rule in the fall of corn prices and led to the lower demand for new farm equipment.

But the indecision over the RFS gives Branstad and other Republicans the opening to ask whether any Democratic president can be trusted to manage the RFS.

Under questioning from Rastetter, New Jersey Gov. Chris Christie said he would support the RFS "absolutely. The law requires it." He added that any "competent" president would have already implemented the volumetric requirements.

The RFS was only one of many issues the candidates had with the EPA and Obama.

Former Gov. Jeb Bush of Florida said the EPA is "a pig in slop. We have to begin to rein in this top-down driven regulatory system. The first thing you do is change presidents."

The Republican candidates from out of state did not, however, express the same understanding of the importance of the RFS to jobs and the well being of rural Iowa. That would seem to leave an opening for Clinton if Iowa voters think a Democrat can be trusted with the RFS.

Clinton herself has had her own tortured experience with ethanol. New York is a state that has to import corn from other states to feed its dairy cattle, and as a senator Clinton voted against the RFS on the grounds that it might raise feed prices. But before she ran for president she started promoting the construction of ethanol and biodiesel plants in New York and declared her support for the RFS.

Obama, who won the Iowa caucus in 2008, used this change of position against her, asking whether she would "shift back" if the battles over ethanol get hard.

Now Clinton may have to contend with Obama's own shifting.

Tom Buis, the CEO of Growth Energy, which represents ethanol plant builders and managers, said here Saturday that the Obama administration could still recover its reputation with the renewable fuels industry if it issues final volumetric requirements that the industry finds acceptable. The administration has "heard loud and clear they got it wrong," Buis said.

Neutralizing rural Iowans' discontent with EPA could help Clinton, who does seem to be onto something with her concern about income inequality.

As Republican Rep. Rod Blum, who won a Democratic-held seat in the House in 2014, told the summit in his defense of the RFS, "I won on raising the wages of families."