The Indiana Department of Environmental Management was letting ethanol plants in the state release more than two times EPA-allowed emissions.
Two of Indiana's largest ethanol plants have recently shut down because of a rapid increase in corn prices.
The lieutenant governor debate held at the Indiana State Fair focused on agricultural issues.
If the drought continues, corn produce could be too low to meet food and ethanol demands.
Indiana produces a significant amount of biofuels that could potentially be used in commercial and military airplanes.
The largest ethanol producer in the world held a grand opening ceremony Tuesday at its new refining facility in Cloverdale.