State will pay rebates to farmers hit with fuel surcharges under WA climate law

Farmers and truckers who say they’ve unfairly paid fuel surcharges under the state’s cap-and-trade program may soon get some relief.

State lawmakers this session set aside $30 million for farm fuel users and haulers of agricultural goods to receive rebates. This follows frustrations among farmers and truckers who say they are not receiving promised exemptions from the extra charges.

“This is a victory for agriculture to have that acknowledgment from the Legislature that we weren’t just making this up,” said Bre Elsey, director of government affairs at the Washington Farm Bureau. “There has been a violation of the law.”

But the $30 million will likely only cover a fraction of the farmers who have been affected, she said. Elsey added that more needs to be done to get the exemption system working as intended. The Farm Bureau has sued, trying to force an overhaul of it.

Under the state’s Climate Commitment Act, industrial polluters must hit certain emissions thresholds every year. If they can’t, they must purchase allowances from the state, which uses the revenue to pay for programs to fight climate change.

Refiners of gasoline and diesel are subject to the law. But it’s supposed to exempt fuel used for agriculture, commercial fishing and aviation from the pollution caps and any extra fees.

But when emissions auctions began last year, farmers and others eligible for exemptions said they began to get hit anyway with surcharges. Fuel distributors have agreed that the exemptions program is not working.

Some fuel distributors have found ways to exempt farmers from fees they’ve added on since the climate program went into effect, but there have been difficulties in tracking fuel, especially for small farmers who may go to a gas station instead of buying in bulk from a supplier.

Coming into this legislative session, Rep. Drew Stokesbary, R-Auburn, said the fuel exemption program was among the top issues he heard about from constituents.

“This is certainly better than nothing, but I don’t think folks that are on the ground would say it comes anywhere close to solving the problem,” Stokesbary said.

The $30 million in the budget comes from the revenue the state received from its quarterly pollution auctions, and it will go to the Department of Licensing, which must start doling out rebates by Sept. 1.

Under the law, the department must base payments on a signed attestation from farmers and other eligible purchasers who can show receipts with overcharged fuel costs. The amount of money someone gets will be based on how many gallons of fuel they’ve used, ranging from $600 for less than 1,000 gallons to $4,500 for more than 10,000 gallons.

“We wanted to make the rebates as easy as possible for folks and streamlined as much as possible,” Sen. Joe Nguyen, D-White Center, said at a press conference on the budget last month.

If voters approve an initiative heading to the ballot in November that would repeal the Climate Commitment Act, the funds will no longer be available for these rebates. However, Elsey said with such a small amount of money and so many farmers wanting it, getting the funds out in two months likely won’t be an issue.

Elsey said she estimates the need is much more than $30 million, likely in the hundreds of millions, but without having concrete data, the state has not been able to calculate a total.

“None of these farms will be made whole,” she said.

Under the budget language, farmers are encouraged to submit all of their fuel receipts to help the state start a database that it can use in the future if the rebate program continues.

Exemptions still not fixed

Farmers and truckers continue to blame the Department of Ecology for failing to fix problems with the exemptions system they’ve flagged to the department for more than a year.

“This is ultimately a problem that Ecology has to own,” Senate Minority Leader John Braun, R-Centralia, said.

The department hosted a series of roundtable discussions last year to determine the best path forward with the exemptions, but Elsey said not much came out of the meetings. She said they did not include anyone who represented the retail gas industry where many of the problems remain.

The Washington Farm Bureau is also awaiting a trial in a lawsuit meant to push the department to open up rulemaking on the exemptions process. Elsey said the rulemaking would force the department to have discussions with industry about how to fix the problems.

Caroline Halter, spokesperson for the Department of Ecology, said there are now large fuel suppliers in almost every part of the state that are offering exempt fuel, but acknowledged that there are still challenges in delivering the exemptions to gas stations or unstaffed locations.

The department has issued updated guidance for exempting fuels, and Halter said the department is continuing to provide technical assistance to fuel suppliers and working to address challenges around off-farm sales.

Halter said the department supported the rebate program to offset the “undue costs” that farmers have felt during the first year of the program.

“The law does not give Ecology the authority to set fuel prices or dictate pricing strategies,” Halter wrote in an email, “but we’re continuing to work with suppliers and farmers to resolve these issues.”