Latest fight over farm fuel exemptions dismissed in court

A Thurston County Superior Court judge has denied an effort to make the state Department of Ecology find a way to assure farmers are exempt from paying fuel surcharges under the state’s cap-and-trade program as intended.

Judge Chris Lanese dismissed a lawsuit earlier this week that would have required the agency to reopen rulemaking to fix the exemption process.

The Washington Farm Bureau, the Washington Trucking Association and others sued the department a year ago after months of frustrations among farmers and truckers who said they were not receiving exemptions from extra charges that fuel companies attribute to the state’s Climate Commitment Act. Their hope was that the lawsuit would force Ecology officials to have formal discussions about how to fix the problems.

The bureau called Lanese’s ruling “inexplicable and disappointing” and would have “catastrophic” financial consequences on farmers and ranchers. It added that the decision is part of “the status quo in a judicial system that systematically rubber stamps agency negligence.”

“The court’s choice to not uphold Ecology’s responsibility to remain in compliance with the laws under the Climate Commitment Act leaves agriculture no path but to fervently support the repeal of this flawed program,” Bre Elsey, Washington Farm Bureau’s Director of Governmental Affairs, said in a statement.

An initiative heading to the ballot this November could eliminate the state’s climate program altogether.

Sheri Call, the trucking association’s president and CEO, said the groups are still determining next steps, including appealing the decision.

Under the Climate Commitment Act, the agricultural, maritime and aviation sectors are supposed to be exempt from the law’s cap on emissions and any fees fuel companies might pass along to customers to cover the cost of buying pollution allowances. Fuel used for trucking crops and other agricultural goods is supposed to be exempt through 2027.

But once the program launched last year, farmers, fishermen and fuel distributors were quick to say the exemptions program was a mess.

They cited difficulties with tracking whether diesel fuel was being used for exempt purposes and said a process where exempt fuel buyers had to present certificates to fuel sellers was cumbersome and faulty. The result, they said, was fuel distributors often passed the cost of allowances to buyers who were supposed to be exempt.

Many large fuel distributors did figure out ways to exempt large farm operations from fees added since the climate program went into effect, but finding ways to exempt small farmers who may purchase fuel at a local gas station remains difficult.

Caroline Halter, spokesperson at the Department of Ecology, said that while the Climate Commitment Act exempts agricultural fuel emissions, it is up to the fuel suppliers to claim the exemption and offer fuel without surcharges to farmers.

“Ecology cannot force suppliers to claim these exceptions or change their prices,” Halter wrote in an email. “What Ecology can and continues to do is help fuel suppliers track and report exempt fuels sales accurately.”

In the last year, the department worked with those affected to try to find a fix. They set up a workgroup of more than 30 farmers, fuel distributors, climate advocates and others that met for months on potential solutions. Ecology also issued guidance on how to report and document emissions that should be exempt from the cap-and-trade program.

The Legislature also set aside $30 million this year to give rebates to farmers who say they have paid surcharges on their fuel. The money went to the Department of Licensing, which will have to start doling out rebates by the end of this month. Payments are based on a signed attestation from purchasers who can show receipts with overcharged fuel costs.

“This [court] decision recognizes that the Department of Ecology is faithfully implementing the Climate Commitment Act as the Legislature intended and within our authority as an agency,” Halter said. “We appreciate the agricultural community’s engagement on this new climate policy, and we’ll continue to be responsive to concerns.”

Call said the state’s efforts haven’t been enough, especially when it comes to helping small farmers and truckers.

“The exemptions system created by the state is a Band-Aid and isn’t adequate, and they don’t seem interested in solving the problem,” Call said. “They created this scheme of rules – it shouldn’t be on the industry to make it work.”