Farmers are exempt from the cap-and-trade law. So why are many still paying?

State officials are holding closed-door meetings with farmers, fuel distributors and environmentalists to ensure those exempt from the climate program don’t pay more.

By: and - June 25, 2023 5:00 am

A combine at work in wheat fields in the Walla Walla region, during 2018. (Washington State Department of Agriculture)

No one said distributing exemptions for the state’s cap-and-trade program would be easy. 

And six months into the program, it’s still not.

On Thursday, state Department of Ecology officials sat down with more than 30 farmers, fuel distributors, climate advocates and fishermen to iron out wrinkles in the new climate program’s exemption process for farm, maritime and aviation fuels. 

It was the first of eight meetings for a workgroup looking to ensure those who are supposed to be exempt from the program are in fact not paying any extra fees. Thursday’s meeting was an opportunity for those involved to air their concerns.

“It was a massive amount of information,” Jay Gordon, policy director at the Washington State Dairy Federation, said. “I don’t know how they’re going to eat this elephant.” 

The group will meet through September and could propose rule changes or legislation to amend existing law. Department of Ecology spokesperson Claire Boyte-White said last week it’s too early to tell what the outcome will be. 

Meetings are not open to the public.

The cap-and-trade program launched this year as part of the state’s Climate Commitment Act. It requires the state to cap how much carbon pollution companies can emit. If they can’t lower their emissions, they can purchase allowances from the state to make up the difference. 

Though no one has to comply with the emissions cap until next year, fuel buyers say companies are already passing down the costs of allowances to their customers, including those who should be exempt. 

The work group was formed after months of complaints from farmers and others who say they have been paying between 40 and 60 cents more per gallon of fuel since the new law took effect. 

“There are a number of places where people are receiving the value of the exemption. There are other places where they are not,” said Issac Kastama, who represented Clean and Prosperous Washington, a coalition of refiners, environmentalists and civic leaders. Its members include Shell, BP, Vigor, Environmental Defense Fund, Climate Solutions and Tacoma Urban League. “We want to figure out how to do it.”

Most people in the room Thursday had already been talking in smaller conversations about how to solve these issues on their own. Getting them around the same table at the same time will provide a clearer sense of the magnitude of the problem and potential solutions, participants said.  

To some participants, however, it is just another forum for “finger-pointing.” 

Bre Elsey, Washington Farm Bureau’s director of governmental affairs, said the premise of the workgroup is “frustrating.” Everyone involved in it has been giving Ecology solutions since the law went into effect, but the department hasn’t adopted any of them, she said. 

“If you were really looking for solutions and you didn’t feel like these people were giving you the solutions you wanted, wouldn’t you invite new people?” Elsey said. “It doesn’t make sense.”

Small farmers, transportation of agricultural goods remain top concerns

The new law exempts fuel used exclusively for agricultural purposes by a farmer as well as fuel used to transport agricultural products on public highways.

In recent months, some fuel distributors have figured out a way to track the farm fuel exemption, often with a form from Ecology that farmers can give to their distributors who then pass it off to the fuel suppliers.

But Elsey said small farmers, who often fill up their vehicles at commercial gas stations, have no way to get exempted. She said the majority of farmers are still paying the added costs because there’s no mechanism for tracking the fuel from the supplier to the end user. 

“There are major components that have been left unaddressed,” she said.

Tracking fuel used for transporting agricultural products can be very difficult, Gordon said. 

Truck drivers often haul more than one type of goods, so it’s not easy to know how much of their fuel is used specifically for agriculture versus something else, such as construction materials. 

Similarly, maritime fuel, especially that used by small fishermen, is also a top issue the workgroup is trying to address, participants said.

Kastama said upcoming meetings will focus on technical aspects of administering exemptions, which vary by industry.

“This needed to happen,” Kastama said of the workgroup. “There’s been a lot of efforts to solve this in different forums and formats and this brings some formality to it. We’ll see what happens next.”

Possible solutions still unclear

The group’s first meeting focused mostly on the problems with the exemption process and not yet on the solutions, something that will likely come about over the next seven meetings. 

Though all members share a goal of fixing the program, Elsey said she is still skeptical of what solutions may come from it. 

The Farm Bureau pushed for legislation that would fix their concerns throughout the last legislative session but faced roadblocks from liberal lawmakers and Gov. Jay Inslee, she said.

A bill sponsored by Democratic Sens. Mark Mullet, of Issaquah, and Joe Nguyen, of White Center, would have created a rebate program for farmers to make up for any added costs they may have been charged. It would have also prohibited companies from including a separate charge related to the program on their billing statements. 

The bill did not get a committee hearing before the end of the legislative session in late April. 

Last week, the Farm Bureau and the Washington Trucking Association petitioned the Department of Ecology to reopen its rulemaking process to address the exemption issues. The department has 60 days to respond. If they refuse to reopen the process, Elsey said there will likely be litigation.

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Laurel Demkovich
Laurel Demkovich

Laurel joined States Newsroom in 2023 after almost three years as a statehouse reporter for the Spokesman-Review. She covers state government, the Legislature and all other Olympia news.

Jerry Cornfield
Jerry Cornfield

Jerry Cornfield joined the Standard after 20 years covering Olympia statehouse news for The Everett Herald. Earlier in his career, he worked for daily and weekly papers in Santa Barbara, California.