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Governor Ducks Question on Low-Carbon Fuel Standards, Complains Transportation Chair – King Offers Inslee a Way Out

Senate Transportation co-chairman Curtis King, R-Yakima.

Senate Transportation co-chairman Curtis King, R-Yakima.

OLYMPIA, Jan. 17.—At least half the Legislature seems convinced that Gov. Jay Inslee will impose costly low-carbon fuel standards on the state of Washington, and as long as that is the case, this year’s effort to pass a gas-tax increase is up against a brick wall, says Senate Transportation Co-Chairman Curtis King, R-Yakima.

Yet in a blistering letter that accuses Inslee of parsing words, hiding his agenda and ducking the question, King also offers the Democratic governor a way out. Certainly Inslee could promise not to do it. But if a public splash makes Inslee uncomfortable, he could accomplish the same thing in a different way. All it would take is legislation that would strip the governor of his ability to impose low-carbon fuel standards by executive order. The governor, of course, would have to agree to let it cross his desk without a veto. He could even let it become law without his signature.

The high-stakes play comes as a suggestion in a letter from King Friday that demonstrates how rapidly Inslee’s silence on low-carbon fuel standards has become a crisis for the transportation effort. After years of preliminary work, lawmakers are finally poised to pass an 11.5-cent gas-tax increase, or at least to debate one, if the final few details of the legislation can be worked out. It is the culmination of years of work by business, labor, environmental interests, transit advocates; it would open the floodgates for a decade of big-ticket construction projects, and Inslee himself is one of its biggest boosters.

But the tax would be a tough sell to the Legislature under any circumstances, and as long as there remains a possibility that Inslee could impose a fuel regulation that could increase the price of gas by a dollar or more, lawmakers of both stripes say they are going to have a tough time putting it over. Inslee hasn’t made it any easier: In a letter Thursday he accused Senate leaders of “fear-mongering,” saying that if he were to impose fuel standards he would do it wisely, he might be able to find a way to do it for less than a buck a gallon, and the only reason lawmakers are raising the issue is that they are looking for an excuse to vote no on taxes. So far he hasn’t said he wouldn’t do it.

No wonder the Legislature is so suspicious, King says. In his letter, he warns the governor, “if you don’t identify your proposal with clarity, it will have an impact on our ability to pass a revenue package. The time for mixed messages is over.”

Tough Talk for the Guv

Inslee invests political capital in climate change bill during a Senate hearing in February.

Inslee invests political capital in bill establishing climate change task force during a Senate hearing last February.

You might say that King is at the center of it: On the first day of the session, King issued a press release urging the governor to “come clean” and address the issue during his state of the State of the State speech. The fact that the governor did not is enough to sound alarm bells, King tells Washington State Wire. “I think it is important that he tells us what his plan is. That’s why I asked him to come clean. And it isn’t just me. I think a lot of people in the Legislature are wondering.”

The campaign for a gas tax is butting up against the big single biggest push for Inslee during his first year of office – to do something about climate change. Low-carbon fuel standards, which would require refiners to blend gasoline and diesel fuel with an advanced low-carbon form of ethanol, were a hot topic in a climate-change task force convened by Inslee last year. But what has put lawmakers on edge is the fact that Inslee went to San Francisco last Oct. 28 to sign an agreement with California, Oregon and British Columbia in which he promised that the state of Washington would enact low-carbon fuel standards. Inslee didn’t say how he would do it. But the state Department of Ecology says it has the authority to impose the rule without an act of the Legislature, if Inslee chooses to issue an executive order.

The cost could be enormous. Consultants to the state climate-change task force last year estimated that the rule would add 93 cents to $1.17 to the cost of a gallon of fuel, if Washington duplicates the program in the state of California, the only state that has enacted such a policy so far.

“It is not like we pulled this out of our head, or other places,” King says. “His own consultants told us that. And there are other sources out there that confirm this is what the possibilities are.”

The prospect already has caused some fuel-using interest groups to peel away from the transportation coalition, among them the Washington Trucking Associations. Lawmakers from both parties have warned in recent weeks that the possible low-carbon fuel standards could derail the transportation plan. Inslee has raised an objection that deals more with procedure than the substance of the complaint. Inslee says he participated in 12 negotiating sessions with lawmakers and not once did they tell him that this might be a problem.

Was Told Compact is Meaningless

King’s letter, reproduced below, tells a rather different story, and one that has not been revealed before. Immediately after Inslee signed the multi-state agreement, King says he had a frank and open discussion with a representative of the governor’s office. He says he was assured that the compact is meaningless. He expands on the story for Washington State Wire.

“I had a 30 to 45-minute conversation with one of his staff people in my office, and I told him at least three times that signing the compact and agreeing that there would be a carbon fuel tax was very detrimental to our ability to get a revenue package out of the Legislature. And I was told that well, all he did was sign a compact, that this wasn’t going to go anywhere. So why keep throwing this in somebody’s face if they are telling you that it is nothing? But it keeps cropping up. I mean, he mentioned it [climate change] in his State of the State. So the governor needs to tell us what he is going to do, because the public is not going to support an 11 ½-cent gas tax increase if six months later gasoline might go up again, possibly a dollar a gallon, because of what he wants to do with carbon.”

King says Inslee has three ways out. He could make a public promise that he will not impose low-carbon fuel standards by executive order. Or he could strike a deal with lawmakers to include a section in the gas-tax bill that would eliminate any Department of Ecology authority to impose fuel standards on its own. Or, King notes, House lawmakers Shelley Short, R-Addy, and J.T. Wilcox, R-Yelm, are readying a separate bill that would strip fuel-standards authority from the Department of Ecology. Under ordinary circumstances, a Republican bill might face tough sledding in the Democrat-controlled House. But lawmakers and the governor’s office might strike a deal under which that bill would be allowed to become law.

King says he is working hard to strike a deal on transportation – big-picture reform issues remain a sticking point. But he says the low-carbon fuel standards issue should not be allowed to get in the way. “I’m not sure if we’re going to get it done this session, but no matter what, I think the conversation has to continue, because we can’t let it just die.”

Full Text of Letter

“Dear Gov. Inslee,

“I am in receipt of your letter dated January 16, 2014, and wish to take the opportunity to respond. First, I embrace your call for continued negotiations. I was also inspired by the thousands of citizens who took the time to meet with Sen. Eide and me during the transportation forums this fall. I’m also encouraged by the progress we made during the last few months of negotiations. In fact, I believe we are not that far apart in terms of numbers and I agree that it is important to continue the dialogue in order to move forward with the package. To keep the conversation going, I have sponsored several reform bills in the Senate and intend to hold or request hearings on them as soon as possible. I am in complete agreement with you that – in the end – the reform and revenue transportation package is about safety, jobs, congestion relief and accountability. I am ready to continue and build upon the work we have already done and see it to completion.

“That said, I needed to correct the record on several matters addressed in your letter. First, I am still uncertain as to your proposal regarding a ‘carbon fuel tax,’ ‘low carbon fuel standard,’ ‘clean fuels standard,’ or whatever phrase you wish to use to describe the product of your agreement with Oregon, California and British Columbia signed on October 28 of last year. I find it strange you would object to my identifying your proposal as a carbon fuel tax. I have attached a number of news articles published after the announcement of the agreement which also clearly identified it as potentially including a ‘carbon fuel tax.’ The bottom line is that, as a result of government action (whether enforced by contract, rule or any other means), the price of fuel is more than likely to increase as a result of the implementation of a policy that mandates lower carbon emissions.

“Second, it is not unreasonable to assume the result of these policies could be an increase in the cost of gas in the amount of one dollar a gallon. In fact, on your own website there is a document, “Evaluation of Approaches to Reduce Greenhouse Gas Emissions in Washington State,” dated September 27, 2013. This was prepared by SAIC, who was the consultant that your bipartisan Climate Legislative and Executive Workgroup (CLEW) hired. Estimate of cost effectiveness of a low carbon fuel standard was $103-$131 per metric ton of CO2 emissions (approximately $.93 to $1.18 per gallon). In addition, the trucking industry (which, incidentally, and withdrew their support for gas tax shortly after you announced your agreement) provided a chart which demonstrates the financial impact of these policies. I have attached it to this response. It is my belief that no matter how you go after the issue of cleaner fuel, it is going to have a negative impact (drive up) on the cost of fuel.

“Third, it is incorrect to say that I’ve never raised this issue during the course of negotiations. On October 29 at 4:30 p.m. (the day after your agreement was announced), I met with your transportation staff member in my office and vehemently expressed to him my frustration with the agreement and how detrimental I felt it was to ongoing negotiations. I was advised that the agreement would not have any impact because was aspirational and would not actually be implemented. As a result of these assurances, I did not raise this issue would negotiations held in your office though I know the other chairs and I discussed it with each other and our staff. It is unfair and incorrect in light of my objections and these assurances to claim that I never raised this issue during negotiations.

“Fourth, I take issue with the idea that somehow I have been engaged in ‘fear-mongering.’ As I’ve stated above, my first inclination was not to go to the public, but again raise my concerns with your staff. The ‘carbon fuel tax’ question was raised by the media and posed to all of the chairs at a media event last week. All of us agreed that the uncertainty posed by this issue made a transportation revenue package more difficult. It is hard to go to the taxpayers (let alone convince legislators to support a gas tax increase) when we don’t know precisely what other measures your administration may take that might also impact the cost of gasoline. I am not the one who signed the compact and I am not the one that brought forth the low carbon fuel standard proposal. The fact that the chairs and ranking members of both the House and Senate transportation committees publicly expressed concerns about the impact of your proposed policies demonstrates that the concerns are well-founded and non-political.

“Fifth, I will also not parse words with you over whether you have been ‘hiding your intentions.’ The fact is that you have not ruled out acting by administrative order and supported taking action on a low carbon fuel standard in your state of the state speech this week. This uncertainty was not resolved in your state of the state address (which is what we were hoping you would do) nor by your letter to me. If you don’t identify your proposal with clarity, it will have an impact on our ability to pass a revenue package. The time for mixed messages is over.

“Governor, if you want to help us get a transportation revenue package, I would suggest that you do one of the following:

“1. Categorically deny that you intend to enforce low carbon fuel standards by administrative order or otherwise without legislative action;

“2. Include in the revenue package a provision that indicates that a low carbon fuel standard may not be enforced or implemented without legislative approval; or,

“3. Support the legislation which is being introduced in the house that prohibits the implementation of a low carbon fuel standard without legislative approval.

“I, along with the other members of the negotiating team, stand ready to continue the discussions where we left off and we look forward to meeting with you to fashion a transportation package that includes the reforms that meet the needs of our state and can win the support of the public.

“Sincerely,

“Sen. Curtis King”


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