Industry Lawsuits Mount Against Washington State's New Carbon Cap

Sep 30, 2016
Originally published on September 30, 2016 5:25 pm

A group of natural gas utilities in Washington Friday filed the third legal challenge this week to new state limits on global warming pollution. The private utility companies Cascade Natural Gas, NW Natural, Avista and Puget Sound Energy filed the latest challenge in Thurston County Superior Court.

The same firms brought suit in federal court in Spokane earlier this week. These cases -- and a third brought by other affected business groups -- seek to invalidate the new state rule that requires utilities and large polluters to gradually reduce greenhouse gas emissions.

Bruce Howard manages environmental affairs for Spokane-based Avista Corporation. He said the policy could be counter-productive.

“It will increase the cost of natural gas and also in a way penalize our customers who have adopted the use of natural gas as a very clean and efficient fuel to heat their homes, heat their businesses, to heat water, to cook, things like that,” Howard said.

A spokeswoman for the Washington state Department of Ecology said her agency carefully considered the legal and economic issues based on previous industry feedback. It believes any effect on energy prices will be minimal.

The Ecology Department "will continue our work to implement the Clean Air Rule," spokeswoman Camille St. Onge added. "When we adopted the Clean Air Rule we joined California and nine other states in the Northeast to do our part to reduce greenhouse gas emissions."

The agency’s position is that it is acting well within its statutory authority to advance legitimate environmental goals.

The Inslee administration moved this year to regulate carbon pollution under the state's Clean Air Act after the Washington Legislature refused to pass the Democratic governor's proposals to create a more ambitious cap-and-trade system to combat climate change.

The Ecology Department describes the resulting state-level carbon pollution cap as "first-of-its-kind." The rules limit greenhouse gas emissions from about 65 large sources, such as factories, power plants, landfills and refineries. Many of those businesses must reduce their emissions by an average of 1.7 percent per year starting in 2017. Companies that cannot reduce their emissions sufficiently must buy greenhouse gas "offsets" to meet their obligations.

St. Onge said the Ecology Department estimated the potential economic impact of the carbon cap on various sectors during its rulemaking. As it pertains to the average household using natural gas, she said the high-end estimate was that utility bills would increase by $2.55 for the entire year in 2020.

“At the low end, there is no increase,” St. Onge said in an interview with public radio.

Howard said his company thinks the Ecology estimates are overly optimistic.

Howard said the utilities' request in Thurston County court to overturn the regulations may be combined with the separate lawsuit filed at the state Capitol by eight industry groups including those representing pulp and paper mills, truckers and food processors.

The lawsuits in Thurston County challenge the authority of the Inslee administration to impose the climate protection rule under state law without approval of the legislature. In addition, the suits allege numerous procedural problems in the enactment of the regulations.

The federal lawsuit is based on different grounds. It alleges that the Inslee administration unduly burdened interstate commerce and regulated "extraterritorially" in violation of the interstate commerce clause of the U.S. Constitution because the carbon cap rules restrict how emissions credits and offsets can be transferred to and from out-of-state.

The plaintiffs are asking the courts to invalidate the rule, but have not asked for a legal stay or restraining order to prevent the carbon limit from taking effect as scheduled on October 17. Avista said it is funding its legal challenge out of a regular operating budget which ultimately comes from ratepayers.

Republicans in the state legislature cheered the industry groups for challenging the Inslee administration's executive action. Conversely, a variety of environmental groups claimed this month that the new emissions rules don't go far enough in light of the magnitude and urgency of regional climate change threats which they perceive.

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