Carbon cap rule in Washington state faces legal challenge

Even as the Trump administration seeks to roll back Obama-era rules to curb greenhouse gas emissions at coal-fired power plants, Washington state is forging ahead with its own rules to cap carbon pollution from big industrial facilities.

But the state faces legal challenges as it begins requiring large polluters to gradually reduce carbon emissions over time to combat climate change.

Four natural gas utilities and eight industry groups are seeking to invalidate Washington's so-called clean air rule, which took effect in January and affects such facilities as power plants, fuel and natural gas distributors, oil refineries and manufacturers.

A Thurston County Superior Court judge is set to hear arguments Friday on one aspect of the case. Arguments on the merits of the challenge are expected later.

After failing to persuade lawmakers to pass an ambitious cap-and-trade program, Gov. Jay Inslee directed state regulators in 2015 to use existing authority to limit carbon emissions from Washington's largest sources. He called climate change a threat to the state and said the new regulations would help Washington meet its requirements to reduce carbon emissions.

"We've looked carefully at our law, and we believe we have the authority to do it, and that's the authority we're using," said Stu Clark, air quality program manager with the state Ecology Department. "That's what the court will sort through. We didn't do this lightly."

Industry groups led by the Association of Washington Business challenged the regulations last fall. Four investor-owned natural gas utilities — Avista Corp., Cascade Natural Gas Corp., Northwest Natural Gas Co. and Puget Sound Energy — also filed a separate suit. The two cases have been consolidated.

The petitioners say the Ecology Department doesn't have the authority to create the new carbon cap program, among other arguments. They also contend the agency violated several state laws when it wrote the rules, including not doing a thorough analysis of the impacts.

"The rule paints a picture that only a few are going to be hit. And what we're saying is that it's going to hit everybody," said Bob Battles, general counsel for the Association of Washington Business, referring to effects on businesses, families and others.

Washington state is a low-carbon leader, he said, and the rule is unnecessary. "We don't think they have the authority to do this."

Puget Sound Energy spokesman Grant Ringel said the program will have the unintended consequence of increased costs to customers as well as increased carbon emissions, since the utility could be forced to rely more heavily on its coal-fired plants.

The state's lawyers argue the rule should "be upheld in its entirety."

Three conservation groups — Washington Environmental Council, Climate Solutions and Natural Resources Defense Council — have intervened to defend the state's position. The groups say the state's Clean Air Act provides broad authority for the Ecology Department to regulate greenhouse gas emissions.

On Friday, a judge will hear arguments on one aspect of the case that's not likely to resolve the larger issues. The state has asked the judge to dismiss one of the claims related to the State Environmental Policy Act.

Lawyers for the Ecology Department say the industry groups lack legal standing to challenge the agency's decision to bypass an environmental impact statement. The opponents say the program will create economic and environmental burdens.

Meanwhile, Washington state is being sued by a group of climate activists who say the Ecology Department should take more aggressive actions to reduce greenhouse gas emissions.

"The programs that are on the books are inadequate to protect the right of young people to a stable atmosphere," said Andrea Rodgers, a senior attorney with Our Children's Trust.

Roughly two dozen facilities that emit at least 100,000 metric tons of carbon pollution each year are covered by the clean air rule. More facilities likely will be covered by the rule as the threshold is lowered over the coming decades.

They're required to reduce carbon emissions by an average of 1.7 percent annually and report those emissions every three years. They could lower their emissions, invest in projects that permanently reduce carbon pollution or buy credits from others in the program or from other approved carbon markets.