WASHINGTON FARM BUREAU, Appellant, v. WASHINGTON STATE DEPARTMENT OF ECOLOGY, Respondent. WASHINGTON TRUCKING ASSOCIATION, Plaintiff, v. WASHINGTON STATE DEPARTMENT OF ECOLOGY, Respondent.
No. 103413-0
In the Supreme Court of the State of Washington
June 25, 2026
MONTOYA-LEWIS, J.
EN BANC
In an effort to address climate change and reduce greenhouse gas emissions from the largest emitting sources, such as suppliers of fossil fuels, in 2021 the Washington State Legislature enacted the CCA.
The legislature tasked the Department of Ecology (Ecology) with
We affirm. We hold that Ecology’s rule largely follows the CCA and did not exceed its statutory authority, and that Ecology’s rule and denial of WFB’s petition for rule making likewise did not rise to the level of arbitrary and capricious action.
FACTS AND PROCEDURAL HISTORY
A. The CCA and Agricultural Fuel Exemptions
The Washington State Legislature passed the CCA in 2021 to address the harmful effects of greenhouse gas emissions on our environment and communities. LAWS OF 2021, chs. 315-317;
The legislature finds that climate change is one of the greatest challenges facing our state and the world today, an existential crisis with major negative impacts on environmental and human health. Washington is experiencing environmental and community impacts
due to climate change through increasingly devastating wildfires, flooding, droughts, rising temperatures and sea levels, and ocean acidification. Greenhouse gas emissions already in the atmosphere will increase impacts for some period of time. Actions to increase resilience of our communities, natural resource lands, and ecosystems can prevent and reduce impacts to communities and our environment and improve their ability to recover.
The CCA imposes emissions regulations on “covered entities.” Former
However, the legislature exempted certain categories of greenhouse gas
The cap and invest program uses a market force structure, meaning the CCA relies on market forces by requiring the largest fuel suppliers in the state to purchase allowances or credits equal to their annual greenhouse gas emissions to comply with emissions limits. See
B. Factual Background
The legislature directed Ecology to adopt rules to implement the cap and invest program, and to “determine a method for expanding” this agricultural exemption to include emissions from “fuels used for the purpose of transporting agricultural products on public highways.” Former
Ecology then became aware that some fuel suppliers had been adding a surcharge to the wholesale price of fuels—even fuel sold to farm users for agricultural purposes—to offset the economic losses from the emissions cap. Ecology responded by publishing interim guidance for fuel exemptions, including information on how to report and document emissions from fuel used for agricultural purposes. As part of that guidance, Ecology explained that fuel suppliers could use a Department of Revenue (DOR) form as the exemption certificate to prove fuel
C. Procedural History
WFB then filed a petition for rule making, asking that Ecology open rule making to establish a more workable method to claim an agricultural exemption under the CCA before purchasing fuel as well as a process for those in the agricultural industry to receive refunds for surcharges on fuel. Ecology formed a work group to address the issue and noted it would be nearly impossible to “create a paper-trail of receipts showing that fuel produced was end-used for [agricultural] purposes.” Id. at 247. Ecology also determined that accurate exemption of emissions is a matter of compliance enforcement as opposed to implementation.
Ecology denied WFB’s petition for rule making. Ecology reasoned that the interim guidance it previously issued assisted fuel suppliers in documenting sales of exempt fuel and in avoiding surcharges on that fuel. Ecology also explained that since the guidance was being implemented successfully by many fuel suppliers, it was unnecessary to change the current rules. Moreover, Ecology stated that it lacked authority to allocate refunds for fuel surcharges and that WFB did not identify
In superior court, WFB filed a petition for declaratory judgment and for review of agency action under the APA. WFB requested that the court declare invalid chapter 173-446 WAC because Ecology’s rule implementing the agricultural fuel exemption failed to create a workable mechanism to receive CCA exemptions, which imposed a large financial burden on those in the agricultural and trucking sectors. WFB argued that Ecology exceeded its statutory authority and acted in an arbitrary and capricious manner by implementing a rule that was contrary to the CCA, and that Ecology wrongly denied WFB’s petition for rule making, which could have presented an opportunity to fix the original rule.
The superior court dismissed WFB’s action with prejudice. WFB sought this court’s direct review, and we retained the case.
ANALYSIS
Under Washington’s APA, a rule promulgated by an agency is valid unless it is unconstitutional, exceeds the statutory authority of the agency, was adopted without compliance with statutory rule-making procedures, or is arbitrary and capricious.
A. Statutory Authority
WFB argues that Ecology exceeded its statutory authority by adopting a rule applying the CCA’s agricultural exemption exclusively to suppliers rather than farm fuel users, which allows suppliers to impose surcharges. Ecology agrees that its rule places the point of regulation on fuel suppliers, not farm fuel users, but asserts that the rule is consistent with the plain language and statutory framework of the CCA and is therefore within its statutory authority. We agree and hold that Ecology did not exceed its statutory authority.
Administrative rules are presumptively valid. Spokane County v. Dep’t of Fish & Wildlife, 192 Wn.2d 453, 457, 430 P.3d 655 (2018); Wash. Fed’n of State Emps. v. Dep’t of Gen. Admin., 152 Wn. App. 368, 378, 216 P.3d 1061 (2009). Agency rules are invalid where they are “inconsistent” with the statutes they implement. Bostain v. Food Express, Inc., 159 Wn.2d 700, 715, 153 P.3d 846 (2007). But where a rule is “reasonably consistent” with the underlying statute, the rule should be upheld. Id.; Campbell v. Dep’t of Soc. & Health Servs., 150 Wn.2d 881, 892, 83 P.3d 999 (2004). WFB bears the burden of demonstrating the invalidity of Ecology’s action and
To determine whether a rule is consistent with a statute, we must engage in statutory interpretation, where our “objective is to ascertain and carry out the Legislature’s intent.” Dep’t of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9, 43 P.3d 4 (2002); Dep’t of Fish & Wildlife, 192 Wn.2d at 457. Statutory interpretation is a question of law we review de novo. Campbell & Gwinn, 146 Wn.2d at 9. We discern the plain meaning by considering the language of the statute and related statutes. Id. at 10-11. It is well established that ‘“[t]he drafters of legislation . . . are presumed to have used no superfluous words and we must accord meaning, if possible, to every word in a statute.”’ In re Recall of Pearsall-Stipek, 141 Wn.2d 756, 767, 10 P.3d 1034 (2000) (alterations in original) (quoting Greenwood v. Dep’t of Motor Vehicles, 13 Wn. App. 624, 628, 536 P.2d 644 (1975)).
WFB argues that in promulgating the cap and invest rule in chapter 173-446 WAC, Ecology exceeded its authority under the CCA, former
In support of this assertion, WFB emphasizes that the CCA states that Ecology must maintain the agricultural exemption “in order to provide the agricultural sector with a feasible transition period” and places the decision of whether to seek the exemption on agricultural users by providing that the “exemption is available only if a buyer of motor vehicle fuel or special fuel provides the seller with an exemption certificate.” Former
We decline to adopt WFB’s position because the plain language of the CCA places the point of regulation on fuel suppliers, not end users. The CCA generally restricts fuel suppliers from selling more than a certain allowance of fuel unless they have an exemption certificate from the buyer showing that the fuel is going to be
While agricultural fuel users benefit from this exemption, the CCA does not directly regulate those end users. Although the CCA predicates a supplier’s eligibility to claim agricultural exemptions on the ultimate end-use of the fuel, the exemptions expressly apply to supplier “emissions [that] are exempt from coverage in the program,” not end users. Former
WFB’s argument about the CCA’s reference to
WFB has not met its burden to show “compelling reasons” why Ecology’s rule conflicts with the intent and purpose of the CCA’s agricultural exemption.
| CCA’s Agricultural Exemption Former RCW 70A.65.080(7)(e)(i)-(ii) | Ecology’s Rule WAC 173-446-040(2)(b)(iii)-(iv) |
|---|---|
| (7) The following emissions are exempt from coverage in the program, regardless of the emissions reported under RCW 70A.15.2200 or provided as required by this chapter: . . . . (e)(i) Motor vehicle fuel or special fuel that is used exclusively for agricultural purposes by a farm fuel user. This exemption is available only if a buyer of motor vehicle fuel or special fuel provides the seller with an exemption certificate in a form and manner prescribed by the department. For the purposes of this subsection, “agricultural purposes” and “farm fuel user” have the same meanings as provided in RCW 82.08.865. (ii) The department must determine a method for expanding the exemption provided under (e)(i) of this subsection to include fuels used for the purpose of transporting agricultural products on public highways. The department must maintain this expanded exemption for a period of five years, in order to provide the agricultural sector with a feasible transition period. | (2)(b) The following supplier emissions are not covered emissions if the supplier can demonstrate to ecology’s satisfaction as specified under WAC 173-441-122(5)(d)(xi) that the emissions originate from: . . . . (iii) Motor vehicle fuel or special fuel used exclusively for agricultural purposes by a farm fuel user as described in WAC 173-441-122(5)(d)(xi)(C).4 (iv) Fuels used for transporting agricultural products on public highways if it meets the requirements in RCW 82.08.865 as described in WAC 173-441-122(5)(d)(xi)(C). This exemption is in effect for emissions years 2023 through 2027 and is not available for emissions after 2027. |
Ecology’s rule follows the CCA’s agricultural exemption in both form and substance. An agency rule need only be “reasonably consistent” with the statute. Bostain, 159 Wn.2d at 715; Campbell, 150 Wn.2d at 892. This rule satisfies that standard. The CCA sets out an agricultural exemption to the general mandate for regulations on emissions for large-scale fuel suppliers, and for fuel suppliers to qualify for the exemption, the CCA provides that the fuel must be “used exclusively for agricultural purposes by a farm fuel user,” which Ecology expressly reflected in its rule. Compare
At its heart, WFB’s challenge seems to be a disagreement with the legislature, not with Ecology. WFB’s concern is that agricultural fuel buyers are not adequately protected from surcharges on fuel that suppliers are imposing to defray the costs of complying with the CCA. The CCA was not enacted to protect those in the agricultural sector from emissions-related costs but rather to reduce emissions from
In accordance with the CCA, Ecology has determined a method for fuel suppliers to use a DOR form as the exemption certificate to prove fuel sales fall under the agricultural exemptions. Compare former
WFB also argues that the CCA’s agricultural exemption is mandatory for suppliers, not optional. Consequently, WFB contends that even if this court determines that Ecology lacks authority to provide the benefits of the exemption directly to farm fuel users, we should find that the plain language of the CCA requires the reporting requirement to be mandatory for suppliers. According to WFB, under Ecology’s rules, suppliers may, but are not required to, distinguish between farm fuel used for agricultural purposes and fuel used for nonexempt purposes, and the exemption certificate for fuel used for agricultural purposes is meaningless if fuel suppliers impose surcharges to the costs of exempt fuel.
The rule at issue is WAC 173-441-122(5)(d)(xi)(c) (the emissions reporting rule), which provides that for “[m]otor vehicle fuel or special fuel that is used exclusively for agricultural purposes by a farm fuel user,” “[t]he supplier must demonstrate to [E]cology’s satisfaction that the buyer of the fuel provided the seller with an exemption certificate as described in RCW 82.08.865.”
The parties disagree as to whether a challenge to that emissions reporting rule is before this court. Ecology argues that since WFB failed to request invalidation of any provision of chapter 173-441 WAC in its petition for review of agency action before the superior court, any arguments regarding WAC 173-441-122 are not properly before us. See CP at 6 (petition for declaratory judgment and for review of agency action seeking relief only from “Ecology’s adoption of the regulatory framework under WAC 173-446” (emphasis added)). WFB contends that it challenged both chapters 173-441 WAC and 173-446 WAC directly to Ecology in its petition for rule making, and the petition for declaratory judgment and review of agency action included that request for relief by reference. See CP at 627 (petition for rule making, arguing that “WAC 173-446-040(2)(b) and WAC 173-441-122(5)(d)(xi) create an arbitrary exemption process that is not consistent with [RCW] 70A.65.080(7)(e)(i)-(ii)”), 6 (petition for declaratory judgment and review of agency action “seek[ing] judicial review of Ecology’s denial of their petition for rulemaking, as well as Ecology’s rules adopted under WAC 173-446”). Although there was a general reference to WFB’s petition for rule making (to the agency), since WFB failed to request invalidation of any provision within chapter 173-441 WAC in its petition for review of agency action to the superior court, that rule making file is not included in the agency record; thus, any arguments regarding
Even if WFB had properly raised its attack on the validity of the emissions reporting rule in chapter 173-441 WAC by broadly challenging the regulatory framework of the cap and invest rule in chapter 173-446 WAC, WFB has not demonstrated that any of the rule provisions are “inconsistent” with the CCA. Bostain, 159 Wn.2d at 715. Nowhere does the CCA mandate reporting of exempt emissions. WFB argues that the CCA mandates suppliers to report exempt fuel uses because it says Ecology “‘must determine a method for expanding the exemption . . . to include fuels used for the purpose of transporting agricultural products on public highways.’” Opening Br. at 50-51 (alteration in original) (quoting former
The legislature has expressly mandated reporting of certain categories of emissions in other related statutes, such as the Washington Clean Air Act, but
Ecology’s rule is reasonably consistent with the CCA’s agricultural exemption substantively and structurally. Compare WAC 173-446-040(2)(b)(iii)-(iv), with former
We presume Ecology‘s rules are valid and conclude that WFB did not satisfy its burden of demonstrating “compelling reasons” that Ecology‘s rules conflict with the intent and purpose of the CCA, which are both aimed at reducing greenhouse gas emissions from the largest emitting suppliers, while providing more flexibility for those in the agricultural sector. Spokane County, 192 Wn.2d at 457;
B. Arbitrary and Capricious Rule Making
WFB argues that Ecology acted in an arbitrary and capricious manner by first adopting an unworkable agricultural exemption and again by denying WFB‘s subsequent petition for rule making after being alerted to the pitfalls of the exemption. We reject WFB‘s arguments and hold that Ecology did not act in an arbitrary and capricious manner.
We must give due deference to the specialized knowledge and expertise
Although such deference does not extend to rule making that is arbitrary and capricious, WFB bears a heavy burden to show Ecology‘s actions rise to that level. Pierce County Sheriff v. Civ. Serv. Comm‘n, 98 Wn.2d 690, 695, 658 P.2d 648 (1983); Schneider, 116 Wn. App. at 716. As we have stated repeatedly, rule making is arbitrary and capricious when an agency engages in “willful and unreasoning action, taken without regard to or consideration of the facts and circumstances surrounding the action.” Abbenhaus v. City of Yakima, 89 Wn.2d 855, 858, 576 P.2d 888 (1978); see also Pierce County Sheriff, 98 Wn.2d at 695; State v. Rowe, 93 Wn.2d 277, 284, 609 P.2d 1348 (1980). “Where there is room for two opinions, an action taken after due consideration is not arbitrary and capricious even though a reviewing court may believe it to be erroneous.” Abbenhaus, 89 Wn.2d at 858-59; Lane v. Port of Seattle, 178 Wn. App. 110, 126, 316 P.3d 1070 (2013). We should not “‘undertake to exercise the discretion that the legislature has placed in the agency.‘” Port of Seattle, 151 Wn.2d at 589 (quoting
First, WFB argues Ecology acted in an arbitrary and capricious manner by adopting an agricultural exemption framework that is unworkable for those in the agricultural sector. Opening Br. at 56-59. Specifically, WFB asserts that Ecology recognized the difficulties of tracing fuel to an exempt agricultural end use but still
For instance, Ecology recognized that the current exemption framework would make it challenging to “create a paper-trail of receipts showing that fuel produced was end-used for [agricultural] purposes.” CP at 247. This challenging accounting issue does not indicate that Ecology disregarded its statutory mandate. Instead, it indicates that Ecology anticipated it would be challenging to prevent incorrect or fraudulent CCA exemption claims. In response, Ecology—consistent with the CCA‘s mandate—adopted a voluntary exemption reporting system, which incentivizes fuel suppliers to accurately document and report exempt sales. Although
Additionally, Ecology considered other alternatives and determined they were not feasible. For example, while brainstorming a method for expanding the agricultural exemption to include fuels used for the purpose of transporting agricultural products on public highways, Ecology drafted an implementation plan. The plan included a consultation “with [the Department of Licensing] and DOR to determine a method, and to coordinate on legislative or budget proposals needed to authorize implementation of this exemption.” CP at 241. Ecology considered, as an alternative, “the easiest way” to implement the expansion of the agricultural exemption framework, which would be to use “dyed fuel” for agricultural use. Id. “Dyed fuel” is diesel fuel with red dye to visually signify that there are no federal or state fuel taxes paid and is often used for farming equipment. Dyed Diesel, WASH. STATE DEP‘T OF LICENSING.8 Thus, use of dyed fuel would avoid added costs and ensure easy implementation of the agricultural
Second, WFB argues that Ecology‘s subsequent denial of WFB‘s petition for rule making was arbitrary and capricious. Opening Br. at 59-64. Specifically, it asserts Ecology “knew that some agricultural fuel users were paying CCA surcharges on exempt fuel” and denied further rule making based on a “flawed interpretation that the CCA only allowed it to regulate suppliers.” Id. at 61. WFB also argues Ecology did not take significant actions to address the problems raised in the work group regarding regulatory exposure for suppliers who have no way to verify the use of fuel they sell and the imposition of surcharges on farm fuel users. Id. at 61-63.
WFB relies on Rios as an example of arbitrary and capricious action. 145 Wn.2d 483. At issue in that case was whether the Department of Labor and Industries (L&I) acted in an arbitrary and capricious manner when it adopted a rule recommending but not requiring a blood testing program monitoring cholinesterase
Rios is inapposite to our analysis. Unlike in Rios, where the work group report found a monitoring program necessary and feasible before denying the request for rule making, id., here, Ecology‘s work group report offered no consensus that Ecology‘s rules and guidance were unworkable, and it was published after Ecology denied the petition for rule making. Ecology‘s decision not to change the rule does not render it arbitrary and capricious because the rule in and of itself is reasonably consistent with the CCA. Compare
Ecology demonstrated its due consideration by providing reasons for its denial of WFB‘s petition for rule making. Namely, Ecology issued two guidance documents and an exemption certificate form as its selected method for claiming exemptions on fuel used exclusively for agricultural purposes, which has been successfully implemented by fuel suppliers to track and document sales of exempt fuels without assessing surcharges on those fuels. Ecology explained that the
Therefore, WFB failed to demonstrate that Ecology engaged in “willful and unreasoning action” by adopting an agricultural exemption that, while unsatisfactory to WFB, was reasonably consistent with the CCA and was taken with due consideration of the facts and circumstances. Id. at 858. WFB likewise failed to meet its burden in arguing that Ecology‘s denial of WFB‘s subsequent petition to reopen rule making constituted arbitrary and capricious action when, again, the rule in and of itself was reasonably consistent with the CCA, and Ecology made a reasoned decision to provide guidance on how to claim the exemption under the existing rule and lacked authority to take the specific actions WFB requested. Bostain,
CONCLUSION
The legislature enacted the CCA to limit greenhouse gas emissions in an effort to address the harms of climate change to our environment and communities. Although the legislature exempted fuel used exclusively for agricultural purposes from these emissions limits if the buyer of the fuel provides the seller with an exemption certificate, the supplier-focused statute does not directly provide protections for those in the agricultural sector from emissions-related costs. Ecology promulgated a rule to carry out the expressed statutory purpose of the CCA and otherwise lacks statutory authority to provide refunds to those in the agricultural sector. WFB raises concerns regarding Ecology‘s method for claiming an agricultural exemption being unworkable, but Ecology is not required to implement WFB‘s preferred exemption framework; Ecology developed its exemption certificate framework through due consideration, which provides a method for tracking and reporting agricultural exemptions that is currently being utilized by suppliers and is reasonably consistent with the CCA.
Montoya-Lewis, J.
WE CONCUR:
Stephens, C.J.
Whitener, J.
Johnson, J.
Mungia, J.
González, J.
Madsen, J.P.T.
Gordon McCloud, J.
Yu, J.P.T.
Washington Farm Bureau v. Washington State Dep‘t of Ecology
No. 103413-0
No justice on this court could do their work without the assistance of brilliant and hardworking law clerks and other staff. I have signed the majority opinion written with the assistance of the author‘s outstanding law clerk, Bailey Warrior Pahang.
Justice Montoya-Lewis will leave this court in January 2027 when her term ends since she has decided not to run for another term. She has done exemplary work these past seven years. Readers of our recent opinions may have noticed that she has been thanking her staff in her opinions without any problems except for an
This time, a majority of this court refused to sign the majority opinion assigned to her with that expression of gratitude included, so it goes out without it.2
I understand why some justices object to thanking a staff member in an opinion, and I will continue to take all the credit in my opinions for the work of this court‘s extraordinary staff. But I lament that we are not flexible enough to support a different cultural tradition. We should respect that acting within that
With these observations, I respectfully concur.
González, J.
Montoya-Lewis, J.
Mungia, J.
Wash. Farm Bureau v. Wash. State Dep‘t of Ecology
No. 103413-0
GORDON McCLOUD, J. (concurring)—The debate in this court over a withdrawn footnote has now delayed the issuance of this opinion for more than a month.
The debate about whether to adopt one particular academic convention for expressing gratitude in published articles, about whether that method of expressing gratitude implicates a particular heritage or value system, and about whether one justice needs to speak up for another justice who is more than capable of speaking up for herself is certainly interesting. But there‘s another debate going on in this case, and it is also interesting: whether a Department of Ecology rule implementing an aspect of the Climate Commitment Act1 is lawful. Our main job is to resolve that legal dispute.
When and how to express gratitude, whether and when to elevate transparency, and how best to foster respect for the court are also important. And I welcome the continuation of that discussion elsewhere.
Gordon McCloud, J.
Madsen, J.P.T.
Yu, J.P.T.
Washington Farm Bureau v. Washington State Dep‘t of Ecology
No. 103413-0
MADSEN, J.* (concurring)—I agree with the majority. However, I write separately to give context to the concurrence by Justice González, which reveals confidential information about the internal actions of the court. Six justices agreed with the following concurrence/dissent before the majority revised:
I completely agree with the majority opinion, however I decline to join the asterisk located above footnote 1 as it is outside of our appellate record.
RAP 9.1(a) (appellate courts consider only the record on review). It is also a practice with which I disagree. I understand the desire to recognize the contributions of dedicated court staff, but “[a] majority opinion is the product of a collegiate court and . . . when filed, it no longer retains any proprietary aspect so far as the drafter is concerned . . . [i]t becomes an institutional product that is owned only by the court.” Engberg v. Meyer, 820 P.2d 70, 170 (Wyo. 1991) (Thomas, J., dissenting). Similar to the United States Supreme Court, this court “is a collegial institution, and its decisions reflect the views of a majority of the sitting Justices.” Holtzman v. Schlesinger, 414 U.S. 1304, 1313, 94 S. Ct. 1, 38 L. Ed. 2d 18 (1973).I do not mean to detract from the work of law clerks, student volunteers, and staff—they are invaluable resources and essential to the work of this court. I write separately because a majority opinion represents
* Justice Barbara Madsen is serving as a justice pro tempore of the Supreme Court pursuant to
At best, attribution to a law clerk in a majority opinion may create confusion and invite questions that are left unanswered in the court‘s opinion. E.g., Parker v. Connors Steel Co., 855 F.2d 1510, 1524 (11th Cir. 1988) (the practice of attributing credit to a law clerk “may erroneously lead some to believe that the law clerk decided the case“). Law clerks serve vital and instrumental roles; however, it is the justices themselves who make the final determination in cases. In my view, a majority opinion should reflect the judgment of the court as a whole rather than emphasize any one individual‘s contribution.
Accordingly, I respectfully concur in part and dissent in part.
Madsen, J.P.T.
Yu, J.P.T.
Notes
Owners and operators may separately indicate the quantity of each fuel type if the fuel supplier can demonstrate to ecology’s satisfaction that the fuel is used for one of the following purposes:
. . . .
(C) Motor vehicle fuel or special fuel that is used exclusively for agricultural purposes by a farm fuel user. The supplier must demonstrate to ecology’s satisfaction that the buyer of the fuel provided the seller with an exemption certificate as described in RCW 82.08.865. Fuel used for the purpose of transporting agricultural products on public highways may be included if it is flagged separately and meets the requirements in