Association of Washington Business v. Washington State Department of Ecology

The Washington Supreme Court concluded that the Washington Clean Air Act did not grant the Department of Ecology authority to regulate indirect greenhouse gas emissions of businesses and utilities whose products ultimately generate such emissions. The court therefore invalidated regulations promulgated by Ecology to the extent the rules regulated “nonemitters” (i.e., petroleum product producers and importers and natural gas distributors) but allowed the regulations’ continued application to “actual emitters.” Ecology projected that the emissions from combustion of products sold by these “nonemitters” or “indirect emitters” accounted for approximately 74% of the emissions covered by the regulations.

A Washington Superior Court issued a written ruling holding that the Clean Air Rule exceeded the Department of Ecology's statutory authority to adopt emission standards because the Rule regulated "indirect emitters" such as natural gas distributors and petroleum product producers that did not directly introduce contaminants into the air. The court also found that the regulation of indirect emitters was fundamental to the entire Clean Air Rule and therefore found that the entire rule was invalid.

Eight business and trade groups filed a challenge to Washington’s “Clean Air Rule” in Washington Superior Court. The petitioners contended that the legislature had not delegated the Washington Department of Ecology the authority to establish Clean Air Rule’s greenhouse gas regulatory program, which Ecology established at the instruction of the governor. In addition, the petitioners asserted that Ecology’s adoption of the regulations violated the State Environmental Policy Act because an environmental impact statement should have been prepared. The petitioners also said that the program violated the Administrative Procedure Act because of its arbitrary treatment of Energy Intensive, Trade Exposed industries and based on arbitrary cost-benefit analysis and least-burdensome alternative analysis. The petitioners also alleged violations of Washington’s Regulatory Fairness Act, which requires preparation of a small business economic impact statement, and of the Washington constitution’s limits on taxation.