Legislature v. Inslee… Again: New Washington Climate Laws Unsettled by Separation of Powers Disputes | Davis Wright Tremaine LLP

On Monday, December 20, 2021, for the second time in three years, the Washington State Legislature sued Governor Inslee over his line-item vetoes related to climate change policy. This is despite the fact that Democrats have held control of Washington’s executive and legislative branches since early 2018 and have collaborated to pass a number of major climate bills. (See our highlights from 2019 and 2021.)

The Washington Supreme Court’s recent resolution of the first lawsuit from the legislature suggests that the legislature may well succeed in this second case, potentially delaying implementation of Washington’s Low-Carbon Fuel Standard (“LCFS”). Meanwhile, the governor may have raised different problems in his apparent attempt to avoid similar issues with his partial veto of the Climate Commitment Act (“CCA”), Washington’s new cap-and-trade legislation.

Recent order in 2019 case casts doubt on Low Carbon Fuel Standard partial vetoes

The new lawsuit concerns Governor Inslee’s veto in May of this year of subsections in Washington’s 2021 LCFS bill (analyzed in DWT’s 2021 blog linked above). Inslee vetoed provisions designed to delay implementation of the LCFS unless and until the legislature enacts future legislation increasing Washington’s fuel tax, which funds many transportation projects. (See Section 3(8) of the LCFS bill and Inslee’s veto statement at the end.) Legislators including the Senate Transportation Committee chair, Democrat Steve Hobbs of Lake Stevens, had insisted on that transportation funding trigger in both the LCFS and CCA.

The trouble for Inslee is that Article III, Section 12 of the Washington State Constitution only provides for veto of entire sections or appropriation items, not subsections:

If any bill presented to the governor contain several sections or appropriation items, he may object to one or more sections or appropriation items while approving other portions of the bill: Provided, That he may not object to less than an entire section, except that if the section contain one or more appropriation items he may object to any such appropriation item or items.

Inslee tried to rest his veto on a narrow exception to that provision created by the courts: When the legislature has obviously organized a bill to thwart the governor’s veto authority, the courts will not tolerate such maneuvers and will uphold veto of less than a nominal section. However, the courts will defer to the legislature’s designation of sections and appropriation items unless obviously intended to skirt the intent of the constitution. See Wash. State Legislature v. Lowry, 131 Wn.2d 309, 313, 931 P.2d 885 (1997); Wash. State Legislature v. State, 139 Wn.2d 129, 985 P.2d 353 (1999) (“Locke“).

Inslee learned that lesson the hard way just six weeks ago, when a 7-2 Supreme Court opinion rejected his line-item veto of a single sentence repeated several times in 2019’s transportation appropriations bill. As with delayed implementation of the LCFS, Inslee saw the vetoed 2019 language as an impediment to climate policy. In the 2019 case, the vetoed provision would have prevented the Washington State Department of Transportation from considering vehicle fuel type (and thus favoring zero-emission vehicles) in awarding hundreds of millions of dollars of transportation grants.

There are differences between the 2019 veto and the challenged vetoes in the 2021 LCFS bill, but the similarities are strong. Even stronger are similarities between the rejected 2019 vetoes and nearly identical line-item vetoes in the 2021 transportation appropriations bill, which the legislature also challenges in Monday’s lawsuit. The court’s solid reaffirmation of deference to the legislature thus suggests a good chance that Inslee’s LCFS and 2021 transportation bill vetoes will fail. That would mean that implementation of Washington’s LCFS would have to wait for a future gas tax increase or some other legislative fix.

Cap-and-trade bill: Different veto, different problems?

Meanwhile, the Washington Department of Ecology is implementing the Climate Commitment Act, Washington’s cap-and-trade bill enacted in 2021—even though Inslee also vetoed significant parts of the CCA.

However, the CCA vetoes differ from those in the LCFS bill and the 2019 and 2021 transportation packages in that Inslee struck two CCA sections in their entirety. In particular, he vetoed Section 22, which contained both compliance obligations for greenhouse gas emitters subject to the cap and language tying cap-and-trade implementation to a future gas tax increase. The latter trigger is identical to one of the provisions in the LCFS veto that prompted Monday’s lawsuit. (Inslee also vetoed significant Tribal consultation requirements, causing an uproar from a completely different political direction.)

Because Inslee vetoed whole sections of the CCA, his actions seem plainly within his constitutional powers—but the veto of a section that includes compliance provisions could cause collateral damage. Inslee’s veto statement (attached at the end of the bill linked above) rationalizes that the compliance provisions merely “provide[] a convenient summary of compliance obligations under the [CCA] that is duplicative of the same key compliance obligations and authorizing provisions that are well established and defined in other sections[.]”

The CCA veto statement barely mentions the gas tax trigger, but that appears to be the motivating reason for the veto. The CCA appears to give Ecology enough authority to implement the cap-and-trade program without the vetoed Section 22, but there is some risk that its absence will become a stumbling block. Inslee has apparently judged that risk to be less than waiting for a gas tax hike or trying another questionable veto of less than a full section.

It will be interesting to see if this struggle over separation of powers slows implementation of Washington’s ground-breaking climate change legislation—and which of Inslee’s approaches proves more successful in advancing climate policy by partial veto.

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