Comments on the March 2 Alliance ballot measure filing

On Friday March 2 the Alliance for Jobs and Clean Energy filed a ballot measure for the Nov 2018 election. I’m trying hard to not publicly share any subjective opinions about their measure so as to give them the space that I wish they’d given the I-732 campaign that I co-chaired, but I am going to chime in objectively about the process and about the contents of the measure. (Note that my comments are mine alone and do not represent the views of Carbon Washington or any other organization.)

The process

The Secretary of State has a handy manual with all the details, but in a nutshell there’s up to 7 working days (as late as T March 13) for the Code Reviser to comment on the bill language, then the sponsor submits their final language (which I’m assuming will happen immediately), then the state Attorney General has up to 5 working days (as late as March 20) to provide the 30-word ballot title that will appear on voters’ ballots. Legal challenges to the ballot language have to be filed within another 5 working days (as late as March 27), and I’d expect as least one legal challenge by the opponents, if for no other reason than to delay the campaign launch. (Opponents might also have substantive challenges, e.g., if the ballot title says “carbon fee” they might argue that that it should say “carbon tax”. The supporters might also file a legal challenge if they think they can get better ballot language. Throughout these five days there will be behind-the-scenes polling efforts to gauge public opinion.) Legal challenges must be resolved by the Thurston County Superior Court within another 5 working days, i.e., as late as April 3.

So it will likely be late March or early April before signature-gathering will begin. Signatures are due July 6, four months before the Nov 6 election.

The contents

It’s a “carbon fee” of $15 per metric ton CO2—equivalent to about 15 cents per gallon of gas—starting on January 1, 2020, increasing by $2 a year plus inflation, or by inflation alone if the state has met its 2035 emissions target and is on track to meet its 2050 target. (Those targets are currently 25% below 1990 levels by 2035 and 50% below 1990 levels by 2050, but there are discussions about making them tougher: 40% below 1990 levels by 2035 and 80% below 1990 levels by 2050.) There are no tax cuts in the bill: the revenue goes toward clean energy investments, healthy forests, etc. etc. There are exemptions for jet fuel, ag diesel, the Centralia coal plant, and various energy-intensive trade-exposed businesses (including those listed here as an “EITE covered party”).

Comment #1: Calling it a “fee” rather than a “tax” is presumably an attempt to get ballot language that polls better. Whether that’s true or not, it’s important to note that there’s a legal difference between a fee and a tax: I’m no lawyer, but my understanding is that revenue from a “fee” has to be spent on fee-related purposes, e.g., a driver’s license fee has to be spent on driver’s license administration. One could argue that the “purpose” of a carbon fee is to reduce carbon emissions without negatively impacting low-income families and therefore that (say) a match of the federal Earned Income Tax Credit qualified as a fee-related purpose, but that might put you on thin ice. The sponsors avoided that risk by putting all the revenue into clean energy investments, healthy forests, etc., but there might still be legal questions about whether this is a “tax in disguise”. And of course there are policy questions, e.g., about how the policy—which includes both the carbon fee and the expenditures—affects low-income households.

Comment #2: The exemption for the Centralia coal plant may or may not be a big deal, depending on legal and economic issues. (Note that Centralia is the only coal plant in Washington State, and that it’s scheduled to shut down by 2025 under a 2012 deal that included a Memorandum of Understanding signed by the plant owners, the Sierra Club, Climate Solutions, Washington Environmental Council, and Northwest Energy Coalition; that memorandum included language about how the “parties desire to see sufficient long term power sales” from Centralia through 2025.)

The economic issue is that exempting coal-fired power from the carbon fee while applying it to natural-gas-fired power may create perverse incentives that could drive carbon emissions up because coal produces about 150% more CO2 per kWh than natural gas. The legal issue is related to the fact that the bill attempts to impose the carbon fee on imported electricity: exempting in-state coal-fired power while imposing the fee on imported coal-fired power may lead to a Dormant Commerce Clause challenge that could result in a court-ordered exemption for imported coal-fired power (from Colstrip and elsewhere). This would exacerbate the economic issue described above by tilting the playing field even further toward coal over natural gas.

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