A bill hoping to deliver on the long-overdue climate tax fuel exemptions promised to agricultural producers has passed the Washington House and is awaiting action by the Senate. Sponsored by Washington State Rep. Tom Dent (R-Moses Lake), HB 1912 addresses the taxes for farmers added by the Climate Commitment Act (CCA).
When the CCA was enacted, farmers were promised a fuel exemption until 2027. However, the required exemption for agricultural producers and transporters was never enacted. Rep. Dent’s bill will build a long-term plan for how Washington’s agricultural sector interacts with the demands of the CCA.
The CCA was passed in 2021, aiming to reduce greenhouse gas emissions by 95% by 2050. It works through a cap and invest program that creates market mechanisms to create a financial incentive for companies to reduce their emissions. It originally stated fuel used for agricultural purposes by a farm fuel user is exempt, and so is fuel used for agricultural transportation on public highways until 2027.
Currently, an agricultural producer can apply for a rebate run by the Washington State Department of Licensing (DOL), known as the Agriculture Support Program (ASP). The rebate available is up to $4,500, but it doesn’t fully repay what producers have lost from the surcharge. Transporters currently can’t enjoy the same rebate benefit as producers. Producers have a deadline of June 30, 2025, to drain this ASP account. All of this is funded by the 2024 Supplemental Budget, but it is essentially giving the money back to farmers who should’ve never had to pay the tax to begin with.
There has been a lot of costs and confusion surrounding this section, so this new legislation clarifies a few things. First, there is an existing exemption that applies to red dye diesel from the CCA, but not other fuel used on a farm, such as gasoline. This oversight will be closed, and the exemptions will be extended to all farm-used fuel, including natural gas, marine fuel, jet fuel, and propane. It also extends the exemption set to expire in 2027 to expire in 2029. Retailers are encouraged to sell exempt fuel at the pump, so farmers can purchase it without the surcharge.
The Department of Ecology (DOE), who was originally tasked with implementing this exemption when the CCA was created, is now involved to make sure that farmers know where the exempt fuel is in their local area. DOE will do this by working with stations that voluntarily agree to map out where all these stations are and make this information available to farmers and ranchers. If passed, an incentive structure will be created to help the retailers who have decided to engage with this new program. For example, it suggests a new card system for retailers to provide financial benefits to both the seller and purchaser.
Rep. Dent commented:
"This could be one of the most challenging times for agriculture we've ever seen, our farmers and ranchers feed us--it's that simple. We need to support them, and we need to fix this. This bill will help every agricultural producer in the state. There's something in it for everybody. Is this perfect? No. But it's definitely a step in the right direction. We started working on this in November, and I'm honored to have been part of it. I'm hopeful we can keep this moving through the process because our farmers and ranchers deserve it."
There have been multiple efforts in prior years that failed to fix this problem. Rep. Dent attributes the success of this year’s legislation to his working relationship with newly elected Gov. Bob Ferguson and serving as an agricultural advisor for his transition team. Rep. Dent stated that this has been a priority for him and his constituents since the CCA was enacted, especially with roughly 32,000 farms across the state, 94% of which are family owned.
HB 1912 passed the House 93-4 on March 12 and is currently waiting for Senate action. Lawmakers should take this measure seriously. Inaction has already resulted in a significant financial burden for Washington’s farmers. Continuing to ignore the problem continues to break the promise made by legislators to those very farmers.
As Gov. Ferguson said on March 3: “We must keep the promise our state made to our farmers.”