May 27, 2009

May 27, 2009


Director Jay Manning
Department of Ecology
PO Box 47600
Olympia, WA 98504-7600

Re: Emissions Reporting Requirements

Dear Director Manning:

The Department of Ecology posted draft rule language (March 31, 2009 version) of WAC 173-441-090 "Reporting Emissions of Greenhouse Gases" that includes a provision requiring third-party verification of the emissions reported by businesses. The third-party verifier must do a conflict of interest check, and the business must pay for the original reporting requirements and the third-party verification. An informal dispute resolution process is created.

Third-party verification was not envisioned by the Legislature as part of its reporting requirements when HB 2815 passed in 2008. In fact, the language that may have supported such a process was removed from the bill. No dispute resolution process was mentioned. The law states:

The rules must establish an annual reporting schedule that takes into account the time needed to allow the owner or operator reporting emissions of greenhouse gases to gather the information needed and to verify the emissions being reported. However, in no event may reports be submitted later than October 31st of the year in which the report is due.

RCW 70.94.151 (5)(a).

This language means that the businesses were to be given enough time so that they could collect the data and verify its accuracy. There was no mention of third-party involvement. Currently, third-party verification in other similar situations arises during dispute resolution, not as a first step in the reporting process. This is how it should remain.

The courts have made clear that administrative agencies are creatures of the Legislature without inherent or common-law powers, and they must be strictly limited in their operations to those powers granted by the legislature. They may only exercise those
powers conferred on them either expressly or necessarily implied by the statute. Agencies are not allowed to determine the scope of their own authority. Based on these established legal concepts, the department is exceeding the scope of its authority by proposing WAC 173-441-090.

Mandatory third-party verification is an unnecessary burdensome step and inserts a foreign influence into the greenhouse gas emissions reporting process that should be simply between business and the government that represents the people. The law merely requires businesses to report greenhouse gas emissions. The Legislature has not authorized the Administration to make choices to force reductions. If the Department of Ecology has concerns about the quality of the reporting, then the government has the obligation to police the transaction, not any other entity.

I am informed there are no businesses in Washington that perform verification at this time. Hundreds of companies will need third-party verification and face $10,000 fines per day if they cannot get a business from out of state to come to Washington to do the verification. Especially in these tough economic times, I am against increasing costs on businesses and their consumers, diverting hundreds of thousands of dollars out of state, and holding Washington businesses hostage to the schedules and whims of other companies. Out-of-state verification companies do not fall under the jurisdiction of Washington’s government. They are free to make determinations based on their own self-interest. There is no guarantee that any company will be willing or able to provide the services required by this proposed rule, which is short-sighted. This rule enables Department of Ecology workers to do less while allowing them to levy penalties against already struggling businesses.

The conflict-of-interest provisions are even more limiting and further hinder the ability of local businesses to receive the mandated services. The government is artificially manipulating the market which drives up costs and makes it more difficult for businesses to report. Even if Washington businesses become accredited, the proposed system has one market driven business policing another market driven business. The department will be ceding its police power by giving to a third-party access to the business records and information of the reporting business to which no other business should have access. Furthermore, this rule would allow the verifier's opinion to sway enforcement actions. Third parties should not have the ability to do this.

The proposed regulation is beyond the scope of the department's authority, unnecessary, burdensome, and shifts control from the government to a third-party business that owes no loyalty to anyone but itself. Because this policy has not been enacted by the Legislature, it should not be a part of the proposed rules. I urge you to remove WAC 173-441-090 from the draft regulation.

Sincerely,

Representative Ed Orcutt, 18th Legislative District
Representative Shelly Short, 7th Legislative District

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For more information, contact: Brendon Wold, Senior Information Officer: (360) 786-7698