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Tribes ramp up pressure on Washington over gas prices as climate laws’ effects take hold

By Daniel Beekman, The Seattle Times
Published: May 24, 2023, 8:15am

LUMMI RESERVATION — Leaders from at least a dozen Washington tribes may soon meet with Gov. Jay Inslee’s administration to raise concerns and ask questions about the effects of the state’s new carbon-cap system on gas prices and tribal sovereignty.

Some say they’re taken aback by how much the system seems to be driving up gas prices, despite Inslee’s assurances that increases would be marginal.

Henry Cagey, a longtime council member from Lummi Nation who’s been working on the issue, said at least 12 tribes want to take part in the meeting about the Clean Fuel Standard and Climate Commitment Act, which were adopted in 2021 and took effect at the start of this year.

The laws require major polluters like fuel suppliers to pay to release greenhouse gases into the atmosphere and to reduce their emissions over time. They’re designed to combat climate change by making the state mostly carbon free by 2050. But fuel suppliers are passing their new expenses down the line to distributors and customers, including Native American tribes, which are sovereign nations that shouldn’t have to pay, Cagey said.

State officials say the new charges are fees related to “compliance obligations,” rather than revenue-generating taxes. Either way, tribal members are now paying more for gas than they would otherwise, Cagey said, noting that lawmakers carved exemptions for other groups, including the aviation industry, fuel exporters, boats headed out of state and farmers.

“Somehow they had pity on the farmers but they didn’t have pity on the Indians,” he said. “These fees shouldn’t apply to our sovereign territory.”

A number of Native leaders are waiting to make public statements on the issue. But Misty Napeahi, vice chair of the Tulalip Tribes, weighed in this week, saying fuel suppliers should be shouldering the new costs, rather than the tribes and other customers. She said the Tulalip Tribes would be taking part in the upcoming meeting.

“There needs to be pressure applied to the Legislature and to the governor because they’re allowing the oil companies to get away from what the CCA is intended to do,” Napeahi said. “They need to amend it and ensure the oil companies have to pay their fair share.”

In 2021, the Inslee administration told tribal leaders the carbon-cap system would have an insignificant effect on gas prices; that was misleading, considering where prices stand today, Cagey said.

A 2022 report commissioned by the Department of Ecology predicted the Clean Fuel Standard would cause gas prices to increase by less than 1 cent a gallon in 2023. The state predicted that the Climate Commitment Act would boost prices by 1-3%.

“This is going to have a minimal impact, if any. Pennies. We are talking about pennies,” Inslee said last year. “Potentially, not all of this would be passed off to the consumer and what they would [pass on] would be pennies.”

Washington’s average price at the pump is lower than a year ago, but the difference between Washington’s average price and the national average has grown about 40 cents a gallon, according to AAA data.

“There was no consultation,” Cagey said. “They didn’t disclose the impact.”

In a March 9 letter, Lummi Nation Chairman Anthony Hillaire urged Inslee to “act quickly to mitigate the ongoing intrusions on tribal sovereignty.”

The issue is particularly salient because tribes have tangled with Washington officials over fuel costs before. The state partly refunds gas taxes to tribes based on agreements reached after years of litigation. A Yakama Nation member-owned company that distributes tax-free fuel to various tribes, including the Lummi Nation, won a U.S. Supreme Court case against the state in 2019.

State’s view

In a March 22 reply to Hillaire, Department of Ecology Director Laura Watson said the state “does not agree that these charges constitute taxes” on the tribes. Instead, the new laws have established “market-based programs that place compliance obligations on regulated businesses,” she said.

“It is the fuel suppliers rather than the Tribes who are subject to these compliance obligations,” Watson said.

Many fuel suppliers “have opted to pass along their anticipated costs,” and the Department of Ecology “has concerns about what appear in some cases to be inflated cost estimates,” Watson said, suggesting that certain companies may be taking the opportunity to raise their prices more than necessary.

The state, however, “lacks authority to regulate oil prices or otherwise force fuel suppliers to stop adding surcharges to fuel invoices,” Watson said. “As a result, many fuel customers, including Tribes, are seeing invoices with compliance-related surcharges.”

Fuel suppliers have in some cases been hiking prices even though their state payments aren’t due until 2024. Even farmers, whose fuels are supposed to be exempt from the fees, have said their suppliers are tacking on compliance costs, anyway.

Sens. Mark Mullet, D-Issaquah, and Joe Nguyen, D-White Center, proposed a bill last month that would have allowed farmers to seek refunds for such costs. Inslee’s office opposed the bill, arguing the state shouldn’t have to refund farmers for costs that their fuel suppliers aren’t actually incurring.

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Just because suppliers are making noise about their carbon-cap expenses driving up prices, that does not mean customers are being taxed to raise money for the state government in general, Watson said. Instead, the suppliers are being regulated to reduce their emissions and the money is being spent to mitigate climate-change impacts, including on projects supported by tribes, she said.

“I understand that this response may not be satisfactory to you. I also understand these issues are of critical importance to the Tribes,” Watson concluded, offering to set up a government-to-government meeting.

Meeting soon

Watson’s explanation didn’t satisfy Lummi leaders, who rejected the state’s stance last month and requested a meeting, Cagey said.

“As the original caretakers of this land, Tribal Nations and their communities revere the protection of our natural resources,” a Lummi response said.

“While we can certainly respect the State’s desire to mitigate some of the harm caused by non-tribal development and the associated reliance of fossil fuels, it is unconscionable for the State to use these new climate policies as a vehicle to encroach on tribal sovereignty,” the letter added. “The fight to protect our planet and natural resources must be centered around indigenous wisdom and traditional knowledge that has stood for thousands of years.”

Inslee’s office initially scheduled a meeting with Lummi Nation leaders for today, “but since then, many other Tribes have expressed interest in joining and we are looking to reschedule to accommodate everyone,” Mike Faulk, a spokesperson for the governor, said in an email Monday. The office didn’t yet have an official list of the tribes set to participate, Faulk said.

The meeting has been rescheduled for May 31, Cagey said.

Some Native leaders contacted by The Seattle Times declined to comment on the issue, including from the Swinomish Indian Tribal Community, Snoqualmie Tribe, Cowlitz Tribe, Quinault Nation and Squaxin Island Tribe. Some others didn’t immediately respond.

The Sauk-Suiattle Tribe will send a council member to the meeting, chair Nino Maltos II said.

“It seems like every year, year after year, there’s a new thing that chips away at tribal sovereignty,” Maltos said.

In an interview Monday on the Lummi Reservation, Cagey and Napeahi listed projects to reduce greenhouse gas emissions and restore ecosystems that their governments have invested in.

“Tulalip is willing and has already been paying our way to build climate adaptation, resilience and mitigation,” said Tulalip Tribes chair Teri Gobin, calling for an approach that “protects the consumer and holds big business accountable.”

Gobin added: “This fight isn’t about money. It’s about protecting our future.”

Washington’s tribes tend to be political allies of Democrats, like Inslee. But Indigenous leaders previously slammed the governor, in 2021, after he vetoed a section of the Climate Commitment Act that would have required the state to consult with and obtain consent from tribes for certain climate projects that could threaten their natural resources and sacred sites. Fawn Sharp, president of the National Congress of American Indians and vice president of the Quinault Nation, an expert on climate-change policies, called the veto a “shameless betrayal.”

A major player in the current conversation is Cougar Den Fuel, the Yakama Nation member-owned distributor.

“The state continues to push new ways to assess fees and taxes within Indian Country” despite prior losses in court, said Harris Teo, director of sales.

Because Cougar Den doesn’t have to pay certain taxes, gas stations on reservations can sometimes offer lower prices. The U.S. Supreme Court sided with Cougar Den in the company’s battle against being taxed by the state because the U.S. government, in a 1855 treaty, gave Yakama Nation members the particular right to travel and carry out trade on public highways, Teo said. The state is again trying to skirt that reality, he said.

“This is a sovereignty issue,” he said. “The state clearly has no right.”

Because fuel suppliers are not legally required to pass on the new compliance costs, the system doesn’t appear to violate federal Indian law, said Kelly Croman, a former attorney for Squaxin Island Tribe.

But, “it also seems to be the latest double standard against Indigenous peoples who are shouldering the burden of this tax, while the polluters and the emitters are apparently being exempt from it,” Indigenous rights attorney Gabe Galanda said.

Legalities aside, gas prices are a practical matter, Cagey said.

“We’ve got 5,000 registered Lummis and at least 5,000 cars out here that buy fuel,” the council member said. “We’ve got people making the minimum wage, paying extra [because of the carbon-cap system]. Our people can’t afford that. Our fishermen too. They’re paying extra now.”

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