JAY INSLEE

Governor

STATE OF WASHINGTON
Office of the Governor

November 20, 2014

The Honorable Curtis King

Washington State Senate
P.O. Box 40414
Olympia, WA 98504-0414

The Honorable Doug Ericksen

Washington State Senate
P.O. Box 40442
Olympia, WA 98504-0442

Dear Senators King and Ericksen:

I am responding to your November 12 letter regarding a clean fuel standard and the ongoing
evaluation being conducted by the Office of Financial Management.
First, I must emphasize that the process employed by OFM was fully open and transparent, both
with you and with affected and interested stakeholders. Any assertion to the contrary is grossly
unfair to the good work of the agency.
As directed, my staff and the lead agencies briefed you early in the OFM evaluation process. At
your request, we have kept legislative staff fully informed both through direct briefings of the
legislative-executive climate staff group, and through distribution of individual pieces of the
draft evaluation report as available. Legislative staff have also participated in the broader
stakeholder briefings conducted by webinar, at key junctures in the work.

OFM held six meetings of their Clean Fuels Technical Workgroup, which included 28 technical
experts, economists and others from affected industries and interest groups. Sixty-nine
stakeholder groups and more than 30 legislative staff were kept informed throughout the process.
The enclosed chronology of OFMs outreach during this work demonstrates their commitment to
engaging interested parties.
By agreement, representatives of the Western States Petroleum Association have participated in
the meetings with OFM and its consultants. I have also met frequently with representatives of
WSPA, more than all other stakeholders combined, to hear their views on how the evaluation
was proceeding and to address their concerns and recommendations with the evaluation in real
time.
These extraordinary steps should fully respond to any misinformed assertions about a lack of
transparency in OFMs work.
Second, the work being conducted by the executive branch is the work assigned to it by the
Legislature. The policy decision to provide the executive branch with authority and direction to

P.O. Box 40002

Olympia, Washington 98504-0002 (360) 902-4111

www.governor.wa.gov

The Honorable Curtis King

The Honorable Doug Ericksen
November 20, 2014
Page 2
address greenhouse gas emissions from significant sources was made through the states clean
air act enacted in 1991 and the law that limits the states greenhouse gas emissions enacted in
2008. As required, a gubernatorial executive order can only direct state agencies within their
existing authority and these agencies are conducting their work based on that authority.

More importantly, while the Legislature made this decision through prior statute, I have made no
decision to exercise this authority through adoption of administrative rules.
Let me be very clear, yet again

there has been no decision on a specific proposal.

If such a decision is made, it will based on careful consideration of the final OFM evaluation,
weighing both costs and benefits, and fully consistent with the law. Of note, any decision to
pursue rules would simply trigger the beginning of an extensive public review process of the
proposal as required by law.
Finally, your letter reaches conclusions that are not supported by the OFM evaluation, or are
based on incorrect assumptions about the status of our work. For example, your letter raises
concerns about the technical feasibility of producing a sufficient quantity of alternative fuels to
comply with a clean fuel standard. OFM has expended significant effort looking at the question
of how much clean fuel could be produced over time. Since a clean fuel standard would not
prescribe a particular technology, they considered a wide range of compliance options with
different liquid fuels. They also considered alternative fonns of compliance, such as credits for
electrification of transportation and banking of credits over time. While the evaluation is not
complete, the draft suggests there are multiple options for affordable compliance.
Your letter also asserts that costs could exceed $1.00 per gallon, as reported by other studies.
That assertion is incorrect, as it overlooks several important facts:

A central piece of the OFM evaluation was a review of policy options for containing costs,
putting an upper bound on the costs of the program to consumers. A cost containment policy
would preclude the costs you claim.

Your letter mentions long-term effects on key economic indicators. However, you do not
mention that the economic modeling secured by OFM concludes that a clean fuel standard
would result in positive gains for these measures. Even at credit prices many times higher
than the current market, the modeling indicates modest gains in jobs, personal income and
gross state product.

Most importantly, as I have stated many times before, I can assure you that no proposal from
me that adds costs at the pump even near your asserted costs, will ever materialize.

You state that we have not considered or addressed comments provided by you or legislative
staff. OFM distributed the draft report to you and staff, and to a wide range of stakeholders, for
the purpose of securing your review and comment. We have only recently received comments

The Honorable Curtis King

The Honorable Doug Ericksen
November 20, 2014
Page 3
from two legislative staff, and changes are being made to the evaluation based on those
comments. I have also asked OFM to extract the comments on the draft report from your letter
and consider them for the final report.
I hope this letter responds to the concerns expressed in your letter.
It is time for all leaders to bring solutions to the table that will meet our statutory obligation to
reduce carbon pollution and that will secure the future of our state. If you are truly prepared to
engage in cooperative and productive discussions on climate change policy during the upcoming
legislative session, as stated in your letter, then I ask that you do more than just criticize and
mischaracterize actions being considered or proposed by others. Instead, I urge you to bring real
solutions forward, solutions that will meet our emissions limits, and to do so prior to the start of
the session.
Very truly yours,

emor
Enclosure

Office of Financial Management

November 2014
EVALUATION OF A CLEAN FUEL STANDARD
Selected Chronology of Outreach and Consultation Process (all dates 2014)

June 23/24. Ted Sturdevant memo to Legislative Chairs, Ranking Members and staff of
committees with jurisdiction, requesting guidance for how legislators wanted to be involved
in the work done under the Governors Executive Order 14-04.
Governors Office briefings of Chairs and Ranking Members:

July15

House Environment

July22

Senate Energy, Environment and Telecommunications

August 5

House Transportation

August 7

House Appropriations

August 14

Senate Transportation

August 12

Senate Ways and Means

August 22

House Capital Budget

August 27

Senate Trade & Economic Development

Sept. 10

House Finance

Sept. 11

House Technology and Economic Development

Clean Fuels Technical Workgroup

June25

July9

July22

August 6

August 20

September 3

Clean Fuels Evaluation Report

this experts and stakeholders group met on:

distribution and briefings on draft products:

July28

webinar briefing of stakeholders on initial analysis for Tasks 1 and 2

Sept. 29

first half of draft evaluation report was posted to the web and distributed

October 6

webinar briefing of stakeholders on draft reports for Task 3

October23

briefing of Legislative-Executive Climate Staff Group

October29

full draft evaluation report was posted to the web and distributed