Ass'n of Wash. Bus. v. Dep't of Ecology

This opinion was
^ filed foj^ecord
/rnjE\ IN CLERKS OFFICE X
at S4»Id. Instead, this case
asks whether the Washington Clean Air Act(Act), ch. 70.94 RCW,grants Ecology
the broad authority to establish and enforce greenhouse gas emission standards for
businesses and utilities that do not directly emit greenhouse gases, but whose
products ultimately do. Ecology claimed and exercised such authority in
promulgating the challenged clean air rule (Rule), ch. 173-442 WAC.
Today we hold that by its plain language and structure, the Act limits the
applicability of emission standards to actual emitters. Ecology's attempt to expand
the scope of emission standards to regulate nonemitters therefore exceeds the
regulatory authority granted by the legislature. We invalidate the Rule to the extent
it exceeds Ecology's regulatory authority, while recognizing that Ecology may
continue to enforce the Rule in its authorized applications to actual emitters.
Accordingly, we affirm in part and reverse in part the trial court's decision and
remand for further proceedings consistent with this opinion.
-2-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
FACTS AND PROCEDURAL HISTORY
L The Legislature's Efforts To Reduce Air Pollution and Curb Greenhouse
Gas Emissions
The legislature created the Act in 1967. Laws of 1967, ch. 238. Recognizing
air pollution as "the most serious environmental threat in Washington state," the
legislature significantly revised the Act in 1991 to better "preserve, protect, and
enhance the air quality for current and future generations." Laws OF 1991, ch. 199,
§§ 101, 102; RCW 70.94.011. The legislature continued to revise and expand
Washington's efforts to combat air pollution, recognizing increasing evidence of
humanity's role in climate change.
In 2008, the legislature took its first direct step to combat climate change by
enacting chapter 70.235 RCW,"Limiting Greenhouse Gas Emissions." That chapter
established a timeline for specific emission reduction targets and directed Ecology
to "submit a greenhouse gas reduction plan for review and approval to the
legislature" by December 2008. RCW 70.235.020(l)(b). That same subsection
encouraged Ecology to take swift action to address climate change, allowing
"[ajctions taken using existing statutory authority [to] proceed prior to approval of
the greenhouse gas reduction plan." Id.
In the years following this enactment,the legislature's progress in addressing
climate change stalled. In 2009 and 2015,the legislature declined to pass two major
-3-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
bills designed to further regulate and reduce greenhouse gas emissions. See H.B.
1819, 61st Leg., Reg. Sess.(Wash. 2009); S.B. 5735, 61st Leg., Reg. Sess.(Wash.
2009); H.B. 1314, 64th Leg., Reg. Sess.(Wash. 2015); S.B. 5283, 64th Leg., Reg.
Sess.(Wash.2015). After the 2015 bill failed. Governor Jay Inslee directed Ecology
to reexamine its existing statutory authority to curb greenhouse gas emissions by
setting emission standards. In response. Ecology promulgated the Rule challenged
here.
11. The Clean Air Rule
Relying on Ecology's authority under the Act, the Rule creates greenhouse
gas emission standards for three types of businesses: (1) "[cjertain stationary
sources,"(2)"[p]etroleum product producers and importers," and(3)"[n]atural gas
distributors." WAG 173-442-010, -020(l)(k). The Rule requires most of these
businesses to reduce their greenhouse gas emissions by 1.7 percent every year, using
their emissions in 2017 as a baseline. WAG 173-442-060(l)(b).
The Rule gives covered businesses two nonexclusive options for reducing
their greenhouse gas emissions. First, and most obviously, businesses can modify
operations at their facilities to lower their actual emissions. WAG 173-442-
200(4)(a). Second, covered businesses can acquire and submit "emission reduction
units," which are accounting units representing the reduction of one metric ton of
-4-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
carbon dioxide or its equivalent. WAC 173-442-020(l)(n), -200(4)(b). Covered
businesses can obtain emission reduction units in three ways:(1) by reducing their
actual greenhouse gas emissions below the reduction requirement for a given
compliance period,(2) by undertaking recognized projects, programs, or activities
that reduce emissions in real, specific, quantifiable, permanent, and verifiable ways,
or (3) by purchasing emission reduction units in greenhouse gas emission markets
outside of Washington. WAC 173-442-110. Once a business has obtained emission
reduction units, it can either bank those units to save them for a later compliance
period or exchange those units with other covered entities. WAC 173-442-
130(1),-140.
Ecology projects that the Rule will reduce emissions by 20 million metric tons
of carbon dioxide or its equivalent by 2035, or about two-thirds of the target
established by the legislature in its 2008 enactment of chapter 70.235 RCW. As
promulgated, the Rule covers approximately 68 percent of all the greenhouse gas
emissions in Washington. Of those emissions covered by the Rule, approximately
74 percent are generated by the combustion of products sold by natural gas
distributors and petroleum product producers and importers. Because these covered
businesses sell products but "do not control the amount of fuel or gas burned,"
Ecology acknowledges these businesses "cannot make direct emissions reductions."
-5-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
Dep't of Ecology, Pub. No. 16-02-014, Concise Explanatory Statement:
Chapter 173-442 WAC,Clean Air Rule; Chapter 173-441 WAC,Reporting of
Emissions of Greenhouse Gases 273 (2016), httpsi/Zfortress.wa.gov/ecy/
publications/documents/1602014.pdf[littps://perma.cc/SA7Z-LFCA]. The emission
reduction unit program therefore provides the sole mechanism through which natural
gas distributors and petroleum product producers and importers can address the
emissions generated by the products they sell. In other words, the Rule requires
these businesses to pay to offset the emissions caused by third parties using their
products.
III. Procedural History
Soon after the Rule was promulgated in 2016,the Association of Washington
Business joined with seven other industry trade organizations (collectively AWB)
and filed a petition for review of the Rule under the Washington Administrative
Procedure Act (WAPA), ch. 34.05 RCW. Among other things, AWB argued
Ecology lacked statutory authority under the Act to promulgate the Rule. Four utility
companies that distribute natural gas throughout Washington also filed a petition for
review. The two petitions were consolidated into a single challenge to the Rule. The
trial court allowed the Washington Environmental Council and two other
environmental organizations(collectively WEC)to intervene in defense ofthe Rule.
-6-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
In late 2017, the trial court ruled that Ecology's "authority under [the Act] is
limited to entities who introduce contaminants into the air, not entities who sell
commodities." Clerk's Papers (CP) 756. In its subsequent written order, the trial
court held that the Rule was invalid under the WAPA because "the Clean Air Rule
exceeds the statutory authority of the agency conferred by law." Id. at 801
(Conclusion of Law 12). Without discussion, the trial court denied Ecology's
request to sever the portions ofthe Rule that were held invalid. Id. at 787-88.
Ecology and WEC promptly filed notices of direct review with this court
under RAP 4.2(a)(4). We granted review. We also granted the motion ofthe Puget
Sound Clean Air Agency to file an amicus brief.
ISSUES
(1) Under the Act, may "emission standards" apply to businesses that do
not directly emit greenhouse gases, but whose products ultimately do?
(2) Is the Rule a valid exercise of Ecology's statutory authority?
(3) Can the Rule be severed to strike only its invalid portions and allow
those portions that apply to actual emitters to remain in effect?
ANALYSIS
We review this challenge to the validity ofEcology's Rule de novo under the
WAPA. Wash. Pub. Ports Ass'n v. Dep't ofRevenue, 148 Wash. 2d 637,645,62 P.3d
-7-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
462(2003); Tapper v. Emp'tSec. Dep't, 122 Wash. 2d 397, 402, 858 P.2d 494(1993)
("In reviewing administrative action, this court sits in the same position as the
superior court, applying the standards ofthe WAPA directly to the record before the
agency."). We will "declare the rule invalid only if...the rule exceeds the statutory
authority of the agency." RCW 34.05.570(2)(c). "Administrative '[r]ules must be
written within the framework and policy of the applicable statutes,' and so long as
the rule is 'reasonably consistent with the controlling statute[s],' an agency does not
exceed its statutory authority." Swinomish Indian Tribal Cmty. v. Dep't ofEcology,
178 Wash. 2d 571, 580, 311 P.3d 6(2013)(alterations in original) (citation omitted)
(quoting Dep't of Labor & Indus, v. Gongyin, 154 Wash. 2d 38, 50, 109 P.3d 816
(2005); Wash. Pub. Ports Ass'n, 148 Wash. 2d at 646). But "'[a]dministrative rules or
regulations cannot amend or change legislative enactments.'" Dep't ofEcology v.
Campbell & Gwinn, LLC, 146 Wash. 2d 1, 19, 43 P.3d 4 (2002)(quoting Dep't of
Ecology V. Theodoratus, 135 Wn.2d 582,600,957 P.2d 1241 (1998)). "[R]ules that
are inconsistent with the statutes they implement are invalid." Bostain v. Food
Express, Inc., 159 Wash. 2d 700, 715, 153 P.3d 846(2007). And while "'we generally
accord substantial deference to agency decisions, we do not defer to an agency the
power to determine the scope of its own authority.'" Lenander v. Dep't ofRet. Sys.,
-8-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
186 Wash. 2d 393, 409, i' ll P.3d 199 (2016) (quoting In re Registration of Elec.
Lightwave, Inc., 123 Wash. 2d 530, 540, 869 P.2d 1045 (1994)).
At the heart of this case is whether the plain meaning of the Act empowers
Ecology to use emission standards to regulate businesses that do not emit greenhouse
gases. Statutory interpretation presents a question of law we review de novo.
Campbell & Gwinn, LLC, 146 Wash. 2d at 9. Our fundamental objective is to
determine and carry out the legislature's intent. Id. When "the statute's meaning is
plain on its face, [we] must give effect to that plain meaning." Id. To determine
plain meaning, we consider "all that the Legislature has said in the statute and related
statutes which disclose legislative intent about the provision in question." Id. at 11.
We also look to "the context of the statute in which that provision is found, related
provisions, and the statutory scheme as a whole" to determine plain meaning. State
V. Engel, 166 Wash. 2d 572, 578, 210 P.3d 1007(2009).
Ecology argues it has authority to promulgate the Rule regulating nonemitters
through emission standards under the Act generally, and under RCW
70.94.33 l(2)(c) and .030(12) in particular. See ch. 173-442 WAC (citing chapter
70.94 RCW as statutory authority). RCW 70.94.33l(2)(c) outlines the "Powers and
duties ofthe department." Among other things, this section directs Ecology to
[ajdopt by rule air quality standards and emission standards for the control
or prohibition of emissions to the outdoor atmosphere ofradionuclides, dust,
fiimes, mist, smoke, other particulate matter, vapor, gas, odorous substances,
-9-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
or any combination thereof. Such requirements may be based upon a system
of classification by types of emissions or types of sources of emissions, or
combinations thereof, which it determines most feasible for the purposes of
this chapter.
Id. The Rule at issue here is an emission standard, which the Act defines as
a requirement established under the federal clean air act or this chapter that
limits the quantity, rate, or concentration of emissions of air contaminants on
a continuous basis, including any requirement relating to the operation or
maintenance of a source to assure continuous emission reduction, and any
design, equipment, work practice, or operational standard adopted under the
federal clean air act or this chapter.
RCW 70.94.030(12). Ecology argues the Rule is a valid exercise of its authority
under the Act because it is a "requirement . . . that limits the quantity, rate, or
concentration of emissions of air contaminants on a continuous basis" "based upon
a system of classification by types of emissions." RCW 70.94.030(12),.331(2)(c).
Ecology is mistaken. While the Act does grant Ecology significant authority
to regulate emissions in the manner it deems best. Ecology carmot exercise this
authority outside the scope delineated by the legislature. RCW 34.05.570(2)(c).
1. The Plain Meaning of the Act Does Not Authorize Ecology To Regulate
Entities That Do Not Directly Emit Greenhouse Gases
The plain meaning of the Act's "emission standards" definition limits the
scope ofEcology's authority to promulgate emission standards to those entities that
actually emit air pollutants. RCW 70.94.030(12). As a preliminary matter, we note
that the "powers and duties of department" section of the Act cannot be read to
-10-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
expand that definition to cover nonemitters. That section describes how emission
standards can be organized—i.e.,"based upon a system of classification by types of
emissions or types of sources of emissions"—^not what din emission standard is.
RCW 70.94.33l(2)(c). The crux of Ecology's argument is that because the Rule is
based on a type of emission—^namely, greenhouse gases—^it can cover businesses
that do not directly emit greenhouse gases, but whose products eventually do. But
basing an emission standard on a type of emission does not mean Ecology can
regulate any entity regardless ofwhether that entity is a source ofemissions. Instead,
the definition of"emission standard" plainly limits such rules to those entities that
release air contaminants (i.e., sources ofair contaminants). The text and the structure
of the definition section—and that of the Act as a whole—directly undercut
Ecology's claims to the contrary.
A. The "Emission Standard" Definition Limits Its Scope to Actual Emitters
An emission standard is "a requirement. . . that limits the quantity, rate, or
concentration of emissions of air contaminants on a continuous basis." RCW
70.94.030(12). The Act defines "emission" as "a release of air contaminants into
the ambient air." RCW 70.94.030(11). Taking these definitions together, an
emission standard is best understood as a limit on how and when regulated entities
can release air contaminants into the ambient air. If an emission standard regulates
-11-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
the release of air contaminants, it naturally follows that emission standards are
intended to regulate those entities that directly cause such releases.
Another indication that emission standards are meant to regulate only actual
emitters is the fact that the definition in RCW 70.94.030(12) applies to both
"emission standard" and "emission limitation," and the Act uses the term "emission
limitation" exclusively in reference to direct sources of emissions. See RCW
70.94.030(6) ('"Best available control technology' (BACT) means an emission
limitation based on the maximum degree of reduction for each air pollutant . . .
emittedfrom or that resultsfrom any new or modified stationary source.''''(emphasis
added)), (7) ('"Best available retrofit technology' (BART) means an emission
limitation based on the degree ofreduction achievable through the application ofthe
best system of continuous emission reduction for each pollutant that is emitted by an
existing stationary facility.'" (emphasis added), (14)(a) ("'Lowest achievable
emission rate'(LAER)means for any source that rate of emissions that reflects ...
\f\he most stringent emission limitation . . .for such class or category ofsource.")
(emphasis added). Because "emission standard" is synonymous with "emission
limitation," emission standard cannot reasonably be interpreted more broadly than
emission limitation. The fact that the term emission limitation is used exclusively
-12-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
in reference to direct sources of emissions strongly suggests that the related term
emission standard also applies only to direct sources of emissions.
Finally,the grammatical structure ofthe emission standard definition does not
support Ecology's interpretation. RCW 70.94.030(12) provides both a primary
definition of emission standard—"a requirement... that limits the quantity, rate, or
concentration ofemissions ofair contaminants on a continuous basis"—and a couple
of examples to illustrate that definition. Ecology argues that by holding emission
standards apply only to sources that directly emit contaminants into the air, the trial
court"g[ave] effect to only one clause in the definition" and ignored the importance
ofexamples that could be read to apply to nonemitters. Br. of Appellant Wash. State
Dep't of Ecology (Br. of Appellant) at 16.
But an example illustrating a definition should not be read to expand that
definition. A "requirement [to]... limit[]... emissions of air contaminants" is just
what it says: a rule requiring covered entities to limit their emissions. RCW
70.94.030(12). At times Ecology appears to understand the provision this way, as
it describes the applicability ofthe Rule in terms ofemission limits. WAG 173-442-
030(1)("Emission reduction requirements apply to a covered party when their ...
covered [greenhouse gas] emissions are greater than or equal to the compliance
threshold."). The definition's inclusion of some examples that could conceivably
-13-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
apply to nonemitters does not prove the legislature intended the Act to authorize
Ecology to regulate more than direct emissions. Our task is to determine what the
legislature intended by this provision—^namely, the scope of the authority the
legislature intended to grant Ecology. Campbell & Gwinn, LLC, 146 Wash. 2d at 9.
We do not defer to agency interpretations of their own authority because their
interpretation could have been what the legislature intended. Lenander, 186 Wash. 2d
at 409. At best, the definition is ambiguous in light of the examples. But the
broadest possible interpretation ofa provision is not a necessary consequence of any
ambiguity, particularly where the evidence weighs heavily against such an
interpretation.
B. The Text and the Structure ofthe Act as a Whole Suggest the Legislature
Intended Emission Standards To Regulate Emitters
To bolster its argument that the Act allows for a regulation that imposes
emission standards on nonemitters. Ecology points to portions of the Act's purpose
section. Ecology correctly notes the Act's purposes include "provid[ing] for the use
of all known, available, and reasonable methods to reduce, prevent, and control air
pollution," as well as "achiev[ing] significant reductions in emissions from those
small sources whose aggregate emissions constitute a significant contribution to air
pollution." RCW 70.94.011. Read in isolation, these clauses might suggest the
legislature intended to imbue Ecology with wide-ranging authority to reduce air
-14-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
pollution in any way possible. But a closer look at the Act's purpose statement
undercuts this reading: "It is the policy ofthe state that the costs ofprotecting the air
resource and operating state and local air pollution control programs shall be shared
as equitably as possible among all sources whose emissions cause air pollution.''''
RCW 70.94.011 (emphasis added). By reading the Act's purpose statement
selectively, Ecology justifies imposing significant costs on entities that do not emit
pollutants into the air, in direct contravention of another provision of the same
purpose statement.
Worse, Ecology attempts to use the purpose statement to justify an expansion
of the Act's scope that is otherwise unsupported by the statutory text. At oral
argument. Ecology suggested that the only limit on its rule-making reach is the
practical ability to measure and assess indirect impacts.^ But the Act's direction to
'See Wash. Supreme Court oral argument,Ass'n of Wash. Bus. v. Dep't ofEcology,
No. 95885-8 (Mar. 19, 2019), at 4 min., 10 sec. through 8 min., 25 sec., video recording
by TVW, Washington State's Public Affairs Network, https://www.tvw.org/watch/
?eventID=2019031166(responding to questions from Justice Sheryl Gordon McCloud and
Justice Susan Owens, the State argued,"The limiting principle is within the definition of
'emission standard' itself . . . . 'Emission standard' has to limit the quantity, rate, or
concentration of emissions, and so you have to know what the quantity of emissions are
that you're dealing with For something in which it's not possible to quantify emissions,
there may be other tools [besides emission standards] to address those greenhouse gas
emissions....[For example,] we know that there are greenhouse gas emissions associated
with the gastric processes oflivestock, and one ofthe answers to [the question why Ecology
does not regulate livestock under the clean air rule] is we can't quantify livestock emissions
with certainty. And if you don't have a quantity of emissions, there is nothing from which
you can reduce those emissions.").
-15-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
use "all known, available, and reasonable methods to reduce, prevent, and control
air pollution" is not an invitation to regulate every entity whose activities may
eventually contribute to quantifiable emissions. RCW 70,94.011. The plain
meaning of "emission standard" in the Act applies only to actual emitters of air
pollution. See RCW 70.94.030(12). Within that scope,the Act grants Ecology broad
discretion to reduce emissions in whatever manner it thinks best. But outside ofthat
scope. Ecology cannot act without further authorization from the legislature.
Nor can Ecology justify a need to use emission standards to solve every air
pollution problem. Emission standards are only one tool the Act gives Ecology to
regulate air pollution and to combat the accumulation of greenhouse gases in the
atmosphere. Ecology is correct in claiming the legislature has vested the agency
"with very broad authority and responsibility for managing this state's
environment." Weyerhaeuser Co. v. Dep't ofEcology,86 Wn.2d 310,315,545 P.2d
5(1976). But Ecology's argument that this broad authority should allow it to expand
the scope of one regulatory tool beyond what the legislature provided is mistaken.
The legislature has not empowered Ecology to do whatever Ecology deems best for
the environment. To the contrary, the legislature has provided Ecology with a
variety of tools to fulfill its environmental responsibilities precisely because
Ecology's responsibilities cover a wide range of environmental issues.
-16-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
One such tool is an air quality standard: '"Air quality standard' means an
established concentration ... of an air contaminant or multiple contaminants in the
ambient air which shall not be exceeded." ROW 70.94.030(3). As explained above,
another tool is emission standards, which govern sources that directly emit air
contaminants into the atmosphere. Emission standards serve a purpose separate and
apart from the purpose of air quality standards. Emission standards govern what is
emitted, while air quality standards govern permissible levels of a given air
contaminant in the air as a whole.
The Act uses "air quality standard" and "emission standard" conjunctively,
suggesting both should be brought to bear when Ecology promulgates rules to
combat the effects of greenhouse gases. See RCW 70.94.33l(2)(c) (directing
Ecology to "[ajdopt by rule air quality standards and emission standards . . ."
(emphasis added)). As we explained 30 years ago, "[b]y explicitly requiring
[Ecology] to adopt separate standards for air quality and emissions," the legislature
authorized Ecology power to create standards applicable to separate aspects of the
air pollution problem: first, "an air quality standard sufficiently limiting the
aggregate concentrations of contaminants," and second, "emission standards to
control the release of contaminants from any individual source." ASARCO, Inc. v.
-17-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
Puget Sound Air Pollution Control Agency, 112 Wash. 2d 314, 320, 111 P.2d 335
(1989)(emphasis omitted).
Here, Ecology claims its Rule is an emission standard and an emission
standard only. But rather than regulate identified sources of greenhouse gases—as
an emission standard ought to do—^the Rule attempts to curb the overall effect of
greenhouse gases by "requir[ing] certain companies that sell, distribute, or import
petroleum products and natural gas to . . . internalize some of the environmental
costs associated with the products from which they profit." Br. of Appellant at 7.
Forcing businesses to internalize the environmental costs oftheir customers' actions
may indirectly help limit the aggregate concentrations of greenhouse gases in the
atmosphere, but it does not actually regulate the release of those contaminants. In
this way, the Rule creeps beyond the scope of an emission standard and into the
realm of an air quality standard.
We need not decide today whether a Rule like the one challenged here would
have been properly promulgated as an air quality standard, but we do decide that it
is improper as an emission standard when applied to businesses that do not directly
emit greenhouse gases. Where the legislature has provided multiple tools for
Ecology to carry out its broad environmental mission.Ecology cannot credibly argue
-18-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
the breadth of its mission supports expanding one tool beyond the authorized scope
ofthe Act.
Taken as a whole, the Act's text and purposes do not provide the support
Ecology claims for its broadly envisioned regulatory power. There may be other
options open to Ecology, now or in the future, for addressing the impact of the
petitioner businesses and utilities on climate change. But regulating them as so-
called "indirect emitters" under the Act is not a statutorily authorized option. We
therefore hold that the Rule exceeds Ecology's authority under the Act and is invalid
to the extent it purports to regulate via emission standards businesses that do not
directly emit greenhouse gases, but whose products ultimately do.^
A final consideration is whether the remaining provisions ofthe Rule survive
without these invalid provisions. We conclude they do.
II. The Unauthorized Aspects ofthe Rule Are Severable
Without discussion, the trial court rejected Ecology's request to invalidate
only those aspects of the Rule that apply to natural gas distributors and petroleum
product producers and importers. CP at 787-88. The Rule contains an express
severability clause, WAG 173-442-370, and Ecology asks us to preserve those
^ Because this holding grants AWB the relief it seeks, we decline to address AWB's
altemative argument that the Rule's creation ofemission reduction units exceeds Ecology's
authority under the Act as to all covered entities.
-19-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
portions of the rule, including its application to actual emitters, that reflect a valid
exercise of its regulatory authority.
While we have not before addressed severability in the context of an
administrative rule, we have recognized with regard to statutes that the presence of
a severability clause"may provide the assurance that the legislative body would have
enacted remaining sections even if others are found invalid," though it "is not
necessarily dispositive on that question," McGowan v. State, 148 Wn,2d 278, 294-
95, 60 P.3d 67(2002)(citing Gerberdingv. Munro, 134 Wash. 2d 188, 197, 949 P.2d
1366 (1998); Leonard v. City of Spokane, 127 Wash. 2d 194, 201, 897 P.2d 358
(1995)). We examine the challenged statute as a whole to determine whether the
legislature could have intended to enact the valid sections alone and whether those
valid sections alone work to achieve the legislature's goals. Id.
When evaluating the severability of regulations, the United States Supreme
Court looks to similar questions of intent and workability. See K Mart Corp. v.
Cartier, Inc., 486 U.S. 281,294,108 S. Ct. 1811,100 L.Ed. 2d 313(1988)(holding
portion of regulation severable where the "severance and invalidation of this
subsection will not impair the function of the statute as a whole, and there is no
indication that the regulation would not have been passed but for its inclusion"). The
Court in K Mart functionally "applied the same test for the severability of statutes
-20-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
that the Court had articulated in Alaska Airlines[, Inc. v. Brock, 480 U.S. 678, 107
S. Ct. 1476, 94 L. Ed. 2d 661 (1987),] just one year earlier." Charles W. Tyler &
E. Donald Elliot, Administrative Severability Clauses, 124 Yale L.J. 2286, 2296
(2015) (discussing the development of standards for determining severability of
agency promulgated regulations).
Like the United States Supreme Court, we believe the test for the severability
of regulations should be governed by the concepts of intent and workability that
inform our test for the severability of statutes. To determine whether an invalid
portion or aspect of a regulation is severable, we ask(1) whether the authorized and
unauthorized portions ofthe regulation are so intertwined that the agency would not
have believably promulgated one without the other and (2) whether the invalid
portion is so intimately connected with the purpose ofthe regulation as to make the
severed regulation useless to advance the purpose of the statute under which it is
promulgated. Applying this test here, we conclude that the portions of the Rule
applying to natural gas distributors and petroleum product producers and importers
are severable from the remainder of the Rule, which will continue to advance the
purpose ofthe Act even without these provisions.
First, Ecology argues it would have adopted a clean air rule creating an
emission standard applicable only to direct emitters. As evidence. Ecology points
-21-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
to its decision to include a severability clause in the Rule. See WAC 173-442-370.
While persuasive, the existence of this clause is not dispositive. McGowan, 148
Wash. 2d at 294-95 {citmg Leonard, 111 Wash. 2d at 201). The heart of Ecology's
argument is that its intent in adopting the Rule was to reduce greenhouse gas
emissions in Washington, which the Rule would accomplish with or without the
portions regulating natural gas distributors and petroleum product producers and
importers. See Br. of Appellant at 23. Ecology calculates that the Rule's benefits
would outweigh its costs even ifsevered, suggesting Ecology would have had reason
to adopt the valid portions ofthe Rule independent ofthe aspect we invalidate today.^
CP at 681-84.
AWB counters that Ecology considered and rejected draft rules that would
have covered only direct emitters, pointing to Ecology's reasoning that these
narrower rules "would severely limit [Ecology's] ability to achieve the goals and
^ The trial court declined to consider these calculations because they were not in the
administrative record. CP at 785-86. Ecology points out that agencies may supplement
the administrative record if new information relates to the validity of agency action and is
needed to decide disputes around material facts that were not required to be determined on
the agency record, RCW 34.05.562(l)(e), and that severability was not addressed in the
agency record because the issue did not arise until after the final Rule was adopted. We
agree that the declaration of Ecology's senior economist, in which Ecology's calculations
regarding severability are described, falls within the meaning of RCW 34.05.562(l)(c), is
appropriately considered as it relates to the validity ofEcology's rule making,and is needed
to resolve whether Ecology would have promulgated the Rule without the provisions we
invalidate today.
-22-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
objectives of the authorizing statutes." Dep't of Ecology, Pub. No. 16-02-015,
Final Cost-Benefit and Least-Burdensome Alternative Analysis: Chapter
173-442 WAC, CLEAN Air Rule; Chapter 173-441 WAC, Reporting of
Emissions of Greenhouse Gases 69 (2016), https://fortress.wa.gov/ecy/
publications/documents/1602015.pdf [https://perma.cc/YNM6-2VGY]. The trial
court seemed to agree, ruling that the provisions of the Rule purporting to regulate
nonemitters were "fundamental to the entire Clean Air Rule" because the majority
of projected emission reductions were expected to come through those provisions.
CP at 801.
While AWB and the trial court are correct that most of the Rule's benefits
were expected from the provisions we invalidate today, this does not show that the
unauthorized provisions are so intertwined with the authorized provisions that
Ecology would not have reasonably promulgated a rule without these provisions. To
the contrary, the Rule regulates covered entities on an individual basis, and the
unauthorized regulation ofany particular nonemitter does not bear on the authorized
regulation of any particular emitter. See WAC 173-442-050, -060, -070
(establishing individual emission baseline and reduction requirements for each
covered entity). The Rule's structure is such that one does not depend on the other—
the regulation of each entity is independent of any other. The fact that the narrowed
-23-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
Rule may result in only a fraction of the emission reductions projected under the
Rule as promulgated does not mean Ecology lacked justification for a rule that
covered only direct emitters of greenhouse gases. We believe Ecology would have
reasonably promulgated a clean air rule without the unauthorized provisions we
invalidate today.
Second,Ecology argues that a severed version ofthe Rule would still advance
the purpose of the Rule and the Act as a whole by requiring annual emission
reductions from the state's 48 largest stationary sources of greenhouse gas
emissions. We agree that regulation of these sources alone marks significant
progress in Washington's efforts to curb greenhouse gas emissions and combat
climate change. While the severed Rule would reduce emissions by a lesser amount
than the Rule as promulgated,this reduction does not render the Rule useless. A less
effective regulation can still advance the purpose of the statute under which it is
promulgated, particularly where—as here—^the unauthorized portions of the Rule
can be severed without impact on the operation of the remainder of the Rule. See
CP at 707-35.
Because Ecology would have reasonably promulgated a rule regulating only
direct emitters of greenhouse gases and such a rule would still advance the purposes
-24-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
ofthe Act, we hold that the unauthorized portions ofthe Rule are severable from its
validly authorized provisions.
CONCLUSION
By the Act's plain terms, emission standards are designed to limit the release
of air contaminants by regulating direct emitters. The Act provides no authority for
Ecology to use emission standards to regulate businesses and utilities that merely
distribute products that generate greenhouse gases when they are combusted
somewhere down the line. Left unchecked. Ecology's expansive interpretation of
its own authority would sweep many newly branded "indirect emitters" into the
regulatory web. We are confident that if the State of Washington wishes to expand
the definition ofemission standards to encompass "indirect emitters," the legislature
will say so. In the meantime. Ecology may not claim more authority than the
legislature has granted in the Act.
Accordingly, we affirm the trial court's ruling that the Rule exceeds Ecology's
authority under the Act by purporting to regulate nonemitters through emission
standards. But we modify the remedy granted by the trial court—instead ofstriking
the Rule in toto, we invalidate the Rule only to the extent it regulates nonemitters
via an emission standard. We remand to the trial court for further proceedings
consistent with this opinion.
-25-
Ass'n of Wash. Bus. v. Dep't ofEcology, 95885-8
WE CONCUR:
^CiM hAAAfU , (jpl
-26-
Ass'n of Wash. Bus. v. Dep't ofEcology
No. 95885-8
OWENS,J.(dissenting) — This case asks us to determine whether the
Department of Ecology(Department) possesses authority under the Washington Clean
Air Act(Act), oh. 70.94 RCW,to promulgate the clean air rule (Rule), ch. 173-442
WAG. Specifically, we are asked to decide whether the Department may establish
and enforce greenhouse gas emission standards as applied to natural gas distributors
and petroleum product producers and importers, which sell products that generate
greenhouse gases when combusted by end users. The plain meaning of RCW
70.94.030(12), defining "emission standard" and "emission limitation,"
unambiguously evinces that "emission standards" may apply to either or both direct or
indirect emitters. And based on the Act's purpose and policies, the Rule was a proper
exercise of authority to regulate and limit greenhouse emissions. Therefore, I
respectfully dissent.
A challenge to the validity of an administrative rule is reviewed under the
Administrative Procedure Act(APA). See RCW 34.05.510; Wash. Pub. Ports Ass'n
V. Dep't ofRevenue, 148 Wash. 2d 637, 645,62 P.3d 462(2003). A "court shall declare
Ass'n of Wash. Bus. v. Dep't ofEcology,]Ao. 95885-8
Owens, J., Dissenting
the rule invalid only if it finds that... the rule exceeds the statutory authority ofthe
agency." RCW 34.05.570(2)(c). "The burden of demonstrating the invalidity of[an
agency rule] is on the party asserting [the] invalidity." RCW 34.05.570(l)(a). When
reviewing an administrative action, we sit in the same position as the trial court,
applying APA standards directly to the record. Tapper v. Emp't Sec. Dep 't, 122
Wash. 2d 397,402, 858 P.2d 494(1993). And most importantly,"when passing laws
that protect Washington's environmental interests, the legislature intended those laws
to be broadly construed to achieve the statute's goals." Quinault Indian Nation v.
Imperium Terminal Servs., LLC, 187 Wn.2d 460,470, 387 P.3d 670(2017).
In this case, the Department had the authority to promulgate chapter 173-442
WAG pursuant to RCW 70.94.33l(2)(c) and .030(12). Specifically, the Act specifies
that the Department shall
[a]dopt by rule air quality standards and emission standards for
the control or prohibition of emissions to the outdoor atmosphere of
radionuclides, dust, fumes, mist, smoke, other particulate matter, vapor,
gas, odorous substances, or any combination thereof. Such requirements
may be based upon a system of classification by types of emissions or
types ofsources ofemissions, or combinations thereof, which it
determines most feasible for the purposes ofthis chapter.
RCW 70.94.33l(2)(c)(emphasis added). Furthermore, the Act's public policies and
purpose section states that "it is the purpose of this chapter to .. . provide for the use
of all known, available, and reasonable methods to reduce, prevent, and control air
pollution." RCW 70.94.011. The Act further identifies that
Ass'n of Wash. Bus. v. Dep't ofEcology,^o. 95885-8
Owens, J., Dissenting
air emissions from thousands of small individual sources are major
contributors to air pollution in many regions ofthe state. ... It is
declared to be the policy of the state to achieve significant reductions in
emissions from those small sources whose aggregate emissions
constitute a significant contribution to air pollution ....
Id.
Contrary to the expansive authority the Act provides to the Department, the
majority concludes that the Department exceeded its authority in this case, and they
reach this conclusion by analyzing the Act and the Rule through canons of statutory
interpretation. However, the majority's analysis falls short of explaining how the Act
limits the Department's regulatory authority to only direct emission sources. First, the
majority recites ROW 70.94.030(12), which defmes "emission standards" for
purposes of the Act—'"a requirement. . . that limits the quantity, rate, or
concentration of emissions of air contaminants on a continuous basis.'" Majority at
11. The majority then recites the definition of"emission," which is '"a release of air
contaminants into the ambient air.'" Id.-, RCW 70.94.030(11). The majority
concludes by combining these definitions, since emission standards regulate air
contaminants,"it naturally follows" that emission standards serve as regulations for
entities that "directly cause such releases." Majority at 12.
This conclusion does not follow. At no point do these provisions state that only
entities directly emitting air contaminants may be regulated under the Act. Rather, the
plain language ofRCW 70.94.030(12)reflects that "emission standards" need only be
Ass'n of Wash. Bus. v. Dep't ofEcology,'No. 95885-8
Owens, J., Dissenting
a requirement that limits the concentration of emissions; it does not reflect that
"emission standards" be a requirement that limits the concentration of emissionsfrom
direct sources. Arguably, the Act remains at most ambiguous as to whether it applies
only to direct emitters or to both direct and indirect emitters, as the majority notes. Id.
at 14. But while the majority is correct that "the broadest possible interpretation of a
provision is not a necessary consequence of any ambiguity," id.,"[w]e have
historically found that when passing laws that protect Washington's environmental
interests, the legislature intended those laws to be broadly construed to achieve the
statute's goals." Quinault Indian Nation, 187 Wn.2d at 470(emphasis added).
Therefore, since the Act's focus is to reduce emissions across the state from various
sources, this potential ambiguity under the Act should be broadly construed to
encompass both direct and indirect emission sources.
Furthermore, we may also discern such regulatory authority from the context in
which the Act is found, from "related provisions, and [from] the statutory scheme as a
whole." State v. Engel, 166 Wash. 2d 572, 578, 210 P.3d 1007(2009). The Act's public
policies and purpose section states that "it is the purpose of this chapter to . .. provide
for the use of all known, available, and reasonable methods to reduce, prevent, and
control air pollution." RCW 70.94.011 (emphasis added). The Act goes on to
emphasize that the state's policy under the Act is to reduce emissions from "thousands
of small individual sources." Id.
Ass'n of Wash. Bus. v. Dep't ofEcology,^o. 95885-8
Owens, J., Dissenting
The Act makes clear that the legislature intended to imbue the Department with
broad authority to reduce, prevent, and control air pollution, circumscribed by a
familiar reasonableness standard. Regulating the producers and distributors of
products that generate significant emissions when combusted by "thousands of small
individual sources" is not only reasonable, id., but doing so may well be the "most
feasible" way to reduce emissions from myriad small sources. RCW 70.94.33l(2)(c)
(authorizing the Department to establish emission standards based on types of
emissions or types of sources, or a combination, depending on what the Department
determines "most feasible for the purposes of this chapter").
The majority also expresses concern that if this portion ofthe Rule is deemed
valid, then there is no limiting principle with regard to the Department's ability to
regulate companies that sell products that emit greenhouse gases. Majority at 25.
However, the Department stated that there is such a limiting principle because the
regulated emissions must be quantifiable so that they may be properly reduced.
Wash. Supreme Court oral argument, Ass'n of Wash. Bus. v. Dep't ofEcology, No.
95885-8(Mar. 19, 2019), at 4 min., 30 sec., video recording by TVW, Washington
State's Public Affairs Network, http://www.tvw.org. The majority states that this
limiting principle unconstitutionally expands the Department's power beyond the
scope ofthe Act. Majority at 15. But because the public policies and purpose section
ofthe Act provides the Department with broad authority in reducing emissions, this
Ass'n of Wash. Bus. v. Dep't ofEcology, No. 95885-8
Owens, J., Dissenting
limiting principle is reasonable and well within the scope ofthe Act.
The legislature has authorized the Department to regulate both direct and
indirect emitters. But the majority's conclusion not only improperly restricts the
Department's authority to regulate indirect emitters but also contradicts the broad
authority the legislature provided to the Department to reduce such emissions in our
state. Because the Rule properly constitutes an emission standard as applied to natural
gas distributors and petroleum product producers and importers, the Department did
not exceed its statutory authority in promulgating the Rule, which should be held valid
in whole. Therefore, I respectfully dissent and would reverse the trial court's ruling.
Ass'n of Wash. Bus. v. Dep't ofEcology, No. 95885-8
Owens, J., Dissenting
iaW.7
/!