A former economist for the Washington state Department of Transportation has alleged he was told to lie about the impacts of the state’s fledgling carbon market on the cost of fuel.
The conservative nonprofit Citizen Action Defense Fund filed a claim Thursday with the state Department of Enterprise Services on behalf of Scott Smith, a former transportation planner, alleging he was forced out of his job for “refusing to violate state law and lie about the cost impacts of the state’s cap and trade program.” The claim is not a complaint or a lawsuit; rather, it is a precursor to a lawsuit.
The claim comes just over a week after opponents of the state’s carbon market submitted signatures for an initiative to repeal the law. As gas prices soared early this summer, conservative think tanks and gas industry trade groups pointed to the carbon market, some calling the compliance fees a “tax.”
The carbon market is the cornerstone of the state’s 2021 Climate Commitment Act, requiring Washington’s biggest polluting businesses, like oil companies, to reduce their emissions or purchase allowances at quarterly auctions to cover their emissions. Over the course of seven three-year periods, state officials will reduce the number of allowances sold, ramping up pressure on the industries to lower their emissions.
The aim is to be mostly carbon free by 2050, in an effort to meet the targets of the Paris Agreement, which sets out an international framework to limit global warming to 1.5 degrees Celsius (or 2.7 degrees Fahrenheit). Climate change’s effects in the state have begun to be realized through warming temperatures, extinct glaciers, intensifying wildfire risks and closures of economically and culturally important fisheries. Communities of color and those with lower incomes often bear the brunt of the biggest polluting industries in the state.
So far, auctions for carbon allowances have raised more than $1.5 billion. Some of the money is intended to go to Washingtonians’ wallets to buy electric vehicles, bikes, heat pumps and other electric gadgets that can help wean the state off of fossil fuels. The money is also to be invested in monitoring air quality in overburdened communities, electrifying the shipping industry and energy and climate resilience projects led by tribal nations, among other things.
Mike Faulk, a spokesperson for Gov. Jay Inslee’s office, said they rely on and expect state agencies to provide thorough, credible analysis based on the best data available. “Thursday was the first time our office was made aware of this individual and his claims,” Faulk wrote in an email. “We’re still trying to learn more, in addition to investigations that will take place.”
Ecology is the lead agency on the Climate Commitment Act, not WSDOT. Faulk said the governor’s office “has always worked with Ecology on understanding price impacts.”
Regulations like the cap-and-invest program play a role in what consumers pay at the pump, but it’s much smaller than the fluctuations associated with global conflict and seasonal demand, Ecology spokesperson Andrew Wineke wrote in an emailed statement.
Wineke wrote that Ecology “uses its own economists to conduct the regulatory analysis for the cap-and-invest program, with support from a respected independent economics firm. No one from the Department of Transportation provided input on that analysis.”
Sen. Marko Liias, D-Edmonds, chair of the Senate committee on transportation, said under a bill that passed in the most recent legislative session, WSDOT experts will no longer draft the transportation revenue forecast. That role was shifted to the economic and revenue forecast council.
“The claims this person made are troubling,” Liias said. “I’m glad the department is taking this seriously and I will look for a complete investigation.”
In a letter attached to the claim, Jackson Maynard, the executive director of Citizen Action Defense Fund, wrote that Smith was the “sole fuel consumption, price and revenue/estimator” for the state. He had worked for the state for five years, with more than three decades of experience performing similar work in New Mexico, Maynard said in a phone interview.
Maynard alleged that, in a January meeting, Smith’s manager “informed him that management ‘would prefer’ that he not include the cap-and-trade surcharges in his quarterly fuel price forecast.”
While the Climate Commitment Act went into effect on Jan. 1 of this year, the first auction of emissions allowances happened at the end of February. Ecology officials previously acknowledged that oil companies started increasing the prices of fuel long before they had a chance to pay for their climate-warming emissions.
By June, a receipt provided by a fuel distributor and expert estimates suggested the legislation at the time cost Washingtonians as much as 50 cents at the pump. Maynard alleged that Smith was retaliated against for sharing estimates of 45 to 50 cents per gallon.
In a whistleblower complaint to the state Auditor’s Office, Smith claimed “the fact that carbon taxes raise the cost of gasoline is a matter of 6th grade math.”
The Citizen Action Defense Fund letter alleged that Smith told his supervisor it was impossible to lie about the cost of the carbon market, “as this surcharge is embedded in the history of prices.”
The letter alleges that Smith was instructed to not include carbon market issues in any email “so that the agency could avoid public record requests.”
“This is not about climate change,” Smith, whose attorney said he was unavailable for an interview Friday, told King 5. “This is not about carbon taxes, whether they’re good or bad. I’m kind of for them. It’s about a regular guy who was doing a good job and then got crushed.”
The Citizen Action Defense Fund claims that after these conversations, WSDOT began a course of “systematically forcing [Smith] from state service in retaliation for his refusal to provide false or misleading information about the source of fuel cost increases.”
The Citizen Action Defense Fund alleges the agency required Smith to run his forecasts by the Office of Financial Management’s senior budget analyst on transportation, scaled down Smith’s duties and denied leave.
The claim requests $750,000 for “for loss of income, benefits, and potential retirement savings for being wrongfully forced out of state service.”
“He had an incredible career, serving the citizens of the state very well,” Maynard said. “For him to be just shown the door in this way for doing the right thing and standing up for the truth is completely unjust.”
Citizen Action Defense Fund says it plans to file a lawsuit if the state does not find a way to make Smith whole.
