OLYMPIA — Talks between the Washington Department of Ecology, farm groups and fuel producers and distributors have been fruitless, leaving farmers overpaying for fuel because of the state’s recently enacted cap-and-trade law.

Cap-and-trade costs are being passed down to farmers, even though lawmakers exempted from the program fuel used to produce and transport farm goods.

Fuel distributors and farm groups assert cap-and-trade is adding more than 40 cents a gallon to fuel based on projections of how much fuel producers will spend to comply with the law.

Matt Harris, state Potato Commission director of governmental affairs, said Feb. 2 he expects cap-and-trade to cost farmers millions of dollars.

“This is such a painful experience. I don’t see a solution going forward,” he said. “We’re stuck with a horrible law that promised us an exemption, and we’re not getting it.”

Cap-and-trade went into effect Jan. 1, putting a price on carbon emissions from fossil fuels. Oil refineries face heavy fines for misreporting emissions.

Cap-and-trade doesn’t affix an exact tax, but it does raise fuel prices as refineries pass on to customers the cost of buying emission allowances.

Ecology was charged by lawmakers to devise a way to shield agriculture and the maritime industry from the higher costs. No way has emerged to separately track exempt fuel and non-exempt fuel flowing through a complicated distribution chain.

Hundreds of suppliers, distributors and storage facilities sell fuel to tens of thousands of potentially exempt customers, according to the Western States Petroleum Association.

“We agree with the concerns among the agricultural and marine users. They are entitled to these exemptions,” the petroleum association said in a statement.

“The state needs to both clearly offer a certification process to allow farmers and marine interests to document the exempt fuel use, and provide documentation that suppliers can rely on, with certainty, in meeting their obligations under the Climate Commitment Act,” the association stated.

Ecology was in regular contact with oil refineries while cap-and-trade rules were being written, Ecology spokeswoman Claire Boyte-White said in an email.

“Ecology was not made aware of any suppliers’ intention to pass along compliance costs to consumers of exempted fuels,” she said.

“We have become aware of this concerning trend, and the trickle-down effect it is having on smaller businesses and consumers, and are trying to work with covered suppliers to come to a resolution,” Boyte-White said.

Washington Farm Bureau lobbyist Breanne Elsey said talks with Ecology appear to be at a dead-end and the Legislature and Gov. Jay Inslee should step in and apply the cap-and-trade law.

Farmers should be shielded from future cap-and-trade fees and reimbursed for what they’ve already paid, she said.

“I believe there’s a legal obligation to ensure that happens,” Elsey said. “The way it’s implemented now is a complete violation of the law.”

Inslee is aware of the issue, spokesman Jaime Smith said in an email. “We believe these surcharges are inappropriate given the explicit exemptions outlined in the law,” she said.