OLYMPIA — The House passed a bill to help farmers avoid paying cap-and-trade taxes on fuel, rejecting a measure supported by the Washington Farm Bureau that would require fuel stations to give farmers on-the-spot discounts.

House Bill 1912 was approved March 12 on a 93-4 vote and now goes to the Senate. It’s an attempt to keep cap-and-trade taxes from being slapped on gasoline and diesel used to produce and transport agricultural goods.

Lawmakers promised the exemption when they passed cap-and-trade four years ago. Applying the exemption in all cases has been devilishly difficult. The petroleum industry likens tracing the destination of every gallon of fuel to tracing the destination of every apple.

Some distributors are managing to sell tax-exempt fuel to agricultural customers, however. HB 1912 directs the Department of Ecology to compile a directory of those stations.

The bill also provides financial incentives for retailers to sell tax-exempt fuel and directs Ecology to set up a program to refund cap-and-trade taxes to farmers. The bill has the support of many farm groups, but not the Farm Bureau.

The Farm Bureau favors requiring retailers to sell discounted fuel to farmers who present the proper paperwork. Retailers would then retrieve the lost revenue from the state.

While some farmers are able to buy tax-free fuel, some, especially small farmers who buy fuel at retail stations, are not getting the exemption promised by the Legislature, Farm Bureau director of government relations Breane Elsey said.

HB 1912 would not fix that problem, she said. If the problem isn’t fixed this year, political fatigue may set in, making legislators unwilling to revisit the issue next year, she said.

“I do believe this is the last chance to fix this,” she said. “”Farm Bureau is still holding out for a fix.”

The House voted down the Farm Bureau’s proposal, brought to the House floor by Rep. Jim Walsh, R-Aberdeen. It then passed HB 1912 sponsored by Rep. Tom Dent, R-Moses Lake.

Eleven farm groups sent Dent a letter supporting his bill. “I made a lot of people happy, and the only one unhappy is the Farm Bureau,” Dent said. “The problem with the discount is that it’s so hard to figure out.”

Dent said his bill doesn’t provide the perfect solution, but a perfect solution doesn’t exist. “It’s definitely a step in the right direction,” he said.

Cap-and-trade taxes fossil fuels, raising money for state programs and increasing retail energy costs. It’s unknown, however, how much of the tax is being passed onto consumers at any one transaction.

The Farm Bureau proposed basing discounts on the most recent auction of carbon allowances. Based on the last auction, cap-and-trade can be expected to add 40 cents a gallon to gasoline and 50 cents a gallon to diesel.

Farm groups signing the letter to Dent supporting his bill were the Washington State Dairy Federation, Washington State Tree Fruit Association, Washington Cattlemen’s Association, Washington Association of Wheat Growers, Washington State Water Resources Association;

Washington Potato and Onion Association, Northwest Agricultural Cooperative Council, Washington Friends of Farms and Forests, Far West Agribusiness Association, Northwest Grain Growers and Yakima-Klickitat Farm Association.