The Washington State Supreme Court has invalidated key portions of a rule imposed by the administration of Gov. Jay Inslee capping greenhouse-gas emissions by fuel distributors, natural-gas companies and other industries.

In a 5-4 ruling Thursday, the court upheld a 2017 lower-court decision that the state Department of Ecology had exceeded its legal authority in trying to apply clean-air standards to “indirect emitters” that don’t directly burn fossil fuels.

“The issue is not whether man-made climate change is real — it is,” wrote Chief Justice Debra Stephens in the majority opinion. However, Stephens wrote, the department’s efforts to enforce the state Clean Air Act went beyond what had been authorized by the law.

“We are confident that if the State of Washington wishes to expand the definition of emission 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,” Stephens wrote.

The court ruling did hand the Inslee administration a partial victory, upholding the portion of Ecology’s carbon cap that applies to fuel burned on-site at refineries and other facilities. But by excluding indirect emissions, the ruling diminished the rule’s impact in cutting greenhouse-gas emissions in Washington, which have continued to increase.

In a dissent joined by three other justices, Justice Susan Owens disagreed with the majority opinion, and wrote that the Clean Air Act provided “broad authority” to reduce emissions, putting the Ecology rule “well within the scope of the Act.”

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The state had projected the rule would reduce emissions by 20 million metric tons by 2035 — about two-thirds of the target established by the Legislature in 2008. But three-quarters of that reduction would have come from applying the regulation to indirect emitters, according to the court ruling.

During a news conference, Inslee said he disagreed with the court majority’s central conclusion but hasn’t yet decided whether to ask lawmakers to amend the Clean Air Act to include indirect emitters.

In the meantime, Inslee, who has made the fight against global warming a cornerstone of his administration as well as his short-lived presidential campaign, called on lawmakers to pass other climate proposals, including a proposed low-carbon fuel standard. “This decision has made it even more abundantly clear that we need to take action in the Legislature,” he said.

Chris Davis, a senior climate adviser for the governor, said the administration hasn’t decided whether to move forward with the partial clean-air standard the court left in place. In order to apply the rule, Ecology would have to reopen its rule-making process and give affected companies and entities another chance to comment.

The court decision means the carbon cap could still be applied to some of the state’s largest sources of carbon pollution, including Seattle’s Ash Grove Cement, Nucor Steel and the University of Washington, according to an Ecology list.

“There is a whole range of options available to us right now,” said Davis. “Ranging from requesting a reconsideration by the court, to moving forward to implement as-is … to working with the Legislature to address it.”

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State Sen. Doug Ericksen, R-Ferndale, praised the court ruling in a statement calling the clean-air rule “a classic example of government arrogance and overreach.”

A longtime opponent of Inslee’s climate agenda, Ericksen, the ranking Republican member of the state Senate’s environment committee, said the rule would have imposed “onerous new regulations on oil refiners and distributors of natural gas” and passed potentially billions of dollars in costs on to consumers.

Ericksen added he hoped the decision would “quell the enthusiasm of other agencies” to push legal boundaries, citing the Puget Sound Clean Air Agency’s decision to develop a low-carbon fuel regulation.

Frustrated by legislative inaction, Inslee had directed Ecology in 2015 to use executive authority under the Clean Air Act to regulate carbon emissions.

After a lengthy rule-making process, the state issued regulations in 2016 which would have targeted dozens of top emitters, from Skagit County oil refineries to Boeing’s Everett plant and Eastern Washington food processors. The rule required such facilities to cut their carbon footprint by an average of 1.7% a year — either by cleaning up their own facilities or paying for carbon-reduction projects off-site.

But the rule was quickly challenged in a lawsuit by business groups led by the Association of Washington Business. The association’s president, Kris Johnson, said in a statement he welcomed the court’s ruling and intends to work with lawmakers “to find a bipartisan solution” to reduce the state’s carbon emissions.

A trade association for paper mills said its members remain concerned about the effects of even a more limited version of the clean-air rule.

“As written, the rule is likely to create a competitive disadvantage for mills in Washington state,” said Chris McCabe, executive director of the Northwest Pulp and Paper Association, in a statement. He predicted it would lead companies to shift production to other states that operate with “significantly higher carbon footprints.”

Nick Abraham, a spokesman for the Washington Environmental Council, which had intervened in the lawsuit in support of the state, said the ruling provides clarity on how to cut fossil-fuel emissions from cars and trucks. “If it [the rule] is going to cover our largest source of pollution, that has got to come from the Legislature,” he said.

State Sen. Reuven Carlyle, D-Seattle, who chairs the senate’s Environment, Energy and Technology Committee, signaled he’d support such action. “This is a clean hand-off for [the Legislature] to clarify authority for further executive action,” he wrote in a tweet.

While the clean-air regulations have been tied up in court, Inslee and his climate allies have not been idle, pushing an array of other climate policies with mixed success.

Voters in 2018 rejected an Inslee-backed initiative to impose a carbon fee on fossil-fuel emissions. But last year, backed by solid Democratic majorities in the state House and Senate, Inslee won approval for a slate of climate bills, including a measure to phase out coal, natural gas and other fossil fuels in Washington’s electric grid by 2045.