WA conservative groups are banding together to dump carbon pricing

Redmond hedge fund manager Brian Heywood is spending millions to end cap-and-invest. The initiative has a web of organizations — and Brandi Kruse — backing it.

an electric bus getting charged

In a 2018 photo, a King County Metro battery bus charges at the charging station at Bellevue’s Eastgate Transit Center. Electric buses are among the projects being supported through the money raised by the cap-and-invest program. (Jovelle Tamayo for Cascade PBS)

Project 42, a 3-year-old nonprofit working to “change the course of Washington state to prioritize free markets, personal liberty and an individual’s right to prosper,” has its fingerprints all over current conservative efforts, including the drive to kill Washington’s new cap-and-invest program. 

Washington’s new initiative king Brian Heywood, who financed three anti-tax initiatives destined for the fall ballot, is a member of Project 42’s board. The other two initiatives brought by Heywood and Let’s Go Washington would repeal the state’s new capital gains tax and make the new long-term care insurance payroll tax optional.

But that’s just one line connecting the Redmond hedge fund manager, Project 42 and Washington conservative circles. 

Heywood is linked to the Washington Policy Center, which provides research to oppose the cap-and-invest program. Project 42 is allied with a legal group involved in lawsuits challenging cap-and-invest. They are allied also with a news website that covers state government and cap-and-invest issues.

The nonprofit describes its goal as building a durable conservative infrastructure, but says it does not use its dollars to support political campaigns or committees. So the extent of Project 42’s influence and money injections into those organizations is fuzzy. 

Project 42, through its communications branch, does buy ads on Brandi Kruse's conservative political podcast, unDivided, but just like with any other journalism organization, buying ads does not buy any control of the content. Kruse has been an outspoken critic of the cap-and-invest program. Kruse has called for state Senate transportation leader Sen. Marko Liias, D-Edmonds, to be recalled by voters because she believes that he has used his government social media accounts to lie. 

Liias and Kruse have disagreed about how revoking the cap-and-invest program will affect funding for transportation projects. She also declared that state Public Lands Commissioner Hilary Franz criticized the use of cap-and-invest money to buy scattered bits of forests — an allegation that Franz’s department says is not true.

Since January 2023, the cap-and-invest program has brought about $2 billion into the state budget, mostly to support climate change mitigation, health and construction programs. During this year’s legislative session, lawmakers allocated more than $800 million of those dollars to do things like buy electric school and transit buses, install electric vehicle charging stations, support salmon recovery and coastline restoration, buy forest land and restore landscapes destroyed by wildfires.

A Tesoro Corp. refinery, including a gas flare flame that is part of normal plant operations, in Anacortes, Washington in a 2010 file photo. (Ted S. Warren/AP Photo)

Polluters including oil companies bid on allowances that determine how much carbon emissions they can emit. The program has been blamed for increases in Washington’s gasoline prices. However, the extent of cap-and-invest’s impact on the gas pump is hazy due to numerous extraneous factors. Cap-and-invest supporters focus on the investments paid for by the program, from new ferries to health and infrastructure projects. 

Formed in 2021, Project 42 is intended to be a conservative version of FUSE, said Dann Mead Smith, Project 42’s co-founder and spokesman. FUSE Washington is a progressive organization that identifies causes to support and works to “create change.” Among the aspects of Project 42’s mission, says its website: “Identify core capacities that need to be built or financed” and “Identify, vet and invest in the most effective organizations to build these capacities.”

It lists “‘capacity groups’ that we either helped launch and/or are working with.” Some of those groups are involved with cap-and-invest, including:

– Future 42: the communication branch of Project 42. It is a paid advertiser on Kruse’s podcast. Kruse said she charges Future 42 the same rate as her other advertisers, but declined to name that rate. Her contract with Future 42 says it does not exert any control over her show. Future 42 approached Kruse on the advertising deal. “They said ‘We really love what you’re doing,’” Kruse said.

– Washington Policy Center, a conservative think tank that is involved in numerous issues beyond cap-and invest. It has been a leading research-related critic of the program. It does not receive money from Project 42, said David Boze, the center’s communications director. “Our research is not for sale,” he said.

But Project 42 board members Heywood and Steven Gordon each individually donated between $30,000 and $49,999 to the policy center, according to its 2022 annual report. Mead Smith was vice president and president of the Washington Policy Center from 1995 to 2021, when he helped co-found Project 42. He has been finance director and a steering committee member of Let’s Go Washington since August 2023, according to his LinkedIn page.

– Citizen Action Defense Fund, a legal organization involved in conservative and government transparency litigation. “The bulk of our cases are unrelated to cap-and-trade,” said Jackson Maynard, the fund’s executive director. 

Two of CADF’s cases, though, do pertain to the cap-and-invest program. One in Thurston County Superior Court involves a recently retired state economist who alleges he was ordered to not include Washington’s cap-and-invest costs in an early 2023 transportation department revenue forecast. He says he was also pressured to retire. Last year, CADF lost a lawsuit in Thurston County Superior Court that claimed putting the cap-and-invest program into the Legislature’s 2022 transportation appropriations package violated the state Constitution. CADF is appealing that case to the Washington Supreme Court.

Maynard said neither lawsuit addresses the merits of the cap-and-invest program itself, but instead involves government transparency.

Maynard declined to discuss donors to CADF. Mead Smith is a CADF director in addition to his current affiliations with Project 42 and Let’s Go Washington.

– The Center Square, which covers state and local government issues as part of a nationwide network of news websites. The editor of The Center Square’s northwest operations did not respond to several emails requesting an interview. Mead Smith did not know why The Center Square is identified as a capacity group. 

Other than Future 42, Mead Smith said Project 42 does not have any formal relationship with any of the organizations that Project 42’s website lists as “capacity groups,” saying it’s just a term that Project 42 came up with for organizations that it sometimes works with because they have similar interests. Mead Smith declined to discuss Project 42’s finances, including which groups it gives money to. 

“It’s just a loose affiliation. We share ideas,” Jackson said of the capacity groups. 

“We’re ideologically aligned,” Kruse said. 

Kruse noted that The Seattle Times and Cascade PBS rely on donors for some of their coverage. Kruse’s podcast [un]Divided covers a wide number of issues. But she is especially critical of the state’s cap-and invest program, including cheerleading for the Heywood-led signature drive in 2023 that put an initiative to repeal that program on the ballot this November. 

Heywood and Kruse both vehemently oppose the cap-and-invest program because of the increase in gasoline prices. Opponents of I-2117 frequently target the initiative as the child of multimillionaire Heywood. In most cases, Kruse defends him by saying hundreds of thousands of Washingtonians signed the petition that created I-2117.

Kruse’s podcast has also gone on the offensive beyond mere policy differences on Let’s Go Washington and I-2117.

Liias, chairman of the Senate Transportation Committee, has posted several tweets claiming that revoking the cap-and-invest program will have a ripple effect on the state’s overall transportation budget, leading to the potential losses of bridge and road projects unrelated to the Climate Commitment Act. 

In her podcast, Kruse called for voters to recall Liias because she believes he is lying with the intent to scare voters with falsehoods.

Liias responds that the cap-and-invest program provides roughly one-third of the revenue for the huge long-range transportation appropriations package passed in 2022. Passage of that package depended on numerous promises to many legislators on what would be spent where. 

If the cap-and-invest program is revoked, the Legislature will lose a huge revenue source and will have to renegotiate countless details of transportation spending, requiring extensive talks on what to preserve in the projects currently funded by cap-and-invest, and what non-cap-and-invest-funded projects would be cut in the effort to compensate for that revenue loss, Liias said. “It’s a case where [if] you pull thread, you create a big hole,” he said.

Kruse disagrees with that explanation. “It’s a lie. It’s gaslighting. He still won’t acknowledge it,” she said. She did not contact Liias for his comments prior to calling for his recall.

If the cap-and-invest program is revoked in November, $675 million in Climate Commitment Act funds would be cut from the Legislature’s 2023-2025 transportation budget, according to state figures. And transportation is far from the only part of the budget benefitting from cap-and-invest dollars.

In another podcast, Kruse criticized the state’s purchase of a 2,000-acre chunk of forest with $70 million in cap-and-invest money, saying even Franz disagreed with the idea that shutting down working forests will help the environment. The 2,000 acres is spread among several chunks across five counties that connect pieces of wild lands with each other.

“The [Kruse] report was wrong. Commissioner Franz has long believed that we can and must conserve vital habitats while strengthening and growing our working forests. The $70 million the Legislature allocated in 2023 allowed us to achieve both these aims. We were able to conserve 2,000 acres of critical forests adjacent to high-value conserved land which will improve fish and wildlife habitat connectivity and avoid isolated fragments of conservation. It also funded the purchase of more than 9,000 acres of working forests in southwest Washington,” Michael Kelly, spokesman for the Washington Department of Natural Resources, wrote in an email.

In an interview, Kruse stood by her story. She said she tried several times to get Franz on her show to discuss the issue, but did not succeed.

CLARIFICATIONS: This version of the story has been updated in several places to clarify Kruse's stand on these issues and to make it clear that her podcast sells ads to Project 42 and does not have any other financial relationship with the organization.

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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at johnstang_8@hotmail.com and on Twitter at @johnstang_8