S-5609.1
SECOND SUBSTITUTE SENATE BILL 6203
State of Washington

65th Legislature

2018 Regular Session

By Senate Ways & Means (originally sponsored by Senators Carlyle,
Ranker, Palumbo, Nelson, Pedersen, Frockt, Billig, Rolfes, McCoy,
Keiser, Wellman, Liias, Hunt, Chase, Saldaña, and Kuderer; by request
of Governor Inslee)
READ FIRST TIME 02/23/18.

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AN ACT Relating to reducing carbon pollution by investing in
rural economic development and a clean energy economy; amending RCW
46.17.005, 46.17.350, 46.17.365, 19.285.030, and 19.285.040; adding
new sections to chapter 43.31 RCW; adding a new chapter to Title 82
RCW; adding a new chapter to Title 43 RCW; adding a new chapter to
Title 70 RCW; creating a new section; providing effective dates; and
providing a contingent expiration date.

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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

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NEW SECTION.
Sec. 1.
(1) Greenhouse gas pollution, including
carbon, is a significant contributor to climate change, and has
devastating negative impacts on Washington's economy, environment,
natural resources, and communities. Our state is already experiencing
rising sea levels, depleting snowpack, increased flooding, acidifying
oceans, and more frequent and severe wildfires. These impacts impair
our prosperity and have already hurt our businesses and communities.
(2) Transitioning to a clean energy economy can help our
residents and businesses thrive without increasing carbon pollution
that leads to climate change. Building a vibrant and successful clean
energy economy can serve as an example to other regions, will put
Washington on the cutting edge of twenty-first century economies,

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create new jobs, and support the health and prosperity of all
residents of Washington.
(3) Washington state is home to some of the world's most
innovative companies, a highly skilled workforce, and important
industries. As our state transitions away from fossil fuels, we must
do so in a way that protects these assets, and allows our businesses
to thrive. By launching a bold new set of investments in carbon
reduction infrastructure and natural resource resilience, we can
reduce our state's carbon emissions while preparing our economy for
the future. In doing so, we recognize that some industries are energy
dependent and trade-exposed, and thus have independent incentive to
be energy efficient. These industries are exempt from carbon taxation
in order to allow them to remain globally competitive and ensure
these industries and jobs remain in Washington.
(4) Washington is home to more than ten million acres of working
forestlands, including private landowners and state trust lands.
These lands represent the foundation of a forest products industry
that sequesters massive amounts of carbon from the atmosphere simply
through its standard, baseline operations. These working forests are
one of the state's greatest natural assets in combating global carbon
emissions. A statewide carbon policy must support and maintain the
ecosystem values provided by the forest products industry. Healthy,
working forests maximize the forests' ability to absorb carbon with
lumber and other forest products continuing to sequester that carbon.
(5) Fossil fuel combustion also is responsible for other
pollutants, like nitrous oxide, carbon monoxide, benzene, and others
that contribute to respiratory diseases like asthma and lung cancer
that compromise public health and shorten life expectancy. This
pollution burden overwhelmingly falls on low-income communities,
communities of color, and the vulnerable parts of our population.
Reducing our reliance on fossil fuels, therefore, will contribute to
improved air quality and better public health.
(6) This act establishes a tax to account for the economic and
environmental
impacts
of
carbon
pollution.
The
revenue
will
facilitate the transition from fossil fuels to clean energy and fund
investments that will benefit our businesses, our families, and our
communities. It will also invest in adapting to the impacts of
climate change and protecting our rural communities and key economic
sectors including agriculture, shellfish, and forestry.
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(7) Further, in general, low-income rural and urban communities
are disproportionately impacted by carbon pollution and are less able
to respond to climate change. This act provides targeted economic
stimulus to ensure that the job creation and health benefits of this
measure are focused in the communities that can most benefit from
these investments.

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Part I
Carbon Pollution Tax

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NEW SECTION.
Sec. 101.
DEFINITIONS. The definitions in this
section apply throughout this chapter unless the context clearly
requires otherwise.
(1) "Aircraft fuel" has the same meaning as provided in RCW

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82.42.010.
(2) "Asset controlling supplier" means any entity that owns or
operates interconnected electricity generating facilities or serves
as an exclusive marketer for these facilities even though it does not
own them, and is assigned a supplier-specific identification number
and system emission factor by the department of ecology, in
consultation with the department of commerce, for the wholesale
electricity procured from its system and sold into Washington.
(3) "Carbon calculation" means a calculation made by the
department of ecology, in consultation with the department of
commerce, for purposes of determining the carbon dioxide emissions
from the complete combustion or oxidation of fossil fuels and, for
each specified source, the carbon dioxide emissions in electricity
for use in calculating the carbon pollution tax pursuant to section
102 of this act.
(4) "Carbon dioxide emissions content inherent in electricity"
means the carbon dioxide generated by the production of electricity
from fossil fuels.
(5) "Carbon dioxide equivalent" means a metric measure used to
compare the emissions from various greenhouse gases based on their
global warming potential.
(6) "Carbon pollution tax" means the tax created in section 102
of this act.
(7) "Coal" means a readily combustible rock of carbonaceous
material, including anthracite coal, bituminous coal, subbituminous
coal, lignite, waste coal, syncoal, and coke of any kind.
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(8) "Department" means the department of revenue.
(9) "Direct access electricity customer" means a person who
purchases electricity for consumption from any seller other than a
seller registered with the department for purposes of paying taxes
due under chapter 82.04 or 82.16 RCW.
(10) "Direct access gas customer" means a person who purchases
natural gas for consumption from any seller other than a seller
registered with the department for purposes of paying taxes due under
chapter 82.04 or 82.16 RCW.
(11) "Direct service industrial customer" has the same meaning as
provided in RCW 82.16.0495.
(12) "Energy-intensive trade-exposed manufacturing facility"
means a manufacturing business that meets the numerical criteria
established by the department of commerce in section 103(3)(b) of
this act, or has a proper primary North American industry
classification system code as provided in section 103(3)(c) of this

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(13) "Facility" means any physical property, plant, building,
structure, source, or stationary equipment located on one or more
contiguous or adjacent properties in actual physical contact or
separated solely by a public roadway or other public right-of-way and
under common ownership or common control, that emits or may emit any
greenhouse gas.
(14) "Fossil fuel" means motor vehicle fuel, special fuel, dyed
special fuel, aircraft fuel, natural gas, coal, and any form of
solid, liquid, or gaseous fuel derived from natural gas, coal,
petroleum, or crude oil, including without limitation still gas,
propane, and petroleum residuals including bunker fuel.
(15) "Gas distribution business" has the same meaning as provided
in RCW 82.16.010.
(16) "Greenhouse gas" means carbon dioxide (CO2), methane (CH4),

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nitrogen trifluoride (NF3), nitrous oxide (N2O), sulfur hexafluoride

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(SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and other

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fluorinated greenhouse gases.

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(17) "Highly impacted communities" means those areas designated
pursuant to section 502 of this act.
(18) "Light and power business" has the same meaning as provided
in RCW 82.16.010.

act.

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(19) "Motor vehicle fuel" has the same meaning as provided in RCW
82.38.020.
(20) "Natural gas" means naturally occurring mixtures of
hydrocarbon gases and vapors consisting principally of methane,
whether in gaseous or liquid form, including methane clathrate.
(21) "Person" has the same meaning as provided in RCW 82.04.030.
(22) "Sale" has the same meaning as provided in RCW 82.04.040.
(23) "Special fuel" has the same meaning as provided in RCW
82.38.020.
(24) "Specified source" means an electrical generation facility
serving Washington customers in which the taxpayer directly or
indirectly has full or partial ownership in the facility or unit or
is party to a written contract or other agreement to procure
electricity generated by that facility.

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(25) "Taxpayer" means a person subject to the carbon pollution
tax imposed in this chapter.
(26) "Tribal lands" has the same meaning as "Indian country" as
provided in 18 U.S.C. Sec. 1151, and also includes sacred sites,
traditional cultural properties, burial grounds and other tribal
sites protected by federal or state law.
(27) "Unspecified source" means electricity from a source other
than a specified source.
(28)(a) "Use," "used," "using," or "put to use" means, with
respect to any fossil fuel other than natural gas, the consumption in
this state of the fossil fuel by the taxpayer or the possession or
storage in this state of the fossil fuel by the taxpayer preparatory
to subsequent consumption of the fossil fuel within this state by the
taxpayer.
(b) "Use," "used," "using," or "put to use" means, with respect
to natural gas, the consumption in this state of the fossil fuel by
the taxpayer.
(c) For purposes of this subsection (28), "possession" means the
control of fossil fuel located within this state and includes either
actual and/or constructive possession. "Actual possession" occurs
when the person with control has physical possession. "Constructive
possession" occurs when the person with control does not have
physical possession. "Control" means the power to sell or use a
fossil fuel or to authorize the sale or use by another.
(29) "Western interconnection" means the area comprising those
states and provinces, or portions thereof, in western Canada,
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northern Mexico, and the western United States in which members of
the western electricity coordinating council, or any successor
thereto, operate synchronously connected transmission systems.
(30) "Year" means the twelve-month period commencing January 1st
and ending December 31st unless otherwise specified.

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NEW SECTION.
Sec. 102.
CARBON POLLUTION TAX. (1)(a) Beginning
July 1, 2019, a carbon pollution tax is imposed on:
(i) The sale or use within this state of all fossil fuels, except
fossil fuels used to generate electricity in the state; or
(ii) The generation within or import for consumption to this
state of electricity generated through the combustion of fossil
fuels.
(b) The measure of the carbon pollution tax is the carbon dioxide
emissions:

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(i) Resulting from the complete combustion or oxidation of fossil
fuels sold or used by the taxpayer within this state; or
(ii) Inherent in electricity generated within or imported for
consumption to this state.
(c)(i) The tax rate is equal to twelve dollars per metric ton of
carbon dioxide.
(ii) Beginning July 1, 2021, the department must annually adjust
the previous year's tax rate by one dollar and eighty cents per
metric ton until reaching thirty dollars per metric ton of carbon
dioxide. The department must calculate tax rate adjustments under
this subsection (1)(c)(ii) in July of each year and publish on its
web site the tax rate for any year by January 1st of that year.
(2) For the purposes of this chapter, the carbon pollution tax is
imposed:
(a) Only once with respect to the same unit of fossil fuel or
electric energy;
(b) At the time and place of the first taxable event within this
state, except as otherwise provided in this section, occurring on or
after the effective date of this section, regardless of whether the
fossil fuel or electricity was previously sold, used, or consumed
within this state before the effective date of this section; and
(c) Upon the first taxable person within this state, except as
otherwise provided in this section. A taxable person is:
(i) A person required to be registered with the department under
RCW 82.32.030(1);
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(ii) The state, its political subdivisions, and municipal
corporations; and
(iii) A person who maintains a place of business in this state
but who is not required to be registered with the department under
RCW 82.32.030(1).
(3) As provided in this section, the carbon pollution tax on the
sale or use of fossil fuels is imposed on the seller or user of the
fossil fuel.
(4) The carbon pollution tax on the sale or use of natural gas is
imposed as follows:
(a) Natural gas transported through the state that is not
produced or delivered in the state is exempt from the carbon
pollution tax imposed by this section. Natural gas possessed or
stored in this state is exempt from the carbon pollution tax imposed
by this section unless taxed under (b), (c), or (d) of this
subsection;
(b) For natural gas sold by a gas distribution business to a
retail customer in the state, the carbon pollution tax is imposed on
the gas distribution business upon the sale of such natural gas to
the retail customer;
(c) For natural gas sold to a light and power business for the
purpose of generation of electricity in the state, the carbon
pollution tax is imposed on the light and power business as provided
for in subsection (5)(a) of this section; and
(d) For natural gas sold to a direct access gas customer in the
state, the carbon pollution tax is imposed on the direct access gas
customer upon the consumption of such natural gas by the direct
access gas customer.
(5) The carbon pollution tax on the generation or import of
electricity for consumption in this state is imposed as follows:
(a) For electricity produced in the state, the carbon pollution
tax is imposed on the person required to be registered with the
department for purposes of paying taxes due under chapter 82.04 or
82.16 RCW that owns or operates the electrical generation facility
producing the electricity; and
(b) For electricity produced outside the state and imported for
consumption in the state, the carbon pollution tax is imposed on the
first person that imports or delivers such electricity to or within
the state.
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(6) For motor vehicle fuel and special fuel, the carbon pollution
tax is imposed on the seller or user of the fuel at the points of
taxation specified in RCW 82.38.030(9).
(7)(a) The carbon pollution tax does not apply to the sale or use
of fossil fuels or consumption of electricity upon which the tax
under this chapter has been imposed.
(b) A sale of fossil fuel takes place in this state when the
fossil fuel is delivered in this state to the purchaser or a person
designated by the purchaser, notwithstanding any contract terms
designating a location outside of this state as the place of sale.
(c) All taxable sales within this state of a fossil fuel or
electricity must document the amount of carbon pollution tax paid in
accordance with rules adopted by the department.
(d)(i) The carbon pollution tax liability imposed on a person
consistent with (a) and (b) of this subsection may be assumed by a
light and power business when it purchases electricity if the light
and power business meets the following requirements:
(A) A light and power business must have a clean energy
investment plan approved by a responsible entity.
(B) A light and power business must apply to the responsible
entity, in a manner and form acceptable to the responsible entity,
for approval to assume liability for the carbon pollution tax
pursuant to this subsection (7)(d).
(C) Upon approval of an application pursuant to (d)(i)(B) of this
subsection,
the
entity
must
issue
a
certificate
or
other
documentation, as prescribed by the department, authorizing the light
and power business to assume liability for the carbon pollution tax
pursuant to this subsection (7)(d).
(D) A light and power business that elects to assume liability
for the carbon pollution tax as authorized under this subsection
(7)(d) must present the certificate or documentation issued pursuant
to (d)(i)(C) of this subsection to a person selling electricity to
the light and power business. Acceptance of the certificate or
documentation presented by a light and power business under this
subsection (7)(d) relieves that person from paying the carbon
pollution tax due on such a sale. Acceptance of the certificate or
documentation may not be unreasonably withheld. The person selling
electricity must keep a copy of the certificate or documentation in
its records pursuant to RCW 82.32.070. If the light and power
business does not elect to assume the carbon pollution tax, the
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carbon pollution tax on the sale of electricity is imposed pursuant
to (a) or (b) of this subsection, as applicable.
(ii) For the purposes of this subsection (7)(d), "responsible
entity" means the entity responsible for approving the clean energy
investment plan of a light and power business pursuant to sections
201 through 206 or 301 through 306 of this act, whichever is
applicable.
(8) For purposes of determining the carbon pollution tax due
under this chapter:
(a) The department must use the carbon calculation for all fossil
fuels sold or used within the state or inherent in electricity
generated or imported for consumption within this state;
(b) For fossil fuels, the department of ecology, in consultation
with the department of commerce, must adopt by rule criteria for
making the carbon calculation;

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(c) For the import of electricity sourced from an asset
controlling supplier, including the Bonneville power administration
and others as approved by the department of ecology, the department
of ecology must calculate and publish on its web site no later than
December 1st of each year the system emissions factors for each asset
controlling supplier for the previous calendar year. Such system
emissions factors must be used to determine the carbon tax associated
with power sourced from asset controlling supplier systems for the
upcoming calendar year. Asset controlling suppliers are considered
specified sources of electricity;
(d) For the generation or import of electricity from an
unspecified source, the carbon dioxide inherent in that electricity
is equal to the default emission factor adopted by the department of
ecology, in consultation with the department of commerce, in a manner
consistent with the default emission factors for electricity
established for other markets in the western interconnection, or, if
the department of ecology has not adopted a default emission factor
by rule, 0.437 metric tons of carbon dioxide per megawatt-hour;
(e) For the generation or import of electricity from a specified
source, the carbon dioxide inherent in that electricity must be based
on the carbon calculation for that source established by the
department of ecology. The department of ecology, in consultation
with the department of commerce, must adopt by rule criteria for
making the carbon calculation for specified sources; and
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(f) The department of ecology may require additional information
to existing reporting programs as necessary, in consultation with the
department of commerce, for determining the carbon calculation under
this chapter.
(9) For taxpayers who are also subject to any of the taxes
imposed under chapter 82.04, 82.08, 82.12, or 82.16 RCW, the
frequency of reporting and payment of the carbon pollution tax must,
to the extent practicable, coincide with a taxpayer's reporting
periods for the taxes imposed under chapter 82.04, 82.08, 82.12, or
82.16 RCW.
(10) The department must develop and make available worksheets,
tax tables, and guidance documents it deems necessary to calculate
the carbon dioxide emissions of fossil fuels or the carbon dioxide
emissions inherent in electricity.

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NEW SECTION.
Sec. 103.
EXEMPTIONS AND CREDITS. (1) The carbon
pollution tax does not apply to:
(a) Fossil fuels brought into this state by means of the primary
fuel supply tank of a motor vehicle, vessel, locomotive, or aircraft,
actively supplying fuel for combustion upon entry into the state, and
any electricity generated by such fossil fuels;
(b) Fossil fuels or electricity that the state is prohibited from
taxing under the state Constitution or the Constitution or laws of
the United States;
(c)(i) Fossil fuels or electricity exported from this state.
Export from this state includes electricity transmitted through the
state that is not produced or consumed in the state including, but
not limited to, imports of electricity that are netted by exports of
electricity with a comparable carbon content by the same entity
within or for the same hour. Export to Indian country located within
the boundaries of this state is not considered export from this
state. For purposes of this subsection, "Indian country" has the same
meaning as provided in RCW 37.12.160.
(ii) An exporter of fossil fuels or electricity upon which
another person previously paid the carbon pollution tax is entitled
to a credit or refund of the tax paid, if the exporter can establish
to the department's satisfaction that the tax under this chapter was
previously paid on the exported fossil fuels or electricity. The
person who paid the carbon pollution tax is not entitled to an
exemption under this subsection (1)(c) when any other person is
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entitled to a refund or credit under this subsection (1)(c)(ii). For
purposes of this subsection, "exporter" means a person who exports
fossil fuels or electricity from this state;
(d) The sale or use of coal transition power as defined in RCW
80.80.010;
(e) Diesel fuel, biodiesel fuel, or aircraft fuel when these
fuels are used solely for agricultural purposes by a farm fuel user,
as those terms are defined in RCW 82.08.865;
(f) Biogas, which includes renewable liquid natural gas or liquid
compressed natural gas made from biogas, landfill gas, biodiesel,
renewable diesel, and cellulosic ethanol;
(g) Aircraft fuel as defined in RCW 82.42.010;
(h) Facilities that manufacture equipment used to generate
electricity from eligible renewable resources as defined in RCW

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19.285.030(21) or facilities that produce components or materials
used exclusively to manufacture eligible renewable resources;
(i) The portion of fossil fuels purchased in the state and
combusted outside the state by interstate motor carriers and vessels
used primarily in interstate or foreign commerce. The department must
provide a methodology by rule to apportion fossil fuels consumed
inside the state of Washington by interstate motor carriers and
vessels used primarily in interstate or foreign commerce;
(j) Activities or property of Indian tribes and individual
Indians that are exempt from state taxation as a matter of federal
law or state law, whether by statute, rule, or compact; and
(k) Fossil fuels used for transporting logs as described in RCW
82.16.010(5).
(2)(a) For any electricity and fossil fuels subject to the carbon
pollution tax imposed by section 102 of this act that are also
subject to a comparable carbon pollution tax or charge on carbon
content imposed by another jurisdiction, including the federal
government or allowances required to be purchased by another
jurisdiction, the entity may take a credit against the tax imposed
under this chapter by the amount of the comparable pollution tax or
charge paid to the other jurisdiction up to the amount of tax owed
under this chapter, provided that the taxpayer claiming the credit
provides evidence acceptable to the department that the equivalent
tax has been paid.

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(b) For the purposes of this section, a comparable carbon
pollution tax or charge means a tax or charge that is not generally
imposed on other activities or privileges that is:
(i) Imposed on:
(A) The sale, use, possession, transfer, or consumption of fossil
fuels; or
(B) The sale, consumption, or generation of electricity produced
through the combustion of fossil fuels; and
(ii) Measured in terms of greenhouse gas emissions by the
greenhouse gas emissions resulting from the complete combustion or
oxidation of such fossil fuels or by the greenhouse gases inherent in
such electricity.
(3)(a) The carbon pollution tax imposed in section 102 of this
act does not apply to fossil fuels and electricity sold to or used
on-site for manufacturing processes by an energy-intensive tradeexposed facility. The fossil fuel exemption does not apply to fossil
fuels used for generation of electricity which is not used on site by
the facility.

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(b) The department of commerce will establish objective numerical
criteria for both energy intensity and trade exposure for the purpose
of
identifying
energy-intensive
trade-exposed
manufacturing
facilities. The criteria will take into consideration approaches used
by other jurisdictions with existing carbon reduction or carbon
pricing programs, and the impact of the carbon pollution tax on
manufacturing activity, including manufacturers with a 2017 North
American industry classification system code 31-33 as developed by
the office of management and budget. A manufacturing business that
can demonstrate to the department of commerce that its facility or
facilities meet the criteria must be issued a certificate denoting
energy-intensive trade-exposed exempt status for the purpose of
exempting appropriate on-site manufacturing processes.
(c)(i) Notwithstanding the criteria established in (b) of this
subsection, the department must issue a certificate denoting energyintensive trade-exposed exempt status to:
(A) Any facility engaged in an activity described in RCW
82.04.260(12); or
(B) A facility primarily engaged in an activity encompassed
within any of the following North American industry classification
system codes (2017):
112310: Chicken egg production;
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112320:
112330:
112340:
112390:
311211:
311221:
311224:
311225:
311230:
311411:
311412:
311421:
311422:
311423:

Broilers and other meat type chicken production;
Turkey production;
Poultry hatcheries;
Other poultry production;
Flour milling;
Wet corn milling;
Soybean and other oilseed processing;
Fats and oils refining and blending;
Breakfast cereal manufacturing;
Frozen fruit, juice, and vegetable manufacturing;
Frozen specialty food manufacturing;
Fruit and vegetable canning;
Specialty canning;
Dried and dehydrated food manufacturing;

311511: Fluid milk manufacturing;
311512: Creamery butter manufacturing;
311513: Cheese manufacturing;
311514:
Dry,
condensed,
and
evaporated
dairy
product
manufacturing;
311520: Ice cream and frozen dessert manufacturing;
311611: Animal (except poultry) processing;
311612: Meat processed from carcasses;
311613: Rendering and meat by-product processing;
311615: Poultry processing;
311710: Seafood product preparation and packaging;
311812: Commercial bakeries;
311821: Cookie and cracker manufacturing;
311824: Flour mixes and dough manufacturing from purchased flour;
311830: Tortilla manufacturing;
311911: Roasted nuts and peanut butter manufacturing;
311919: Other snack food manufacturing;
311930: Flavoring syrup and concentrate manufacturing;
311941:
Mayonnaise,
dressing,
and
other
prepared
sauce
manufacturing;
311942: Spice and extract manufacturing;
311991: Perishable prepared food manufacturing;
311999: All other miscellaneous food manufacturing;
312112: Bottled water manufacturing;
321212: Softwood veneer and plywood manufacturing;
321213: Sawmills;
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322110:
322121:
322122:
322130:
324110:
325188:
325193:
325199:
325311:
327211:
327213:
327310:
327410:
327420:

Pulp mills;
Paper (except newsprint) mills;
Newsprint mills;
Paperboard mills;
Petroleum refineries;
All other basic inorganic chemical manufacturing;
Biodiesel manufacturing;
All other basic organic chemical manufacturing;
Nitrogenous fertilizer manufacturing;
Flat glass manufacturing;
Glass container manufacturing;
Cement manufacturing;
Lime manufacturing;
Gypsum product manufacturing;

331110: Iron and steel mills;
331312: Primary aluminum production;
331313: Aluminum refining and primary aluminum production;
331314: Secondary smelting and alloying of aluminum;
331315: Aluminum sheet, plate, and foil manufacturing;
331318: Other aluminum rolling, drawing, and extruding;
334413: Semiconductor and related device manufacturing;
336411: Aircraft manufacturing;
336412: Aircraft engine and engine parts manufacturing;
336413:
Other
aircraft
parts
and
auxiliary
equipment
manufacturing;
336414: Guided missile and space vehicle manufacturing;
336415: Guided missile and space vehicle propulsion unit and
propulsion unit parts manufacturing; and
336419: Other guided missile and space vehicle parts and
auxiliary equipment manufacturing.
(ii) The exemptions under (c)(i)(B) of this subsection (3) apply
to electricity and fossil fuels used on-site for manufacturing
activities by energy-intensive and trade-exposed manufacturers.
(d)(i) To qualify for an exemption under this subsection (3) for
a specific facility, a person must apply to the department in the
form and manner required by the department. If a person has more than
one potentially exempt facility, that person must submit a separate
application for each facility. The department may consult with the
department of commerce and can take whatever steps it deems necessary
to determine eligibility under this subsection (3), including
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requesting additional information from the applicant or an on-site
visit to the facility to observe its operations.
(ii) If a person qualifies for an exemption for more than one
facility, the department must issue an exemption certificate for each
exempt
facility.
An
exemption
certificate
issued
under
this
subsection (3) must include the name of the person operating the
facility, the physical location of the facility, and the activities
that qualify the facility for an exemption.
(e)(i) The department may rescind an exemption certificate issued
under this subsection (3) if it determines that the facility does not
meet the qualifications for an exemption under this subsection (3).
The department must notify the certificate holder of its decision to
rescind an exemption certificate.
(ii) A person receiving an exemption under this subsection (3)
based on a certificate issued in error must immediately repay to the
department the exempted amounts plus interest as provided in chapter
82.32 RCW. No penalties apply if amounts assessed by the department
under this subsection (3)(e)(ii) are paid in full by the date due.
(4)(a) A credit is authorized against the tax otherwise due under
this chapter. The credit amount may be up to one hundred percent of
the taxes owed under this chapter by a light and power business or a
gas distribution business that chooses to claim a credit pursuant to
sections 202 and 301 of this act.
(b) Any amount taken as a tax credit by a light and power
business or gas distribution business under subsection (1)(c)(ii) or
(2) of this section is not subject to the provisions of part II or
III of this act.
(5)(a) A person is entitled to a refund or credit of carbon
pollution tax included in the price of fossil fuels or electricity
purchased by the person if:
(i) An exemption under this chapter applies to the person or the
person's use or disposition of the fossil fuel or electricity;
(ii) The person can establish to the department's satisfaction
that the tax under this chapter was previously paid on the fossil
fuel or electricity; and
(iii) The person submits an application to the department in a
form and manner required by the department within four years after
the calendar year in which the person paid the carbon pollution taxes
for which the refund or credit is sought.
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(b) A person is not entitled to a refund or credit of carbon
pollution tax under this section if any subsequent purchaser of the
fossil fuel or electricity is entitled to a refund or credit of that
tax under this subsection.
(c) Refunds or credits under this subsection are not subject to
interest.
(d) For purposes of this subsection (5), "person" means any
purchaser or consumer of fossil fuel or electricity who indirectly
paid carbon pollution tax included in the price of the fossil fuel or
electricity.

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NEW SECTION.
Sec. 104.
RULE MAKING AND OTHER ADMINISTRATIVE
AUTHORITY. (1) The provisions of chapter 82.32 RCW apply to this
chapter.

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(2) The department and department of ecology may adopt rules as
they deem necessary to administer this chapter. The department of
commerce may adopt rules as it deems necessary to administer section
103 of this act.
(3) The department of commerce must convene a stakeholder work
group to examine the efficient and consistent integration of carbon
pricing in electricity markets within the state and transactions with
markets outside the state, including the market operated by the
California independent system operator. To assist in its examination
of the issues identified in this subsection, as well as any other
issues pertinent to its review, the work group must, at a minimum,
consist of light and power businesses, gas distribution businesses,
the Bonneville power administration, and other agencies. The work
group must prepare a report to the legislature of its findings and
recommendations to improve the carbon transparency and market
liquidity in electricity markets and submit the report, in compliance
with RCW 43.01.036, by no later than December 1, 2020. The department
and the department of ecology must provide necessary data and other
support to the department of commerce.
(4) By December 31, 2025, the department of revenue, supported by
the departments of commerce and ecology must review the energyintensive trade-exposed process under section 103 of this act,
including its effectiveness in controlling leakage and minimizing any
unnecessary exemptions from taxation, merits of alternative exemption
structures such as production-based incentives, and the scope of
industries within the energy-intensive trade-exposed designation.
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(5) The department of commerce must provide information on its
web site regarding the impacts of the carbon pollution tax under this
chapter on the price of electricity, natural gas, and vehicle fuels
by sector.

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NEW SECTION.
Sec. 105.
REPORT BY THE DEPARTMENT OF COMMERCE.
(1) On or before December 31, 2020, and each year thereafter, and in
compliance with RCW 43.01.036, the department of commerce, with
support from the department of revenue as well as the state auditor
for the initial report, must submit a report to the joint committee
on climate programs oversight under section 801 of this act. The
initial report must include recommendations for establishing a
process to audit account uses and allow for public input. Each annual
report must contain specific recommendations for modifications or
improvements to this act to ensure the goals of this act are being
met in addition to the following with respect to the annual period
ending the December 31st immediately preceding the reporting date:

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(a) The total carbon pollution tax collected during the reporting
period and a list of the taxpayers and the amount of carbon pollution
tax paid by those taxpayers. The department must provide the
information required under this subsection (1)(a), which is not
confidential tax information under RCW 82.32.330;
(b) Estimated costs incurred by the department, the department of
commerce, the department of ecology, and the Washington State
University
extension
energy
program
directly
associated
with
administration of the carbon pollution tax, shown both in dollar
amounts and as a percentage of the total amount of carbon pollution
tax revenues collected. The department of ecology, the department of
commerce, and Washington State University extension energy program
must
report
their
estimated
administrative
costs
under
this
subsection to the department of commerce each year at least one month
before the deadline for the report required under this section;
(c) The estimated overall net revenue gain or loss calculated by
comparison of this subsection and subsection (2) of this section in
dollar amounts and the estimated costs determined under subsection
(2) of this section as a percentage of carbon pollution tax revenues
collected;
(d) The impact on the economic health of Washington state,
including verifiable data on emissions leakage and any job loss since
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the implementation of the carbon pollution tax under section 102 of
this act;
(e) An analysis of whether the point of taxation is appropriate
under section 102 of this act;
(f) A summary of the investments made through its administration
of the energy transformation account created in section 401 of this
act and the rural economic development account created in section 701
of this act. The summary must include amounts invested in each
program area, project descriptions, names of grant recipients, an
estimate of the greenhouse gas emissions reductions achieved or
anticipated via the investments, and other pertinent information or
information as periodically requested by the legislature;
(g) A summary of the progress made by utilities implementing
their plans under the clean energy investment program created in
parts II and III of this act. The summary must include aggregate
totals of anticipated greenhouse gas reductions called for by plans
and progress made toward achieving these reductions; an accounting of
funds spent and average cost per ton of verified greenhouse gas
reductions achieved through program investments; and a review of the
mitigation of increased gas or electric costs to qualifying lowincome customers and recommendations on whether consumer-owned energy
utilities have the resources to mitigate these costs; and

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(h) An analysis on the impact of section 102 and parts II and III
of this act on the utility rates as it affects individuals of varying
income levels, ethnic backgrounds, and racial backgrounds.
(2) On or before December 1, 2026, the department of commerce, in
consultation with the department of ecology, must provide specific
recommendations to the joint committee on climate programs oversight
under section 801 of this act on whether or not the carbon pollution
tax rate under section 102 of this act will need to be adjusted
upward or downward or will be sufficient to meet the net cumulative
reduction of greenhouse gas emissions of twenty-five percent below
1990 levels by the year 2035.

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NEW SECTION.
Sec. 106.
TECHNICAL ASSISTANCE. Upon request of
the department, the department of commerce, the department of
ecology, and the Washington State University extension energy program
must provide technical assistance to the department as may be
necessary for the department to effectively administer this chapter.
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NEW SECTION. Sec. 107. CARBON POLLUTION REDUCTION ACCOUNT. The
carbon pollution reduction account is created in the state treasury.
All receipts from the carbon pollution tax under section 102 of this
act, and other moneys directed to the account by the legislature,
must be deposited into the account. Moneys in the account may only be
spent after appropriation. Moneys in the account must be first
appropriated to the department of revenue and other appropriate
agencies for the administration of chapter . . ., Laws of 2018 (this
act). Expenditures from the account must be distributed by the state
treasurer as follows:
(1) Fifty percent of the moneys to the energy transformation
account created in section 401 of this act;
(2) Twenty percent of the moneys to the water and natural
resources resilience account created in section 601 of this act;

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(3) Fifteen percent of the moneys for the transition assistance
account created in section 501 of this act;
(4) Fifteen percent of the moneys for the rural economic
development account created in section 701 of this act.

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NEW SECTION.
Sec. 108.
TRIBAL COMPACTS. (1) The governor may
enter into an agreement with any federally recognized Indian tribe
located on a reservation within this state regarding carbon pollution
taxes included in the price of fuel delivered to a retail station
wholly owned and operated by a tribe, tribal enterprise, or tribal
member licensed by the tribe to operate a retail station located on
reservation or trust property. The agreement may provide mutually
agreeable means to address any tribal immunities or any preemption of
the carbon pollution tax.
(2) The provisions of this section do not repeal existing state/
tribal fuel tax agreements or consent decrees in existence upon the
effective date of this section.
(3) If a new agreement is negotiated, the agreement must:
(a) Require that the tribe or the tribal retailer acquire all
fuel only from persons or companies operating lawfully in accordance
with this chapter as a fuel distributor, supplier, or blender, or
from a tribal distributor, supplier, or blender lawfully doing
business according to all applicable laws;
(b) Provide that the tribe will expend carbon pollution tax
proceeds or equivalent amounts on: Reducing greenhouse gas emissions
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or increasing the resilience of tribal lands to the impacts of
climate change;
(c) Include provisions for audits or other means of ensuring
compliance to certify the number of gallons of fuel purchased by the
tribe for resale at tribal retail stations, and the use of carbon
pollution tax proceeds or their equivalent for the purposes
identified in (b) of this subsection. Compliance reports must be
delivered to the director of the department of licensing.
(4) Information from the tribe or tribal retailers received by
the state or open to state review under the terms of an agreement are
deemed personal information under RCW 42.56.230(4)(b) and are exempt
from public inspection and copying.
(5) The governor may delegate the power to negotiate carbon
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(6) The department of licensing must include in its annual report
to the legislature on the status of fuel tax agreements with tribes
the status of carbon pollution tax agreements with tribes as well as
any negotiations on such agreements with tribes.

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Part II
Clean Energy Investment Fund for Investor-Owned Energy Utilities

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NEW SECTION.
Sec. 201.
DEFINITIONS. The definitions in this
section apply throughout this chapter unless the context clearly
requires otherwise.
(1)
"Commission"
means
the
utilities
and
transportation
commission.
(2) "Consumer-owned energy utility" means any consumer-owned gas
distribution business or consumer-owned light and power business.
(3) "Consumer-owned gas distribution business" means any gas
distribution business not subject to regulation by the commission of
the rates, tolls, rentals, contracts or charges, or service rendered,
or the adequacy or sufficiency of the facilities, equipment,
instrumentalities, or buildings, or the reasonableness of rules or
regulations made, furnished, used, supplied, or in force affecting
any gas plant owned and operated by such gas distribution business.
(4) "Consumer-owned light and power business" means any light and
power business not subject to regulation by the commission of the
rates, tolls, rentals, contracts or charges, or service rendered, or
the
adequacy
or
sufficiency
of
the
facilities,
equipment,
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instrumentalities, or buildings, or the reasonableness of rules or
regulations made, furnished, used, supplied, or in force affecting
any electric plant owned and operated by such light and power
business.
(5) "Department" means the department of commerce.
(6) "Gas distribution business" has the same meaning as provided
in RCW 82.16.010.
(7) "Investor-owned energy utility" means any investor-owned gas
distribution business or investor-owned light and power business.
(8) "Investor-owned gas distribution business" means any gas
distribution business subject to regulation by the commission of the
rates, tolls, rentals, contracts or charges, or service rendered, or
the
adequacy
or
sufficiency
of
the
facilities,
equipment,
instrumentalities, or buildings, or the reasonableness of rules or
regulations made, furnished, used, supplied, or in force affecting
any gas plant owned and operated by such gas distribution business.

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(9) "Investor-owned light and power business" means any light and
power business subject to regulation by the commission of the rates,
tolls, rentals, contracts or charges, or service rendered, or the
adequacy
or
sufficiency
of
the
facilities,
equipment,
instrumentalities, or buildings, or the reasonableness of rules or
regulations made, furnished, used, supplied, or in force affecting
any electric plant owned and operated by such light and power
business.
(10) "Light and power business" has the same meaning as provided
in RCW 82.16.010.
(11) "Low income" means an annual income, adjusted for household
size, that is at or below the greater of: (a) Eighty percent of area
median income; or (b) two hundred percent of the federal poverty
level.

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NEW SECTION. Sec. 202. CREDITS FOR CLEAN ENERGY INVESTMENTS OF
INVESTOR-OWNED ENERGY UTILITIES. (1) Except as provided in subsection
(2) of this section, beginning July 1, 2019, each investor-owned
energy utility may claim a credit against the carbon pollution tax
imposed in section 102 of this act for clean energy investments
approved pursuant to this chapter, not to exceed one hundred percent
of the taxes owed under section 102 of this act in the same calendar
year.
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(2) For electricity produced by a generating facility that burns
coal as the primary fuel source and the electricity is not otherwise
exempt from the carbon pollution tax imposed in section 102 of this
act, the department of revenue will adopt a schedule for each
facility to calculate the credits such that beginning January 1,
2020, the credit decreases on a pro rata basis annually until
reaching zero percent in 2036.
(3) To be eligible for the credit under this section for clean
energy investment, an investor-owned energy utility must, as of the
date the credit is claimed, have received approval by the commission
of a clean energy investment plan pursuant to section 205 of this
act. Remaining carbon pollution tax owed under section 102 of this
act, if any, must be remitted to the department of revenue and
deposited in the carbon pollution reduction account created in
section 107 of this act.

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(4) Each investor-owned energy utility claiming a credit pursuant
to this section must establish and maintain a separate clean energy
investment account into which it must deposit amounts equal to the
credit taken under this section. Moneys in the clean energy
investment account must be deposited in an interest-bearing account
in a financial institution as defined by RCW 30A.22.040 that is
separate from other accounts and that credits all interest earned on
the funds to that account. Moneys in the clean energy investment
account may only be expended for the purposes identified in this
chapter.
(5) An investor-owned energy utility may not earn a rate of
return from the portion of investments paid for with moneys from the
clean energy investment account.
(6) Moneys in the separate clean energy investment account are
considered gross operating revenue for the purpose of RCW 80.24.010,
and may not be considered gross income for the purposes of chapters
82.04 and 82.16 RCW. Each investor-owned energy utility must report
to the commission the total amount of revenue placed in its clean
energy investment account during the preceding calendar year. In
addition to fees paid pursuant to RCW 80.24.010 on moneys in the
clean energy investment account, each investor-owned energy utility
must pay an annual fee set by the commission of up to one percent of
moneys deposited in the clean energy investment account to pay the
reasonable cost of administering sections 201 through 206 of this
act. The commission must set the fee each year by general order. Any
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additional fees collected by the commission under this subsection
must be deposited into the public service revolving fund.

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NEW SECTION.
Sec. 203.
TECHNICAL STANDARDS COMMITTEE CREATED.
(1) The commission must create a technical standards committee for
the purpose of advising the commission and other state agencies, the
legislature, utilities, and local governments on utility reinvestment
of moneys credited pursuant to section 202 of this act. The technical
standards committee must develop standards and guidelines used by the
commission to evaluate, quantify, and verify greenhouse gas emissions
reductions proposed by utility plans pursuant to section 205 of this
act. The duties of the technical standards committee include, but are
not limited to:
(a)
Establishing
standard
protocols
for
verification
and
evaluation of greenhouse gas emissions reductions from utility
investments;

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(b) Developing common planning assumptions for use in utility
clean energy investment plans;
(c) Developing a standard reporting format to be adopted by the
commission for all investments and activities supported by the clean
energy investment accounts; and
(d) Other duties consistent with the purpose of this section, as
required by the commission.
(2) The technical standards committee established in this section
constitutes a class one group under RCW 43.03.220. Expenses for the
technical standards committee are an appropriate administrative
expense for the purpose of section 205(7)(b)(xiii) of this act. Staff
support must be provided by the commission.
(3) The commission may elect to work with the department under
section 302 of this act to create one joint technical standards
committee for the purpose of advising on utility reinvestment of
moneys credited pursuant to sections 202 and 301 of this act.

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38

NEW

SECTION.

Sec.

204.

WASHINGTON

CLEAN

ENERGY

INVESTMENT

PROGRAMS ESTABLISHED FOR INVESTOR-OWNED ENERGY UTILITIES—RULE MAKING.
By July 1, 2019, the commission must adopt rules concerning the
process, timelines, reporting, and documentation required to ensure
the proper implementation of this chapter. Such rules must also
establish requirements for review, approval, performance standards,
and independent monitoring and evaluation of clean energy investment
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plans of investor-owned energy utilities. The department of commerce
and the commission must, to the extent practicable, adopt rules that
are
similar
enough
to
ensure
coordinated
and
consistent
implementation of this chapter for consumer-owned and investor-owned
energy utilities.

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NEW SECTION.
Sec. 205.
CLEAN ENERGY INVESTMENT PLANS FOR
INVESTOR-OWNED ENERGY UTILITIES. (1) To be eligible for the tax
credit under section 202 of this act, an investor-owned energy
utility must develop and maintain an approved clean energy investment
plan, which identifies approved funding for clean energy investments
over a ten-year period, pursuant to subsection (5) of this section.
The clean energy investment plan must eliminate, to the extent
feasible and at a reasonable cost, any tax obligation imposed by this
act associated with electricity by 2050.

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(2) When developing and updating its clean energy investment
plan, an investor-owned energy utility must solicit public input
through public processes under the oversight of the commission.
(3) Beginning July 1, 2019, an investor-owned energy utility
seeking a credit under section 202 of this act must submit:
(a) A clean energy investment plan;
(b) A summary of the public input received during development of
the plan; and
(c) A schedule for independent evaluation of activities financed
through the clean energy investment plan, including verification of
carbon emissions reductions. The reasonable costs of such independent
evaluations may be included in a utility's clean energy investment
plan and paid for from a utility's clean energy investment account.
(4) An investor-owned energy utility's clean energy investment
plan may use methods and calculations that deviate from the common
protocols and planning assumptions recommended by the technical
standards committee when approved by the commission.
(5) Each clean energy investment plan must include the following:
(a) A demonstration that the portfolio of funded activities will
achieve significant greenhouse gas emissions reductions at a
reasonable cost over the shortest reasonable time frame;
(b) An estimate, based on protocols developed by the technical
standards committee, of the cost per ton of emissions reductions for
the portfolio of projects in the clean energy investment plan;
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(c) A demonstration that expenditures in the clean energy
investment plan will be additional to expenditures necessary to meet
other emissions reduction, energy conservation, low-income programs,
or renewable energy requirements existing on the effective date of
this section;
(d) Sufficient funding, as determined by the commission, to
mitigate all increases in gas or electric costs to qualifying lowincome customers as a result of the carbon pollution tax imposed in
section 102 of this act. Such moneys must be additional to other
funding for low-income energy assistance; and
(e) A demonstration that all funded activities within the clean
energy investment plan were developed using the cumulative impact
analysis in section 502 of this act and that expenditures prioritize
highly impacted communities.

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(6) Each clean energy investment plan may include the following:
(a) A customer education and outreach program to promote
widespread participation by consumers and businesses; and
(b) Up to ten percent of the expenditures in the clean energy
investment accounts pursuant to this section may be dedicated for
research and development by the investor-owned energy utility that
will promote energy conservation, or the deployment of zero-emission
energy resources.
(7)(a) A clean energy investment plan must include programs for
investments or expenditures that are incremental to investments or
expenditures required by laws and regulations existing on the
effective date of this section; and
(i) Reduce greenhouse gas emissions of the investor-owned energy
utility; or
(ii) Advance market transformation, educate consumers, develop
new low carbon fuels such as renewable natural gas, increase
participation in programs that incentivize consumers to choose low
carbon alternatives, or increase carbon sequestration.
(b) Eligible investments may include contributions in aid of
construction or expenditures for the following:
(i) Additional conservation in excess of the target established
under RCW 19.285.040(1), other state obligations, or other obligation
established by the commission in effect on the effective date of this
section;
(ii) Market transformation for energy efficiency products;
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(iii) Eligible renewable resources as defined by RCW 19.285.030,
in excess of the target established under RCW 19.285.040(2) in effect
on the effective date of this section;
(iv) Low-income weatherization;
(v) Measures to support electrification of the transportation
sector including, but not limited to:
(A) Equipment on an electrical company's transmission and
distribution system to accommodate electric vehicle connections, and
smart grid systems, that enable electronic interaction between the
company and charging systems, and facilitate company utilization of
vehicle batteries for system needs;
(B) Incentives for car dealers to sell alternative vehicles;
(C) Incentives for property owners to install charging equipment
for alternative vehicles; and

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(D) Incentives for the electrification of vehicle fleets;
(vi) Investments that support the use of alternative fuels in the
transportation sector for medium and heavy duty vehicles and
equipment that will result in a reduction of greenhouse gas emissions
and if the commission determines the alternative fuel is more costeffective and commercially accepted than electrification;
(vii) Investment in clean distributed energy resources and grid
modernization to facilitate distributed resources and improved grid
resiliency;
(viii) Research and development that will promote energy
conservation, or the deployment of zero-emission energy resources;
(ix) Investments in renewable natural gas production, including
equipment to collect or condition biogas, or equipment used solely
for the purpose of delivering biogas for consumption;
(x) Incentives for small businesses to support energy efficiency
and the replacement of equipment;
(xi) Contributions to self-directed investments in the following
measures to serve the sites of large industrial gas and electrical
customers; conservation; new renewable energy resources; behind-themeter technology that facilitates demand response cooperation to
reduce peak loads; infrastructure to support electrification of
transportation needs and heating loads; or renewable natural gas
production, including gas conditioning equipment for biogas;
(xii) Pumped storage facilities whose development does not
conflict with existing state and federal fish recovery plans and that
comply with all local, state, and federal laws and regulations; and
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(xiii) The reasonable costs of administration of the carbon
pollution tax under section 102 of this act and the clean energy
investment program, as determined by the commission.
(8) Funds from a clean energy investment account may be expended
by an investor-owned utility to replace all or some of the debt
financing portion of capital projects identified in the utility's
approved clean energy investment plan, if the commission determines
that such treatment would reduce the overall cost of the project to
customers, and is otherwise consistent with the purposes of this
section.
(9) Investments in infrastructure or facilities to process or
liquefy fossil fuels are not eligible for inclusion in a clean energy
investment plan.

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NEW SECTION.
Sec. 206.
CLEAN ENERGY INVESTMENT PROGRAM
EXPENDITURE MONITORING, AUDITING, AND OVERSIGHT FOR INVESTOR-OWNED
ENERGY UTILITIES. (1) Upon approval of a clean energy investment
plan, an investor-owned energy utility must expend moneys from its
clean energy investment account in accordance with the clean energy
investment plan approved by the commission.
(2) In order to maintain eligibility for the tax credit under
section 202 of this act and to retain authority to expend money from
a clean energy investment account, an investor-owned energy utility
must submit and receive approval of an updated clean energy
investment plan every two years, and submit annual reports to the
commission, including:
(a) The status of projects approved in the previous clean energy
investment plan;
(b) Demonstration that the plan has met performance standards
established by the commission by order;
(c) An accounting of verified emissions reductions, and the cost
per ton of emissions reductions compared to estimates of the cost per
ton in emissions reductions contained in the clean energy investment
plan; and
(d) An updated estimate of future emissions reductions and the
estimated cost per ton.
(3) If the commission determines that the plan or any project in
the plan did not meet performance standards, the commission may
require the utility to remit remaining tax moneys dedicated for the
nonperforming plan or project to the department of revenue.
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(4) The commission must annually provide the department of
revenue a report summarizing who is entitled to the credit, over what
timeline, any required adjustments to credit previously issued, and
any further information required to assist the department of revenue
in administering the credit.

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Part III
Clean Energy Investment Fund for Consumer-Owned Energy Utilities

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NEW SECTION.
Sec. 301.
CARBON POLLUTION TAX CREDIT. (1)
Beginning July 1, 2019, each consumer-owned energy utility may claim
a credit against the carbon pollution tax imposed in section 102 of
this act for clean energy investments approved pursuant to this
chapter, not to exceed one hundred percent of the taxes owed under
section 102 of this act in the same calendar year.

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(2) To be eligible for the credit under this section for clean
energy investment, a consumer-owned energy utility must, as of the
date the credit is claimed, have a plan, approved by the governing
body of a consumer-owned energy utility, to reinvest an equivalent
amount of revenues collected from customers during that year, the
preceding year, or any of the three subsequent years. Remaining
carbon pollution tax amounts owing must be remitted to the department
of revenue and deposited in the carbon pollution reduction account
created in section 107 of this act.
(3) Each consumer-owned energy utility claiming a credit pursuant
to this section must establish and maintain a separate clean energy
investment account into which it must deposit amounts equal to the
credit taken under this section. Moneys in this account must be kept
separate from other accounts, and may only be expended for the
purposes identified in this chapter. Interest accrued on this account
must be expended only for purposes identified in this chapter.
(4) Moneys retained in the separate clean energy investment
account are not considered gross income for the purpose of chapter
82.16 RCW.

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NEW SECTION.
Sec. 302.
TECHNICAL ADVISORY COMMITTEE CREATED.
(1) The department must create a broadly representative technical
advisory committee for the purpose of advising the department, other
state agencies, the legislature, utilities, and local governments on
consumer-owned energy utility reinvestment of moneys credited
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pursuant to section 301 of this act. The advisory committee will
advise on guidelines developed or adopted by the department to
evaluate, quantify, and verify greenhouse gas emissions reductions
proposed by utility plans pursuant to section 304 of this act. The
duties of the technical advisory committee include, but are not
limited to:
(a)
Advising
on
standard
protocols
for
verification
and
evaluation of greenhouse gas emissions reductions from utility
investments;
(b) Recommending common planning assumptions for use in utility
clean energy investment plans;
(c) Advising on a standard reporting format to be adopted by the
department for all investments and activities supported by the clean
energy investment accounts; and

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(d) Other duties consistent with the purpose of this section, as
required by the department.
(2) The technical advisory committee established in this section
constitutes a class one group under RCW 43.03.220. Expenses for the
technical advisory committee are an appropriate administrative
expense for the purpose of section 304(6)(n) of this act. Staff
support must be provided by the department.
(3) The department may elect to work with the commission under
section 203 of this act to create one joint technical standards
committee for the purpose of advising on utility reinvestment of
moneys credited pursuant to sections 202 and 301 of this act.

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NEW

SECTION.

Sec.

303.

WASHINGTON

CLEAN

ENERGY

INVESTMENT

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PROGRAMS ESTABLISHED—RULE MAKING. By July 1, 2019, the department

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must adopt rules concerning only the process, timelines, reporting,
documentation, and performance metrics required to ensure the proper
implementation of this chapter. Such rules may include rules
associated with utility development, implementation, and evaluation
of clean energy investment plans. The department and the commission
must, to the extent practicable, adopt rules that are similar enough
to ensure coordinated and consistent implementation of this chapter
for consumer-owned and investor-owned energy utilities.

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NEW SECTION. Sec. 304. CLEAN ENERGY INVESTMENT PLANS. (1) To be
eligible for the tax credit under section 301 of this act, a
consumer-owned energy utility must develop and maintain a clean
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energy investment plan that is approved by its governing body. The
clean energy investment plan must seek to eliminate any tax
obligation imposed by this act associated with electricity.
(2) When developing and updating its clean energy investment
plan, a consumer-owned energy utility must solicit public input
through public processes under the oversight of its governing body.
(3) Each clean energy investment plan must include:
(a) A summary of the public input received during development of
the plan; and
(b) A schedule for independent evaluation of activities financed
through the clean energy investment plan, including verification of
carbon emissions reductions. The reasonable costs of such independent
evaluations may be included in a utility's clean energy investment
plan and paid for from a utility's clean energy investment account.

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(4) A consumer-owned energy utility's clean energy investment
plan may use methods and calculations that deviate from the common
protocols and planning assumptions recommended by the technical
advisory committee when approved by the governing body.
(5) A clean energy investment plan must include:
(a) Programs for investments or expenditures that:
(i) Are incremental to investments or expenditures required by
existing regulations on the effective date of this section; and
(ii)(A) Reduce carbon dioxide emissions of the utility; or
(B) Advance market transformation, educate consumers, develop new
low carbon fuels such as renewable natural gas, and increase
participation in programs that enable consumers to choose low carbon
alternatives;
(b) A demonstration that the portfolio of funded activities can
reasonably be expected to achieve reductions in greenhouse gas
emissions;
(c) An estimate, based on protocols developed by the technical
advisory committee or other protocol as authorized under subsection
(4) of this section, of the metric tons of emissions reductions and
the cost per metric ton of emissions reductions for the portfolio of
projects in the clean energy investment plan;
(d) A demonstration that expenditures in the clean energy
investment plan will be additional to expenditures necessary to meet
other emissions reductions, energy conservation, or renewable energy
requirements not to exceed an average cost per metric ton of
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greenhouse gases abated at three hundred percent of the carbon tax
rate or to be determined by the department as appropriate;
(e) A customer education and outreach program;
(f) Sufficient funding, as determined by the department, to
mitigate all increases in gas or electric costs to qualifying lowincome customers as a result of the carbon pollution tax imposed in
section 102 of this act. Such moneys must be additional to other
funding for low-income energy assistance; and
(g) A demonstration that all funded activities within the clean
energy investment plan were developed using the cumulative impact
analysis in section 502 of this act and that expenditures prioritize
highly impacted communities.
(6) A clean energy investment plan may only include the following
types of investments or expenditures:

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(a) Additional conservation in excess of the target established
under RCW 19.285.040(1), or other state obligations;
(b) Market transformation for energy efficiency products;
(c) Eligible renewable resources as defined by RCW 19.285.030, in
excess of the target established under RCW 19.285.040(2);
(d) Low-income weatherization;
(e) Measures to support electrification of the transportation
sector including, but not limited to:
(i) Equipment on an electrical company's transmission and
distribution system to accommodate electric vehicle connections, and
smart grid systems, that enable electronic interaction between the
company and charging systems, and facilitate company utilization of
vehicle batteries for system needs;
(ii) Incentives for car dealers to sell alternative vehicles;
(iii) Incentives for property owners to install charging
equipment for alternative vehicles; and
(iv) Incentives for the electrification of vehicle fleets;
(f) Investment in clean distributed energy resources and grid
modernization to facilitate distributed resources and improved grid
resiliency;
(g)
Research
and
development
that
will
promote
energy
conservation, or the deployment of zero-emission energy resources;
(h) Investments in renewable natural gas production, including
gas conditioning equipment for biogas;
(i) Investments in the following measures to serve the sites of
large industrial gas and electrical customers: Conservation; new
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renewable
energy
resources;
behind-the-meter
technology
that
facilitates demand response cooperation to reduce peak loads;
infrastructure to support electrification of transportation needs and
heating loads; or renewable natural gas production, including gas
conditioning equipment for biogas;
(j) Investments in zero-carbon emission resources, including
installing generation capacity at levies, irrigation canals, and
existing unpowered dams that comply with all federal and state
permitting requirements;
(k) Investments that lower net emissions through fuel switching;
(l) Incentives for small businesses to support energy efficiency
and the replacement of equipment;
(m) Other measures determined by the governing body to meet the
requirements of subsection (5) of this section; and

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(n) The reasonable costs of administration of the clean energy
investment program, as determined by the department.
(7) In order to maintain eligibility for the tax credit under
section 301 of this act and to continue to retain authority to expend
money from the utility's clean energy investment account, a consumerowned energy utility must submit and receive approval from the
governing body of the consumer-owned energy utility of an updated
clean energy investment plan every two years.

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NEW SECTION. Sec. 305. AGGREGATION OF THE CARBON POLLUTION TAX
CREDIT AND JOINT DEVELOPMENT OF CLEAN ENERGY INVESTMENT PLANS. (1) A
consumer-owned energy utility may enter into an agreement with a
joint operating agency organized under chapter 43.52 RCW on or before
January 1, 2017, to aggregate their claims against the carbon
pollution tax imposed in section 102 of this act and to develop and
implement a joint clean energy investment plan. Implementation of a
joint clean energy investment plan may not begin until the governing
bodies of all member utilities have approved the plan through a
public process. The purpose of this section is to facilitate broad,
equitable, and efficient use of the carbon pollution tax credit.
(2) A consumer-owned energy utility that is not a member of a
joint operating agency may enter into an agreement with a nonprofit
organization to aggregate their claims against the carbon pollution
tax imposed in section 102 of this act and to develop and implement a
joint clean energy investment plan. Implementation of a joint clean
energy investment plan may not begin until the governing bodies of
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all participating utilities have approved the plan through a public
process. The purpose of this section is to facilitate broad,
equitable, and efficient use of the carbon pollution tax credit.
(3) Each utility that enters into an agreement authorized in
subsection (1) or (2) of this section must empower the joint
operating agency or nonprofit organization to, on their behalf, claim
the credit against the carbon pollution tax imposed in section 102 of
this act. The joint operating agency or nonprofit organization must
establish and maintain a separate clean energy investment account and
deposit into that account amounts equal to the credits taken under
this section. Moneys in this account must be kept separate from other
accounts, and may only be expended for the purposes identified in
this chapter.

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NEW SECTION.
Sec. 306.
CLEAN ENERGY INVESTMENT PROGRAM
EXPENDITURE MONITORING AND OVERSIGHT. (1) A consumer-owned energy
utility or a joint operating agency or nonprofit organization on
behalf of an aggregated group of consumer-owned utilities must submit
annual reports to the department including, but not limited to:
(a) The status of projects approved in the previous clean energy
investment plan; and
(b) Using the performance metrics established by the department:
(i) An accounting of greenhouse gas emissions reductions achieved
and the cost per metric ton of emissions reductions compared to
estimates of the cost per metric ton in emissions reductions
contained in the clean energy investment plan; and
(ii) An updated estimate of future greenhouse gas emissions
reductions and the estimated cost per metric ton.
(2) The state auditor is responsible for auditing compliance with
the approved plan for consumer-owned energy utilities that are
subject to the jurisdiction of the state auditor and the attorney
general is responsible for enforcing that compliance. An independent
auditor selected by a consumer-owned energy utility that is not
subject to the jurisdiction of the state auditor is responsible for
auditing compliance with the approved plan and the attorney general
is responsible for enforcing that compliance.
(3) If the department determines that the plan or any project in
the plan did not meet performance metrics, the department must notify
the department of revenue. The department of revenue may require the
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utility to remit remaining tax moneys dedicated for the nonperforming
plan or project.

3
4

Part IV
Energy Transformation Account Funds

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NEW SECTION. Sec. 401. A new section is added to chapter 43.31
RCW to read as follows:
ENERGY TRANSFORMATION ACCOUNT. (1) The energy transformation
account is created in the state treasury. The account must receive
moneys distributed to the account from the carbon pollution reduction
account created in section 107 of this act as well as other moneys
directed to the account by the legislature. Moneys in the account
must be used for projects and incentive programs that yield
verifiable reductions in carbon pollution in excess of current
practices, and may only be spent after appropriation. On a biennial
basis a minimum of ten percent of the expenditures under this section
must be for projects and activities located in communities designated
under section 502 of this act.

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(2) The department must solicit proposals and award grants for
projects and incentive programs that reduce greenhouse gas emissions
in Washington state or reduce emissions directly connected to energy
use and other activity in Washington state.
(a) Grant awards must be aligned to a strategy, which when
combined with the utility clean energy investments plans in sections
205 and 304 of this act, are anticipated to achieve a net cumulative
reduction of greenhouse gas emissions of twenty-five percent below
1990 levels by the year 2035 within the amounts as appropriated.
(b)(i)
The
department
of
commerce
must
consider
the
recommendation of the Washington State University extension energy
program in section 405 of this act in determining the award amount
offered for a given project and the appropriate process or method for
awarding proposals in that program area.
(ii) The award amounts must reflect the impact of the carbon
pollution tax in section 102 of this act, and the availability of
other public incentives or credits to determine the minimum level
necessary to catalyze investment of each project type but avoid
windfall profits in projects.
(iii) Award amounts from the energy transformation account may
not exceed one hundred dollars in 2017 dollars per ton of carbon
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dioxide equivalent or reduced emissions of greenhouse gases; however
the total project cost per ton of reduced emissions may exceed that
amount provided additional funding from another source.
(3) The department must consult with the department of ecology
and the Washington State University extension energy program in the
design and operation of the fund and must follow the guidelines and
obligations set forth in the implementation plan created in section
405 of this act.
(4) Priority must be given to the following:
(a) Projects and activities that provide benefits to low-income
communities, communities of color, and communities of indigenous
peoples provided the projects achieve equivalent net emissions
reductions and are cost-competitive compared to other proposals;
(b) Consideration for procuring and using materials and content
that have lower carbon emissions associated with their transportation
and manufacturing, as determined through the best available reporting
and assessment tools;

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(c) Support for high quality labor standards, apprenticeship and
preapprenticeship
utilization
and
preferred
entry
standards,
community workforce agreements with priority local hire, procurement
from women and minority-owned businesses, procurement from and
contract with entities that have a history of complying with federal
and state wage and hour laws and regulations, and other related labor
standards;
(d) Applications from entities subject to the carbon pollution
tax under section 102 of this act who are not eligible to receive
credits under sections 202 or 301 of this act;
(e) Applications from consumer-owned energy utilities with
retained credit amounts of less than five million dollars annually
for comparable incentives for utility customers who otherwise would
not have access to the programs, services, and investments offered in
a clean energy investment plan as provided in sections 205 and 304 of
this act; and
(f)
Projects
with
a
high
leverage
ratio
of
nonenergy
transformation account funds to energy transformation account funds,
excluding funding sourced from utility credits as provided in
sections 205 and 304 of this act.
(5)(a) Projects and incentive programs must meet all of the
following criteria to be eligible for funding. Emissions reductions
from projects and incentive programs must be:
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(i) Real, specific, identifiable, and quantifiable;
(ii) Permanent: The department will look to other jurisdictions
in setting this standard and will make a reasonable determination on
length of time recognizing the advantages of near-term reductions and
the potential for future technology to mitigate the long-term release
of greenhouse gas emissions into the atmosphere;
(iii) Enforceable by the state of Washington;
(iv) Verifiable; and
(v) Not eligible for funding, if an emissions reduction is
required by another statute, rule, or other legal requirement, or is
approved under a clean energy investment plan as provided in sections
205 and 304 of this act, or can be reasonably assumed to occur absent
additional funding in the near future.
(b) Funding may be provided for incremental carbon reductions
from projects which have already secured funding, but can furnish
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(6) Emissions reductions resulting in part or in whole from the
policies listed in (a) through (d) of this subsection (6) are
eligible under this program:
(a) Commute trip reduction programs as established through RCW
70.94.527 under WAC 173-442-160(3);
(b) Carbon dioxide emissions from the industrial combustion of
biomass in the form of fuel wood, wood waste, wood by-products, and
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defined under RCW 70.235.020(3);
(c) Washington's carbon dioxide mitigation standard for fossilfueled electric generation facilities, through an energy facility
site evaluation council site certificate or by chapter 80.70 RCW; and

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(d) The acquisition of conservation and energy efficiency in
excess of the targets required by the energy independence act under
RCW 19.285.040.
(7) The department must consider projects and incentive programs
for the following activities:
(a) Industrial energy efficiency, including projects that
increase the energy efficiency or reduce the greenhouse gas emissions
at manufacturing facilities. Examples include projects to implement
combined heat and power, district energy, or on-site renewables or to
upgrade existing equipment such as boilers to more efficient models
and to switch to less carbon intensive fuel sources. Projects that
reduce process emissions may also be considered;
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(b) Clean transportation, including projects and programs that:
(i) Exceed workplace targets for commute trip reduction under the
authority of chapter 70.94 RCW; accelerate uptake of renewable fuels
and electrification in transit and other vehicle fleets; promote
advanced-technology transportation networks that achieve greater
safety and energy efficiency; create electric vehicle charging or
hydrogen refueling infrastructure; and increase equitable transitoriented development; and (ii) implement biomethane or other gaseous
or liquid biofuels for transportation that result in reduced
greenhouse gas emissions;
(c) Energy efficiency and electrification for existing buildings,
including projects that improve energy efficiency and utilize demand
side management of electricity. A priority must be accorded to
projects
otherwise
eligible
and
not
receiving
funding
from
investments pursuant to part III of this act;

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(d) Agricultural, forestry, and other working lands emissions,
including projects and programs that achieve energy efficiency and
emission reductions in the agricultural sector including fertilizer
management, soil management, bioenergy, and biogas;
(e) Other technologies not explicitly covered by the program in
(a) through (d) of this subsection, such as proposals that diversify
opportunities for addressing peak loads such as storage and demand
response or advance market transformation, educate consumers, develop
new low carbon fuels such as renewable natural gas, increase
participation in programs, or that incentivize consumers to choose
low carbon alternatives;
(f) Low carbon architecture, including projects that develop,
promote, or result in buildings constructed of newly emerging
alternative building materials that result in a lower carbon
footprint in the built environment over the life cycle of the
building and component building materials; and
(g) Decarbonization of aviation fuels, including projects and
programs that accelerate the development of sustainable aviation fuel
production facilities; reduce the cost differential between low
carbon aviation fuels and fossil aviation fuels; promote greater
coordination between regional sustainable aviation fuel production
feedstock suppliers and producers; and increases sustainable aviation
fuel access and integration into existing fueling infrastructure and
pipelines.
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(8) Recipients of funding for projects must submit to the
department a progress report at a date or dates to be determined by
the department. The progress report must include the following in
addition to any other information the department may require:
(a) A summary of the investments made and technology or other
changes installed and deployed; and
(b) Verification of the avoided greenhouse gas emissions since
the date of the signed contract or the last report from a qualified
third party, as identified by the department of commerce. The
qualified third party must report on:
(i) Whether the project was built or implemented according to the
proposed design and any protocols or methodologies that were
referenced in the proposal, as approved in the funding contract;
(ii) A verification plan that details the methods used to
evaluate the project;

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(iii) Their review of the recipient's accounting of current and
projected emissions reductions;
(iv) The site visits conducted by verifiers; and
(v) Any additional data as the department identifies by rule to
sufficiently evaluate the project and to provide the highest level of
integrity and verification for the emissions reductions.
(9) The department must design project funding contracts, monitor
project implementation, and track contract performance, to actively
assist the project proponent in securing the expected project
outcomes. The department may suspend or terminate funding when
projects do not achieve projected reductions as provided in the
funding agreement and, in cases of gross misuse of funds, may require
a return of grant funding.
(10) Amounts must be appropriated to the department from the
account for the department's and other agencies' costs to administer
the projects and programs in this section.
(11) The department may adopt rules necessary to implement this
section.
(12) Public entities, including but not limited to state
agencies, municipal corporations, and federally recognized Indian
tribes, and private entities, both not-for-profit and for-profit, are
eligible to receive energy transformation account funds authorized by
this section.
(13) The department must develop an electronic database available
to the public to track projects and incentive programs receiving
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funding under this section. Projects will be ranked and sortable
based on quantitative performance metrics, including the avoided cost
of a ton of carbon dioxide.

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NEW SECTION.
Sec. 402.
SEQUESTRATION OF CARBON. (1) Funds
appropriated from the account created in section 401 of this act may
be used for the following carbon sequestration activities using
procedures and criteria developed by the appropriate state agencies,
in consultation with Indian tribes, universities, and stakeholders
with expertise on natural resources and carbon sequestration:
(a) Sequestration of carbon in aquatic marine and freshwater
natural resources. The recreation and conservation office with
technical assistance from the department of natural resources will
award grants for blue carbon projects, such as wetland and seagrass
restoration projects, that result in aquatic carbon sequestration
outcomes with priority given, when relevant, to projects that also
provide multiple benefits for coastal and wetland habitat restoration
and are consistent with the Puget Sound partnership action agenda
produced under chapter 90.71 RCW;

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(b) Sequestration of carbon in agricultural lands and soils. The
department of agriculture will award grants for projects to increase
soil sequestration and reduce emissions from the loss and disturbance
of soils and conversion of grassland and cropland soils to urban
development;
(c) Sequestration of carbon in terrestrial, riparian, and aquatic
habitats. The recreation and conservation office with technical
assistance from the department of natural resources will award grants
for projects and activities that protect and prevent the loss of
ecosystems that provide fish and wildlife habitat and carbon
sequestration values;
(d) The establishment of a working forest conservation grant
program developed and administered by the recreation and conservation
office with technical assistance from the department of natural
resources. The procedures and criteria must be developed in
consultation with Indian tribes and be designed to achieve additional
carbon absorption and sequestering values provided by Washington's
working forests. The procedures and criteria must also include, at a
minimum, a mechanism for ranking project applicants that allows for
the prioritization of projects that maximize the acres of working
forests
able
to
be
maintained
by
the
program,
considering
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scientifically based, landscape scale forest ecosystem carbon
sequestration calculations to determine the life-cycle carbon
sequestration capacity of the carbon stored in wood from the working
forest and including consideration of carbon sequestered in resulting
wood building materials. The working forest conservation program must
be designed to add to the carbon sequestration value in working
forests, prevent conversion of working forests to nonforestry uses,
avoid wood market leakage through a sustainable supply of timber,
ensure the ecological longevity of working forests, and provide longterm, sustainable jobs in rural communities.
(i) The priority uses of funds in the working forest conservation
program must be to:
(A) Fund the acquisition or transfer of development rights or
other property interests designed to limit or prevent the loss of
working
forests
and
their
associated
carbon
absorbing
and
sequestering value; and

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(B) Provide grants for the purchase of nonforested land for the
purpose of afforestation and establishing a working forest.
(ii) If the recreation and conservation office determines it is
necessary to capture a forest's carbon sequestration potential, the
program may include the acquisition of easements for forest land for
which there is a comparatively high probability that contiguous
forestland acreage will eventually be converted to nonforestry uses,
otherwise sold in smaller acreage parcels, or its timber stock
liquidated in the near term.
(iii) The recreation and conservation office may give preference
under this subsection (1)(d) to projects that are proposed by small
forest landowners as defined in RCW 76.09.450.
(2) The projects funded under this section must prioritize and
rank projects considering the achievement of carbon sequestration and
the comparative need of the applicants. Associated benefits that must
also be considered include improving landscape scale ecological
functions to protect water, soils, and provide improved fish and
wildlife habitat.

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NEW SECTION. Sec. 403. A new section is added to chapter 43.31
RCW to read as follows:
CLEAN TRANSPORTATION ACCOUNT. Annually, thirty percent of the
moneys from the energy transformation account under section 401 of
this act must be deposited by the state treasurer into the clean
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transportation account, hereby created as a subaccount in the
multimodal transportation account. Moneys in the account may only be
spent after appropriation. Of the funds in the account:
(1) Eighty-five percent of the moneys must be provided to offset
some or all of the state fiscal impacts of the following activities:
(a) The alternative fuel vehicle tax exemption pursuant to RCW
82.08.809 and 82.12.809;
(b) The alternative fuel commercial vehicle tax credit pursuant
to RCW 82.16.0496;
(c) Tax credits provided for biodiesel feedstock pursuant to RCW
82.08.0205 and 82.12.0205;
(d) Expenditures from the clean energy account under section 601,
chapter . . . (Substitute Senate Bill No. 6080), Laws of 2018; and
(e) Funding for projects that can demonstrate reduced singleoccupant vehicle trips and increased transit ridership, including
park and rides, increased transit service, regional mobility grants,
rural mobility grants, transit priority infrastructure projects,
transit pass subsidies, and the commute trip reduction act; and

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(2) Fifteen percent of the moneys to support the electrification
of transportation in rural communities pursuant to section 404 of
this act.
(3) The department must utilize the cumulative impact analysis in
section 502 of this act and ensure expenditures prioritize highly
impacted communities.

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NEW SECTION. Sec. 404. A new section is added to chapter 43.31
RCW to read as follows:
RURAL ELECTRIFICATION PROJECTS. (1) The department of commerce
must
administer
a
grant
program
designed
to
support
the
electrification of transportation in rural communities with a legacy
of nonfossil fuel generated electric power. Eligible grant recipients
may be public entities, including municipal corporations, school
districts,
public
transit
benefit
areas,
and
consumer-owned
utilities; federally recognized Indian tribes; and private entities,
both not-for-profit and for-profit.
(2) Grants must be awarded in counties with a population of less
than two hundred fifty thousand based on 2010 census data served by a
consumer-owned utility with an electric resources portfolio that is
composed of at least ninety percent renewable resources as defined in
RCW 19.285.030 as existing on the effective date of this section, and
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electrification projects must be served by that consumer-owned
utility. In addition, the department must utilize the cumulative
impact analysis in section 502 of this act and ensure expenditures
prioritize highly impacted communities.
(3) Moneys received by an entity pursuant to this subsection must
be spent on the development and implementation of the following
greenhouse gas reducing activities in their respective county:
(a) The electrification of transportation in all industry
sectors; to include but not be limited to the conversion of passenger
and commercial vehicles, short-haul agricultural, private and public
fleets, including transit fleets, and school buses.
(b) Programs or investments to support energy efficiency and
conservation measures, including but not limited to projects or
research
designed
to
increase
the
efficiency
and
production
capability of hydroelectric project generation, demand response and
enhanced energy efficiency, and measures beyond the conservation
targets required in RCW 19.285.040(1).
(4) The department of commerce must set potential annual award
amounts for each eligible county based on available funds. Potential
award amounts must be set at an amount equal to the percentage of the
population of each eligible county in proportion to the population of
all eligible counties, based on 2010 census data.
(5) The department must prioritize applications which demonstrate
strong community partnerships and leverage the participation and
investment of private businesses. A consumer-owned energy utility
receiving funds must follow the process and procedures of a clean
energy investment plan as provided in section 304 of this act
concerning expenditures, monitoring, auditing, and oversight for
consumer-owned
utilities.
Receiving
moneys
pursuant
to
this
subsection does not preclude submitting proposals or receiving
additional grants under the energy transformation account in section
401 of this act.
(6) Moneys not expended according to potential awards pursuant to
subsection (4) of this section must first be made available to other
eligible entities on a competitive grant basis. Any remaining funds
must be transferred to the energy transformation account created in
section 401 of this act.
NEW SECTION. Sec. 405.
RCW to read as follows:

A new section is added to chapter 43.31
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IMPLEMENTATION PLAN FOR THE ENERGY TRANSFORMATION ACCOUNT. (1)
The department must, by June 30, 2019, develop an implementation plan
for the investment of the energy transformation account. This
planning and preparation must include:
(a) Analysis, to be implemented in partnership with the
Washington State University extension energy program, to further
determine overall carbon pollution abatement opportunities in
Washington. The analysis may include the development of a marginal
abatement cost curve for Washington that may be used by the
department to recommend appropriate award amounts per metric ton of
carbon dioxide equivalent of greenhouse gas emissions reductions for
a
variety
of
clean
energy,
efficiency,
transportation
electrification, and other project portfolio types. By March 1, 2021,
and by March 1st of each odd-numbered year thereafter, the Washington
State University extension energy program and the department of
commerce must update the recommended amounts per metric ton of
emissions reductions for the following two-year period;
(b) Preparation of robust monitoring and evaluation systems to
ensure that the effects and cost-effectiveness of grants are
rigorously assessed and that such assessments are used over time to
inform and strengthen the grant-making process;
(c) Assessment and development of efficient and transparent
grant-making strategies designed to ensure program objectives are met
and taxpayer interests are protected including, but not limited to,
leveraging investments through partnerships, reverse auctions, and
pay-for-performance mechanisms in which funding is released upon
emissions reductions verifications and the development of incentive
programs;
(d) Outreach and education to engage eligible recipients for
grant funding and to prepare them to develop and submit grant
applications for priority projects;
(e) Utilization of the cumulative impact analysis in section 502
of this act to ensure expenditures prioritize highly impacted
communities; and
(f) Assessment of the relationship between priority areas of the
energy transformation account and the carbon reduction policies and
plans being made by key sectors in the state, including the state's
aviation sector. In the last five years, aviation fuel consumption in
Washington has grown more than twenty percent, and is projected to
continue to grow in step with population growth and economic
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development. Airport operators in the state have set aggressive goals
to reduce the carbon emissions associated with their operations,
while also helping to support development of a sustainable fuels
supply chain in a manner that would support rural economic
development. The department should address these activities in its
implementation plan, and seek to ensure that the state's investments
through the energy transformation account support a sustainable
future for the aviation sector in Washington state.
(2) The department must implement a performance management
system, complete an independent audit every two years, and report the
results of each assessment to the joint committee on climate programs
oversight created in section 801 of this act and to the appropriate
committees of the legislature.

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Part V
Transition Assistance

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NEW SECTION.
Sec. 501.
TRANSITION ASSISTANCE ACCOUNT. (1) The
legislature finds that increased energy expenses will have a
disproportionate impact upon the finances of low-income households
engaging in life-sustaining activities including but not limited to
heating, cooling, and transportation. The legislature therefore
creates the transition assistance account to provide a financially
equitable transition to a clean energy economy by providing economic,
financial, and public health supports, programs, services, and
assistance to low-income households. Additionally, in providing
mitigation of the impact of carbon pricing on those most impacted,
the legislature intends to provide general property tax relief in
combination with this legislation.
(2) The transition assistance account is created in the state
treasury. The account must receive moneys distributed to the account
from the carbon pollution reduction account created in section 107 of
this act as well as other moneys directed to the account by the
legislature. Moneys in the account may only be used for the purposes
described in this section and sections 503 and 504 of this act, and
may only be spent after appropriation.

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NEW SECTION.
Sec. 502.
(1) By December 31, 2018, for the
purposes of mitigating harm from climate change and dangerous air
pollutants that impact human health or the environment and are
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regulated under the federal clean air act or chapter 70.94 RCW, the
department of health must conduct or adopt a cumulative impact
analysis to designate the communities highly impacted by fossil fuel
pollution and climate change in Washington.
(2) The cumulative impact analysis must map, rank, and designate
a percentile of census tracts as highly impacted communities based on
an index of criteria, including:
(a) Vulnerable population characteristics including, but not
limited to, socioeconomic factors, like unemployment, housing and
transportation burden, and linguistic isolation, and sensitivity,
such as low birth weight and hospitalizations;
(b) Environmental burden characteristics including, but not
limited to, exposures to air, water, and toxics and environmental
effects such as toxic sites, hazardous waste, and climate impacts;
and

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(c) Census tracts that are wholly or partly "Indian country," as
that term is defined in 25 U.S.C. Sec. 1151, in effect on the
effective date of this section.
(3) The department of health must conduct meaningful consultation
with vulnerable communities in Washington, including Indian tribes,
and consult the University of Washington department of environmental
and occupational health sciences in developing the analysis, or adopt
an analysis that included this consultation.
(4) The cumulative impact analysis may integrate with and build
upon other population tracking resources used by the department of
health and analysis done by the University of Washington department
of environmental and occupational health sciences.
(5) By March 1, 2023, and every two years thereafter, the
department of health, under advisement from the economic and
environmental justice oversight panel created under section 805 of
this act, must update the designation of highly impacted communities
pursuant to this section. By March 1, 2025, and every four years
thereafter, the department of health must review and consider
revisions to the cumulative impacts methodology for designating
highly impacted communities to reflect best practices.

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NEW
INCOME
created
provide

SECTION.
Sec. 503.
ENERGY TRANSITION ASSISTANCE TO LOWHOUSEHOLDS. (1) Using funds appropriated from the account
in section 501 of this act, the department of commerce must
for an equitable transition to a clean energy economy by
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providing funding to assist low-income households during that
transition
with
increased
energy
prices
that
will
have
a
disproportionate impact upon such households and to provide access to
clean energy and low carbon housing, transportation options, and
technologies to those with greater barriers and where pollution is
concentrated. For the purposes of this section, the term "low income"
means at or below eighty percent of area median income or two hundred
percent of the federal poverty level.
(2) Funding must be prioritized to mitigate any additional energy
and transportation costs borne by low-income persons as a direct
result of this act and not fully mitigated by utilities plans in
sections 201 through 306 of this act and the reduced vehicle fees
under sections 506 through 508 of this act. Funding must also be
prioritized to provide assistance to displaced fossil fuel-related
industries workers as provided under section 504 of this act.
Remaining funds must be used to reduce carbon pollution and reduce
vulnerable population characteristics or environmental burdens in
highly impacted communities designated by the department of health
under section 502 of this act.

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(3) Transition assistance under this chapter may include direct
financial assistance in the form of a grant, subsidy, rebate, or
other similar financial benefit or product including:
(a) Through expansion of or increases to existing programs and
authorizations administered by the department of social and health
services;
(b) Expansion or increases to existing regional community health
programs administered by the health care authority; or
(c) New programs that efficiently enable direct financial
assistance.
(4) The assistance may include but is not limited to programs
such
as
energy
bill
pay
subsidies,
energy
efficiency
and
weatherization assistance and services, public health programs and
services, affordable transportation services and options, affordable
housing, improved community services, and reductions in vehicle fees
as provided in sections 506, 507, and 508 of this act.
(5) The department must form a transition assistance advisory
group comprised of appropriate state agencies, local governments,
Indian tribes, social service agencies, workers, representatives of
vulnerable populations in highly impacted communities, and low-income
and community advocacy organizations to develop an implementation
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plan that selects the most efficient and financially equitable
delivery of transition assistance to low-income households across the
state. The department must consult with and take into strong
consideration the recommendations of the advisory group, as well as
the views of the economic and environmental justice oversight panel
created under section 805 of this act. The advisory group may consist
of a subcommittee of the panel created under section 805 of this act.
The
implementation
plan
together
with
recommendations
for
appropriations and recommended legislative action must be provided to
the joint committee on climate programs oversight created in section
801 of this act and to the governor and appropriate committees of the
senate and house of representatives not later than December 31, 2018.

13

NEW SECTION.
DISPLACED WORKERS.

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Sec.

504.

ENERGY

TRANSITION

ASSISTANCE

TO

(1) Using funds appropriated from the account
created in section 501 of this act, the department of commerce, with
the assistance of the employment security department and in
consultation
with
fossil
fuel-related
businesses,
labor
organizations, and the panel created in section 805 of this act, must
develop a program and provide assistance to eligible displaced fossil
fuel-related industries workers.
(2) The assistance provided for in subsection (1) of this section
may include, but is not limited to:
(a) Wage, pension, and health benefits replacement for up to two
years; the replacement assistance must be based on the average of the
worker's previous two years' wages received, pension contributions
made by the employer for the worker's benefit, and the cost to the
employer of the worker's health insurance benefits while the worker
was working in the fossil fuel-related industry;
(b) Notwithstanding the benefits in (a) of this subsection,
displaced workers with more than five years of employment in the
industry are eligible for up to two years of wage insurance;
(c) For a worker who is within five years of eligibility for a
union pension or social security, the period of time the replacement
assistance described in (a) of this subsection may be paid continues
until the worker is eligible for the union pension or full social
security benefits, whichever is later;
(d) Training and education costs not to exceed the average cost
of two years tuition and fees at Washington state's community and
technical colleges;
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(e) Peer counseling services;
(f) Enhanced job placement services; and
(g) Relocation expenses and assistance.
(3) The definitions in this subsection apply throughout this
section unless the context clearly requires otherwise.
(a) "Eligible displaced fossil fuel-related industries worker"
means a fossil fuel-related industries worker who:
(i)(A) Has been terminated or received notice of termination from
employment and is unlikely to return to employment in the
individual's principal occupation or previous industry because of a
diminishing demand for the individual's skills in that occupation or
industry; or
(B) Is self-employed and has been displaced from the individual's
business because of the diminishing demand for the business'
services; and

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(ii) Was working at a fossil fuel-related industries facility
when at least one of the following situations occurs with respect to
the facility:
(A) Any permanent fossil fuel facility or major portion thereof
is permanently closed or curtailed, or closed or curtailed for more
than six months;
(B) A facility reduces production by more than three percent
relative to its average production over the previous three years; or
(C) A facility's production is replaced by an increase in fossil
fuels imported into the state from foreign or domestic sources.
(b) "Fossil fuel-related industries" means petroleum refining,
natural gas distribution, oil and gas pipeline construction and
transportation, petroleum bulk stations and terminals, and fossil
fuel-based electric power generation in Washington state.
(c) "Fossil fuel-related industries worker" means a full-time
worker who is covered under a collective bargaining agreement, and is
a nonsupervisory worker; or is a full-time independent contractor
working in the fossil fuel-related industries.

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NEW SECTION.
Sec. 505.
EDUCATION PROGRAMS. Using funds
appropriated from the account created in section 501 of this act, the
office of the superintendent of public instruction may provide
education programs and teacher professional development opportunities
at public schools to expand awareness of and increase preparedness
for the environmental, social, and economic impacts of climate change
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and strategies to reduce carbon pollution, and to prepare all
students for employment opportunities in the clean energy economy.

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NEW SECTION.
Sec. 506.
REPORTING. The department of commerce
must provide reports on assistance provided to low-income persons
under section 503 of this act and to displaced fossil fuel-related
industry workers under section 504 of this act to the joint committee
on climate programs oversight created under section 801 of this act
at such intervals as the committee requests.

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Sec. 507. RCW 46.17.005 and 2010 c 161 s 501 are each amended to
read as follows:
(1)(a) A person who applies for a vehicle registration or for any
other right to operate a vehicle on the highways of this state

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((shall)) must pay a three dollar filing fee in addition to any other
fees and taxes required by law.
(b) Subsection (1)(a) of this section does not apply to a person
with an income at or below two hundred percent of the federal poverty
line. On the last day of January, April, July, and October of each
year, the state treasurer, based upon information provided by the
department, must transfer from the transition assistance account
created in section 501 of this act for distribution under RCW
46.68.400 a sum equal to the dollar amount that would otherwise have
been distributed under subsection (3) of this section during the
prior calendar quarter but for the exemption provided in this
subsection (1)(b).
(2) A person who applies for a certificate of title ((shall))
must pay a four dollar filing fee in addition to any other fees and
taxes required by law.
(3) The filing fees established in this section must be
distributed under RCW 46.68.400.

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Sec. 508.
RCW 46.17.350 and 2014 c 30 s 2 are each amended to
read as follows:
(1) Except as provided in subsection (2) of this section, before
accepting an application for a vehicle registration, the department,
county auditor or other agent, or subagent appointed by the director
((shall)) must require the applicant, unless specifically exempt, to
pay the following vehicle license fee by vehicle type:
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VEHICLE TYPE

3
4

(a) Auto stage, six seats or

5

INITIAL RENEWAL

DISTRIBUTED

FEE

FEE

UNDER

$ 30.00

$ 30.00

RCW 46.68.030

(b) Camper

$ 4.90

$ 3.50

RCW 46.68.030

6

(c) Commercial trailer

$ 34.00

$ 30.00

RCW 46.68.035

7
8

(d) For hire vehicle, six

$ 30.00

$ 30.00

RCW 46.68.030

$ 30.00

$ 30.00

RCW 46.68.030

less

seats or less

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(e) Mobile home (if

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(f) Moped

$ 30.00

$ 30.00

RCW 46.68.030

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(g) Motor home

$ 30.00

$ 30.00

RCW 46.68.030

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(h) Motorcycle

$ 30.00

$ 30.00

RCW 46.68.030

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(i) Off-road vehicle

$ 18.00

$ 18.00

RCW 46.68.045

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(j) Passenger car

$ 30.00

$ 30.00

RCW 46.68.030

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(k) Private use single-axle

$ 15.00

$ 15.00

RCW 46.68.035

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(l) Snowmobile

$ 50.00

$ 50.00

RCW 46.68.350

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(m) Snowmobile, vintage

$ 12.00

$ 12.00

RCW 46.68.350

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(n) Sport utility vehicle

$ 30.00

$ 30.00

RCW 46.68.030

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(o) Tow truck

$ 30.00

$ 30.00

RCW 46.68.030

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(p) Trailer, over 2000

$ 30.00

$ 30.00

RCW 46.68.030

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(q) Travel trailer

$ 30.00

$ 30.00

RCW 46.68.030

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(r) Wheeled all-terrain

$ 12.00

$ 12.00

RCW 46.09.540

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(s) Wheeled all-terrain

$ 18.00

$ 18.00

RCW 46.09.510

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registered)

trailer

pounds

vehicle, on-road use

vehicle, off-road use

(2) Subsection (1)(a), (d), (e), (h), (j), (n), and (o) of this
section do not apply to an applicant with an income at or below two
hundred percent of the federal poverty line. On the last day of
January, April, July, and October of each year, the state treasurer,
based upon information provided by the department, must transfer from
the transition assistance account created in section 501 of this act
for distribution under RCW 46.68.030 a sum equal to the dollar amount
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that would otherwise have been distributed under subsection (1) of
this section during the prior calendar quarter but for the exemption
provided in this subsection (2).

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(3) The vehicle license fee required in subsection (1) of this
section is in addition to the filing fee required under RCW
46.17.005, and any other fee or tax required by law.

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Sec. 509. RCW 46.17.365 and 2015 3rd sp.s. c 44 s 202 are each
amended to read as follows:
(1) Except as provided in subsection (2) of this section, a
person applying for a motor vehicle registration and paying the
vehicle license fee required in RCW 46.17.350(1) (a), (d), (e), (h),
(j), (n), and (o) ((shall)) must pay a motor vehicle weight fee in
addition to all other fees and taxes required by law.

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(a) For vehicle registrations that are due or become due before
July 1, 2016, the motor vehicle weight fee:
(i) Must be based on the motor vehicle scale weight;
(ii) Is the difference determined by subtracting the vehicle
license fee required in RCW 46.17.350 from the license fee in
Schedule B of RCW 46.17.355, plus two dollars; and
(iii) Must be distributed under RCW 46.68.415.
(b) For vehicle registrations that are due or become due on or
after July 1, 2016, the motor vehicle weight fee:
(i) Must be based on the motor vehicle scale weight as follows:

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WEIGHT

FEE

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4,000 pounds

$ 25.00

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6,000 pounds

$ 45.00

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8,000 pounds

$ 65.00

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16,000 pounds and over

$ 72.00;

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(ii) If the resultant motor vehicle scale weight is not listed in
the table provided in (b)(i) of this subsection, must be increased to
the next highest weight; and
(iii) Must be distributed under RCW 46.68.415 unless prior to
July 1, 2023, the actions described in (b)(iii)(A) or (B) of this
subsection occur, in which case the portion of the revenue that is
the result of the fee increased in this subsection must be
distributed to the connecting Washington account created under RCW
46.68.395.
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(A) Any state agency files a notice of rule making under chapter
34.05 RCW for a rule regarding a fuel standard based upon or defined
by the carbon intensity of fuel, including a low carbon fuel standard
or clean fuel standard.
(B) Any state agency otherwise enacts, adopts, orders, or in any
way implements a fuel standard based upon or defined by the carbon
intensity of fuel, including a low carbon fuel standard or clean fuel
standard.
(C) Nothing in this subsection acknowledges, establishes, or
creates legal authority for the department of ecology or any other
state agency to enact, adopt, order, or in any way implement a fuel
standard based upon or defined by the carbon intensity of fuel,
including a low carbon fuel standard or clean fuel standard.
(2) Subsection (1) of this section does not apply to a person

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with an income at or below two hundred percent of the federal poverty
line, but only if the person's motor vehicle falls under the 4,000
pounds or 6,000 pounds fee schedule in subsection (1)(b)(i) of this
section. On the last day of January, April, July, and October of each
year, the state treasurer, based upon information provided by the
department, must transfer from the transition assistance account
created in section 501 of this act for distribution under subsection
(1)(b)(iii) of this section a sum equal to the dollar amount that
would otherwise have been distributed under subsection (1)(b)(iii) of
this section during the prior calendar quarter but for the exemption
provided in this subsection (2).
(3) A person applying for a motor home vehicle registration
((shall)) must, in lieu of the motor vehicle weight fee required in
subsection (1) of this section, pay a motor home vehicle weight fee
of seventy-five dollars in addition to all other fees and taxes
required by law. The motor home vehicle weight fee must be
distributed under RCW 46.68.415.
(((3))) (4) Beginning July 1, 2022, in addition to the motor
vehicle weight fee as provided in subsection (1) of this section, the
department, county auditor or other agent, or subagent appointed by
the director must require an applicant to pay an additional weight
fee of ten dollars, which must be distributed to the multimodal
transportation account under RCW 47.66.070 unless prior to July 1,
2023, the actions described in (a) or (b) of this subsection occur,
in which case the portion of the revenue that is the result of the
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fee increased in this subsection must be distributed to the
connecting Washington account created under RCW 46.68.395.
(a) Any state agency files a notice of rule making under chapter
34.05 RCW for a rule regarding a fuel standard based upon or defined
by the carbon intensity of fuel, including a low carbon fuel standard
or clean fuel standard.
(b) Any state agency otherwise enacts, adopts, orders, or in any
way implements a fuel standard based upon or defined by the carbon
intensity of fuel, including a low carbon fuel standard or clean fuel
standard.
(c) Nothing in this subsection acknowledges, establishes, or
creates legal authority for the department of ecology or any other
state agency to enact, adopt, order, or in any way implement a fuel
standard based upon or defined by the carbon intensity of fuel,
including a low carbon fuel standard or clean fuel standard.

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(((4))) (5) The department ((shall)) must:
(a) Rely on motor vehicle empty scale weights provided by vehicle
manufacturers, or other sources defined by the department, to
determine the weight of each motor vehicle; and
(b) Adopt rules for determining weight for vehicles without
manufacturer empty scale weights.

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Part VI
Climate Resilience

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NEW SECTION.
Sec. 601.
WATER AND NATURAL RESOURCES RESILIENCE
ACCOUNT. (1) The water and natural resources resilience account is
created in the state treasury. The account must receive moneys
distributed to the account from the carbon pollution reduction
account created in section 107 of this act as well as other moneys
directed to the account by the legislature. Moneys in the account may
only be used for the purposes described in sections 602 and 603 of
this act. Within this account on a biennial basis, fifty percent of
the funding appropriated from the account must be provided for the
purposes set forth in section 602 of this act. The remaining moneys
must be deposited to two subaccounts hereby created in the state
treasury as follows:
(a) Twenty-five percent to the fire prevention and suppression
account; and
(b) Seventy-five percent to the forest resilience account.
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(2) Moneys in the account may not be used for projects that would
violate tribal rights or result in long-term damage to critical
habitat or ecological functions. Instead, investments under this
account must result in long-term environmental benefit and increased
resiliency to the impacts of climate change.
(3) The departments of ecology and natural resources must prepare
such progress reports as required by the joint committee on climate
programs oversight created under section 801 of this act, and prepare
information as necessary to inform the government-to-government
consultation with Indian tribes required under section 802 of this
act.

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NEW SECTION.
Sec. 602.
WATER-RELATED PROJECTS AND ACTIVITIES.
(1) From funds appropriated by the legislature from the account
created in section 601 of this act, the department of ecology may
provide grants and loans for water-related projects and activities
described in this section. The department may not sign contracts or
financially obligate funds from the account created in section 601 of
this act before the legislature has appropriated funds for a specific
list of project and activities. The department must develop an
implementation plan for such expenditures using extensive public
involvement and considering the peer-reviewed science on climate
risks, resilience, and risk management. The department must consult
with appropriate state agencies, Indian tribes, and the climate
impacts group at the University of Washington in developing the
implementation plan and funding criteria. On a biennial basis, a
minimum of ten percent of the expenditures under this section must be
for projects and activities that directly benefit highly impacted
communities designated under section 502 of this act.
(2) The department may fund projects and activities that include
but are not limited to:
(a) Project-specific planning, design, and construction projects
that reduce stormwater impacts from existing infrastructure and
development. Grants must be made available to public and private
entities for projects that reduce stormwater impacts from existing
infrastructure and development, where there is a substantial water
quality benefit and the project is not required by court order or
required as a condition of a local or state permit;
(b) Reducing the risk of flooding by restoring natural floodplain
ecological functions, protecting against damage caused by floods, and
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protecting or restoring naturally functioning areas where floods
occur, including modeling of projected flood risks;
(c) Improving the availability and reliability of water supplies
for instream and out-of-stream uses, including groundwater mapping
and modeling;
(d) Construction by the department of transportation of fish
barrier correction projects at state highways required by the
injunction entered in United States v. Washington (Civ No CV9213RSM).
Where the department determines that the amounts appropriated exceed
the current biennial appropriation necessary to meet the overall
timeline for compliance with the injunction, the department may
provide funding for fish barrier correction projects on state or
local roadways, with the highest priority for funding to be accorded
to projects with the greatest restoration of fish habitat access. In
making awards for projects not subject to the injunction, the
department must obtain the recommendations of the fish passage
barrier removal board created in RCW 77.95.160;
(e) Projects to prepare for sea level rise and to restore and
protect estuaries, fisheries, marine shoreline and inland habitats,
including anadromous fish passage and habitat projects with a fair
allocation of funding to all geographic regions of the state, and
including small forest landowner fish passage barrier projects
authorized under RCW 76.09.420; and
(f) Increasing the ability to adapt to and remediate the impacts
of ocean acidification. This may include the activities of the
Kenneth K. Chew center for shellfish research and restoration. The
department must consult with the recreation and conservation office,
and the climate impacts group and ocean acidification center at the
University of Washington in developing the implementation for
investments under this subsection (2)(f).
(3) The department must provide information about the projects
when the government-to-government consultation with Indian tribes is
conducted under section 802 of this act.
(4) The department must adopt rigorous performance-based criteria
and objectives for funding decisions, and incorporate project
implementation monitoring and evaluation requirements into the
projects. Examples of numeric performance criteria include the
quantity of offstream water supplies made available or more secure
during drought, the number of rivers and streams meeting minimum flow
standards, miles of river and stream habitat made available through
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passage barrier removals, and the number of municipal stormwater
discharges meeting state and federal standards.
(5) The department must utilize the cumulative impact analysis in
section 502 of this act when developing the implementation plan and
prioritize funding and investments to benefit highly impacted
communities.
(6) The department must require annual progress reports by all
recipients of funding under this section, and provide summaries of
those reports and assessment of achievement of the performance-based
criteria and objectives to the joint committee on climate programs
oversight created under section 801 of this act at such intervals as
the committee requests.
(7) The department must consult with the climate impacts group at
the University of Washington, establish a citizen advisory group to
provide input on the development of project funding criteria and
project funding decisions, and must seek input from the panel created
under section 805 of this act.

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NEW SECTION.
Sec. 603.
NATURAL RESOURCES-RELATED PROJECTS AND
ACTIVITIES. (1) From funds appropriated by the legislature from the
account created in section 601 of this act, the department of natural
resources may undertake or contract for, and provide grants and loans
for natural resources-related projects and activities described in
this section. The department must develop an implementation plan for
such expenditures using extensive public involvement and considering
the best available science on climate risks, resilience, and risk
management. The department must consult with appropriate state
agencies, Indian tribes, and the climate impacts group at the
University of Washington in developing the implementation plan and
funding criteria.
(2)(a) Funds appropriated by the legislature from the forest
resilience account must be used to improve forest and natural lands
health and resilience to the impacts of climate change. The projects
and activities that may be funded include but are not limited to
thinning or prescribed fires, with priority given to projects
prioritized subject to RCW 76.06.200 and 79.10.530 across any
combination of voluntarily participating local, state, federal,
tribal, and private ownerships that accommodates the management
objectives of the landowner.
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(b) The department of natural resources must consider the
benefits of supporting cross-laminated timber and other mass timber
technologies in its funding decisions and attempt to prioritize
projects that help develop mass timber investment opportunities.
(c) The department must utilize the forest health advisory
committee established in RCW 76.06.200 for input on forest health
projects funded under this section.
(d) Nothing in this section provides a basis for regulations or
nonvoluntary participation.
(3) The department of natural resources in partnership with the
board for community and technical colleges will develop a center of
excellence to research and promote renewable forest products and
research to improve forest health and reduce fire risk.
(4) Funds appropriated by the legislature from the fire
prevention and suppression account may be used to undertake agency
activities and provide grants that go beyond existing state efforts
for:

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(a) Wildland fire prevention;
(b) Projects and activities that reduce the risk of wildland
fires to communities and improve their ability to adapt to wildfires;
and
(c) Supporting fire prevention, suppression, and recovery for
tribal communities impacted and potentially impacted by wildfires.
(5) The department of natural resources must adopt rigorous
performance-based criteria and objectives for funding decisions, and
incorporate
project
implementation
monitoring
and
evaluation
requirements into projects funded under this section other than to
the state board for community and technical colleges. Examples of
numeric performance criteria include the number of acres thinned or
otherwise treated to improve forest health, acres of forest for which
wildland fire prevention measures have been implemented, and the
number of communities in the wildland urban interface for which
wildfire resilience and defense measures have been implemented.
(6) The department of natural resources must utilize the
cumulative impact analysis in section 502 of this act and ensure
expenditures prioritize highly impacted communities.
(7) The department of natural resources must require annual
progress reports by all recipients of funding under this section
other than the state board for community and technical colleges, and
must also periodically summarize the department's activities. It must
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submit those reports and an assessment of the achievement of the
performance-based criteria and objectives to the joint committee on
climate programs oversight created under section 801 of this act at
such intervals as the committee requests.
(8) The department of natural resources may not provide funding
to projects that would violate tribal rights or result in significant
long-term damage to critical habitat or ecological functions. The
department must provide information about the projects when the
government-to-government consultation with Indian tribes is conducted
under section 802 of this act.
(9) The department of natural resources must consult with the
climate impacts group at the University of Washington and seek input
from the panel created under section 805 of this act in the
development of the funding program and in the review and selection of
projects to be funded under this section. The department may also
obtain input from existing advisory groups, including the forest
health and wildland fire advisory committees created under RCW

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76.06.200 and 76.04.179.

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Part VII
Rural Economic Development Account

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NEW SECTION. Sec. 701. A new section is added to chapter 43.31
RCW to read as follows:
RURAL ECONOMIC DEVELOPMENT ACCOUNT. (1) The rural economic
development account is created in the state treasury. The account
must receive moneys distributed to the account from the carbon
pollution reduction account created in section 107 of this act as
well as other moneys directed to the account by the legislature.
Moneys in the account may only be used for the purposes described in
this section, and may only be spent after appropriation.
(2) Using funds appropriated from the account, the department
must provide assistance to rural communities. The assistance may
include support for low carbon innovation and entrepreneurship,
providing for increased affordable transportation options and
services, partnerships and investments that enhance rural economic
and natural resource resilience related to reducing greenhouse gas
emissions, and encouraging telecommuting by funding the expansion of
broadband and telecommunication services as provided under section
702 of this act.
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(3) The department must develop a grant application process to
competitively
select
small
businesses
as
defined
under
RCW
19.85.020(3) to receive grant awards to assist with projects eligible
for funding under the energy transformation account in section 401 of
this act. The department must utilize the cumulative impact analysis
in section 502 of this act and ensure expenditures prioritize highly
impacted communities and consult with the economic and environmental
justice oversight panel in section 805 of this act when designing and
awarding grants under this subsection.
(4)(a) The state board for community and technical colleges must
use funds deposited into this account to establish two clean energy
centers for excellence in the state community and technical college
system located in rural counties, with one center each devoted to:
(i) Renewable energy integration and generation; and

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(ii) Smart grid technology and the next generation of hydropower
resources.
(b) The centers must work with industry to ensure their program
offerings are aligned with local employer needs. In addition, the
state's energy research institutions must facilitate research and
development, help attract investment in clean energy, and promote
clean energy jobs across a range of sectors.
(5) The department may adopt rules necessary to implement this
section.

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NEW SECTION. Sec. 702. RURAL BROADBAND. The legislature intends
that the sum of thirty million dollars, or as much thereof as may be
necessary, be appropriated for the fiscal year ending June 30, 2020,
from the rural economic development account to the department of
commerce for the purpose of providing local governments, communities,
public and private entities, federally recognized tribes, and
consumer-owned and investor-owned energy utilities to develop
strategies and plans for deployment of broadband infrastructure and
access to broadband services to unserved and underserved areas of the
state.

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Part VIII
Oversight of Climate Programs

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NEW SECTION.
Sec. 801.
JOINT COMMITTEE ON CLIMATE PROGRAMS
OVERSIGHT. (1) The joint committee on climate programs oversight is
created. The committee must consist of:
(a) The governor or the governor's designee;
(b) The commissioner of public lands or the commissioner's
designee;
(c) The state auditor or the auditor's designee;
(d) Two members of the senate, appointed by the president of the
senate, one from each major political party; and
(e) Two members of the house of representatives, appointed by the
speaker, one from each major political party.
(2) The committee must select a chair from among its members. The
committee must have staff support from the senate and house of
representatives. All state agencies must provide information and
assistance as requested by the committee in order to perform its
responsibilities.

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(3) The committee is responsible for ongoing review of the
implementation of the carbon pollution tax and funding from the
revenues of that tax to ensure the fairest, most efficient, and
timely achievement of objectives in this act regarding greenhouse gas
emissions reductions, transition assistance, jobs development, and
climate resilience. The committee's responsibilities include but are
not limited to:
(a) Reviewing the report by the department of commerce under
section 105 of this act;
(b) Reviewing the plans for implementing the funding programs
authorized in sections 401, 501, 601, and 701 of this act;
(c) Reviewing the criteria for funding allocations and project
award decisions;
(d) Reviewing project and activity funding decisions as well as
summary reports and information regarding implementing projects;
(e) Reviewing compliance of consultation requirements and
providing recommendations for how implementation can come into
compliance; and
(f) Providing recommendations for standards by which to measure
emissions reductions outcomes from investments of funds under
sections 205 and 304 of this act.
(4) The committee may contract for independent evaluative
expertise in its review of the performance of the carbon pollution
tax and funding programs in meeting this act's objectives regarding
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greenhouse gas emissions reductions, transition assistance, job
creation, rural economic development, and climate resilience.
(5) Beginning July 1, 2019, the committee must meet at least
quarterly.
(6) The committee has no appropriation authority.

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NEW SECTION.
Sec. 802.
GOVERNMENT-TO-GOVERNMENT CONSULTATION.
To ensure mutual respect for the rights, interests, and obligations
of each sovereign Indian tribe, the governor must develop a framework
for
government-to-government
consultation
with
Indian
tribes
consistent with the centennial accord, chapter 43.376 RCW, and
applicable tribal policies. The consultation must ensure meaningful
tribal involvement in the implementation of this act, including rule
making, programmatic, and project level decisions. Within this
framework, the governor at least once each year must invite all
federally recognized Indian tribes with reserved rights within the
geographical boundaries of the state to meet in government-togovernment consultation. The governor must also invite the joint
committee on climate programs oversight to the meeting. The purpose
of the meeting is to share information, views, tribal knowledge and
science, and recommendations regarding the progress of implementing
the carbon pollution tax and providing funding from revenues of the
tax to reduce emissions, to strengthen climate resilience in
communities throughout the state, to strengthen climate resilience in
the water and natural resources shared by all citizens in the state,
and to ensure a just transition to a clean energy economy.

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NEW SECTION. Sec. 803. INDIAN TRIBE CONSULTATION. (1) In order
to achieve the goals set forth in this act, any state agency
receiving carbon tax revenue must consult with Indian tribes on all
decisions that may affect Indian tribes' rights and interests in
their tribal lands. Such consultation must occur pursuant to chapter
43.376 RCW and must be independent of any public participation
process required by state law, or by a state agency, and regardless
of whether the agency receives a request for consultation from an
Indian tribe. A consultation framework must be developed in
coordination with tribal governments that includes best practices,
protocols for communication, and collaboration with Indian tribes.
(2) No project that impacts tribal lands may be funded prior to
meaningful consultation with affected Indian tribes. For projects
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that directly impact tribal lands, the goal of the consultation
process is to obtain free, prior and informed consent for the
project, and at the end of such consultation, the Indian tribe's
government will provide the community climate advisory board created
in section 804 of this act with a written resolution providing
consent or withholding consent. If any project that impacts tribal
lands is funded under this act without consultation with Indian
tribes, an affected Indian tribe may request that all further action
on the project cease until consultation with any directly impacted
Indian tribe is completed.

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NEW SECTION.
Sec. 804.
COMMUNITY CLIMATE ADVISORY BOARD. (1)
The community climate advisory board is established within the
executive office of the governor. The purpose of the board is to
oversee implementation of this act toward reducing pollution and
facilitating the transition to a clean energy economy equitably,
sustainably, and efficiently.

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(2)(a) The board must have twenty-one voting members. Voting
members of the board must be appointed by the governor. The board
must include, at a minimum, representatives from tribal, local
government, business, environmental, labor, land conservation, and
public health organizations. At least one-third of the appointees
must be members of the panel established in section 805 of this act.
The board may also appoint representatives from public agencies as
nonvoting board members.
(b) The governor must appoint members of the board by January 1,
2019. Any member appointed by the governor may be removed by the
governor for cause. The governor must appoint board members to
achieve a board membership with balanced representation by geography,
gender, and ethnicity.
(3) The board has the following powers and duties:
(a) Providing advice and recommendations to the governor, the
legislature, the oversight committee created in section 801 of this
act, and state agencies regarding the implementation of this act,
including evaluating biannually the tax imposed pursuant to section
102 of this act;
(b) Monitoring the implementation of this act to ensure it
furthers the intent and purposes of this act and does not lead to
inequitable environmental or economic impacts, including but not
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limited to leakage of emissions related to energy-intensive tradeexposed manufacturing facilities; and
(c) Reporting periodically to the legislature, the governor, and
the oversight committee created in section 801 of this act on such
matters.
(4) Members of the board who are not state employees are entitled
to reimbursement for expenses related to the work of the board as a
class one group under RCW 43.03.220.

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NEW SECTION.
Sec. 805.
ECONOMIC AND ENVIRONMENTAL JUSTICE
OVERSIGHT PANEL. (1) An economic and environmental justice oversight
panel is established as a subcommittee of the advisory board created
in section 804 of this act. The board will appoint the panel members
consistent with this section, and the panel will coordinate its work
with the governor's office, the department of commerce, the
department of health, and other state departments or divisions as the
governor may determine. The membership of the panel must consist of
at least nine persons, based on the nomination of statewide
organizations that represent the following interests:

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(a) Five or more members, representing vulnerable populations and
residing in highly impacted communities, as identified in section 502
of this act;
(b) Two members representing union labor with expertise in
economic dislocation, clean energy economy, or energy-intensive
trade-exposed facilities; and
(c) Two members representing tribal governments.
(2) The purpose of the panel is to:
(a) Provide a forum for analysis of whether the policies adopted
in this act lead to improvements within highly impacted communities.
This subcommittee must also advise the board created in section 804
of this act in the performance of its responsibilities;
(b) Make recommendations on the cumulative impact analysis and
highly impacted communities designation required by section 502 of
this act;
(c) Make recommendations on the investment allocations authorized
by parts II through VII of this act, including its evaluation of the
projected performance of the investments to meet the criteria and
objectives developed in specific implementation plans;
(d) Evaluate the level of funding provided to assist low-income
individuals and displaced workers under part V of this act and the
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funding of projects and activities located within or benefiting
highly impacted communities designated under section 502 of this act;
and
(e) Provide recommendations to implementation agencies for
meaningful consultation with vulnerable populations.
(3) The panel must conduct an evaluation of the economic impacts
of the emissions tax imposed under section 102 of this act on low and
middle-income
households
and
vulnerable
populations,
including
communities of color and indigenous communities. The panel's
evaluation must include a summary of projected household economic
impacts of the emissions tax in the first decade of its
implementation, the projected impacts of investments in parts II
through VII of this act, including assistance directed to low-income
populations in part V of this act, and provide recommendations to
reduce any disproportionate impact upon low and middle-income
households, either through revisions in the tax or through measures
that mitigate for that impact. The evaluation must also include an
assessment of expenditures for light rail versus other mass transit
options by individuals living in disadvantaged communities. The
report must include recommendations to reduce the regressivity of the
carbon pollution tax through transit-related options such as
providing free or reduced-price transit passes or ridership. The
panel's report must be provided to the legislature, in compliance
with RCW 43.01.036, not later than December 31, 2020. The panel may
collaborate with the caseload forecast council to include its
evaluation and recommendations in a general disproportionality report
provided by the council to the legislature pursuant to section 2,
chapter . . ., Laws of 2018 (Engrossed Substitute Senate Bill No.
5588).

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Part IX
Preemption

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NEW SECTION. Sec. 901. (1) No state agency may adopt or enforce
a statewide program that sets a greenhouse gas emissions cap or
charge except as provided in this chapter.
(2) As of the effective date of this section, chapter 173-442 WAC
(the clean air rule) and associated amendments to chapter 173-441 WAC
previously adopted by the department of ecology may not be enforced
by
the
department
of
ecology.
Nothing
in
this
subsection
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acknowledges, establishes, or creates legal authority for the
department of ecology or any other state agency to enact, adopt,
order, or in any way implement a rule or policy establishing a
statewide limit, cap, or standard to control the amount of greenhouse
gas emissions occurring during a period of time.
(3) For the purposes of this section, "cap" means a statewide
aggregate emission limit that applies to one or more economic sectors
and that requires the designated entities responsible for emissions
within those sectors to keep their cumulative emissions at or below
the level of the aggregate limit.

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NEW SECTION. Sec. 902. (1) The carbon pollution tax levied in
section 102 of this act is in lieu of any carbon tax upon the sale or
use within this state of all fossil fuels, including fossil fuels
used in generating electricity and the retail sale or consumption
within this state of electricity generated through the combustion of
fossil fuels. No city, town, county, township, or other subdivision
or municipal corporation of the state may levy or collect any
comparable carbon tax or charge upon the sale or use within this
state of all fossil fuels, including fossil fuels used in generating
electricity and the retail sale or consumption within this state of
electricity generated through the combustion of fossil fuels.

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(2) No city, town, county, township, or other subdivision or
municipal corporation of the state may levy any tax of any kind
whatsoever on amounts received by any person with respect to a carbon
pollution tax liability imposed under the provisions of the carbon
pollution tax act. This restriction is not imposed upon federally
recognized Indian tribes and this section places no restriction on
the ability of such tribes to institute a comparable tribal tax
within tribal lands.

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Part X
Incremental Electricity

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Sec. 1001. RCW 19.285.030 and 2017 c 315 s 1 are each amended to
read as follows:
The definitions in this section apply throughout this chapter
unless the context clearly requires otherwise.
(1) "Attorney general" means the Washington state office of the
attorney general.
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(2) "Auditor" means: (a) The Washington state auditor's office or
its designee for qualifying utilities under its jurisdiction that are
not investor-owned utilities; or (b) an independent auditor selected
by a qualifying utility that is not under the jurisdiction of the
state auditor and is not an investor-owned utility.
(3)(a) "Biomass energy" includes: (i) Organic by-products of
pulping and the wood manufacturing process; (ii) animal manure; (iii)
solid organic fuels from wood; (iv) forest or field residues; (v)
untreated wooden demolition or construction debris; (vi) food waste
and food processing residuals; (vii) liquors derived from algae;
(viii) dedicated energy crops; and (ix) yard waste.
(b) "Biomass energy" does not include: (i) Wood pieces that have
been
treated
with
chemical
preservatives
such
as
creosote,
pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old
growth forests; or (iii) municipal solid waste.
(4) "Coal transition power" has the same meaning as defined in
RCW 80.80.010.
(5) "Commission" means the Washington state utilities and
transportation commission.
(6) "Conservation" means any reduction in electric power
consumption resulting from increases in the efficiency of energy use,
production, or distribution.
(7) "Cost-effective" has the same meaning as defined in RCW
80.52.030.
(8) "Council" means the Washington state apprenticeship and
training council within the department of labor and industries.
(9) "Customer" means a person or entity that purchases
electricity for ultimate consumption and not for resale.
(10) "Department" means the department of commerce or its
successor.
(11) "Distributed generation" means an eligible renewable
resource where the generation facility or any integrated cluster of
such facilities has a generating capacity of not more than five
megawatts.
(12) "Eligible renewable resource" means:
(a) Electricity from a generation facility powered by a renewable
resource other than freshwater that commences operation after March
31, 1999, where: (i) The facility is located in the Pacific
Northwest; or (ii) the electricity from the facility is delivered
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into Washington state on a real-time basis without shaping, storage,
or integration services;
(b) Incremental electricity produced as a result of efficiency
improvements completed after March 31, 1999, to hydroelectric
generation projects owned by a qualifying utility and located in the
Pacific Northwest where the additional generation does not result in
new water diversions or impoundments;
(c) Hydroelectric generation from a project completed after March
31, 1999, where the generation facility is located in irrigation
pipes, irrigation canals, water pipes whose primary purpose is for
conveyance of water for municipal use, and wastewater pipes located
in Washington where the generation does not result in new water
diversions or impoundments;
(d) Qualified biomass energy;

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(e) For a qualifying utility that serves customers in other
states, electricity from a generation facility powered by a renewable
resource other than freshwater that commences operation after March
31, 1999, where: (i) The facility is located within a state in which
the qualifying utility serves retail electrical customers; and (ii)
the qualifying utility owns the facility in whole or in part or has a
long-term contract with the facility of at least twelve months or
more; ((or))
(f)(i) Incremental electricity produced as a result of a capital
investment completed after January 1, 2010, that increases, relative
to a baseline level of generation prior to the capital investment,
the amount of electricity generated in a facility that generates
qualified biomass energy as defined under subsection (18)(c)(ii) of
this section and that commenced operation before March 31, 1999.
(ii) Beginning January 1, 2007, the facility must demonstrate its
baseline level of generation over a three-year period prior to the
capital investment in order to calculate the amount of incremental
electricity produced.
(iii) The facility must demonstrate that the incremental
electricity resulted from the capital investment, which does not
include expenditures on operation and maintenance in the normal
course of business, through direct or calculated measurement;
(g) That portion of incremental electricity produced as a result
of
efficiency
improvements
completed
after
March
31,
1999,
attributable to a qualifying utility's share of the electricity
output from hydroelectric generation projects whose energy output is
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marketed by the Bonneville power administration where the additional
generation does not result in new water diversions or impoundments;
or
(h) The environmental attributes, including renewable energy
credits, from (g) of this subsection transferred to investor-owned
utilities
pursuant
to
the
Bonneville
power
administration's
residential exchange program.
(13) "Investor-owned utility" has the same meaning as defined in
RCW 19.29A.010.
(14) "Load" means the amount of kilowatt-hours of electricity
delivered in the most recently completed year by a qualifying utility
to its Washington retail customers.
(15)(a) "Nonpower attributes" means all environmentally related
characteristics, exclusive of energy, capacity reliability, and other
electrical power service attributes, that are associated with the
generation of electricity from a renewable resource, including but
not limited to the facility's fuel type, geographic location,
vintage, qualification as an eligible renewable resource, and avoided
emissions of pollutants to the air, soil, or water, and avoided
emissions of carbon dioxide and other greenhouse gases.

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(b) "Nonpower attributes" does not include any aspects, claims,
characteristics, and benefits associated with the on-site capture and
destruction of methane or other greenhouse gases at a facility
through a digester system, landfill gas collection system, or other
mechanism, which may be separately marketable as greenhouse gas
emission reduction credits, offsets, or similar tradable commodities.
However, these separate avoided emissions may not result in or
otherwise have the effect of attributing greenhouse gas emissions to
the electricity.
(16) "Pacific Northwest" has the same meaning as defined for the
Bonneville power administration in section 3 of the Pacific Northwest
electric power planning and conservation act (94 Stat. 2698; 16
U.S.C. Sec. 839a).
(17) "Public facility" has the same meaning as defined in RCW
39.35C.010.
(18) "Qualified biomass energy" means electricity produced from a
biomass energy facility that: (a) Commenced operation before March
31, 1999; (b) contributes to the qualifying utility's load; and (c)
is owned either by: (i) A qualifying utility; or (ii) an industrial
facility that is directly interconnected with electricity facilities
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that are owned by a qualifying utility and capable of carrying
electricity at transmission voltage.
(19) "Qualifying utility" means an electric utility, as the term
"electric utility" is defined in RCW 19.29A.010, that serves more
than twenty-five thousand customers in the state of Washington. The
number of customers served may be based on data reported by a utility
in form 861, "annual electric utility report," filed with the energy
information administration, United States department of energy.
(20) "Renewable energy credit" means a tradable certificate of
proof, except as provided in RCW 19.285.040(2)(m), of at least one
megawatt-hour of an eligible renewable resource where, except as
provided in subsection (12)(h) of this section, the generation
facility is not powered by freshwater. The certificate includes all
of the nonpower attributes associated with that one megawatt-hour of
electricity, and the certificate is verified by a renewable energy
credit tracking system selected by the department.

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(21) "Renewable resource" means: (a) Water; (b) wind; (c) solar
energy; (d) geothermal energy; (e) landfill gas; (f) wave, ocean, or
tidal power; (g) gas from sewage treatment facilities; (h) biodiesel
fuel as defined in RCW 82.29A.135 that is not derived from crops
raised on land cleared from old growth or first-growth forests where
the clearing occurred after December 7, 2006; or (i) biomass energy.
(22) "Rule" means rules adopted by an agency or other entity of
Washington state government to carry out the intent and purposes of
this chapter.
(23) "Year" means the twelve-month period commencing January 1st
and ending December 31st.

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Sec. 1002. RCW 19.285.040 and 2017 c 315 s 2 are each amended to
read as follows:
(1) Each qualifying utility ((shall)) must pursue all available
conservation that is cost-effective, reliable, and feasible.
(a) By January 1, 2010, using methodologies consistent with those
used by the Pacific Northwest electric power and conservation
planning council in the most recently published regional power plan
as it existed on June 12, 2014, or a subsequent date as may be
provided by the department or the commission by rule, each qualifying
utility ((shall)) must identify its achievable cost-effective
conservation potential through 2019. Nothing in the rule adopted
under this subsection precludes a qualifying utility from using its
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utility specific conservation measures, values, and assumptions in
identifying its achievable cost-effective conservation potential. At
least every two years thereafter, the qualifying utility ((shall))
must review and update this assessment for the subsequent ten-year
period.
(b) Beginning January 2010, each qualifying utility ((shall))
must establish and make publicly available a biennial acquisition
target
for
cost-effective
conservation
consistent
with
its
identification of achievable opportunities in (a) of this subsection,
and meet that target during the subsequent two-year period. At a
minimum, each biennial target must be no lower than the qualifying
utility's pro rata share for that two-year period of its costeffective conservation potential for the subsequent ten-year period.
(c)(i) Except as provided in (c)(ii) and (iii) of this
subsection, beginning on January 1, 2014, cost-effective conservation
achieved by a qualifying utility in excess of its biennial
acquisition target may be used to help meet the immediately
subsequent two biennial acquisition targets, such that no more than
twenty percent of any biennial target may be met with excess
conservation savings.

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(ii) Beginning January 1, 2014, a qualifying utility may use
single large facility conservation savings in excess of its biennial
target to meet up to an additional five percent of the immediately
subsequent two biennial acquisition targets, such that no more than
twenty-five percent of any biennial target may be met with excess
conservation savings allowed under all of the provisions of this
section combined. For the purposes of this subsection (1)(c)(ii),
"single large facility conservation savings" means cost-effective
conservation savings achieved in a single biennial period at the
premises of a single customer of a qualifying utility whose annual
electricity consumption prior to the conservation savings exceeded
five average megawatts.
(iii) Beginning January 1, 2012, and until December 31, 2017, a
qualifying utility with an industrial facility located in a county
with a population between ninety-five thousand and one hundred
fifteen thousand that is directly interconnected with electricity
facilities that are capable of carrying electricity at transmission
voltage((,)) may use cost-effective conservation from that industrial
facility in excess of its biennial acquisition target to help meet
the immediately subsequent two biennial acquisition targets, such
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that no more than twenty-five percent of any biennial target may be
met with excess conservation savings allowed under all of the
provisions of this section combined.
(d) In meeting its conservation targets, a qualifying utility may
count high-efficiency cogeneration owned and used by a retail
electric customer to meet its own needs. High-efficiency cogeneration
is the sequential production of electricity and useful thermal energy
from a common fuel source, where, under normal operating conditions,
the facility has a useful thermal energy output of no less than
thirty-three percent of the total energy output. The reduction in
load due to high-efficiency cogeneration ((shall)) must be: (i)
Calculated as the ratio of the fuel chargeable to power heat rate of
the cogeneration facility compared to the heat rate on a new and
clean
basis
of
a
best-commercially
available
technology
combined-cycle natural gas-fired combustion turbine; and (ii) counted
towards meeting the biennial conservation target in the same manner
as other conservation savings.
(e) The commission may determine if a conservation program
implemented by an investor-owned utility is cost-effective based on
the commission's policies and practice.
(f) The commission may rely on its standard practice for review
and approval of investor-owned utility conservation targets.
(2)(a) Except as provided in (j) and (l) of this subsection, each
qualifying utility ((shall)) must use eligible renewable resources or
acquire equivalent renewable energy credits, or any combination of
them, to meet the following annual targets:
(i) At least three percent of its load by January 1, 2012, and
each year thereafter through December 31, 2015;
(ii) At least nine percent of its load by January 1, 2016, and
each year thereafter through December 31, 2019; and
(iii) At least fifteen percent of its load by January 1, 2020,
and each year thereafter.
(b) A qualifying utility may count distributed generation at
double the facility's electrical output if the utility: (i) Owns or
has contracted for the distributed generation and the associated
renewable energy credits; or (ii) has contracted to purchase the
associated renewable energy credits.
(c) In meeting the annual targets in (a) of this subsection, a
qualifying utility ((shall)) must calculate its annual load based on
the average of the utility's load for the previous two years.
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(d) A qualifying utility ((shall be)) is considered in compliance
with an annual target in (a) of this subsection if: (i) The utility's
weather-adjusted load for the previous three years on average did not
increase over that time period; (ii) after December 7, 2006, the
utility did not commence or renew ownership or incremental purchases
of electricity from resources other than coal transition power or
renewable resources other than on a daily spot price basis and the
electricity is not offset by equivalent renewable energy credits; and
(iii) the utility invested at least one percent of its total annual
retail revenue requirement that year on eligible renewable resources,
renewable energy credits, or a combination of both.
(e) The requirements of this section may be met for any given
year with renewable energy credits produced during that year, the
preceding year, or the subsequent year. Each renewable energy credit
may be used only once to meet the requirements of this section.

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(f) In complying with the targets established in (a) of this
subsection, a qualifying utility may not count:
(i) Eligible renewable resources or distributed generation where
the associated renewable energy credits are owned by a separate
entity; or
(ii) Eligible renewable resources or renewable energy credits
obtained for and used in an optional pricing program such as the
program established in RCW 19.29A.090.
(g) Where fossil and combustible renewable resources are cofired
in one generating unit located in the Pacific Northwest where the
cofiring commenced after March 31, 1999, the unit ((shall be)) is
considered to produce eligible renewable resources in direct
proportion to the percentage of the total heat value represented by
the heat value of the renewable resources.
(h)(i) A qualifying utility that acquires an eligible renewable
resource or renewable energy credit may count that acquisition at one
and two-tenths times its base value:
(A) Where the eligible renewable resource comes from a facility
that commenced operation after December 31, 2005; and
(B) Where the developer of the facility used apprenticeship
programs approved by the council during facility construction.
(ii) The council ((shall)) must establish minimum levels of labor
hours to be met through apprenticeship programs to qualify for this
extra credit.
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(i) A qualifying utility ((shall be)) is considered in compliance
with an annual target in (a) of this subsection if events beyond the
reasonable control of the utility that could not have been reasonably
anticipated or ameliorated prevented it from meeting the renewable
energy target. Such events include weather-related damage, mechanical
failure, strikes, lockouts, and actions of a governmental authority
that adversely affect the generation, transmission, or distribution
of an eligible renewable resource under contract to a qualifying
utility.
(j)(i) Beginning January 1, 2016, only a qualifying utility that
owns or is directly interconnected to a qualified biomass energy
facility may use qualified biomass energy to meet its compliance
obligation under this subsection.
(ii) A qualifying utility may no longer use electricity and
associated renewable energy credits from a qualified biomass energy
facility if the associated industrial pulping or wood manufacturing
facility ceases operation other than for purposes of maintenance or
upgrade.

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(k) An industrial facility that hosts a qualified biomass energy
facility may only transfer or sell renewable energy credits
associated with qualified biomass energy generated at its facility to
the qualifying utility with which it is directly interconnected with
facilities owned by such a qualifying utility and that are capable of
carrying electricity at transmission voltage. The qualifying utility
may only use an amount of renewable energy credits associated with
qualified biomass energy that are equivalent to the proportionate
amount of its annual targets under (a)(ii) and (iii) of this
subsection that was created by the load of the industrial facility. A
qualifying utility that owns a qualified biomass energy facility may
not transfer or sell renewable energy credits associated with
qualified biomass energy to another person, entity, or qualifying
utility.
(l) Beginning January 1, 2019, a qualifying utility may use
eligible renewable resources as identified under RCW 19.285.030(12)
(g) and (h) to meet its compliance obligation under this subsection
(2). A qualifying utility may not transfer or sell these eligible
renewable resources to another utility for compliance purposes under
this chapter.

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(m)
Renewable
energy
credits
allocated
under
RCW
19.285.030(12)(h) may not be transferred or sold to another
qualifying utility for compliance under this chapter.
(3) Utilities that become qualifying utilities after December 31,
2006, ((shall)) must meet the requirements in this section on a time
frame comparable in length to that provided for qualifying utilities
as of December 7, 2006.

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9

Part XI
Miscellaneous Provisions

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11

NEW SECTION.
Sec. 1101.
The provisions of RCW 82.32.805 and
82.32.808 do not apply to this act.

12
13

NEW SECTION.
Sec. 1102.
chapter in Title 82 RCW.

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16

NEW SECTION. Sec. 1103. Sections 402, 501 through 506, and 702
of this act and parts II, III, VIII, and IX of this act constitute a
new chapter in Title 43 RCW.

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NEW SECTION. Sec. 1104.
chapter in Title 70 RCW.

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22

NEW SECTION.
Sec. 1105.
If any provision of this act or its
application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other
persons or circumstances is not affected.

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NEW SECTION.
July 1, 2019.

Sec. 1106.

Section 102 of this act takes effect

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NEW SECTION.
Sec. 1107.
take effect April 1, 2019.

Sections 507 through 509 of this act

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NEW SECTION. Sec. 1108. CONTINGENT EXPIRATION DATE. (1)(a) This
act expires on the earlier of the date that any of the following
statutes, rules, or measures takes effect:
(i) Any statewide law that places a charge, tax, or cap on the
level of carbon emissions within the state; or

Part I of this act constitutes a new

Part VI of this act constitutes a new

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(ii) A statewide initiative measure by the people that creates a
charge, tax, or cap upon the emission of greenhouse gases that is
imposed broadly upon those persons subject to the state carbon
pollution tax imposed under section 102 of this act.
(b) For the purposes of this section, "cap" means a statewide
aggregate emission limit that applies to one or more economic sectors
and that requires the designated entities responsible for emissions
within those sectors to keep their cumulative emissions at or below
the level of the aggregate limit.
(2) The department must provide written notice of the expiration
date of this act to affected parties, the chief clerk of the house of
representatives, the secretary of the senate, the office of the code
reviser, and others as deemed appropriate by the department.
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