wa-law.org > bill > 2025-26 > HB 2416 > Second Substitute
The legislature intends to treat all municipal solid waste management systems fairly and equivalently throughout the state under the Washington cap and invest program. This act achieves more equal treatment of all communities with municipal solid waste management systems under the Washington cap and invest program by creating greenhouse gas emissions reduction and other requirements that recognize the unique status of the state's only waste to energy facility.
A person is a covered entity as of the beginning of the first compliance period and all subsequent compliance periods if the person reported emissions under RCW 70A.15.2200 for any calendar year from 2015 through 2019, or if additional data provided as required by this chapter indicates that emissions for any calendar year from 2015 through 2019 equaled or exceeded any of the following thresholds, or if the person is a first jurisdictional deliverer and imports electricity into the state during the compliance period:
Where the person owns or operates a facility and the facility's emissions equal or exceed 25,000 metric tons of carbon dioxide equivalent;
Where the person is a first jurisdictional deliverer and generates electricity in the state and emissions associated with this generation equals or exceeds 25,000 metric tons of carbon dioxide equivalent;
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(A) For specified sources, the cumulative annual total of emissions associated with the imported electricity exceeds 25,000 metric tons of carbon dioxide equivalent;
(B) For unspecified sources, the cumulative annual total of emissions associated with the imported electricity exceeds 0 metric tons of carbon dioxide equivalent; or
(C) For electricity purchased from a federal power marketing administration pursuant to section 5(b) of the Pacific Northwest electric power planning and conservation act of 1980, P.L. 96-501, if the department determines such electricity is not from a specified source, the cumulative annual total of emissions associated with the imported electricity exceeds 25,000 metric tons of carbon dioxide equivalent.
ii. In consultation with any linked jurisdiction to the program created by this chapter, by October 1, 2026, the department, in consultation with the department of commerce and the utilities and transportation commission, shall adopt by rule a methodology for addressing imported electricity associated with a centralized electricity market;
d. Where the person is a supplier of fossil fuel other than natural gas and from that fuel 25,000 metric tons or more of carbon dioxide equivalent emissions would result from the full combustion or oxidation, excluding the amounts for fuel products that are produced or imported with a documented final point of delivery outside of Washington and combusted outside of Washington; and
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i. Where the person supplies natural gas in amounts that would result in exceeding 25,000 metric tons of carbon dioxide equivalent emissions if fully combusted or oxidized, excluding the amounts for fuel products that are produced or imported with a documented final point of delivery outside of Washington and combusted outside of Washington, and excluding the amounts: (A) Supplied to covered entities under (a) through (d) of this subsection; and (B) delivered to opt-in entities;
ii. Where the person who is not a natural gas company and has a tariff with a natural gas company to deliver to an end-use customer in the state in amounts that would result in exceeding 25,000 metric tons of carbon dioxide equivalent emissions if fully combusted or oxidized, excluding the amounts: (A) Supplied to covered entities under (a) through (d) of this subsection; and (B) the amounts delivered to opt-in entities;
iii. Where the person is an end-use customer in the state who directly purchases natural gas from a person that is not a natural gas company and has the natural gas delivered through an interstate pipeline to a distribution system owned by the purchaser in amounts that would result in exceeding 25,000 metric tons of carbon dioxide equivalent emissions if fully combusted or oxidized, excluding the amounts: (A) Supplied to covered entities under (a) through (d) of this subsection; and (B) delivered to opt-in entities.
2.
A person is a covered entity as of the beginning of the third compliance period, and all subsequent compliance periods if the person reported emissions under RCW 70A.15.2200 or provided emissions data as required by this chapter for 2027 or 2028, where the person owns or operates a railroad company, as that term is defined in RCW 81.04.010, and the railroad company's emissions equal or exceed 25,000 metric tons of carbon dioxide equivalent.
When a covered entity reports, during a compliance period, emissions from a facility under RCW 70A.15.2200 that are below the thresholds specified in subsection (1) of this section, the covered entity continues to have a compliance obligation through the current compliance period. When a covered entity reports emissions below the threshold for each year during an entire compliance period, or has ceased all processes at the facility requiring reporting under RCW 70A.15.2200, the entity is no longer a covered entity as of the beginning of the subsequent compliance period unless the department provides notice at least 12 months before the end of the compliance period that the facility's emissions were within 10 percent of the threshold and that the person will continue to be designated as a covered entity in order to ensure equity among all covered entities. Whenever a covered entity ceases to be a covered entity, the department shall notify the appropriate policy and fiscal committees of the legislature of the name of the entity and the reason the entity is no longer a covered entity.
For types of emissions sources described in subsection (1) of this section that begin or modify operation after January 1, 2023, coverage under the program starts in the calendar year in which emissions from the source exceed the applicable thresholds in subsection (1) of this section, or upon formal notice from the department that the source is expected to exceed the applicable emissions threshold, whichever happens first. Sources meeting these conditions are required to transfer their first allowances on the first transfer deadline of the year following the year in which their emissions were equal to or exceeded the emissions threshold.
For emissions sources described in subsection (1) of this section that are in operation or otherwise active between 2015 and 2019 but were not required to report emissions for those years under RCW 70A.15.2200 for the reporting periods between 2015 and 2019, coverage under the program starts in the calendar year following the year in which emissions from the source exceed the applicable thresholds in subsection (1) of this section as reported pursuant to RCW 70A.15.2200 or provided as required by this chapter, or upon formal notice from the department that the source is expected to exceed the applicable emissions threshold for the first year that source is required to report emissions, whichever happens first. Sources meeting these criteria are required to transfer their first allowances on the first transfer deadline of the year following the year in which their emissions, as reported under RCW 70A.15.2200 or provided as required by this chapter, were equal to or exceeded the emissions threshold.
The following emissions are exempt from coverage in the program, regardless of the emissions reported under RCW 70A.15.2200 or provided as required by this chapter:
Emissions from the combustion of aviation fuels;
Emissions from watercraft fuels supplied in Washington that are combusted outside of Washington;
Emissions from a coal-fired electric generation facility exempted from additional greenhouse gas limitations, requirements, or performance standards under RCW 80.80.110;
Carbon dioxide emissions from the combustion of biomass or biofuels;
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Motor vehicle fuel or special fuel that is used exclusively for agricultural purposes by a farm fuel user. This exemption is available only if a buyer of motor vehicle fuel or special fuel provides the seller with an exemption certificate in a form and manner prescribed by the department. Prior to January 1, 2030, this exemption is available whether motor vehicle fuel or special fuel is used to propel a motor vehicle or not, but beginning January 1, 2030, this exemption only applies to motor vehicle fuel or special fuel that the farm fuel user uses to propel a motor vehicle.
The department must determine a method for expanding the exemption provided under (e)(i) of this subsection to include fuels used for the purpose of transporting agricultural products on public highways. The department must maintain this expanded exemption until December 31, 2029, in order to provide the agricultural sector with a feasible transition period.
For the purposes of this subsection:
(A) "Agricultural purposes" and "farm fuel user" have the same meanings as provided in RCW 82.08.865;
(B) "Motor vehicle fuel" means gasoline, the chief use of which is as a fuel for the propulsion of motor vehicles or vessels; and
(C) "Special fuel" means diesel, liquefied petroleum gas (also called propane), and biodiesel;
f. Emissions from facilities with North American industry classification system code 92811 (national security);
g. Emissions from municipal solid waste landfills that are subject to, and in compliance with, chapter 70A.540 RCW; and
h. Emissions from a waste to energy facility that was constructed prior to 1992, utilized by a county and city solid waste management program that is subject to, and in compliance with chapter 70A.--- RCW (the new chapter created in section 12 of this act).
The department shall not require multiple covered entities to have a compliance obligation for the same emissions. The department may by rule authorize refineries, fuel suppliers, facilities using natural gas, and natural gas utilities to provide by agreement for the assumption of the compliance obligation for fuel or natural gas supplied and combusted in the state. The department must be notified of such an agreement at least 12 months prior to the compliance obligation period for which the agreement is applicable.
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The legislature intends to promote a growing and sustainable economy and to avoid leakage of emissions from manufacturing to other locations. The legislature further intends to see innovative new businesses locate and grow in Washington that contribute to Washington's prosperity and environmental objectives.
Consistent with the intent of the legislature to avoid the leakage of emissions to other jurisdictions, in achieving the state's greenhouse gas limits in RCW 70A.45.020, the state, including lead agencies under chapter 43.21C RCW, shall pursue the limits in a manner that recognizes that the siting and placement of new or expanded best-in-class facilities with lower carbon emitting processes is in the economic and environmental interests of the state of Washington.
In conducting a life-cycle analysis, if required, for new or expanded facilities that require review under chapter 43.21C RCW, a lead agency must evaluate and attribute any potential net cumulative greenhouse gas emissions resulting from the project as compared to other existing facilities or best available technology including best-in-class facilities and emerging lower carbon processes that supply the same product or end use. The department may adopt rules to determine the appropriate threshold for applying this analysis.
Covered emissions from an entity that is or will be a covered entity under this chapter may not be the basis for denial of a permit for a new or expanded facility. Covered emissions must be included in the analysis undertaken pursuant to (c) of this subsection. Nothing in this subsection requires a lead agency or a permitting agency to approve or issue a permit to a permit applicant, including to a new or expanded fossil fuel project.
A lead agency under chapter 43.21C RCW or a permitting agency shall allow a new or expanded facility that is a covered entity or opt-in entity to satisfy a mitigation requirement for its covered emissions under this chapter and under any greenhouse gas emissions mitigation requirements for covered emissions under chapter 43.21C RCW by submitting to the department the number of compliance instruments equivalent to its covered emissions during a compliance period.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Allowance" has the same meaning as in RCW 70A.65.010.
"Baseline" means the average greenhouse gas emissions from a waste to energy facility during the calendar years 2014 through 2016.
"Carbon dioxide equivalents" has the same meaning as in RCW 70A.65.010.
"Department" means the department of ecology.
"Greenhouse gas" includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and any other gas or gases designated by the department by rule.
"Municipal solid waste landfill" has the same meaning as in RCW 70A.540.010.
"Waste to energy facility" means a waste to energy facility utilized by a county and city solid waste management program that was constructed prior to 1992.
The owner or operator of a waste to energy facility must achieve the following greenhouse gas emissions reductions associated with the operations of the waste to energy facility:
By December 31, 2030, and each year thereafter until 2040, a 15 percent reduction in greenhouse gas emissions, exclusive of any emissions from the combustion of biofuels or biomass including, but not limited to, wood products, wood by-products, wood residuals, food, and yard waste, relative to baseline levels;
By December 31, 2040, and each year thereafter until 2050, a 70 percent reduction in greenhouse gas emissions relative to baseline levels; and
By December 31, 2050, and each year thereafter, a 95 percent reduction in greenhouse gas emissions relative to baseline levels.
The owner and operator of a waste to energy facility shall not utilize waste diverted to a landfill for compliance purposes that can otherwise be recovered, recycled, or otherwise processed at the facility.
By December 1, 2030, the owner or operator of a waste to energy facility must provide a report to the department and the department of commerce. The report must include:
A proposed waste reduction and material recovery plan that is consistent with the state's waste management hierarchy established in RCW 70A.205.005, takes into consideration the organic material management policies in RCW 70A.205.540 and 70A.205.545 and the expected impacts of chapter 70A.208 RCW and also outlines how the facility will achieve the 2040 and 2050 greenhouse gas emissions reduction standards established in section 4(1) of this act;
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(A) Diverting additional types or sources of waste from the facility to other means of solid waste management;
(B) Refurbishing the waste to energy facility;
(C) Replacing the waste to energy facility; and
(D) Closing the waste to energy facility;
ii. The owner or operator of the waste to energy facility must hire an independent third party to carry out the impact analysis.
In the proposed waste reduction and material recovery plan, emissions reductions may be proposed to be achieved by any combination of carbon capture, sequestration or other captured carbon use adopted by rule or policy by the department, waste reduction activities, recycling and reuse activities, energy conservation, industrial symbiosis, or other greenhouse gas emissions reduction strategies identified by the owners or operators of the waste to energy facility.
In developing the report, the owner or operator of the waste to energy facility must consult with local municipally created stakeholder and community advisory bodies formed with the purpose of advising on climate or sustainability decisions. The proposed independent third party's impact analysis and the draft report and plan must be presented in a public forum with an opportunity for public comment prior to a final decision to approve the draft report and plan.
Within 90 days of receipt, the department, in consultation with the department of commerce, must complete its review of the report. The owner or operator of the waste to energy facility must address the department's comments and finalize the report within 90 days of receipt of the department's comments. The owner or operator of a waste to energy facility must take reasonable steps towards implementation of the plan and operate the facility and take other actions, as appropriate, consistent with the goals of the plan.
The department may adopt rules as necessary for implementing, administering, and enforcing this chapter.
Except as provided in subsection (3) of this section, a person violating a requirement of this chapter, a rule adopted under this chapter, or an order issued under this chapter, is subject to a civil penalty not to exceed $5,000 for each violation in the case of a first offense. Repeat violations are subject to a civil penalty not to exceed $10,000 for each repeat offense.
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For a failure to meet the 2030 gas emissions reduction standards specified in section 4 of this act in any year through 2039, a person must pay a penalty equal to the average price of one allowance during the preceding calendar year of implementation of chapter 70A.65 RCW for each metric ton of carbon dioxide equivalent above the greenhouse gas emissions reduction target.
For a failure to meet the 2040 gas emissions reduction standards specified in section 4 of this act in any year through 2049, or for a failure to meet the 2050 gas emissions reduction standards specified in section 4 of this act in any year beginning with calendar year 2050, a person must pay a penalty equal to the average price of two allowances during the preceding calendar year of implementation of chapter 70A.65 RCW for each metric ton of carbon dioxide equivalent above the greenhouse gas emissions reduction target.
For purposes of this subsection, the average price of one allowance during a calendar year of implementation of chapter 70A.65 RCW must be measured using the mean price of allowances sold at auction during the calendar year, not including the price of allowances sold at any reserve auctions held during that calendar year, weighted according to the number of allowances sold at each such auction.
The department may issue a corrective action order to a person in violation of the requirements of this chapter.
Any penalty provided for in this section, and any order issued by the department under this chapter, may be appealed to the pollution control hearings board.
All penalties collected under this chapter shall be deposited in the price ceiling unit emissions reduction investment account created in RCW 70A.65.160.
(1) The hearings board shall only have jurisdiction to hear and decide appeals from the following decisions of the department, the director, local conservation districts, the air pollution control boards or authorities as established pursuant to chapter 70A.15 RCW, local health departments, the department of natural resources, the department of fish and wildlife, the parks and recreation commission, and authorized public entities described in chapter 79.100 RCW:
(1) Any civil penalty provided in RCW 18.104.155, 70A.15.3160, 70A.205.280, 70A.230.080, 70A.300.090, 70A.20.050, 70A.245.040, 70A.245.050, 70A.245.070, 70A.245.080, 70A.245.130, 70A.245.140, 70A.65.200, 70A.430.070, 70A.455.090, 70A.500.260, 70A.505.110, 70A.555.110, 70A.560.020, 70A.208.230, section 6 of this act, 70A.565.030, 86.16.081, 88.46.090, 90.03.600, 90.46.270, 90.48.144, 90.56.310, 90.56.330, and 90.64.102 and chapter 70A.355 RCW shall be imposed by a notice in writing, either by certified mail with return receipt requested or by personal service, to the person incurring the penalty from the department or the local air authority, describing the violation with reasonable particularity. For penalties issued by local air authorities, within 30 days after the notice is received, the person incurring the penalty may apply in writing to the authority for the remission or mitigation of the penalty. Upon receipt of the application, the authority may remit or mitigate the penalty upon whatever terms the authority in its discretion deems proper. The authority may ascertain the facts regarding all such applications in such reasonable manner and under such rules as it may deem proper and shall remit or mitigate the penalty only upon a demonstration of extraordinary circumstances such as the presence of information or factors not considered in setting the original penalty.
The review under this chapter of greenhouse gas emissions from a new or expanded facility subject to the greenhouse gas emissions reduction requirements of chapter 70A.65 RCW must occur consistent with RCW 70A.65.080(8).
By October 1, 2025, the department must post and periodically update on its website a directory tool, by county and, if applicable, city, of the name and address of each retail fuel seller of exempt agricultural fuel under RCW 70A.65.080(6)(e) that has notified the department under subsection (3) of this section including, but not limited to, retail fuel sellers that rely on a cardholder or membership program and exempt fuel purchase aggregators. The department may only identify in the directory entities that make available exempt agricultural fuel under RCW 70A.65.080(6)(e) for purchase at a price that is different than the price of fuel that is not exempt under RCW 70A.65.080(6)(e). The directory tool must allow a user to use a simple search function to find a retail seller of exempt agricultural fuel in a specific jurisdiction within the state.
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By October 1, 2025, the department must publish on its website a guide for potentially eligible users of exempt agricultural fuel under RCW 70A.65.080(6)(e) that describes:
In consultation with the department of licensing, the mechanisms by which the exempt fuel user may obtain a remittance; or
The mechanisms by which the exempt fuel user may purchase exempt fuel including, but not limited to, exempt fuel purchase aggregators and cardholder or membership-based payment options offered by private parties. The information that the department is required to publish under this subsection is limited to information that is voluntarily disclosed by retail fuel sellers or exempt fuel purchase aggregators.
This guide must include a description of the information submission and procedural requirements associated with obtaining a remittance payment under the remittance program implemented by the department of licensing.
A retail fuel seller including, but not limited to, an exempt fuel purchase aggregator or cardholder or membership-based payment option, may voluntarily notify the department of locations where exempt agricultural fuel under RCW 70A.65.080(6)(e) is available for purchase, including contact information for the location, types of exempt fuel for sale, and the address and latitude and longitude of each location.
Nothing in this section establishes, limits, or otherwise alters the obligation of a person to be a covered or opt-in entity under RCW 70A.65.080, an opt-in entity under RCW 70A.65.090(3), or to report emissions under RCW 70A.15.2200. Nothing in this section makes a fuel seller that is not a covered entity under this chapter subject to the penalties provided in RCW 70A.65.200(5).
5.
For purposes of this section "exempt fuel purchase aggregator" means a for-profit or nonprofit entity that makes exempt agricultural fuel available to customers for purchase at a differential rate than the rate charged for nonexempt fuels, and that has established procedures for verifying that the fuel purchased qualifies as exempt, as well as procedures for tracking and reporting the volumes of exempt fuel sales to covered or opt-in entities from which the aggregator purchases fuel.
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The price ceiling for calendar years 2026 and 2027 shall be $80 to provide cost protection for covered entities obligated to comply with this chapter. The department must adjust the allowance price containment reserve tier 2 price to reflect the 2026 and 2027 price ceiling, and the price ceiling must increase annually in proportion to the reserve auction floor price established in RCW 70A.65.150(1).
If the department enters into a linkage agreement, and the linked jurisdictions do not amend their rules to synchronize with Washington's price ceiling established in (a) of this subsection, the department may amend its rules to synchronize Washington's price ceiling with those of the linked jurisdictions. The price ceiling may not be set at a level below the ceiling specified in (a) of this subsection unless the director of the department determines that an amendment to the price ceiling is necessary in order to enter into a linkage agreement.
In the event that no allowances remain in the allowance price containment reserve, the department must issue the number of price ceiling units for sale sufficient to provide cost protection for covered entities as established under subsection (1) of this section. Purchases must be limited to entities that do not have sufficient eligible compliance instruments in their holding and compliance accounts for the current compliance period and these entities may only purchase what they need to meet their compliance obligation for the current compliance period. Price ceiling units may not be sold or transferred and must be retired for compliance in the current compliance period. A price ceiling unit is not a property right.
The price ceiling unit emissions reduction investment account is created in the state treasury. All receipts from the sale of price ceiling units and penalties imposed under section 6 of this act must be deposited in the account. Moneys in the account may only be spent after appropriation. Moneys in the account must be expended to achieve emissions reductions on at least a metric ton for metric ton basis that are real, permanent, quantifiable, verifiable, enforceable by the state, and in addition to any greenhouse gas emissions reduction otherwise required by law or regulation and any other greenhouse gas emissions reduction that otherwise would occur.