SB 6449 — Promoting renewable natural gas.

S-4464.1SUBSTITUTEZ-0835.1SENATE SENATE BILL 6449State of Washington65th Legislature2018 Regular SessionBy Senate Energy, Environment & Technology (originally sponsored by Senators Warnick and Palumbo;

by request of Department of Commerce)READCommerceRead FIRSTfirst TIMEtime 02/02/18.AN01/17/18. ACT Relating to promoting renewable natural gas;

Referred to Committee on Energy, Environment & Technology.AN ACT Relating to promoting renewable natural gas;

and creating a new sections;section.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:NEW SECTION.  Sec. 1.  RENEWABLE NATURAL GAS QUALITY STANDARD AND REPORT TO THE LEGISLATURE.

(1) By September 1, 2018, and providingin ancompliance effectivewith date.BERCW IT43.01.036, ENACTEDthe BYWashington THEState LEGISLATUREUniversity OFextension THEenergy STATEprogram OFand WASHINGTON:NEWthe SECTION.  Sec. 1.  Thisdepartment sectionof iscommerce must submit recommendations to the taxgovernor's preferenceoffice performanceand statementthe energy committees of the legislature on how to promote the sustainable development of renewable natural gas in the state, including specific opportunities for state agencies and public facilities to take advantage of renewable natural gas potential, recommendations for limiting the taxlife-cycle preferencescarbon containedintensity of the renewable natural gas to the extent feasible, and whether to adopt a procurement standard for renewable natural gas.(2) The department of commerce, in sectionsconsultation 4,with 6,the 8,department of ecology and 9,the chapterdepartment .of health, must develop voluntary gas quality standards for renewable natural gas.

.,The Lawspurpose of 2018such (sectionsstandards 4,should 6,be 8,to andidentify 9acceptable levels of thisconstituents act).of concern for health, safety, and environmental purposes, including ensuring pipeline integrity, while providing reasonable and predictable access to pipeline transmission and distribution facilities.

The performancedepartment statementof iscommerce onlyshould intendedconsult industry groups and identify industry best practices.(3) For the purposes of this section, "renewable natural gas" means a methane-rich gas derived from organic feedstocks that has been conditioned to bemeet usedstandards for subsequentnatural evaluationgas ofderived from fossil fuel sources.Sec. 2.  RCW 82.04.260 and 2017 c 135 s 11 are each amended to read as follows:(1) Upon every person engaging within this state in the taxbusiness preferences.of manufacturing:(a) Wheat into flour, barley into pearl barley, soybeans into soybean oil, canola into canola oil, canola meal, or canola by-products, or sunflower seeds into sunflower oil;

It is not intended to create a private right of action by any party or to be used to determine eligibility for preferential tax treatment.(1) The legislature categorizes the tax preferences as ones intended to induce certain designated behavior by taxpayers, as indicated in RCW 82.32.808(2)(a).(2) It is the legislature's specific public policy objective to increase the production of renewable natural gas in Washington.

It is the legislature's intent to reinstate and expand tax incentives for certain landfills and anaerobic digesters in order to stimulate investment in biogas capture and conditioning, compression, nutrient recovery, and use of renewable natural gas for heating, electricity generation, and transportation fuel.(3) To measure the effectiveness of the tax preferences in sections 4, 6, 8, and 9, chapter .

., Laws of 2018 (sections 4, 6, 8, and 9 of this act) in achieving the public policy objectives described in subsection (2) of this section, the joint legislative audit and review committee must evaluate the number of public and private landfills and anaerobic digesters producing renewable natural gas in the state and the extent to which they are utilizing these incentives.(4) In order to obtain the data necessary to perform the review in subsection (3) of this section, the department of revenue must provide data needed for the joint legislative audit and review committee analysis.

In addition to the data source described under this subsection, the joint legislative audit and review committee may use any other data it deems necessary.NEW SECTION.  Sec. 2.  RENEWABLE NATURAL GAS QUALITY STANDARD AND REPORT TO THE LEGISLATURE.

(1) By September 1, 2018, and in compliance with RCW 43.01.036, the Washington State University extension energy program and the department of commerce, in consultation with the Washington utilities and transportation commission, must submit recommendations to the governor's office and the energy committees of the legislature on how to promote the sustainable development of renewable natural gas in the state, including a detailed inventory of the practical opportunities and costs associated with renewable natural gas production in the state, specific opportunities for state agencies and public facilities to take advantage of renewable natural gas potential, recommendations for limiting the life-cycle carbon intensity of the renewable natural gas to the extent feasible, and whether to adopt a procurement standard for renewable natural gas.(2) The department of commerce, in consultation with the department of ecology, the department of health, and the Washington utilities and transportation commission, must explore development of voluntary gas quality standards for the injection of renewable natural gas into the natural gas pipeline system.

The purpose of such standards should be to identify acceptable levels of constituents of concern for safety and environmental purposes, including ensuring pipeline integrity, while providing reasonable and predictable access to pipeline transmission and distribution facilities.

The department of commerce must consult industry groups and identify industry best practices.(3) For the purposes of this section, "renewable natural gas" means a methane-rich gas derived from organic feedstocks that has been conditioned to meet standards for natural gas derived from fossil fuel sources.Sec. 3.  RCW 82.04.260 and 2017 c 135 s 11 are each amended to read as follows:(1) Upon every person engaging within this state in the business of manufacturing:(a) Wheat into flour, barley into pearl barley, soybeans into soybean oil, canola into canola oil, canola meal, or canola by-products, or sunflower seeds into sunflower oil;

For the purposes of this section, "wood biomass fuel" means a liquidfuel orused gaseousin fuelinternal combustion engines that is produced from lignocellulosic feedstocks, including wood, forest, or field residue, and dedicated energy crops, and that does not include wood treated with chemical preservations such as creosote, pentachlorophenol, or copper-chrome-arsenic.(2) Upon every person engaging within this state in the business of splitting or processing dried peas;

and biocomposite surface products.(f) Except for small harvesters as defined in RCW 84.33.035, a person reporting under the tax rate provided in this subsection (12) must file a complete annual tax performance report with the department under RCW 82.32.534.(13) Upon every person engaging within this state in inspecting, testing, labeling, and storing canned salmon owned by another person, as to such persons, the amount of tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.(14)(a) Upon every person engaging within this state in the business of printing a newspaper, publishing a newspaper, or both, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.35 percent until July 1, 2024, and 0.484 percent thereafter.(b) A person reporting under the tax rate provided in this subsection (14) must file a complete annual tax performance report with the department under RCW 82.32.534.Sec. 4.  RCW82.32.534.Sec. 3.  RCW 82.08.900 and 2015 c 86 s 202 are each amended to read as follows:(1) The tax levied by RCW 82.08.020 does not apply to sales to an eligible person:(a) In respect to equipment necessary to process biogas from a landfill into marketable coproducts, including but not limited to biogas conditioning,conditioning compression, and electrical generation equipment, or to services rendered in respect to installing, constructing, repairing, cleaning, altering, or improving equipment necessary to process biogas from a landfill into marketable coproducts;

The seller must retain a copy of the certificate for the seller's files.(3) The definitions in this subsection apply to this section and RCW 82.12.900 unless the context clearly requires otherwise:(a) "Anaerobic digester" means a facility that processes ((manure from livestock into biogas and dried manure)) organic material into biogas and digestate using microorganisms in a decomposition process within a closed, oxygen-free container as well as the equipment necessary to process biogas or digestate produced by an anaerobic digester into marketable coproducts, including but not limited to biogas conditioning, compression, nutrient recovery, and electrical generation equipment.(b) "Eligible person" means any person establishing or operating an anaerobic digester ((to treat primarily livestock manure)) or landfill.(((c) "Primarily" means more than fifty percent measured by volume or weight.))Sec. 5.  RCWweight.))Sec. 4.  RCW 82.08.962 and 2017 3rd sp.s.

or (b) sales of or charges made for labor and services rendered in respect to installing such machinery and equipment.(6) This section expires January 1, 2020.Sec. 6.  RCW2020.Sec. 5.  RCW 82.12.900 and 2006 c 151 s 5 are each amended to read as follows:The provisions of this chapter do not apply with respect to:(1) Equipment necessary to process biogas from a landfill into marketable coproducts, including but not limited to biogas conditioning,conditioning compression, and electrical generation equipment, or to services rendered in respect to installing, constructing, repairing, cleaning, altering, or improving equipment necessary to process biogas from a landfill into marketable coproducts;

((The anaerobic digester must be used primarily to treat livestock manure.))Sec. 7.  RCWmanure.))Sec. 6.  RCW 82.12.962 and 2017 3rd sp.s.

and(b) To any other machinery and equipment described in subsection (1)(a) of this section, or to sales of or charges made for labor and services rendered in respect to installing such machinery or equipment, when first use within this state of such machinery and equipment, or labor and services, occurs after December 31, 2019.(6) This section expires January 1, 2020.Sec. 8.  RCW2020.Sec. 7.  RCW 84.36.635 and 2010 1st sp.s.

Once filed, the exemption is valid for six ((years)) assessment years following the date on which the facility or the addition to the existing facility becomes operational and may not be renewed.

No claims may be filed after December 31, ((2015, except for claims for anaerobic digesters, which may be filed no later than December 31, 2012)) 2024.(4) The department of revenue may promulgate such rules, pursuant to chapter 34.05 RCW, as necessary to properly administer this section.Sec. 9.  RCWsection.Sec. 8.  RCW 82.29A.135 and 2010 1st sp.s.

Once filed, the exemption is valid for six ((years)) assessment years following the date on which the facility or the addition to the existing facility becomes operational and may not be renewed.

No claims may be filed after December 31, ((2015, except for claims for anaerobic digesters, which may be filed no later than December 31, 2012)) 2024.(4) The department of revenue may promulgate such rules, pursuant to chapter 34.05 RCW, as are necessary to properly administer this section.NEWsection.--- SECTION.  Sec. 10.  This act takes effect July 1, 2018.--- END ---