CERTIFICATION OF ENROLLMENT
ENGROSSED THIRD SUBSTITUTE HOUSE BILL 1091
Chapter 317, Laws of 2021
(partial veto)
67th Legislature
2021 Regular Session
TRANSPORTATION FUEL—CLEAN FUELS PROGRAM
EFFECTIVE DATE: July 25, 2021
Passed by the House April 25, 2021 CERTIFICATE
Yeas 54 Nays 43
I, Bernard Dean, Chief Clerk of the
House of Representatives of the
LAURIE JINKINS State of Washington, do hereby
Speaker of the House of certify that the attached is
Representatives ENGROSSED THIRD SUBSTITUTE HOUSE
BILL 1091 as passed by the House of
Representatives and the Senate on
the dates hereon set forth.
Passed by the Senate April 25, 2021
Yeas 26 Nays 23
BERNARD DEAN
DENNY HECK Chief Clerk
President of the Senate
Approved May 17, 2021 2:53 PM with FILED
the exception of section 3(8), which
is vetoed. May 18, 2021
Secretary of State
JAY INSLEE State of Washington
Governor of the State of Washington
 ENGROSSED THIRD SUBSTITUTE HOUSE BILL 1091
AS RECOMMENDED BY THE CONFERENCE COMMITTEE
Passed Legislature - 2021 Regular Session
State of Washington 67th Legislature 2021 Regular Session
By House Transportation (originally sponsored by Representatives
Fitzgibbon, Slatter, Berry, Dolan, Bateman, Ramos, Simmons, Ramel,
Senn, Peterson, Duerr, Ryu, Valdez, Callan, Kloba, Chopp, Ormsby,
Frame, Macri, Pollet, Goodman, and Bergquist; by request of Office of
the Governor)
READ FIRST TIME 02/22/21.
1 AN ACT Relating to reducing greenhouse gas emissions by reducing
2 the carbon intensity of transportation fuel; amending RCW 80.50.060,
3 46.17.365, 46.25.100, 46.20.202, 46.25.052, 46.25.060, 70A.15.3150,
4 70A.15.3160, 19.112.110, and 19.112.120; reenacting and amending RCW
5 80.50.020; adding a new section to chapter 82.04 RCW; adding a new
6 section to chapter 43.21A RCW; adding a new chapter to Title 70A RCW;
7 creating new sections; prescribing penalties; and providing
8 expiration dates.
9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
10 NEW SECTION. Sec. 1. (1) The legislature finds that rapid
11 innovations in low carbon transportation technologies, including
12 electric vehicles and clean transportation fuels, are at the
13 threshold of widespread commercial deployment. In order to help
14 prompt the use of clean fuels, other states have successfully
15 implemented programs that reduce the carbon intensity of their
16 transportation fuels. California and Oregon have both implemented low
17 carbon fuel standards that are similar to the program created in this
18 act, and both states have experienced biofuel sector growth and have
19 successfully sited large biofuel projects that had originally been
20 planned for Washington. Washington state has extensively studied the
21 potential impact of a clean fuels program, and most projections show
p. 1 E3SHB 1091.SL
 1 that a low carbon fuel standard would decrease greenhouse gas and
2 conventional air pollutant emissions, while positively impacting the
3 state's economy.
4 (2) The legislature further finds that the health and welfare of
5 the people of the state of Washington is threatened by the prospect
6 of crumbling or swamped coastlines, rising water, and more intense
7 forest fires caused by higher temperatures and related droughts, all
8 of which are intensified and made more frequent by the volume of
9 greenhouse gas emissions. As of 2017, the transportation sector
10 contributes 45 percent of Washington's greenhouse gas emissions, and
11 the legislature's interest in the life cycle of the fuels used in the
12 state arises from a concern for the effects of the production and use
13 of these fuels on Washington's environment and public health,
14 including its air quality, snowpack, and coastline.
15 (3) Therefore, it is the intent of the legislature to support the
16 deployment of clean transportation fuel technologies through a
17 carefully designed program that reduces the carbon intensity of fuel
18 used in Washington, in order to:
19 (a) Reduce levels of conventional air pollutants from diesel and
20 gasoline that are harmful to public health;
21 (b) Reduce greenhouse gas emissions associated with
22 transportation fuels, which are the state's largest source of
23 greenhouse gas emissions; and
24 (c) Create jobs and spur economic development based on innovative
25 clean fuel technologies.
26 NEW SECTION. Sec. 2. The definitions in this section apply
27 throughout this chapter unless the context clearly indicates
28 otherwise.
29 (1) "Carbon dioxide equivalents" has the same meaning as defined
30 in RCW 70A.45.010.
31 (2) "Carbon intensity" means the quantity of life-cycle
32 greenhouse gas emissions, per unit of fuel energy, expressed in grams
33 of carbon dioxide equivalent per megajoule (gCO2e/MJ).
34 (3) "Clean fuels program" means the requirements established
35 under this chapter.
36 (4) "Cost" means an expense connected to the manufacture,
37 distribution, or other aspects of the provision of a transportation
38 fuel product.
p. 2 E3SHB 1091.SL
 1 (5) "Credit" means a unit of measure generated when a
2 transportation fuel with a carbon intensity that is less than the
3 applicable standard adopted by the department under section 3 of this
4 act is produced, imported, or dispensed for use in Washington, such
5 that one credit is equal to one metric ton of carbon dioxide
6 equivalents. A credit may also be generated through other activities
7 consistent with this chapter.
8 (6) "Deficit" means a unit of measure generated when a
9 transportation fuel with a carbon intensity that is greater than the
10 applicable standard adopted by the department under section 3 of this
11 act is produced, imported, or dispensed for use in Washington, such
12 that one deficit is equal to one metric ton of carbon dioxide
13 equivalents.
14 (7) "Department" means the department of ecology.
15 (8) "Electric utility" means a consumer-owned utility or
16 investor-owned utility, as those terms are defined in RCW 19.29A.010.
17 (9) "Greenhouse gas" has the same meaning as defined in RCW
18 70A.45.010.
19 (10) "Military tactical vehicle" means a motor vehicle owned by
20 the United States department of defense or the United States military
21 services and that is used in combat, combat support, combat service
22 support, tactical or relief operations, or training for such
23 operations.
24 (11) "Motor vehicle" has the same meaning as defined in RCW
25 46.04.320.
26 (12) "Price" means the amount of payment or compensation provided
27 as consideration for a specified quantity of transportation fuel by a
28 consumer or end user of the transportation fuel.
29 (13) "Regulated party" means a producer or importer of any amount
30 of a transportation fuel that is ineligible to generate credits under
31 this chapter.
32 (14)(a) "Tactical support equipment" means equipment using a
33 portable engine, including turbines, that meets military
34 specifications, owned by the United States military services or its
35 allies, and that is used in combat, combat support, combat service
36 support, tactical or relief operations, or training for such
37 operations.
38 (b) "Tactical support equipment" includes, but is not limited to,
39 engines associated with portable generators, aircraft start carts,
40 heaters, and lighting carts.
p. 3 E3SHB 1091.SL
1 (15) "Transportation fuel" means electricity and any liquid or
2 gaseous fuel sold, supplied, offered for sale, or used for the
3 propulsion of a motor vehicle or that is intended for use for
4 transportation purposes.
5 *NEW SECTION. Sec. 3. (1) The department shall adopt rules that
6 establish standards that reduce carbon intensity in transportation
7 fuels used in Washington. The standards established by the rules must
8 be based on the carbon intensity of gasoline and gasoline substitutes
9 and the carbon intensity of diesel and diesel substitutes. The
10 standards:
11 (a) Must reduce the overall, aggregate carbon intensity of
12 transportation fuels used in Washington;
13 (b) May only require carbon intensity reductions at the aggregate
14 level of all transportation fuels and may not require a reduction in
15 carbon intensity to be achieved by any individual type of
16 transportation fuel;
17 (c) Must assign a compliance obligation to fuels whose carbon
18 intensity exceeds the standards adopted by the department, consistent
19 with the requirements of section 4 of this act; and
20 (d) Must assign credits that can be used to satisfy or offset
21 compliance obligations to fuels whose carbon intensity is below the
22 standards adopted by the department and that elect to participate in
23 the program, consistent with the requirements of section 4 of this
24 act.
25 (2) The clean fuels program adopted by the department must be
26 designed such that:
27 (a) Regulated parties generate deficits and may reconcile the
28 deficits, and thus comply with the clean fuels program standards for
29 a compliance period, by obtaining and retiring credits;
30 (b) Regulated parties and credit generators may generate credits
31 for fuels used as substitutes or alternatives for gasoline or diesel;
32 (c) Regulated parties, credit generators, and credit aggregators
33 shall have opportunities to trade credits; and
34 (d) Regulated parties shall be allowed to carry over to the next
35 compliance period a small deficit without penalty.
36 (3) The department shall, throughout a compliance period,
37 regularly monitor the availability of fuels needed for compliance
38 with the clean fuels program.
p. 4 E3SHB 1091.SL
 1 (4)(a) Under the clean fuels program, the department shall
2 monthly calculate the volume-weighted average price of credits and,
3 no later than the last day of the month immediately following the
4 month for which the calculation is completed, post the formula and
5 the nonaggregated data the department used for the calculation and
6 the results of the calculation on the department's website.
7 (b) In completing the calculation required by this subsection,
8 the department may exclude from the data set credit transfers without
9 a price or other credit transfers made for a price that falls two
10 standard deviations outside of the mean credit price for the month.
11 Data posted on the department's website under this section may not
12 include any individually identifiable information or information that
13 would constitute a trade secret.
14 (5)(a) Except as provided in this section, the rules adopted
15 under this section must reduce the greenhouse gas emissions
16 attributable to each unit of the fuels to 20 percent below 2017
17 levels by 2038 based on the following schedule:
18 (i) No more than 0.5 percent each year in 2023 and 2024;
19 (ii) No more than an additional one percent each year beginning
20 in 2025 through 2027;
21 (iii) No more than an additional 1.5 percent each year beginning
22 in 2028 through 2031; and
23 (iv) No change in 2032 and 2033.
24 (b) The rules must establish a start date for the clean fuels
25 program of no later than January 1, 2023, except as provided in
26 subsection (8) of this section.
27 (6) Beginning with the program year beginning in calendar year
28 2028, the department may not increase the carbon intensity reductions
29 required by the applicable clean fuels program standard adopted by
30 the department under subsection (5) of this section beyond a 10
31 percent reduction in carbon intensity until the department
32 demonstrates that the following have occurred:
33 (a) At least a 15 percent net increase in the volume of in-state
34 liquid biofuel production and the use of feedstocks grown or produced
35 within the state relative to the start of the program; and
36 (b) At least one new or expanded biofuel production facility
37 representing an increase in production capacity or producing, in
38 total, in excess of 60,000,000 gallons of biofuels per year has or
39 have received after July 1, 2021, all necessary siting, operating,
40 and environmental permits post all timely and applicable appeals. As
p. 5 E3SHB 1091.SL
 1 part of the threshold of 60,000,000 gallons of biofuel under this
2 subsection, at least one new facility producing at least 10,000,000
3 gallons per year must have received all necessary siting, operating,
4 and environmental permits. Timely and applicable appeals must be
5 determined by the attorney general's office.
6 (7) Beginning with the program year beginning in calendar year
7 2031, the department may not increase the carbon intensity reductions
8 required by the applicable clean fuels program standard adopted by
9 the department under subsection (5) of this section beyond a 10
10 percent reduction in carbon intensity until the:
11 (a) Joint legislative audit and review committee report required
12 in section 15 of this act has been completed; and
13 (b) 2033 regular legislative session has adjourned, in order to
14 allow an opportunity for the legislature to amend the requirements of
15 this chapter in light of the report required in (a) of this
16 subsection.
17 (8)(a) In order to coordinate and synchronize the clean fuels
18 program with other transportation-related investments, the department
19 may not assign compliance obligations or allow the generation of
20 credits under this chapter until a separate additive transportation
21 revenue act becomes law, at which time the department of licensing
22 must provide written notice to the chief clerk of the house of
23 representatives, the secretary of the senate, and the office of the
24 code reviser.
25 (b) For the purposes of this subsection, "additive transportation
26 revenue act" means an act enacted after April 1, 2021, in which the
27 state fuel tax under RCW 82.38.030 is increased by an additional and
28 cumulative tax rate of at least five cents per gallon of fuel.
29 (9) Transportation fuels exported from Washington are not subject
30 to the greenhouse gas emissions reduction requirements in this
31 section.
32 (10) To the extent the requirements of this chapter conflict with
33 the requirements of chapter 19.112 RCW, the requirements of this
34 chapter prevail.
*Sec. 3 is partially vetoed. See message at end of chapter.
35 NEW SECTION. Sec. 4. The rules adopted by the department to
36 achieve the greenhouse gas emissions reductions per unit of fuel
37 energy specified in section 3 of this act must include, but are not
38 limited to, the following:
p. 6 E3SHB 1091.SL
 1 (1) Standards for greenhouse gas emissions attributable to the
2 transportation fuels throughout their life cycles, including but not
3 limited to emissions from the production, storage, transportation,
4 and combustion of transportation fuels and from changes in land use
5 associated with transportation fuels and any permanent greenhouse gas
6 sequestration activities.
7 (a) The rules adopted by the department under this subsection (1)
8 may:
9 (i) Include provisions to address the efficiency of a fuel as
10 used in a powertrain as compared to a reference fuel;
11 (ii) Consider carbon intensity calculations for transportation
12 fuels developed by national laboratories or used by similar programs
13 in other states; and
14 (iii) Consider changes in land use and any permanent greenhouse
15 gas sequestration activities associated with the production of any
16 type of transportation fuel.
17 (b) The rules adopted by the department under this subsection (1)
18 must:
19 (i) Neutrally consider the life-cycle emissions associated with
20 transportation fuels with respect to the political jurisdiction in
21 which the fuels originated and may not discriminate against fuels on
22 the basis of having originated in another state or jurisdiction.
23 Nothing in this subsection may be construed to prohibit inclusion or
24 assessment of emissions related to fuel production, storage,
25 transportation, or combustion or associated changes in land use in
26 determining the carbon intensity of a fuel;
27 (ii) Measure greenhouse gas emissions associated with electricity
28 and hydrogen based on a mix of generation resources specific to each
29 electric utility participating in the clean fuels program. The
30 department may apply an asset-controlling supplier emission f