"Sec. 1   RCW 15.110.005 and 2006 c 171 s 1 are each amended to read as follows:
     The legislature finds that:
     (1) Washington's dependence on energy supplied from outside the state and volatile global energy markets makes its economy and citizens vulnerable to unpredictable and high energy prices;
     (2) Washington's dependence on petroleum-based fuels increases energy costs for citizens and businesses;
     (3) Diesel soot from diesel engines ranks as the highest toxic air pollutant in Washington, leading to hundreds of premature deaths and increasing rates of asthma and other lung diseases;
     (4) The use of biodiesel results in significantly less air pollution than traditional diesel fuels;
     (5) Improper disposal and treatment of organic waste from farms and livestock operations can have a significant negative impact on water quality;
     (6) Washington has abundant supplies of organic wastes from farms that can be used for energy production and abundant farmland where crops could be grown to supplement or supplant petroleum-based fuels;
     (7) The use of energy and fuel derived from these sources can help citizens and businesses conserve energy and reduce the use of petroleum-based fuels, would improve air and water quality in Washington, reduce environmental risks from farm wastes, create new markets for farm products, and provide new industries and jobs for Washington citizens;
     (8) The bioenergy industry is a new and developing industry that is, in part, limited by the availability of capital for the construction of facilities for converting farm and forest products into energy and fuels;
     (9) Wind-generated electricity provides a pollution-free source of electricity, the utilization of which would be a valuable step toward improving the health of the regional environment;
     (10) Instead of leaving our economy at the mercy of global events, and the policies of foreign nations, Washington state should adopt a policy of energy independence; and
     (((10))) (11) The energy freedom program is meant to lead Washington state towards energy independence.
     Therefore, the legislature finds that it is in the public interest to encourage the rapid adoption and use of wind power and bioenergy, to develop a viable wind and bioenergy industry within Washington state, to promote public research and development in wind and bioenergy sources and markets, and to support wind power production and a viable agriculture industry to grow bioenergy crops. To accomplish this, the energy freedom program is established to promote public research and development in wind power and bioenergy, and to stimulate the construction of facilities in Washington to generate energy from wind and farm sources, or to convert organic matter into fuels.

Sec. 2   RCW 15.110.010 and 2006 c 171 s 2 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Applicant" means any political subdivision of the state, including port districts, counties, cities, towns, special purpose districts, and other municipal corporations or quasi-municipal corporations. "Applicant" may also include federally recognized tribes ((and)), state institutions of higher education with appropriate research capabilities, and not for profit or nonprofit corporations as defined in RCW 24.03.005.
     (2) "Assistance" includes loans, leases, product purchases, or other forms of financial or technical assistance.
     (3) "Department" means the department of ((agriculture)) community, trade, and economic development.
     (4) "Director" means the director of the department of ((agriculture)) community, trade, and economic development.
     (5) "Peer review committee" means a board, appointed by the director, that includes wind or bioenergy specialists, energy conservation specialists, scientists, and individuals with specific recognized expertise.
     (6) "Project" means the construction of facilities, including the purchase of equipment, to convert farm products or wastes into electricity or gaseous or liquid fuels or other coproducts associated with such conversion. These specifically include fixed or mobile facilities to generate electricity or methane from the anaerobic digestion of organic matter, and fixed or mobile facilities for extracting oils from canola, rape, mustard, and other oilseeds. "Project" may also include the construction of facilities associated with such conversion for the distribution and storage of such feedstocks and fuels, or wind power up to five megawatts.
     (7) "Research and development project" means research and development, by an institution of higher education as defined in subsection (1) of this section, relating to:
     (a) Wind power;
     (b) Bioenergy sources including but not limited to biomass and associated gases; or
     (((b))) (c) The development of markets for bioenergy coproducts.

Sec. 3   RCW 15.110.020 and 2006 c 171 s 3 are each amended to read as follows:
     (1) The energy freedom program is established within the department. The director may establish policies and procedures necessary for processing, reviewing, and approving applications made under this chapter.
     (2) When reviewing applications submitted under this program, the director shall consult with those agencies having expertise and knowledge to assess the technical and business feasibility of the project and probability of success. These agencies may include, but are not limited to, Washington State University, the University of Washington, the department of ecology, the department of community, trade, and economic development, and the Washington state conservation commission.
     (3) The director, in cooperation with the department of community, trade, and economic development, may approve an application only if the director finds:
     (a) The project will convert farm products, wind, or wastes directly into electricity or into gaseous or liquid fuels or other coproducts associated with such conversion;
     (b) The project demonstrates technical feasibility and directly assists in moving a commercially viable project into the marketplace for use by Washington state citizens;
     (c) The facility will produce long-term economic benefits to the state, a region of the state, or a particular community in the state;
     (d) The project does not require continuing state support;
     (e) The assistance will result in new jobs, job retention, or higher incomes for citizens of the state;
     (f) The state is provided an option under the assistance agreement to purchase a portion of the fuel or feedstock to be produced by the project, exercisable by the department of general administration, if applicable;
     (g) The project will increase energy independence or diversity for the state;
     (h) The project will use feedstocks produced in the state, if feasible, except this criterion does not apply to the construction of facilities used to distribute and store fuels that are produced from farm products or wastes, nor does it apply to wind projects;
     (i) Any product produced by the project will be suitable for its intended use, will meet accepted national or state standards, and will be stored and distributed in a safe and environmentally sound manner;
     (j) The application provides for adequate reporting or disclosure of financial and employment data to the director, and permits the director to require an annual or other periodic audit of the project books; and
     (k) For research and development projects, the application has been independently reviewed by a peer review committee as defined in RCW 15.110.010 and the findings delivered to the director.
     (4) The director may approve an application for assistance up to five million dollars. In no circumstances shall this assistance constitute more than fifty percent of the total project cost.
     (5) The director shall enter into agreements with approved applicants to fix the terms and rates of the assistance to minimize the costs to the applicants, and to encourage establishment of a viable bioenergy industry. The agreement shall include provisions to protect the state's investment, including a requirement that a successful applicant enter into contracts with any partners that may be involved in the use of any assistance provided under this program, including services, facilities, infrastructure, or equipment. Contracts with any partners shall become part of the application record.
     (6) The director may defer any payments for up to twenty-four months or until the project starts to receive revenue from operations, whichever is sooner.

NEW SECTION.  Sec. 4   This act expires June 30, 2016."