FINAL BILL REPORT
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.
C 164 L 18
Synopsis as Enacted
Brief Description: Promoting renewable natural gas.
Sponsors: House Committee on Technology & Economic Development (originally sponsored by Representatives Morris, Lytton, Fey and Doglio; by request of Department of Commerce).
House Committee on Technology & Economic Development
House Committee on Finance
Senate Committee on Ways & Means
Business and Occupation Tax Preferences.
Manufacturers of wood biomass fuel are eligible for a preferential business and occupation (B&O) tax rate equal to the value of wood biomass fuel manufactured, multiplied by the rate of 0.138 percent.
"Wood biomass fuel" is defined to mean a pyrolytic liquid fuel or synthesis gas-derived liquid fuel, used in internal combustion engines, and produced from wood, forest, or field residue, or dedicated energy crops that do not include wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic.
A preferential B&O tax rate for manufacturers of alcohol fuel, biodiesel fuel, or biodiesel feedstock expired on July 1, 2009.
Sales and Use Tax Preferences.
A sales and use tax exemption is available for establishing or operating an anaerobic digester. The anaerobic digester must be used primarily to treat livestock manure.
Until July 30, 2011, a sales and use tax exemption was available for the sale of machinery and equipment used directly in generating electricity using alternative energy resources, including anaerobic digestion and landfill gas. Beginning on July 1, 2011, and until January 1, 2020, the sales and use tax exemption is equal to 75 percent of the state and local sales tax paid and is available in the form of a remittance.
Property Tax and Leasehold Excise Tax Preferences.
Until December 31, 2015, all buildings, machinery, equipment, and other personal property which were used primarily for the manufacturing of alcohol fuel, biodiesel fuel, or biodiesel feedstock were exempt from property taxes and leasehold taxes for a period of six years following the date on which the facility or the addition to the existing facility became operational. The same tax preference was available for property used primarily for the operation of an anaerobic digester until December 31, 2012. Buildings and other personal property which were used primarily for the manufacturing of wood biomass fuel were exempt from leasehold taxes for a period of six years following the date on which the facility or the addition to the existing facility became operational.
Renewable Natural Gas.
The Washington State University Extension Energy Program (WSU Energy Program) and Department of Commerce (Department), in consultation with the Utilities and Transportation Commission (UTC), must submit recommendations to the Governor and the energy committees of the Legislature by September 1, 2018, on how to promote the sustainable development of renewable natural gas (RNG). The recommendations must include a detailed inventory of the practical opportunities and costs associated with RNG production in the state, specific opportunities for state agencies and public facilities to take advantage of RNG potential, recommendations for limiting the life-cycle carbon intensity of RNG to the extent feasible, and whether to adopt a procurement standard for RNG.
The Department, in consultation with the Department of Ecology, the UTC, and the Department of Health, must explore development of voluntary gas quality standards for the injection of RNG into the natural gas pipeline system. The purpose of the 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 must consult industry groups and identify industry best practices in developing its recommendations.
"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.
For the purposes of the preferential business and occupation (B&O) tax rate for manufacturers of wood biomass fuel, the definition of "wood biomass fuel" is amended to mean a fuel used in internal combustion engines that is produced from lignocellulosic feedstocks, including wood, forest, field residue, and dedicated energy crops, and does not include wood treated with chemical preservations.
Sales and use of equipment and services necessary to process biogas from a landfill into marketable coproducts, including but not limited to biogas conditioning, compression, and electrical generation equipment, are eligible for a sales and use tax exemption.
A sales and use tax exemption is available for establishing or operating an anaerobic digester, regardless of whether the anaerobic digester is used primarily to treat livestock manure.
A six-year property tax and leasehold excise tax exemption is restored for personal property used primarily for the operation of an anaerobic digester until December 31, 2024. The six-year property tax and leasehold excise tax exemption is not restored for property used primarily for the manufacturing of alcohol fuel, biodiesel fuel, wood biomass fuel, and biodiesel feedstock, and references to such fuels are removed.
A tax preference performance statement is established which specifies that 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 RNG for heating, electricity generation, and transportation fuel.
To measure the effectiveness of the tax preferences, the Joint Legislative Audit and Review Committee must evaluate the number of public and private landfills and anaerobic digesters producing RNG and the extent to which they are utilizing the incentives.
An expired preferential B&O tax rate for manufacturers of alcohol fuel, biodiesel fuel, or biodiesel feedstock is repealed. An expired sales and use tax exemption for the sale and use of machinery and equipment used directly in generating electricity using alternative energy resources is repealed.
References to anaerobic digestion and landfill gas are removed from a sales and use tax exemption for the sale of machinery and equipment used directly in generating electricity using alternative energy resources that is equal to 75 percent of the state and local sales taxes paid.
Votes on Final Passage:
July 1, 2018