BILL REQ. #:  H-4521.3 

Read first time 03/11/14.   Referred to Committee on Finance.

     AN ACT Relating to establishing a price on carbon pollution in order to fulfill the paramount duty of the state to fund basic education; and adding a new chapter to Title 82 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) Article IX of the state Constitution confers that the paramount duty of the state is to make ample provision for the education of children within the state. In 2012, the Washington supreme court ruled in McCleary v. the State of Washington that the state has not met its constitutionally enshrined paramount duty to fully fund basic education.
     (2) In recognition of the benefits of positioning the state as a leader in climate policy, the 2008 legislature adopted limits for greenhouse gas emissions in Washington for the years 2020, 2035, and 2050. Recent analyses by the department of ecology and independent consultants of projected future greenhouse gas emissions indicate that without the adoption of new policies to cap greenhouse gas emissions or create an incentive for reduced emissions the state will be very unlikely to achieve its greenhouse gas emissions limits in 2020, 2035, and 2050.
     (3) Therefore, it is the intent of the legislature to place a price on carbon in order to help the state meet its greenhouse gas emissions limits and to generate the billions of dollars in revenue that will be needed to help the state comply with the constitutional requirement to amply fund basic education, the Washington supreme court decision in McCleary v. the State of Washington.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Coal" means bituminous coal, subbituminous coal, lignite, and coke.
     (2) "Fossil fuel" means coal, natural gas, crude oil, and petroleum products.     
     (3) "First taxable event" means:
     (a) The first possession of natural gas acquired by a gas distribution business;
     (b) The first possession of natural gas acquired by a person subject to the tax under RCW 82.12.022 with respect to such natural gas;
     (c) The first possession of coal acquired by a person using the coal for the generation of electricity, heat, or steam within the state of Washington;
     (d) The first possession of a petroleum product subject to tax under chapter 82.21 RCW;
     (e) The purchase or import from outside of Washington by a light and power business of electricity generated by the use of fossil fuels; and
     (f) The use of fossil fuels by a facility in Washington that results in carbon dioxide emissions in conjunction with the process of distilling, fractionating, refining, or processing of crude oil or petroleum products.
     (4) "Gas distribution business" has the same meaning as provided in RCW 82.16.010.
     (5) "Light and power business" has the same meaning as provided in RCW 82.16.010.
     (6) "Petroleum product" has the same meaning as provided in RCW 82.21.020.

NEW SECTION.  Sec. 3   (1) Except as provided in section 4 of this act, there is levied and imposed, at the time of the first taxable event and upon the first taxable person within this state, a fossil fuel carbon pollution tax upon the carbon content of fossil fuels extracted, manufactured, or introduced into this state equal to:
     (a) Beginning July 1, 2015, until July 1, 2017, ten dollars per metric ton of carbon dioxide; and
     (b) Beginning July 1, 2017, and thereafter, twenty dollars per metric ton of carbon dioxide.
     (2) The department must calculate the carbon content of fossil fuels, in consultation with the department of ecology, by using relevant methods based on those established by the United States department of energy or the United States environmental protection agency. The department must develop and make available worksheets and guidance documents necessary to calculate the carbon content of fossil fuels.

NEW SECTION.  Sec. 4   (1) The following fossil fuels are exempt from the fossil fuel carbon pollution tax imposed under this chapter:
     (a) Fossil fuels used for air or marine travel between Washington and a jurisdiction outside the geographic borders of Washington;
     (b) Fossil fuels purchased in Washington for export for use outside of Washington; and
     (c) Fossil fuels brought into this state by means of the fuel supply tank of a motor vehicle, vessel, locomotive, or aircraft.
     (2)(a) The fossil fuel carbon pollution tax rates provided in section 3 of this act must be reduced for any fossil fuel extraction, manufacturing, or introduction when the taxable person can demonstrate to the department's satisfaction that the environmental effects of the extraction, manufacturing, or introduction have been offset through participation by the taxable person in a carbon sequestration program or activity.
     (b) Any reductions to the fossil fuel carbon pollution tax rates due under this section may not be considered a credit and may not be transferred, traded, or banked.

NEW SECTION.  Sec. 5   All taxes collected under the fossil fuel carbon pollution tax imposed under this chapter must be deposited in the education legacy trust account created in RCW 83.100.230.

NEW SECTION.  Sec. 6   (1) The fossil fuel carbon pollution tax imposed under this chapter is to be collected in addition to all other taxes imposed on fossil fuels.
     (2) To the extent practical, the department must integrate the administration and collection of the fossil fuel carbon pollution taxes imposed under this chapter with the administration and collection of other taxes imposed on the taxpayer. The administrative provisions of chapter 82.32 RCW apply to this chapter.

NEW SECTION.  Sec. 7   The department must adopt and maintain rules to implement this chapter.

NEW SECTION.  Sec. 8   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 9   Sections 1 through 7 of this act constitute a new chapter in Title 82 RCW.