"Sec. 1   RCW 47.60.005 and 2007 c 512 s 3 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Adaptive management" means a systematic process for continually improving management policies and practices by learning from the outcomes of operational programs.
     (2) "Capital plan" means the state ferry system plan developed by the department as described in RCW 47.06.050(2) ((and adopted)), reviewed by the commission, and reported to the transportation committees of the legislature by the commission.
     (3) "Capital project" has the same meaning as used in budget instructions developed by the office of financial management.
     (4) "Commission" means the transportation commission created in RCW 47.01.051.
     (5) "Improvement project" has the same meaning as in the budget instructions developed by the office of financial management. If the budget instructions do not define improvement project, then it has the same meaning as "program project" in the budget instructions. If a project meets both the improvement project and preservation project definitions in this section it must be defined as an improvement project. New vessel acquisitions must be defined as improvement projects.
     (6) "Life-cycle cost model" means that portion of a capital asset inventory system which, among other things, is used to estimate future preservation needs.
     (7) "Maintenance cost" has the same meaning as used in budget instructions developed by the office of financial management.
     (8) "Preservation project" has the same meaning as used in budget instructions developed by the office of financial management.
     (9) "Route" means all ferry sailings from one location to another, such as the Seattle to Bainbridge route or the Port Townsend to Keystone route.
     (10) "Sailing" means an individual ferry sailing for a specific route, such as the 5:00 p.m. sailing from Seattle to Bremerton.
     (11) "Travel shed" means one or more ferry routes with distinct characteristics as determined by the department.

NEW SECTION.  Sec. 2   A new section is added to chapter 47.60 RCW to read as follows:
     The department shall develop and maintain a vessel rebuild and replacement plan that, at a minimum:
     (1) Includes projected retirement dates for all vessels, distinguishing between active and inactive vessels;
     (2) Includes projected rebuild dates for all vessels;
     (3) Includes timelines for vessel replacement, including business decisions, design, procurement, and construction; and
     (4) Includes a summary of the condition of all vessels, distinguishing between active and inactive vessels.

Sec. 3   RCW 47.60.375 and 2007 c 512 s 13 are each amended to read as follows:
     (1) The capital plan must adhere to the following:
     (((1))) (a) A current ridership demand forecast;
     (((2))) (b) Vehicle level of service standards as described in RCW 47.06.140;
     (((3))) (c) Operational strategies as described in RCW 47.60.327; and
     (((4))) (d) Terminal design standards as described in RCW 47.60.365.
     (2) The capital plan must include the following:
     (a) A current vessel preservation plan;
     (b) A current systemwide vessel rebuild and replacement plan, which includes an evaluation of the long-term vessel operating costs related to fuel efficiency and staffing;
     (c) A current vessel deployment plan; and
     (d) A current terminal preservation plan.

Sec. 4   RCW 47.60.345 and 2007 c 512 s 10 are each amended to read as follows:
     (1) The department shall maintain a life-cycle cost model on capital assets such that:
     (a) Available industry standards are used for estimating the life of an asset, and department-adopted standard life cycles derived from the experience of similar public and private entities are used when industry standards are not available;
     (b) Standard estimated life is adjusted for asset condition when inspections are made;
     (c) It does not include utilities or other systems that are not replaced on a standard life cycle; and
     (d) It does not include assets not yet built.
     (2) All assets in the life-cycle cost model must be inspected and updated in the life-cycle cost model for asset condition at least every three years.
     (3) The life-cycle cost model shall be used when estimating future ((system)) terminal and vessel preservation needs.
     (4) The life-cycle cost model shall be the basis for developing the budget request for terminal and vessel preservation funding.

NEW SECTION.  Sec. 5   A new section is added to chapter 47.60 RCW to read as follows:
     (1) The department shall develop and maintain a vessel maintenance and preservation program that meets or exceeds all federal requirements and, at a minimum:
     (a) Includes a bilge and void maintenance program;
     (b) Includes a visual inspection/audio gauging steel preservation program; and
     (c) Uses a lowest life-cycle cost method.
     (2) The vessel maintenance and preservation program must maximize cost efficiency by, at a minimum:
     (a) Reducing planned out-of-service time to the greatest extent possible; and
     (b) Striving to eliminate planned peak season out-of-service periods.
     (3) When construction is underway for the replacement of a vessel, the vessel that is scheduled for retirement is exempt from the requirement in subsection (1)(c) of this section.
     (4) The department shall include a plain language status report on the maintenance and preservation vessel program with each budget submittal to the office of financial management. This report must include, at a minimum:
     (a) A description of the maintenance and preservation of each vessel in the fleet;
     (b) A highlight and explanation of any significant deviation from the norm;
     (c) A highlight and explanation of any significant deviation from the vessel preservation plan required under RCW 47.60.375;
     (d) A highlight and explanation of decisions not to invest in vessels; and
     (e) A highlight and explanation of decisions to invest early in vessels."