"Sec. 1   RCW 74.46.803 and 2001 1st sp.s. c 8 s 16 are each amended to read as follows:
     (1) The department shall establish rules for issuing a certificate of capital authorization. ((Applications for a certificate of capital authorization shall be submitted and approved on a biennial basis.)) The rules shall address the following subjects, among others:
     (a) The period of time during which applications for certificates of capital authorization will be accepted;
     (b) The period of time for which a certificate of capital authorization will be valid; and
     (c) The prioritization of applications for certificates of capital authorization, consistent with the principles set out in this section.
     (2) The rules for a certificate of capital authorization shall be consistent with the following principles:
     (((1) The certificate of capital authorization shall be approved on a first-come, first-served basis.
     (2) Those projects that do not receive approval in one authorization period shall have priority the following biennium should the project be resubmitted.))
     (a) In processing and approving certificates of capital authorization, priority shall be given to construction or major renovation of existing facilities or replacement facilities. Those existing or replacement facilities with the greatest length of time since their last major renovation or construction shall be given first priority.
     (b) A certificate of capital authorization is only required for capital expenditures exceeding the expenditure minimum as defined in RCW 70.38.025.
     (c) Certificates of capital authorization for new facilities shall receive last priority and be assigned on a first-come, first-served basis.
     (d) Within the priorities established by this section, applications for certificates of capital authorization that do not receive approval in one state fiscal year because that year's authorization limit has been reached shall have priority the following year if the applications are resubmitted.
     (3) The department shall have the authority to give first priority for a project that is necessitated by an emergency situation even if the project is not submitted in a timely fashion. ((The department shall establish rules for determining what constitutes an emergency.)) Projects shall be considered on an emergency basis if the construction or renovation must be completed as soon as possible to:
     (a) Retain a facility's license or certification;
     (b) Protect the health or safety of the facility's residents; or
     (c) Avoid closure.
     (4) The department shall establish deadlines for progress and the department shall have the authority to withdraw the certificate of capital authorization where the holder of the certificate has not complied with those deadlines in a good faith manner.

Sec. 2   RCW 74.46.807 and 2001 1st sp.s. c 8 s 15 are each amended to read as follows:
     The total capital authorization available for any ((biennial)) state fiscal year period shall be specified in the biennial appropriations act and shall be calculated on an annual basis. ((When setting the capital authorization level, the legislature shall consider both the need for, and the cost of, new and replacement beds.))"