BILL REQ. #:  S-1273.2 

Read first time 02/10/11.   Referred to Committee on Environment, Water & Energy.

     AN ACT Relating to coal-fired electric generation facilities; amending RCW 80.80.040, 80.80.070, 80.50.100, and 43.160.076; reenacting and amending RCW 80.80.010 and 80.80.060; adding new sections to chapter 80.80 RCW; adding a new section to chapter 43.155 RCW; adding a new chapter to Title 80 RCW; creating new sections; repealing RCW 82.08.811 and 82.12.811; providing an effective date; and providing an expiration date.

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

NEW SECTION.  Sec. 101   (1) In chapter 14, Laws of 2008, the legislature required that statewide overall greenhouse gas emissions must be reduced to 1990 levels by 2020.
     (2) The legislature finds that generating electricity from the combustion of coal produces large amounts of harmful pollutants, including ammonia, arsenic, lead, mercury, hydrochloric acid, nitrogen oxides, sulfuric acid, sulfur dioxide, particulate matter, and several toxic heavy metals, all of which have been determined by medical science to be harmful to human health and safety. The emissions from the combustion of coal in the state significantly impact visibility in eight class I areas in the state. Furthermore, these harmful by- products are damaging the cultural history of Washington and its people by eroding ancient native American petroglyphs and pictographs and by accumulating in the soil and waters of the usual and accustomed areas for tribal hunting, fishing, gathering, and grazing.
     (3) The legislature has previously recognized that greenhouse gas emissions contribute to climate change and has found that Washington is especially vulnerable to climate change. The legislature now finds that coal-powered electricity generation is one of the largest sources of greenhouse gas emissions in the state, accounting for ten percent of the state's total greenhouse gas emissions and nearly eighty percent of such emissions from the generation of electricity in the state.
     (4) The legislature finds coal-fired electric generation may provide baseload power that is necessary for the stability and reliability of the electrical transmission grid and that efforts to transition that power to other fuels requires the deliberate development of replacement generation.
     (5) The legislature finds that coal-fired electric generation facilities are large industrial facilities that require substantial planning and funding for closure and postclosure to ensure that the site is fully restored and free of contamination.
     (6) Therefore, it is the purpose of this act to provide for the reduction of greenhouse gas emissions from large coal-fired electric power generation facilities, to ensure appropriate cleanup and site restoration upon decommissioning of any facilities in the state, and to provide assistance to host communities planning for new economic development and mitigating the economic impacts of the closure of these facilities.

Sec. 102   RCW 80.80.010 and 2009 c 565 s 54 and 2009 c 448 s 1 are each reenacted and amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Attorney general" means the Washington state office of the attorney general.
     (2) "Auditor" means: (a) The Washington state auditor's office or its designee for consumer-owned utilities under its jurisdiction; or (b) an independent auditor selected by a consumer-owned utility that is not under the jurisdiction of the state auditor.
     (3) "Average available greenhouse gas emissions output" means the level of greenhouse gas emissions as surveyed and determined by the energy policy division of the department of commerce under RCW 80.80.050.
     (4) "Baseload electric generation" means electric generation from a power plant that is designed and intended to provide electricity at an annualized plant capacity factor of at least sixty percent.
     (5) "Cogeneration facility" means a power plant in which the heat or steam is also used for industrial or commercial heating or cooling purposes and that meets federal energy regulatory commission standards for qualifying facilities under the public utility regulatory policies act of 1978 (16 U.S.C. Sec. 824a-3), as amended.
     (6) "Combined-cycle natural gas thermal electric generation facility" means a power plant that employs a combination of one or more gas turbines and steam turbines in which electricity is produced in the steam turbine from otherwise lost waste heat exiting from one or more of the gas turbines.
     (7) "Commission" means the Washington utilities and transportation commission.
     (8) "Consumer-owned utility" means a municipal utility formed under Title 35 RCW, a public utility district formed under Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, a cooperative formed under chapter 23.86 RCW, a mutual corporation or association formed under chapter 24.06 RCW, or port district within which an industrial district has been established as authorized by Title 53 RCW, that is engaged in the business of distributing electricity to more than one retail electric customer in the state.
     (9) "Department" means the department of ecology.
     (10) "Distributed generation" means electric generation connected to the distribution level of the transmission and distribution grid, which is usually located at or near the intended place of use.
     (11) "Electric utility" means an electrical company or a consumer-owned utility.
     (12) "Electrical company" means a company owned by investors that meets the definition of RCW 80.04.010.
     (13) "Governing board" means the board of directors or legislative authority of a consumer-owned utility.
     (14) "Greenhouse ((gases)) gas" includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
     (15) "Long-term financial commitment" means:
     (a) Either a new ownership interest in baseload electric generation or an upgrade to a baseload electric generation facility; or
     (b) A new or renewed contract for baseload electric generation with a term of five or more years for the provision of retail power or wholesale power to end-use customers in this state.
     (16) "Plant capacity factor" means the ratio of the electricity produced during a given time period, measured in kilowatt-hours, to the electricity the unit could have produced if it had been operated at its rated capacity during that period, expressed in kilowatt-hours.
     (17) "Power plant" means a facility for the generation of electricity that is permitted as a single plant by a jurisdiction inside or outside the state.
     (18) "Upgrade" means any modification made for the primary purpose of increasing the electric generation capacity of a baseload electric generation facility. "Upgrade" does not include routine or necessary maintenance, installation of emission control equipment, installation, replacement, or modification of equipment that improves the heat rate of the facility, or installation, replacement, or modification of equipment for the primary purpose of maintaining reliable generation output capability that does not increase the heat input or fuel usage as specified in existing generation air quality permits as of July 22, 2007, but may result in incidental increases in generation capacity.
     (19) "Clean fuel transition power" means the power purchased by an electric utility or other entity as part of implementing a memorandum of agreement entered under sections 106 and 107 of this act to achieve early emissions reductions of greenhouse gases.
     (20) "Memorandum of agreement" or "memorandum" means a binding and enforceable contract between the governor and an owner of a baseload electric generation facility in the state that provides for early greenhouse gas emissions reductions from the facility through the use of clean fuel transition power.

Sec. 103   RCW 80.80.040 and 2009 c 448 s 2 are each amended to read as follows:
     (1) Beginning July 1, 2008, the greenhouse gas emissions performance standard for all baseload electric generation for which electric utilities enter into long-term financial commitments on or after such date is the lower of:
     (a) One thousand one hundred pounds of greenhouse gases per megawatt-hour; or
     (b) The average available greenhouse gas emissions output as determined under RCW 80.80.050.
     (2) This chapter does not apply to long-term financial commitments with the Bonneville power administration.
     (3)(a) Except as provided in (c) of this subsection, all baseload electric generation facilities in operation as of June 30, 2008, are deemed to be in compliance with the greenhouse gas emissions performance standard established under this section until the facilities are the subject of long-term financial commitments.
     (b) All baseload electric generation that commences operation after June 30, 2008, and is located in Washington, must comply with the greenhouse gas emissions performance standard established in subsection (1) of this section.
     (c) A baseload electric generation facility in Washington that has emitted more than one million tons of greenhouse gases annually in each of calendar years 2005, 2006, and 2007 must comply with the greenhouse gas emissions performance standard established in subsection (1) of this section by December 31, 2020, unless extended by order of the governor pursuant to section 109 of this act.
     (4) All electric generation facilities or power plants powered exclusively by renewable resources, as defined in RCW 19.280.020, are deemed to be in compliance with the greenhouse gas emissions performance standard established under this section.
     (5) All cogeneration facilities in the state that are fueled by natural gas or waste gas or a combination of the two fuels, and that are in operation as of June 30, 2008, are deemed to be in compliance with the greenhouse gas emissions performance standard established under this section until the facilities are the subject of a new ownership interest or are upgraded.
     (6) In determining the rate of emissions of greenhouse gases for baseload electric generation, the total emissions associated with producing electricity shall be included.
     (7) In no case shall a long-term financial commitment be determined to be in compliance with the greenhouse gas emissions performance standard if the commitment includes more than twelve percent of electricity from unspecified sources.
     (8) For a long-term financial commitment with multiple power plants, each specified power plant must be treated individually for the purpose of determining the annualized plant capacity factor and net emissions, and each power plant must comply with subsection (1) of this section, except as provided in subsections (3) through (5) of this section.
     (9) The department shall establish an output-based methodology to ensure that the calculation of emissions of greenhouse gases for a cogeneration facility recognizes the total usable energy output of the process, and includes all greenhouse gases emitted by the facility in the production of both electrical and thermal energy. In developing and implementing the greenhouse gas emissions performance standard, the department shall consider and act in a manner consistent with any rules adopted pursuant to the public utilities regulatory policy act of 1978 (16 U.S.C. Sec. 824a-3), as amended.
     (10) The following greenhouse gas emissions produced by baseload electric generation owned or contracted through a long-term financial commitment shall not be counted as emissions of the power plant in determining compliance with the greenhouse gas emissions performance standard:
     (a) Those emissions that are injected permanently in geological formations;
     (b) Those emissions that are permanently sequestered by other means approved by the department; and
     (c) Those emissions sequestered or mitigated as approved under subsection (16) of this section.
     (11) In adopting and implementing the greenhouse gas emissions performance standard, the department of ((community, trade, and economic development)) commerce energy policy division, in consultation with the commission, the department, the Bonneville power administration, the western electricity ((coordination [coordinating])) coordinating council, the energy facility site evaluation council, electric utilities, public interest representatives, and consumer representatives, shall consider the effects of the greenhouse gas emissions performance standard on system reliability and overall costs to electricity customers.
     (12) In developing and implementing the greenhouse gas emissions performance standard, the department shall, with assistance of the commission, the department of ((community, trade, and economic development)) commerce energy policy division, and electric utilities, and to the extent practicable, address long-term purchases of electricity from unspecified sources in a manner consistent with this chapter.
     (13) The directors of the energy facility site evaluation council and the department shall each adopt rules under chapter 34.05 RCW in coordination with each other to implement and enforce the greenhouse gas emissions performance standard. The rules necessary to implement this section shall be adopted by June 30, 2008.
     (14) In adopting the rules for implementing this section, the energy facility site evaluation council and the department shall include criteria to be applied in evaluating the carbon sequestration plan, for baseload electric generation that will rely on subsection (10) of this section to demonstrate compliance, but that will commence sequestration after the date that electricity is first produced. The rules shall include but not be limited to:
     (a) Provisions for financial assurances, as a condition of plant operation, sufficient to ensure successful implementation of the carbon sequestration plan, including construction and operation of necessary equipment, and any other significant costs;
     (b) Provisions for geological or other approved sequestration commencing within five years of plant operation, including full and sufficient technical documentation to support the planned sequestration;
     (c) Provisions for monitoring the effectiveness of the implementation of the sequestration plan;
     (d) Penalties for failure to achieve implementation of the plan on schedule;
     (e) Provisions for an owner to purchase emissions reductions in the event of the failure of a sequestration plan under subsection (16) of this section; and
     (f) Provisions for public notice and comment on the carbon sequestration plan.
     (15)(a) Except as provided in (b) of this subsection, as part of its role enforcing the greenhouse gas emissions performance standard, the department shall determine whether sequestration or a plan for sequestration will provide safe, reliable, and permanent protection against the greenhouse gases entering the atmosphere from the power plant and all ancillary facilities.
     (b) For facilities under its jurisdiction, the energy facility site evaluation council shall contract for review of sequestration or the carbon sequestration plan with the department consistent with the conditions under (a) of this subsection, consider the adequacy of sequestration or the plan in its adjudicative proceedings conducted under RCW 80.50.090(3), and incorporate specific findings regarding adequacy in its recommendation to the governor under RCW 80.50.100.
     (16) A project under consideration by the energy facility site evaluation council by July 22, 2007, is required to include all of the requirements of subsection (14) of this section in its carbon sequestration plan submitted as part of the energy facility site evaluation council process. A project under consideration by the energy facility site evaluation council by July 22, 2007, that receives final site certification agreement approval under chapter 80.50 RCW shall make a good faith effort to implement the sequestration plan. If the project owner determines that implementation is not feasible, the project owner shall submit documentation of that determination to the energy facility site evaluation council. The documentation shall demonstrate the steps taken to implement the sequestration plan and evidence of the technological and economic barriers to successful implementation. The project owner shall then provide to the energy facility site evaluation council notification that they shall implement the plan that requires the project owner to meet the greenhouse gas emissions performance standard by purchasing verifiable greenhouse gas emissions reductions from an electric ((generating)) generation facility located within the western interconnection, where the reduction would not have occurred otherwise or absent this contractual agreement, such that the sum of the emissions reductions purchased and the facility's emissions meets the standard for the life of the facility.

Sec. 104   RCW 80.80.060 and 2009 c 448 s 3 and 2009 c 147 s 1 are each reenacted and amended to read as follows:
     (1) No electrical company may enter into a long-term financial commitment unless the baseload electric generation supplied under such a long-term financial commitment complies with the greenhouse ((gases [gas])) gas emissions performance standard established under RCW 80.80.040.
     (2) In order to enforce the requirements of this chapter, the commission shall review in a general rate case or as provided in subsection (5) of this section any long-term financial commitment entered into by an electrical company after June 30, 2008, to determine whether the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases [gas])) gas emissions performance standard established under RCW 80.80.040.
     (3) In determining whether a long-term financial commitment is for baseload electric generation, the commission shall consider the design of the power plant and its intended use, based upon the electricity purchase contract, if any, permits necessary for the operation of the power plant, and any other matter the commission determines is relevant under the circumstances.
     (4) Upon application by an electric utility, the commission may provide a case-by-case exemption from the greenhouse ((gases [gas])) gas emissions performance standard to address: (a) Unanticipated electric system reliability needs; (b) extraordinary cost impacts on utility ratepayers; or (c) catastrophic events or threat of significant financial harm that may arise from unforeseen circumstances.
     (5) Upon application by an electrical company, the commission shall determine whether the company's proposed decision to acquire electric generation or enter into a power purchase agreement for electricity complies with the greenhouse ((gases [gas])) gas emissions performance standard established under RCW 80.80.040. The commission shall not decide in a proceeding under this subsection (5) issues involving the actual costs to construct and operate the selected resource, cost recovery, or other issues reserved by the commission for decision in a general rate case or other proceeding for recovery of the resource or contract costs.
     (6) An electrical company may account for and defer for later consideration by the commission costs incurred in connection with a long-term financial commitment, including operating and maintenance costs, depreciation, taxes, and cost of invested capital. The deferral begins with the date on which the power plant begins commercial operation or the effective date of the power purchase agreement and continues for a period not to exceed twenty-four months; provided that if during such period the company files a general rate case or other proceeding for the recovery of such costs, deferral ends on the effective date of the final decision by the commission in such proceeding. Creation of such a deferral account does not by itself determine the actual costs of the long-term financial commitment, whether recovery of any or all of these costs is appropriate, or other issues to be decided by the commission in a general rate case or other proceeding for recovery of these costs. For the purpose of this subsection (6) only, the term "long-term financial commitment" also includes an electric company's ownership or power purchase agreement with a term of five or more years associated with an eligible renewable resource as defined in RCW 19.285.030.
     (7) The commission shall consult with the department to apply the procedures adopted by the department to verify the emissions of greenhouse gases from baseload electric generation under RCW 80.80.040. The department shall report to the commission whether baseload electric generation will comply with the greenhouse ((gases [gas])) gas emissions performance standard for the duration of the period the baseload electric generation is supplied to the electrical company.
     (8) The commission shall adopt rules for the enforcement of this section with respect to electrical companies and adopt procedural rules for approving costs incurred by an electrical company under subsection (4) of this section.
     (9) This section does not apply to a long-term financial commitment for the purchase of clean fuel transition power.
     (10) The commission shall adopt rules necessary to implement this section by December 31, 2008.

Sec. 105   RCW 80.80.070 and 2007 c 307 s 9 are each amended to read as follows:
     (1) No consumer-owned utility may enter into a long-term financial commitment unless the baseload electric generation supplied under such a long-term financial commitment complies with the greenhouse ((gases)) gas emissions performance standard established under RCW 80.80.040.
     (2) The governing board shall review and make a determination on any long-term financial commitment by the utility, pursuant to this chapter and after consultation with the department, to determine whether the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases)) gas emissions performance standard established under RCW 80.80.040. No consumer-owned utility may enter into a long-term financial commitment unless the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases)) gas emissions performance standard established under RCW 80.80.040.
     (3) In confirming that a long-term financial commitment is for baseload electric generation, the governing board shall consider the design of the power plant and the intended use of the power plant based upon the electricity purchase contract, if any, permits necessary for the operation of the power plant, and any other matter the governing board determines is relevant under the circumstances.
     (4) The governing board may provide a case-by-case exemption from the greenhouse ((gases)) gas emissions performance standard to address: (a) Unanticipated electric system reliability needs; or (b) catastrophic events or threat of significant financial harm that may arise from unforeseen circumstances.
     (5) The governing board shall apply the procedures adopted by the department to verify the emissions of greenhouse gases from baseload electric generation under RCW 80.80.040, and may request assistance from the department in doing so.
     (6) For consumer-owned utilities, the auditor is responsible for auditing compliance with this chapter and rules adopted under this chapter that apply to those utilities and the attorney general is responsible for enforcing that compliance.
     (7) This section does not apply to long-term financial commitments for the purchase of clean fuel transition power.

NEW SECTION.  Sec. 106   A new section is added to chapter 80.80 RCW to read as follows:
     (1) The governor shall seek to enter into a memorandum of agreement with the owners of a facility that has emitted more than one million tons of greenhouse gases annually in calendar years 2005 through 2007.
     (2) The memorandum of agreement must incorporate binding commitments to achieve the reductions required by this section and include a schedule of major steps and resource investments necessary to achieve the reductions. The agreement must provide for the following minimum levels of emission reductions when measured on a calendar year basis as a percentage of the average annual emissions in calendar years 2005 through 2007:
     (a) Beginning January 1, 2014, the facility must achieve at least a twenty-five percent reduction; and
     (b) Beginning January 1, 2017, the facility must achieve at least a forty percent reduction.
     (3) The memorandum of agreement must be consistent with the requirement that the facility meet the emissions performance standard by the applicable date in RCW 80.80.040(3)(c).

NEW SECTION.  Sec. 107   A new section is added to chapter 80.80 RCW to read as follows:
     (1) A memorandum of agreement formed under section 106 of this act may describe the potential sources and types of fuel for electricity generation that may qualify as clean fuel transition power. If the memorandum of agreement provides such a provision, the memorandum of agreement must also provide timely procedures for the governor to review the proposed purchases and determine that the purchases will assist in implementing the memorandum of agreement. When negotiating the issue of clean fuel transition power in any memorandum of agreement, the governor may consult with any entity necessary to ensure a regional dialogue concerning replacement power, transmission reliability, natural gas pipeline capacity, or any other relevant issue.
     (2) No state agency or political subdivision of the state may adopt a greenhouse gas emission performance standard, or other operating requirement or limitation, that is inconsistent with the provisions of a memorandum of agreement entered pursuant to this section. The memorandum of agreement may provide for its termination or suspension, or require modification to the satisfaction of the parties to the memorandum of agreement, in the event that a conflicting emission or performance standard, or other operational requirement or limitation directly addressing greenhouse gas emissions, is imposed by federal law, rules, or regulatory requirements.

NEW SECTION.  Sec. 108   A new section is added to chapter 80.80 RCW to read as follows:
     (1) A memorandum of agreement entered into pursuant to section 106 of this act may include provisions to assist in the financing of emissions reductions that exceed those required by RCW 80.80.040(3)(c) by providing for the recognition of such reductions in applicable state policies and programs relating to greenhouse gas emissions, and by encouraging and advocating for the recognition of the reductions in all established and emerging emission reduction frameworks at the regional, national, or international level.
     (2) Where the agreement includes the provisions referred to in subsection (1) of this section, electric utilities serving customers in this state must be afforded an opportunity to manage their future carbon regulatory risk through investments in early emission reductions under the agreement. Such an investment must be treated as if it were an equal reduction in the emissions generated by the utility and of any emissions resulting from the consumption of electricity by the utility's customers. Such an investment must be treated as prudent in meeting the utility's responsibilities to contribute toward greenhouse gas emissions reductions to meet the state's limits established under RCW 70.235.020.
     (3) The governor may recommend actions by the legislature to strengthen implementation of an agreement or a proposed agreement relating to recognition of investments in early emissions reductions.

NEW SECTION.  Sec. 109   A new section is added to chapter 80.80 RCW to read as follows:
     (1) Upon petition by the baseload electric generation facility owner, the governor may grant an extension of the compliance date applicable under RCW 80.80.040(3)(c) when the governor determines under the provisions of this section that such an extension would be in the public interest. An extension of the compliance date may not be granted beyond December 31, 2025.
     (2) The governor shall broadly seek information and positions upon the petition, including the views of agencies and entities engaged in the management of the generation, transmission, and distribution of electricity. A reasonable opportunity to provide comments must be afforded to all interested persons.
     (3) The governor shall consider all relevant information submitted in support of or opposing the petition, including but not limited to such considerations as:
     (a) Impacts upon baseload and peak load electricity supplies in the state and throughout the region;
     (b) Impacts upon the reliability and the operational costs of the region's electrical transmission system;
     (c) Impacts of the compliance date upon retail electric rates;
     (d) Impacts upon employment and other economic impacts in the community hosting the baseload electric generation facility; and
     (e) Financial impact upon the baseload electric generation facility owner.
     (4) The governor shall issue a draft order that must identify the information relied upon to support the order. The draft order must be made available to the public and a reasonable time afforded for review and comments to be submitted to the governor.
     (5) The governor may grant or deny the petition by order.
     (6) The governor may designate an official of state government to perform the duties under this section, except that the governor must review the information submitted and issue the final decision whether to grant or deny the petition.

Sec. 110   RCW 80.50.100 and 1989 c 175 s 174 are each amended to read as follows:
     (1) The council shall report to the governor its recommendations as to the approval or rejection of an application for certification within twelve months of receipt by the council of such an application, or such later time as is mutually agreed by the council and the applicant. In the case of an application for certification of an energy facility proposed for construction, modification, or expansion for the purpose of providing clean fuel transition power assisting in implementing provisions of a memorandum of agreement entered pursuant to section 106 of this act, the council shall report its recommendations to the governor within one hundred eighty days of receipt by the council of such an application, or a later time as is mutually agreed by the council and the applicant. If the council recommends approval of an application for certification, it shall also submit a draft certification agreement with the report. The council shall include conditions in the draft certification agreement to implement the provisions of this chapter, including, but not limited to, conditions to protect state or local governmental or community interests affected by the construction or operation of the energy facility, and conditions designed to recognize the purpose of laws or ordinances, or rules or regulations promulgated thereunder, that are preempted or superseded pursuant to RCW 80.50.110 as now or hereafter amended.
     (2)(a) Within sixty days of receipt of the council's report the governor shall take one of the following actions:
     (((a))) (i) Approve the application and execute the draft certification agreement; or
     (((b))) (ii) Reject the application; or
     (((c))) (iii) Direct the council to reconsider certain aspects of the draft certification agreement.
     (b) The council shall reconsider such aspects of the draft certification agreement by reviewing the existing record of the application or, as necessary, by reopening the adjudicative proceeding for the purposes of receiving additional evidence. Such reconsideration shall be conducted expeditiously. The council shall resubmit the draft certification to the governor incorporating any amendments deemed necessary upon reconsideration. Within sixty days of receipt of such draft certification agreement, the governor shall either approve the application and execute the certification agreement or reject the application. The certification agreement shall be binding upon execution by the governor and the applicant.
     (3) The rejection of an application for certification by the governor shall be final as to that application but shall not preclude submission of a subsequent application for the same site on the basis of changed conditions or new information.

NEW SECTION.  Sec. 201   The legislature finds that very large coal-fired electric generation facilities, together with nearby coal mines that have historically supplied coal to the facilities, are major industrial facilities whose closure, removal of structures, and site reclamation requires significant planning and funding. In order to ensure that the site of these facilities after closure is fully cleaned up and surrounding communities are fully assured that applicable and appropriate clean-up standards are met, it is necessary to require that the facility owner demonstrate during the facility's operation that sufficient funding will be available for closure and postclosure activities.

NEW SECTION.  Sec. 202   (1) By June 30, 2013, the department of ecology shall adopt rules establishing requirements for the closure and postclosure of coal-fired electric generating facilities in operation prior to the effective date of this section and which have emitted more than five million tons of greenhouse gases in each of the calendar years 2006 through 2010.
     (2) The rules must include but not be limited to:
     (a) Demonstrating financial assurance to fund the closure and postclosure of the facility and providing methods by which this assurance may be demonstrated. The rules must be consistent with the requirement to establish a closure trust account provided under section 204 of this act;
     (b) Methods for estimating closure costs, including full site reclamation under all applicable federal and state clean-up standards;
     (c) Methods to ensure that the full funding necessary for closure and postclosure costs will be available at the time of closure of the facility; and
     (d) Requiring a decommissioning and site restoration plan. The plan must address restoring physical topography, cleanup of all hazardous substances on the site, potential future uses of the site following restoration, and coordination with local and community plans for economic development in the vicinity of the site. Adoption of the plan and significant revisions to the plan must be approved by the department following consultation with the advisory board created in section 302 of this act.

NEW SECTION.  Sec. 203   (1) Each coal-fired electric generating facility in operation on the effective date of this section and which has emitted more than five million tons of greenhouse gases in each of the calendar years 2006 through 2010 must, on or before December 31, 2012, and on or before December 31st of each year thereafter until coal combustion at the facility ceases, pay into the trust account required by section 204 of this act funds for the purpose of decommissioning such a facility.
     (2) The funding must be calculated based upon the total annual electricity generated from the combustion of coal in the amount of one dollar per megawatt hour in the preceding twelve months.
     (3) The parent corporation, holding company, or successor owner of the coal-fired electric generating facility is responsible for any costs associated with eliminating toxic contamination at the facility, dismantling infrastructure at the facility, and disposing of waste created by the dismantling of infrastructure at the facility if those costs exceed the amount reserved in the trust account required by section 204 of this act.

NEW SECTION.  Sec. 204   (1) All funds required under section 203 of this act for the purpose of decommissioning must be deposited into a trust account, maintained for the purpose of holding such decommissioning funds, with a financial institution as defined by RCW 30.22.041 or licensed escrow agent located in Washington. Except as provided in subsection (2) of this section, all interest paid on trust account deposits must be reinvested in the account. The qualifying coal-fired electric generating facility shall provide to the department and to the advisory board created in section 302 of this act a written accounting of all relevant deposits, and provide written notice of the name, address, and location of the depository and any subsequent change thereof. If ownership of the facility is transferred to another person, entity, or corporation, any sums in the trust account affected by such a transfer must simultaneously be transferred to an equivalent trust account of the successor owner, and the successor owner shall promptly notify the department and the advisory board created in section 302 of this act of the transfer and of the name, address, and location of the new depository. No creditor of the qualifying facility has a superior claim to any moneys deposited under this section, including a trustee in bankruptcy or receiver.
     (2) All moneys paid in excess of the yearly deposits required by section 203 of this act as security for performance of the facility's decommissioning obligations must be deposited into the account required by subsection (1) of this section. The interest accruing on deposits in the account, minus fees charged to administer the account, must be reinvested in the account. All other provisions of subsection (1) of this section apply to deposits under this subsection.
     (3) Expenditures from the trust account may only be made in accordance with an authorized decommissioning and site restoration plan.

NEW SECTION.  Sec. 205   The department of ecology shall consult with the energy facility site evaluation council to harmonize the standards required under the rules adopted under section 202 of this act with rules adopted by the council for site restoration and preservation applicable to facilities subject to a site certification agreement under chapter 80.50 RCW.

NEW SECTION.  Sec. 206   The department of ecology shall consult with the department of natural resources to harmonize the standards required under the rules adopted under section 202 of this act with the site reclamation requirements of the department of natural resources under the surface mining regulations of chapter 78.44 RCW. Where the department of ecology determines that a site reclamation permit from the department of natural resources establishes sufficient financial assurance mechanisms for the restoration of surface mining sites associated with a generation facility to the levels required by this chapter, the department of ecology may recognize such a permit in lieu of compliance with the rules adopted under section 202 of this act solely with regard to the site areas addressed in the site reclamation permit.

NEW SECTION.  Sec. 207   Sections 201 through 206 and 302 of this act constitute a new chapter in Title 80 RCW.

NEW SECTION.  Sec. 301   The legislature finds that to achieve the state's greenhouse gas emissions limits established under chapter 14, Laws of 2008, very large emissions sources from fossil fuel electric generation facilities in the state are likely to be transitioned to lower-emitting fuels. It is in the public interest to assist local communities in which very large facilities may be closed, in order to plan for future economic uses of the site and in the community surrounding the site.

NEW SECTION.  Sec. 302   (1) By January 1, 2016, the governor shall create a coal-fired electric generating facility transition and decommissioning advisory board for each facility that is operating on July 1, 2015, and that is subject to the standards applicable under RCW 80.80.040(3)(c). The advisory board shall serve the purpose of providing community involvement in facility and site decommissioning and planning for future economic development to mitigate the community impacts of facility decommissioning.
     (2)(a) Five members of the advisory board are voting members and must be appointed by the governor. One voting member must be a representative of the owner of the facility. One voting member must be a representative of the county economic development council where the facility is located. One voting member must be a representative of the majority of employees at the facility, chosen by those employees or a bargaining entity established to represent those employees. Two voting members must represent the general public. All voting advisory board members must comply with applicable provisions in chapter 42.52 RCW concerning any potential conflicts of interest. The governor shall appoint one of the general public members of the board as the chair.
     (b) In making the appointments to the advisory board, the governor shall seek a board membership that collectively provides strong fiscal and environmental oversight of the decommissioning plan, that provides extensive knowledge of local government processes, and that has an understanding of issues relevant to the environment and economic development in Washington state. Vacant positions on the advisory board must be filled in the same manner as the original appointments. Advisory board members appointed by the governor shall serve for terms coextensive with the term of the governor. All advisory board members may be removed for cause.
     (3) In addition to the five voting members of the advisory board, the following shall serve as ex officio nonvoting members of the advisory board: The director of the department of ecology; the mayor of the city in which the qualifying facility is located; a representative of the city council in which the facility is located; and the chair of the county council in which the facility is located. The members serving in an ex officio capacity may designate a representative of their respective agencies to serve on the board on their behalf. Such a designation must be made in writing and in such a manner as is specified by the advisory board.
     (4) The advisory board has the following powers and duties related to decommissioning of the facility and planning for future site uses:
     (a) To review and provide comments regarding the decommissioning and site restoration plan required by this chapter;
     (b) To review and concur in expenditures from the decommission trust account required under section 204 of this act; and
     (c) To set its meeting schedules and convene at scheduled times or meet at the request of a majority of its members or the chair.
     (5) Decisions of the advisory board must be made by a majority of its total voting membership.
     (6) Members of the board must be reimbursed as provided by RCW 43.03.050 and 43.03.060.
     (7) This section expires December 31, 2020.

Sec. 303   RCW 43.160.076 and 2008 c 327 s 8 are each amended to read as follows:
     (1) Except as authorized to the contrary under subsection (2) of this section, from all funds available to the board for financial assistance in a biennium under this chapter, the board shall approve at least seventy-five percent of the first twenty million dollars of funds available and at least fifty percent of any additional funds for financial assistance for projects in rural counties.
     (2) If at any time during the last six months of a biennium the board finds that the actual and anticipated applications for qualified projects in rural counties are clearly insufficient to use up the allocations under subsection (1) of this section, then the board shall estimate the amount of the insufficiency and during the remainder of the biennium may use that amount of the allocation for financial assistance to projects not located in rural counties.
     (3) The board shall solicit qualifying projects to plan, design, and construct public facilities needed to attract new industrial and commercial activities in areas impacted by the closure or potential closure of large fossil fuel electric generation facilities, which for the purposes of this section means a facility that has emitted more than one million tons per year of greenhouse gases in each of the calendar years 2005 through 2007. The projects should be consistent with any applicable plans for major industrial activity on lands formerly used or designated for surface coal mining and supporting uses under RCW 36.70A.368. When the board receives timely and eligible project applications from a political subdivision of the state for financial assistance for such projects, the board from available funds shall provide a priority for funding projects at the following levels:
     (a) For the 2011-2013 biennium, at least two hundred fifty thousand dollars;
     (b) For the 2013-2015 biennium, at least two hundred fifty thousand dollars;
     (c) For the 2015-2017 biennium, at least one million dollars;
     (d) For the 2017-2019 biennium, at least one million dollars;
     (e) For the 2019-2021 biennium, at least two million dollars; and
     (f) For the 2021-2023 biennium, at least two million dollars.

NEW SECTION.  Sec. 304   A new section is added to chapter 43.155 RCW to read as follows:
     The board shall solicit qualifying projects to plan, design, and construct public works projects needed to attract new industrial and commercial activities in areas impacted by the closure or potential closure of large fossil fuel electric generation facilities, which for the purposes of this section means a facility that has emitted more than one million tons per year of greenhouse gases in each of the calendar years 2005 through 2007. The projects should be consistent with any applicable plans for major industrial activity on lands formerly used or designated for surface coal mining and supporting uses under RCW 36.70A.368. When the board receives timely and eligible project applications from a political subdivision of the state for financial assistance for such projects, the board from available funds shall provide a priority for funding projects at the following levels:
     (1) For the 2011-2013 biennium, at least two hundred fifty thousand dollars;
     (2) For the 2013-2015 biennium, at least two hundred fifty thousand dollars;
     (3) For the 2015-2017 biennium, at least one million dollars;
     (4) For the 2017-2019 biennium, at least one million dollars;
     (5) For the 2019-2021 biennium, at least two million dollars; and
     (6) For the 2021-2023 biennium, at least two million dollars.

NEW SECTION.  Sec. 305   A new section is added to chapter 80.80 RCW to read as follows:
     (1) The clean fuel transition community assistance account is created in the treasury. All receipts from subsection (2) of this section must be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the purpose of assisting communities hosting a coal-fired electric generating facility for which decommissioning of the facility and planning for future uses of the site and economic development in the community is being planned.
     (2) The state treasurer shall transfer from the general fund to the account the following amounts in each of the following fiscal years, the transfers to be made on July 1st of each fiscal year:
     (a) For the fiscal years ending June 30, 2016, 2017, 2018, 2019, and 2020, the amount of two million four hundred thousand dollars; and
     (b) For the fiscal years ending June 30, 2021, 2022, 2023, 2024, 2025, and 2026, two million dollars.

NEW SECTION.  Sec. 306   The following acts or parts of acts are each repealed:
     (1) RCW 82.08.811 (Exemptions -- Coal used at coal-fired thermal electric generation facility -- Application -- Demonstration of progress in air pollution control -- Notice of emissions violations -- Reapplication--Payments on cessation of operation) and 1997 c 368 s 4; and
     (2) RCW 82.12.811 (Exemptions -- Coal used at coal-fired thermal electric generation facility -- Application -- Demonstration of progress in air pollution control -- Notice of emissions violations -- Reapplication--Payments on cessation of operation) and 1997 c 368 s 6.

NEW SECTION.  Sec. 307   Sections 305 and 306 of this act take effect July 1, 2015.