Text of WA HB 2251 (2026)

AN ACT Relating to climate commitment act accounts; amending RCW 1 70A.65.100, 70A.65.230, 70A.65.280, 70A.65.300, 70A.65.040, 2 70A.65.060, 70A.65.200, 70A.65.305, 76.04.196, and 76.13.120; 3 reenacting and amending RCW 43.21B.300 and 70A.65.030; adding new 4 sections to chapter 70A.65 RCW; creating a new section; repealing RCW 5 70A.65.250, 70A.65.260, and 70A.65.270; and providing an effective 6 date. 7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON: 8 NEW SECTION. Sec. 1. A new section is added to chapter 70A.65 9 RCW to read as follows: 10 (1) The climate commitment act operating account is created in 11 the state treasury. Receipts from the auction of allowances 12 authorized in this chapter must be deposited into the account as 13 provided in RCW 70A.65.100. Moneys in the account may be spent only 14 after appropriation. The legislature intends expenditures from the 15 account to supplement, not supplant, existing expenditures for 16 similar purposes. Expenditures from the account may be used only for 17 the following purposes: 18 (a) The department's costs to administer the program under this 19 chapter, in an amount not to exceed $25,000,000 per fiscal year 20 H-2685.2 HOUSE BILL 2251 State of Washington 69th Legislature 2026 Regular Session By Representatives Fitzgibbon and Gregerson Prefiled 01/05/26. p. 1 HB 2251 adjusted by the fiscal growth factor as defined in RCW 43.135.025, as 1 described in RCW 70A.65.100(7)(b); 2 (b) Programs, activities, and projects in the operating budget 3 that reduce greenhouse gas emissions, increase resilience to the 4 impacts of climate change, result in long-term environmental 5 benefits, or otherwise achieve the purposes of this chapter; 6 (c) Tribal capacity grants for tribal consultation under RCW 7 70A.65.305 or tribal projects and activities related to climate 8 resilience and adaptation, clean energy, state or federal grant 9 funding applications, or other related work; 10 (d) The working families' tax credit in RCW 82.08.0206; 11 (e) The same authorized uses as the growth management planning 12 and environmental review fund established in RCW 36.70A.490; 13 (f) Reduction and mitigation of impacts from greenhouse gases and 14 copollutants in overburdened communities, including strengthening the 15 air quality monitoring network required in RCW 70A.65.020; 16 (g) Projects or activities to promote electrification or reduce 17 the greenhouse gas emissions associated with electricity production, 18 distribution, or consumption, including (i) renewable energy 19 resources, such as solar and wind power, (ii) distributed generation, 20 (iii) energy storage, (iv) demand-side technologies and strategies, 21 and (v) grid modernization projects; 22 (h) Increased energy efficiency or reduced greenhouse gas 23 emissions for industrial facilities including, but not limited to, 24 combined heat and power, district energy, on-site renewables such as 25 solar and wind power, and less emissions-intensive fuel sources; 26 (i) Increased energy efficiency or reduced greenhouse gas 27 emissions for the agricultural sector including, but not limited to, 28 fertilizer management, soil management, bioenergy, biofuels, grants 29 and other financial incentives for agricultural equipment or food 30 processing, renewable energy projects, farmworker housing 31 weatherization programs, dairy digester research and development, 32 alternative manure management, and the sustainable farms and fields 33 grant program under RCW 89.08.615; 34 (j) Increased energy efficiency or reduced greenhouse gas 35 emissions in new and existing residential, commercial, and industrial 36 buildings, including low carbon architecture, alternative building 37 materials that result in a lower carbon footprint over the life cycle 38 of the building and component building materials, electric 39 appliances, and equipment for space and water heating; 40 p. 2 HB 2251 (k) The expansion of clean manufacturing capacity in communities 1 across Washington, including related community investments such as 2 transportation, municipal service delivery, and technology 3 investments, with an emphasis on communities in greatest need of job 4 creation and economic development and potential for commute 5 reduction; 6 (l) Improved energy affordability and reduced energy burden for 7 people with lower incomes, including bill assistance, energy 8 efficiency and weatherization programs, and community renewable 9 energy projects that allow qualifying participants to own or receive 10 the benefits of those projects at reduced or no cost; 11 (m) Assistance for affected fossil fuel workers during the 12 transition to a clean energy economy, including (i) full wage 13 replacement, health benefits, and pension contributions for every 14 worker within five years of retirement; (ii) full wage replacement, 15 health benefits, and pension contributions for every worker with at 16 least one year of service for each year of service up to five years 17 of service; (iii) wage insurance for up to five years for workers 18 reemployed who have more than five years of service; (iv) up to two 19 years of retraining costs, including tuition and related costs, based 20 on in-state community and technical college costs; (v) peer 21 counseling services during transition; (vi) employment placement 22 services, prioritizing employment in the clean energy sector; (vii) 23 relocation expenses; and (viii) workforce development, including 24 forest health workforce initiatives under RCW 76.04.521 and education 25 or jobs related to the clean energy economy; 26 (n) Reduced emissions from landfills and waste-to-energy 27 facilities through diversion of organic materials, methane capture or 28 conversion strategies, installation of gas collection devices and gas 29 control systems, monitoring and reporting of methane emissions, or 30 other means, prioritizing funding needed for any activities by local 31 governments to comply with chapter 70A.540 RCW; 32 (o) Carbon dioxide removal; 33 (p) Activities to support efforts to mitigate and adapt to the 34 effects of climate change affecting Indian tribes; 35 (q) Environmental justice activities, including implementation of 36 chapter 70A.02 RCW; 37 (r) Electric vehicles and related costs, such as equipment and 38 infrastructure, and alternative fuel; 39 p. 3 HB 2251 (s) Clean water investments that improve resilience from climate 1 impacts. Funding under this subsection (1)(s) must be used to: 2 (i) Restore and protect estuaries, fisheries, and marine 3 shoreline habitats and prepare for sea level rise; 4 (ii) Increase carbon storage in the ocean or aquatic and coastal 5 ecosystems; 6 (iii) Increase the ability to remediate and adapt to the impacts 7 of ocean acidification; 8 (iv) Reduce flood risk and restore natural floodplain ecological 9 function; 10 (v) Increase the sustainable supply of water and improve aquatic 11 habitat, including groundwater mapping and modeling; 12 (vi) Improve infrastructure treating stormwater from previously 13 developed areas within an urban growth boundary designated under 14 chapter 36.70A RCW, with a preference given to projects that use 15 green stormwater infrastructure; 16 (vii) Either preserve or increase, or both, greenhouse gas 17 sequestration and storage benefits in forests, forested wetlands, 18 agricultural soils, tidally influenced agricultural or grazing lands, 19 or freshwater, saltwater, or brackish aquatic lands; or 20 (viii) Either preserve or establish, or both, greenhouse gas 21 sequestration by protecting or planting trees in marine shorelines 22 and freshwater riparian areas sufficient to promote climate 23 resilience, protect cold water fisheries, and achieve water quality 24 standards; and 25 (t) Healthy forest investments to improve resilience from climate 26 impacts, including but not limited to: (i) Increased forest and 27 community resilience to wildfire; and (ii) improved forest health, 28 including reduced vulnerability to changes in hydrology, insect 29 infestation, and other impacts of climate change. 30 (2) The legislature intends that at least 25 percent of the total 31 appropriations each biennium from this account and the climate 32 commitment act capital account created in section 2 of this act are 33 made for the purposes of the clean water and healthy forest 34 investments in subsection (1)(s) and (t) of this section or section 35 2(1) (m) and (n) of this act. 36 (3) Moneys in the account may not be used for projects or 37 activities that would violate tribal treaty rights or result in 38 significant long-term damage to critical habitat or ecological 39 functions. 40 p. 4 HB 2251 (4) Projects or activities funded from the account must meet high 1 labor standards, including: (a) Employer-paid sick leave programs and 2 other health care benefits; (b) employer-contributed retirement 3 plans; (c) pay practices in relation to living wage indicators, such 4 as the federal poverty level; (d) efforts to evaluate pay equity 5 based on gender identity, race, and other protected status under 6 Washington law; (e) career development opportunities, such as 7 apprenticeship programs, internships, job-shadowing, and on-the-job 8 training; and (f) employment assistance and employment barriers for 9 justice-affected individuals. 10 (5) Projects or activities funded from the account must maximize 11 access to economic benefits from such projects for local workers and 12 diverse businesses. 13 NEW SECTION. Sec. 2. A new section is added to chapter 70A.65 14 RCW to read as follows: 15 (1) The climate commitment act capital account is created in the 16 state treasury. Receipts from the auction of allowances authorized in 17 this chapter must be deposited into the account as provided in RCW 18 70A.65.100. Moneys in the account may be spent only after 19 appropriation. The legislature intends expenditures from the account 20 to supplement, not supplant, existing expenditures for similar 21 purposes. Expenditures from the account may be used only for the 22 following purposes: 23 (a) Programs, activities, and projects in the capital budget that 24 reduce greenhouse gas emissions, increase resilience to the impacts 25 of climate change, result in long-term environmental benefits, or 26 otherwise achieve the purposes of this chapter; 27 (b) Reduction and mitigation of impacts from greenhouse gases and 28 copollutants in overburdened communities, including strengthening the 29 air quality monitoring network required in RCW 70A.65.020; 30 (c) Projects or activities to promote electrification or reduce 31 the greenhouse gas emissions associated with electricity production, 32 distribution, or consumption, including (i) renewable energy 33 resources, such as solar and wind power, (ii) distributed generation, 34 (iii) energy storage, (iv) demand-side technologies and strategies, 35 and (v) grid modernization projects; 36 (d) Increased energy efficiency or reduced greenhouse gas 37 emissions for industrial facilities including, but not limited to, 38 p. 5 HB 2251 combined heat and power, district energy, on-site renewables such as 1 solar and wind power, and less emissions-intensive fuel sources; 2 (e) Increased energy efficiency or reduced greenhouse gas 3 emissions for the agricultural sector including, but not limited to, 4 fertilizer management, soil management, bioenergy, biofuels, grants 5 and other financial incentives for agricultural equipment or food 6 processing, renewable energy projects, farmworker housing 7 weatherization programs, dairy digester research and development, and 8 alternative manure management; 9 (f) Increased energy efficiency or reduced greenhouse gas 10 emissions in new and existing residential, commercial, and industrial 11 buildings, including low carbon architecture, alternative building 12 materials that result in a lower carbon footprint over the life cycle 13 of the building and component building materials, electric 14 appliances, and equipment for space and water heating; 15 (g) The expansion of clean manufacturing capacity in communities 16 across Washington, including related community investments such as 17 transportation, municipal service delivery, and technology 18 investments, with an emphasis on communities in greatest need of job 19 creation and economic development and potential for commute 20 reduction; 21 (h) Improved energy affordability and reduced energy burden for 22 people with lower incomes, including energy efficiency and 23 weatherization programs, and community renewable energy projects that 24 allow qualifying participants to own or receive the benefits of those 25 projects at reduced or no cost; 26 (i) Reduced emissions from landfills and waste-to-energy 27 facilities through diversion of organic materials, methane capture or 28 conversion strategies, installation of gas collection devices and gas 29 control systems, monitoring and reporting of methane emissions, or 30 other means, prioritizing funding needed for any activities by local 31 governments to comply with chapter 70A.540 RCW; 32 (j) Carbon dioxide removal; 33 (k) Activities to support efforts to mitigate and adapt to the 34 effects of climate change affecting Indian tribes, including capital 35 investments in support of the relocation of Indian tribes located in 36 areas at heightened risk due to anticipated sea level rise, flooding, 37 or other disturbances caused by climate change. The legislature 38 intends to dedicate at least $50,000,000 per biennium from the 39 account for purposes of this subsection when the department's most 40 p. 6 HB 2251 recent baseline climate commitment act forecast projects 1 $1,000,000,000 or more for the biennium in total revenue to the 2 state. When the department's most recent baseline climate commitment 3 act forecast projects less than $1,000,000,000 for the biennium, the 4 legislature intends to dedicate at least five percent of total 5 projected revenue to the state for the biennium for the purposes of 6 this subsection; 7 (l) Electric vehicle infrastructure, including infrastructure in 8 buildings; 9 (m) Clean water investments that improve resilience from climate 10 impacts. Funding under this subsection (1)(m) must be used to: 11 (i) Restore and protect estuaries, fisheries, and marine 12 shoreline habitats and prepare for sea level rise; 13 (ii) Make fish passage correction investments, such as those 14 identified in the cost-share barrier removal program for small 15 forestland owners created in RCW 76.13.150 and those that are 16 considered by the fish passage barrier removal board created in RCW 17 77.95.160; 18 (iii) Increase carbon storage in the ocean or aquatic and coastal 19 ecosystems; 20 (iv) Increase the ability to mitigate, remediate, and adapt to 21 the impacts of ocean acidification; 22 (v) Reduce flood risk and restore natural floodplain ecological 23 function; 24 (vi) Increase the sustainable supply of water and improve aquatic 25 habitat, including groundwater mapping and modeling; 26 (vii) Improve infrastructure treating stormwater from previously 27 developed areas within an urban growth boundary designated under 28 chapter 36.70A RCW, with a preference given to projects that use 29 green stormwater infrastructure; 30 (viii) Either preserve or increase, or both, greenhouse gas 31 sequestration and storage benefits in forests, forested wetlands, 32 agricultural soils, tidally influenced agricultural or grazing lands, 33 or freshwater, saltwater, or brackish aquatic lands; or 34 (ix) Either preserve or establish, or both, greenhouse gas 35 sequestration by protecting or planting trees in marine shorelines 36 and freshwater riparian areas sufficient to promote climate 37 resilience, protect cold water fisheries, and achieve water quality 38 standards; 39 p. 7 HB 2251 (n) Healthy forest investments to improve resilience from climate 1 impacts. Funding under this subsection (1)(n) must be used for 2 projects that will: 3 (i) Increase forest and community resilience to wildfire in the 4 face of increased seasonal temperatures and drought; 5 (ii) Improve forest health and reduce vulnerability to changes in 6 hydrology, insect infestation, and other impacts of climate change; 7 or 8 (iii) Prevent emissions by preserving natural and working lands 9 from the threat of conversion to development or loss of critical 10 habitat, through actions that include, but are not limited to, the 11 creation of new conservation lands, community forests, or increased 12 support to small forestland owners through assistance programs 13 including, but not limited to, the forest riparian easement program 14 and the family forest fish passage program. It is the intent of the 15 legislature that not less than $10,000,000 be expended each biennium 16 for the forestry riparian easement program created in chapter 76.13 17 RCW or for riparian easement projects funded under the agricultural 18 conservation easements program established under RCW 89.08.530, or 19 similar riparian enhancement programs when the department's most 20 recent baseline climate commitment act forecast projects 21 $1,000,000,000 or more for that biennium in total revenue to the 22 state. When the department's most recent baseline climate commitment 23 act forecast projects less than $1,000,000,000 for that biennium, the 24 legislature intends to dedicate at least one percent of total 25 projected revenue to the state for the biennium for the purposes of 26 the forestry riparian easement program and similar programs; and 27 (o) Housing that reduces commute times and distances for low- 28 income households. 29 (2) The legislature intends that at least 25 percent of the total 30 appropriations each biennium from this account and the climate 31 commitment act operating account created in section 1 of this act are 32 made for the purposes of the clean water and healthy forest 33 investments in subsection (1)(m) and (n) of this section and section 34 1(1) (s) and (t) of this act. 35 (3) Moneys in the account may not be used for projects or 36 activities that would violate tribal treaty rights or result in 37 significant long-term damage to critical habitat or ecological 38 functions. 39 p. 8 HB 2251 (4) Moneys in the account must be spent in a manner that is 1 consistent with scientific assessment of current and future climate 2 risks such as those encompassed in the state's current climate 3 resilience strategy developed under chapter 70A.05 RCW. 4 Sec. 3. RCW 70A.65.100 and 2024 c 352 s 5 are each amended to 5 read as follows: 6 (1) Except as provided in RCW 70A.65.110, 70A.65.120, and 7 70A.65.130, the department shall distribute allowances through 8 auctions as provided in this section and in rules adopted by the 9 department to implement these sections. An allowance is not a 10 property right. 11 (2)(a) The department shall hold a maximum of four auctions 12 annually, plus any necessary reserve auctions. An auction may include 13 allowances from the annual allowance budget of the current year and 14 allowances from the annual allowance budgets from prior years that 15 remain to be distributed. The department must transmit to the 16 environmental justice council an auction notice at least 60 days 17 prior to each auction, as well as a summary results report and a 18 postauction public proceeds report within 60 days after each auction. 19 The department must communicate the results of the previous calendar 20 year's auctions to the environmental justice council on an annual 21 basis beginning in 2024. 22 (b) The department must make future vintage allowances available 23 through parallel auctions at least twice annually in addition to the 24 auctions through which current vintage allowances are exclusively 25 offered under (a) of this subsection. 26 (3) The department shall engage a qualified, independent 27 contractor to run the auctions. The department shall also engage a 28 qualified financial services administrator to hold the bid 29 guarantees, evaluate bid guarantees, and inform the department of the 30 value of bid guarantees once the bids are accepted. 31 (4) Auctions are open to covered entities, opt-in entities, and 32 general market participants that are registered entities in good 33 standing. The department shall adopt by rule the requirements for a 34 registered entity to register and participate in a given auction. 35 (a) Registered entities intending to participate in an auction 36 must submit an application to participate at least 30 days prior to 37 the auction. The application must include the documentation required 38 for review and approval by the department. A registered entity is 39 p. 9 HB 2251 eligible to participate only after receiving a notice of approval by 1 the department. 2 (b) Each registered entity that elects to participate in the 3 auction must have a different representative. Only a representative 4 with an approved auction account is authorized to access the auction 5 platform to submit an application or confirm the intent to bid for 6 the registered entity, submit bids on behalf of the registered entity 7 during the bidding window, or to download reports specific to the 8 auction. 9 (5) The department may require a bid guarantee, payable to the 10 financial services administrator, in an amount greater than or equal 11 to the sum of the maximum value of the bids to be submitted by the 12 registered entity. 13 (6) To protect the integrity of the auctions, a registered entity 14 or group of registered entities with a direct corporate association 15 are subject to auction purchase and holding limits. The department 16 may impose additional limits if it deems necessary to protect the 17 integrity and functioning of the auctions: 18 (a) A covered entity or an opt-in entity may not buy more than 25 19 percent of the allowances offered during a single auction; 20 (b) A general market participant may not buy more than four 21 percent of the allowances offered during a single auction; 22 (c) Until Washington links with a jurisdiction that does not have 23 this requirement, a general market participant may not in aggregate 24 own more than 10 percent of total allowances to be issued in a 25 calendar year; 26 (d) No registered entity may buy more than the entity's bid 27 guarantee; and 28 (e) No registered entity may buy allowances that would exceed the 29 entity's holding limit at the time of the auction. 30 (7)(((a) For fiscal year 2023, upon completion and verification 31 of the auction results, the financial services administrator shall 32 notify winning bidders and transfer the auction proceeds to the state 33 treasurer for deposit as follows: (i) $127,341,000 must first be 34 deposited into the carbon emissions reduction account created in RCW 35 70A.65.240; and (ii) the remaining auction proceeds to the climate 36 investment account created in RCW 70A.65.250 and the air quality and 37 health disparities improvement account created in RCW 70A.65.280. 38 (b) For fiscal year 2024, upon completion and verification of the 39 auction results, the financial services administrator shall notify 40 p. 10 HB 2251 winning bidders and transfer the auction proceeds to the state 1 treasurer for deposit as follows: (i) $356,697,000 must first be 2 deposited into the carbon emissions reduction account created in RCW 3 70A.65.240, except during fiscal year 2024, the deposit as provided 4 in this subsection (7)(b)(i) may be prorated equally across each of 5 the auctions occurring in fiscal year 2024; and (ii) the remaining 6 auction proceeds to the climate investment account created in RCW 7 70A.65.250 and the air quality and health disparities improvement 8 account created in RCW 70A.65.280, which may be prorated equally 9 across each of the auctions occurring in fiscal year 2024. 10 (c) For fiscal year 2025, upon completion and verification of the 11 auction results, the financial services administrator shall notify 12 winning bidders and transfer the auction proceeds to the state 13 treasurer for deposit as follows: (i) $366,558,000 must first be 14 deposited into the carbon emissions reduction account created in RCW 15 70A.65.240, except that during fiscal year 2025, the deposit as 16 provided in this subsection (7)(c)(i) may be prorated equally across 17 each of the auctions occurring in fiscal year 2025; and (ii) the 18 remaining auction proceeds to the climate investment account created 19 in RCW 70A.65.250 and the air quality and health disparities 20 improvement account created in RCW 70A.65.280, which may be prorated 21 equally across each of the auctions occurring in fiscal year 2025. 22 (d) For fiscal years 2026 through 2037, upon)) Upon completion 23 and verification of the results of each auction ((results)), the 24 financial services administrator shall notify winning bidders and 25 transfer the auction proceeds to the state treasurer for deposit as 26 follows: 27 (a) During a fiscal year in which, as of the first auction of 28 that fiscal year, the department's most recent baseline climate 29 commitment act forecast projects total revenue to the state for that 30 fiscal year of $513,117,000 or more: (i) $359,117,000 per year must 31 first be deposited into the carbon emissions reduction account 32 created in RCW 70A.65.240; ((and)) (ii) ((the remaining auction 33 proceeds to the climate investment account created in RCW 70A.65.250 34 and the air quality and health disparities improvement account 35 created in RCW 70A.65.280. 36 (e) The deposits into the carbon emissions reduction account 37 pursuant to (a) through (d) of this subsection must not exceed 38 $5,200,000,000 over the first 16 fiscal years and any remaining 39 auction proceeds must be deposited into the climate investment 40 p. 11 HB 2251 account created in RCW 70A.65.250 and the air quality and health 1 disparities improvement account created in RCW 70A.65.280. 2 (f) For fiscal year 2038 and each year thereafter, upon 3 completion and verification of the auction results, the financial 4 services administrator shall notify winning bidders and transfer the 5 auction proceeds to the state treasurer for deposit as follows:)) 6 $144,000,000 per year must then be deposited in the climate 7 commitment act operating account created in section 1 of this act; 8 (iii) $10,000,000 per year must then be deposited in the air quality 9 and health disparities improvement account created in RCW 70A.65.280; 10 and (iv) the remaining auction proceeds for each fiscal year must be 11 deposited into the climate commitment act capital account created in 12 section 2 of this act. 13 (b) During a fiscal year in which, as of the first auction of 14 that fiscal year, the department's most recent baseline climate 15 commitment act forecast projects total revenue to the state for that 16 fiscal year of less than $513,117,000: (i) First, an amount must be 17 deposited in the climate commitment act operating account created in 18 section 1 of this act as follows: $25,000,000 for fiscal year 2028, 19 increased each subsequent fiscal year by the fiscal growth factor as 20 defined in RCW 43.135.025 for that fiscal year. The department must 21 calculate this amount for every fiscal year and communicate it to the 22 state treasurer as needed, though it is only to be used for a 23 transfer amount when the criteria in this subsection (7)(b) are met; 24 and (ii) for the remaining auction proceeds in that fiscal year, the 25 proceeds of each auction must be distributed 50 percent ((of the 26 auction proceeds)) to the carbon emissions reduction account created 27 in RCW 70A.65.240((; and (ii) the remaining auction proceeds to the 28 climate investment account created in RCW 70A.65.250 and the air 29 quality and health disparities improvement account created in RCW 30 70A.65.280)), 32 percent to the climate commitment act capital 31 account created in section 2 of this act, 17 percent to the climate 32 commitment act operating account created in section 1 of this act, 33 and one percent to the air quality and health disparities improvement 34 account created in RCW 70A.65.280. 35 (8) The department shall adopt by rule provisions to guard 36 against bidder collusion and minimize the potential for market 37 manipulation. A registered entity may not release or disclose any 38 bidding information including: Intent to participate or refrain from 39 participation; auction approval status; intent to bid; bidding 40 p. 12 HB 2251 strategy; bid price or bid quantity; or information on the bid 1 guarantee provided to the financial services administrator. The 2 department may cancel or restrict a previously approved auction 3 participation application or reject a new application if the 4 department determines that a registered entity has: 5 (a) Provided false or misleading facts; 6 (b) Withheld material information that could influence a decision 7 by the department; 8 (c) Violated any part of the auction rules; 9 (d) Violated registration requirements; or 10 (e) Violated any of the rules regarding the conduct of the 11 auction. 12 (9) Records containing the following information are confidential 13 and are exempt from public disclosure in their entirety: 14 (a) Bidding information as identified in subsection (8) of this 15 section; 16 (b) Information contained in the secure, online electronic 17 tracking system established by the department pursuant to RCW 18 70A.65.090(6); 19 (c) Financial, proprietary, and other market sensitive 20 information as determined by the department that is submitted to the 21 department pursuant to this chapter; 22 (d) Financial, proprietary, and other market sensitive 23 information as determined by the department that is submitted to the 24 independent contractor or the financial services administrator 25 engaged by the department pursuant to subsection (3) of this section; 26 and 27 (e) Financial, proprietary, and other market sensitive 28 information as determined by the department that is submitted to a 29 jurisdiction with which the department has entered into a linkage 30 agreement pursuant to RCW 70A.65.210, and which is shared with the 31 department, the independent contractor, or the financial services 32 administrator pursuant to a linkage agreement. 33 (10) Any cancellation or restriction approved by the department 34 under subsection (8) of this section may be permanent or for a 35 specified number of auctions and the cancellation or restriction 36 imposed is not exclusive and is in addition to the remedies that may 37 be available pursuant to chapter 19.86 RCW or other state or federal 38 laws, if applicable. 39 p. 13 HB 2251 (11) The department shall design allowance auctions so as to 1 allow, to the maximum extent practicable, linking with external 2 greenhouse gas emissions trading programs in other jurisdictions and 3 to facilitate the transfer of allowances when the state's program has 4 entered into a linkage agreement with other external greenhouse gas 5 emissions trading programs. The department may conduct auctions 6 jointly with linked jurisdictions. 7 (12) In setting the number of allowances offered at each auction, 8 the department shall consider the allowances in the marketplace due 9 to the marketing of allowances issued as required under RCW 10 70A.65.110, 70A.65.120, and 70A.65.130 in the department's 11 determination of the number of allowances to be offered at auction. 12 The department shall offer only such number of allowances at each 13 auction as will enhance the likelihood of achieving the goals of RCW 14 70A.45.020. 15 Sec. 4. RCW 70A.65.230 and 2025 c 417 s 806 are each amended to 16 read as follows: 17 (1) It is the intent of the legislature that each ((year)) 18 biennium the total investments made through the carbon emissions 19 reduction account created in RCW 70A.65.240, the ((climate commitment 20 account created in RCW 70A.65.260, the natural climate solutions 21 account created in RCW 70A.65.270)) climate commitment act operating 22 account created in section 1 of this act, the climate commitment act 23 capital account created in section 2 of this act, and the air quality 24 and health disparities improvement account created in RCW 70A.65.280, 25 achieve the following: 26 (a) A minimum of not less than 35 percent and a goal of 40 27 percent of total investments that provide direct and meaningful 28 benefits to vulnerable populations within the boundaries of 29 overburdened communities identified under chapter 70A.02 RCW; and 30 (b) In addition to the requirements of (a) of this subsection, a 31 minimum of not less than 10 percent of total investments that are 32 used for programs, activities, or projects ((formally)) supported by 33 ((a resolution of)) an Indian tribe, with priority given to otherwise 34 qualifying projects directly administered or proposed by an Indian 35 tribe. Investments that meet the requirement of this subsection 36 (1)(b) may include a letter of support from an Indian tribe, funding 37 provided to or requested by an Indian tribe, a formal resolution of 38 an Indian tribe, or similar expressions of support from an Indian 39 p. 14 HB 2251 tribe. An investment that meets the requirements of both this 1 subsection (1)(b) and (a) of this subsection may count toward the 2 minimum percentage targets for both subsections. 3 (2) The expenditure of moneys under this chapter must be 4 consistent with applicable federal, state, and local laws, and treaty 5 rights including, but not limited to, prohibitions on uses of funds 6 imposed by the state Constitution. 7 (3) For the purposes of this section, "benefits" means 8 investments or activities that: 9 (a) Reduce vulnerable population characteristics, environmental 10 burdens, or associated risks that contribute significantly to the 11 cumulative impact designation of overburdened communities; 12 (b) Meaningfully protect an overburdened community from, or 13 support community response to, the impacts of air pollution or 14 climate change; or 15 (c) Meet a community need identified by vulnerable members of the 16 overburdened community that is consistent with the intent of this 17 chapter. 18 (((4) The state must develop a process by which to evaluate the 19 impacts of the investments made under this chapter, work across state 20 agencies to develop and track priorities across the different 21 eligible funding categories, and work with the environmental justice 22 council pursuant to RCW 70A.65.040.)) 23 Sec. 5. RCW 70A.65.280 and 2021 c 316 s 31 are each amended to 24 read as follows: 25 (1) The air quality and health disparities improvement account is 26 created in the state treasury. Moneys in the account may be spent 27 only after appropriation. Expenditures from the account are intended 28 to: 29 (a) Improve air quality through the reduction of criteria 30 pollutants, including through effective air quality monitoring and 31 the establishment of adequate baseline emissions data; and 32 (b) Reduce health disparities in overburdened communities by 33 improving health outcomes through the reduction or elimination of 34 environmental harms and the promotion of environmental benefits. 35 (2) Moneys in the account may be used for ((either)) operating 36 budget, capital budget, or transportation budget purposes((, or 37 both)). Moneys in the account may not be used for projects that would 38 violate tribal treaty rights or result in significant long-term 39 p. 15 HB 2251 damage to critical habitat or ecological functions. Investments from 1 the account must result in long-term environmental benefits and 2 increased resilience to the impacts of climate change. 3 (((3) It is the intent of the legislature that not less than 4 $20,000,000 per biennium be dedicated to the account for the purposes 5 of the account.)) 6 Sec. 6. RCW 70A.65.300 and 2025 c 424 s 975 are each amended to 7 read as follows: 8 (1) The department shall prepare, post on the department website, 9 and submit to the appropriate committees of the legislature ((an 10 annual)) a report that identifies all distributions of moneys from 11 the accounts created in RCW 70A.65.240 ((through)), 70A.65.280, 12 section 1 of this act, and section 2 of this act. 13 (2) The report must identify, at a minimum((, the)): 14 (a) The recipient of the funding, the amount of the funding, the 15 purpose of the funding, the actual end result or use of the funding, 16 whether the project that received the funding produced any verifiable 17 reduction in greenhouse gas emissions or other long-term impact to 18 emissions, and if so, the quantity of reduced greenhouse gas 19 emissions, the cost per carbon dioxide equivalent metric ton of 20 reduced greenhouse gas emissions, and a comparison to other 21 greenhouse gas emissions reduction projects in order to facilitate 22 the development of cost-benefit ratios for greenhouse gas emissions 23 reduction projects; and 24 (b) The expenditures that provide direct and meaningful benefits 25 to vulnerable populations within the boundaries of overburdened 26 communities as described in RCW 70A.65.030 and 70A.65.230, and the 27 expenditures that are supported by an Indian tribe as described in 28 RCW 70A.65.230, including: 29 (i) The amount of each expenditure that provides direct and 30 meaningful benefits to vulnerable populations within the boundaries 31 of overburdened communities; 32 (ii) An explanation of how the expenditure provides such 33 benefits; 34 (iii) The methods by which overburdened communities and 35 vulnerable populations were identified by the agency and an 36 explanation of the outcomes of those identification processes, 37 including the geographic location impacted by the expenditure where 38 p. 16 HB 2251 relevant, and the geographic boundaries of overburdened communities 1 identified by the agency; and 2 (iv) The amount of each expenditure used for programs, 3 activities, or projects supported by an Indian tribe. 4 (3) The department shall require by rule that recipients of funds 5 from the accounts created in RCW 70A.65.240 through 70A.65.280, 6 section 1 of this act, and section 2 of this act report to the 7 department, in a form and manner prescribed by the department, the 8 information required for the department to carry out the department's 9 duties established in this section. 10 (4) ((The department shall update its website with the 11 information described in subsection (2) of this section as 12 appropriate but no less frequently than once per calendar year. 13 (5) The)) After the conclusion of each fiscal year through fiscal 14 year 2027, the department shall submit ((its)) the report under this 15 section to the appropriate committees of the legislature ((with the 16 information described in subsection (2) of this section)) and update 17 its website no later than ((September 30)) December 31st of each 18 year. ((For fiscal year 2025, the report must be submitted no later 19 than November 30, 2024. During the 2025-2027 fiscal biennium, the 20 report must be submitted no later than November 30 of each fiscal 21 year.)) Beginning with the 2027-2029 biennium, after the conclusion 22 of each biennium the department shall submit the report on a biennial 23 basis by December 31st of each odd-numbered year. 24 NEW SECTION. Sec. 7. Following the fiscal closure of the 25 2025-2027 biennium, the state treasurer must transfer the remaining 26 balance of the climate investment account created in RCW 70A.65.250, 27 the climate commitment account created in RCW 70A.65.260, and the 28 natural climate solutions account created in RCW 70A.65.270 as 29 follows: (1) 80 percent into the climate commitment act capital 30 account created in section 2 of this act; and (2) 20 percent to the 31 carbon emissions reduction account created in RCW 70A.65.240, to be 32 used for infrastructure and incentives that support transportation 33 electrification. 34 Sec. 8. RCW 43.21B.300 and 2025 c 316 s 302 and 2025 c 58 s 3008 35 are each reenacted and amended to read as follows: 36 (1) Any civil penalty provided in RCW 18.104.155, 70A.15.3160, 37 70A.205.280, 70A.230.080, 70A.300.090, 70A.20.050, 70A.245.040, 38 p. 17 HB 2251 70A.245.050, 70A.245.070, 70A.245.080, 70A.245.130, 70A.245.140, 1 70A.65.200, 70A.430.070, 70A.455.090, 70A.500.260, ((70A.505.110,)) 2 70A.555.110, 70A.560.020, 70A.208.230, 70A.565.030, 86.16.081, 3 88.46.090, 90.03.600, 90.46.270, 90.48.144, 90.56.310, 90.56.330, and 4 90.64.102 and chapter 70A.355 RCW shall be imposed by a notice in 5 writing, either by certified mail with return receipt requested or by 6 personal service, to the person incurring the penalty from the 7 department or the local air authority, describing the violation with 8 reasonable particularity. For penalties issued by local air 9 authorities, within 30 days after the notice is received, the person 10 incurring the penalty may apply in writing to the authority for the 11 remission or mitigation of the penalty. Upon receipt of the 12 application, the authority may remit or mitigate the penalty upon 13 whatever terms the authority in its discretion deems proper. The 14 authority may ascertain the facts regarding all such applications in 15 such reasonable manner and under such rules as it may deem proper and 16 shall remit or mitigate the penalty only upon a demonstration of 17 extraordinary circumstances such as the presence of information or 18 factors not considered in setting the original penalty. 19 (2) Any penalty imposed under this section may be appealed to the 20 pollution control hearings board in accordance with this chapter if 21 the appeal is filed with the hearings board and served on the 22 department or authority 30 days after the date of receipt by the 23 person penalized of the notice imposing the penalty or 30 days after 24 the date of receipt of the notice of disposition by a local air 25 authority of the application for relief from penalty. 26 (3) A penalty shall become due and payable on the later of: 27 (a) 30 days after receipt of the notice imposing the penalty; 28 (b) 30 days after receipt of the notice of disposition by a local 29 air authority on application for relief from penalty, if such an 30 application is made; or 31 (c) 30 days after receipt of the notice of decision of the 32 hearings board if the penalty is appealed. 33 (4) If the amount of any penalty is not paid to the department 34 within 30 days after it becomes due and payable, the attorney 35 general, upon request of the department, shall bring an action in the 36 name of the state of Washington in the superior court of Thurston 37 county, or of any county in which the violator does business, to 38 recover the penalty. If the amount of the penalty is not paid to the 39 authority within 30 days after it becomes due and payable, the 40 p. 18 HB 2251 authority may bring an action to recover the penalty in the superior 1 court of the county of the authority's main office or of any county 2 in which the violator does business. In these actions, the procedures 3 and rules of evidence shall be the same as in an ordinary civil 4 action. 5 (5) All penalties recovered shall be paid into the state treasury 6 and credited to the general fund except the following: 7 (a) Penalties imposed pursuant to RCW 18.104.155 must be credited 8 to the reclamation account as provided in RCW 18.104.155(7); 9 (b) Penalties imposed pursuant to RCW 70A.15.3160 must be 10 disposed of pursuant to RCW 70A.15.3160; 11 (c) Penalties imposed pursuant to RCW 70A.230.080, 70A.300.090, 12 70A.430.070, 70A.555.110, 70A.560.020, and 70A.565.030 must be 13 credited to the model toxics control operating account created in RCW 14 70A.305.180; 15 (d) Penalties imposed pursuant to RCW 70A.245.040, 70A.245.050, 16 and chapter 70A.208 RCW must be credited to the recycling enhancement 17 account created in RCW 70A.245.100; 18 (e) Penalties imposed pursuant to RCW 70A.500.260 must be 19 deposited into the electronic products recycling account created in 20 RCW 70A.500.130; 21 (f) Penalties imposed pursuant to RCW 70A.65.200 must be credited 22 to the climate ((investment)) commitment act operating account 23 created in ((RCW 70A.65.250)) section 1 of this act; 24 (g) Penalties imposed pursuant to RCW 90.56.330 must be credited 25 to the coastal protection fund established in RCW 90.48.390; and 26 (h) Penalties imposed pursuant to RCW 70A.355.070 must be 27 credited to the underground storage tank account created in RCW 28 70A.355.090. 29 Sec. 9. RCW 70A.65.030 and 2025 c 424 s 972, 2025 c 417 s 804, 30 and 2025 c 58 s 3011 are each reenacted and amended to read as 31 follows: 32 (1) Except as provided in subsection (4) of this section, each 33 year or biennium, as appropriate, when allocating funds from the 34 carbon emissions reduction account created in RCW 70A.65.240, the 35 climate commitment act operating account created in ((RCW 36 70A.65.260)) section 1 of this act, the ((natural climate solutions)) 37 climate commitment act capital account created in ((RCW 70A.65.270)) 38 section 2 of this act, ((the climate investment account created in 39 p. 19 HB 2251 RCW 70A.65.250,)) or the air quality and health disparities 1 improvement account created in RCW 70A.65.280, or administering 2 grants or programs funded by the accounts, agencies shall conduct an 3 environmental justice assessment consistent with the requirements of 4 RCW 70A.02.060 and establish a minimum of not less than 35 percent 5 and a goal of 40 percent of total investments that provide direct and 6 meaningful benefits to vulnerable populations within the boundaries 7 of overburdened communities through: (a) The direct reduction of 8 environmental burdens in overburdened communities; (b) the reduction 9 of disproportionate, cumulative risk from environmental burdens, 10 including those associated with climate change; (c) the support of 11 community led project development, planning, and participation costs; 12 or (d) meeting a community need identified by the community that is 13 consistent with the intent of this chapter or RCW 70A.02.010. 14 (2) The allocation of funding under subsection (1) of this 15 section must adhere to the following principles, additional to the 16 requirements of RCW 70A.02.080: (a) Benefits and programs should be 17 directed to areas and targeted to vulnerable populations and 18 overburdened communities to reduce statewide disparities; (b) 19 investments and benefits should be made roughly proportional to the 20 health disparities that a specific community experiences, with a goal 21 of eliminating the disparities; (c) investments and programs should 22 focus on creating environmental benefits, including eliminating 23 health burdens, creating community and population resilience, and 24 raising the quality of life of those in the community; and (d) 25 efforts should be made to balance investments and benefits across the 26 state and within counties, local jurisdictions, and unincorporated 27 areas as appropriate to reduce disparities by location and to ensure 28 efforts contribute to a reduction in disparities that exist based on 29 race or ethnicity, socioeconomic status, or other factors. 30 (3) Except as provided in subsection (4) of this section, state 31 agencies allocating funds or administering grants or programs from 32 the carbon emissions reduction account created in RCW 70A.65.240, the 33 climate commitment act operating account created in ((RCW 34 70A.65.260)) section 1 of this act, the ((natural climate solutions)) 35 climate commitment act capital account created in ((RCW 70A.65.270)) 36 section 2 of this act, ((the climate investment account created in 37 RCW 70A.65.250,)) or the air quality and health disparities 38 improvement account created in RCW 70A.65.280, must: 39 p. 20 HB 2251 (a) Report ((annually)) biennially to the environmental justice 1 council created in RCW 70A.02.110 regarding progress toward meeting 2 environmental justice and environmental health goals; 3 (b) Consider recommendations by the environmental justice 4 council; and 5 (c)(i) If the agency is not a covered agency subject to the 6 requirements of chapter 70A.02 RCW, create and adopt a community 7 engagement plan to describe how it will engage with overburdened 8 communities and vulnerable populations in allocating funds or 9 administering grants or programs from the climate investment account. 10 (ii) The plan must include methods for outreach and communication 11 with those who face barriers, language or otherwise, to 12 participation. 13 (4) ((During the 2023-2025 and 2025-2027 fiscal biennia:)) 14 (a) The requirement of subsection (1) of this section to conduct 15 an environmental justice assessment applies only to covered agencies 16 as defined in RCW 70A.02.010 and to significant agency actions as 17 defined in RCW 70A.02.010. 18 (b) Agencies shall coordinate with the department and the office 19 of financial management to achieve total statewide spending from the 20 accounts listed in subsection (1) of this section of not less than 35 21 percent and a goal of 40 percent of total investments that provide 22 direct and meaningful benefits to vulnerable populations within the 23 boundaries of overburdened communities as otherwise described in 24 subsection (1)(a) through (d) of this section and in accordance with 25 RCW 70A.65.230. 26 (c) The requirements of subsection (3)(c) of this section for 27 agencies other than covered agencies to create and adopt community 28 engagement plans apply only to executive branch agencies and 29 institutions of higher education, as defined in RCW 28B.10.016, 30 receiving total appropriations of more than $2,000,000 ((for the 31 2023-2025 fiscal)) per biennium from the accounts listed in 32 subsection (1) of this section. 33 Sec. 10. RCW 70A.65.040 and 2025 c 417 s 805 are each amended to 34 read as follows: 35 (1) The environmental justice council created in RCW 70A.02.110 36 must provide recommendations to the legislature, agencies, and the 37 governor in the development and implementation of the program 38 established in RCW 70A.65.060 through 70A.65.210, and the programs 39 p. 21 HB 2251 funded from the carbon emissions reduction account created in RCW 1 70A.65.240, the climate commitment act operating account created in 2 ((RCW 70A.65.260)) section 1 of this act, and the ((natural climate 3 solutions)) climate commitment act capital account created in ((RCW 4 70A.65.270, and the climate investment account created in RCW 5 70A.65.250)) section 2 of this act. 6 (2) In addition to the duties and authorities granted in chapter 7 70A.02 RCW to the environmental justice council, the environmental 8 justice council must: 9 (a) Provide recommendations to the legislature, agencies, and the 10 governor in the development of: 11 (i) The program established in RCW 70A.65.060 through 70A.65.210 12 including, but not limited to, linkage with other jurisdictions, 13 protocols for establishing offset projects and securing offset 14 credits, designation of emissions-intensive and trade-exposed 15 industries under RCW 70A.65.110, and administration of allowances 16 under the program; and 17 (ii) Investment plans and funding proposals for the programs 18 funded from the climate ((investment)) commitment act operating 19 account created in ((RCW 70A.65.250)) section 1 of this act for the 20 purpose of providing environmental benefits and reducing 21 environmental health disparities within overburdened communities; 22 (b) Provide a forum to analyze policies adopted under this 23 chapter to determine if the policies lead to improvements within 24 overburdened communities; 25 (c) Recommend procedures and criteria for evaluating programs, 26 activities, or projects; 27 (d) Recommend copollutant emissions reduction goals in 28 overburdened communities; 29 (e) Evaluate the level of funding provided to assist vulnerable 30 populations, low-income individuals, and impacted workers and the 31 funding of projects and activities located within or benefiting 32 overburdened communities; 33 (f) Recommend environmental justice and environmental health 34 goals for programs, activities, and projects funded from the climate 35 investment account, and review agency annual reports on outcomes and 36 progress toward meeting these goals; 37 (g) Provide recommendations to implementing agencies for 38 meaningful consultation with vulnerable populations, including 39 community engagement plans under RCW 70A.65.020 and 70A.65.030; and 40 p. 22 HB 2251 (h) Recommend how to support public participation through 1 capacity grants for participation. 2 (3) For the purpose of performing the duties under subsection (2) 3 of this section, two additional tribal members are added to the 4 council. 5 Sec. 11. RCW 70A.65.060 and 2024 c 352 s 2 are each amended to 6 read as follows: 7 (1) In order to ensure that greenhouse gas emissions are reduced 8 by covered entities consistent with the limits established in RCW 9 70A.45.020, the department must implement a cap on greenhouse gas 10 emissions from covered entities and a program to track, verify, and 11 enforce compliance through the use of compliance instruments. 12 (2) The program must consist of: 13 (a) Annual allowance budgets that limit emissions from covered 14 entities, as provided in this section and RCW 70A.65.070 and 15 70A.65.080; 16 (b) Defining those entities covered by the program, and those 17 entities that may voluntarily opt into coverage under the program, as 18 provided in this section and RCW 70A.65.070 and 70A.65.080; 19 (c) Distribution of emission allowances, as provided in RCW 20 70A.65.100, and through the allowance price containment provisions 21 under RCW 70A.65.140 and 70A.65.150; 22 (d) Providing for offset credits as a method for meeting a 23 compliance obligation, pursuant to RCW 70A.65.170; 24 (e) Defining the compliance obligations of covered entities, as 25 provided in chapter 316, Laws of 2021; 26 (f) Establishing the authority of the department to enforce the 27 program requirements, as provided in RCW 70A.65.200; 28 (g) ((Creating a climate investment account for the deposit of 29 receipts from the distribution of emission allowances, as provided in 30 RCW 70A.65.250; 31 (h))) Providing for the transfer of allowances and recognition of 32 compliance instruments, including those issued by jurisdictions with 33 which Washington has linkage agreements; 34 (((i))) (h) Providing monitoring and oversight of the sale and 35 transfer of allowances by the department; 36 (((j))) (i) Creating a price ceiling and associated mechanisms as 37 provided in RCW 70A.65.160; and 38 p. 23 HB 2251 (((k))) (j) Providing for the allocation of allowances to 1 emissions-intensive, trade-exposed industries pursuant to RCW 2 70A.65.110. 3 (3) The department shall consider opportunities to implement the 4 program in a manner that allows linking the state's program with 5 those of other jurisdictions. The department must evaluate whether 6 such linkage will provide for a more cost-effective means for covered 7 entities to meet their compliance obligations in Washington while 8 recognizing the special characteristics of the state's economy, 9 communities, and industries. The department is authorized to enter 10 into a linkage agreement with another jurisdiction after conducting 11 an environmental justice assessment and after formal notice and 12 opportunity for a public hearing, and when consistent with the 13 requirements of RCW 70A.65.210. The department is authorized to 14 withdraw from a linkage agreement and every linkage agreement must 15 provide that the department reserves the right to withdraw from the 16 agreement. 17 (4) During the 2022 regular legislative session, the department 18 must bring forth agency request legislation developed in consultation 19 with emissions-intensive, trade-exposed businesses, covered entities, 20 environmental advocates, and overburdened communities that outlines a 21 compliance pathway specific to emissions-intensive, trade-exposed 22 businesses for achieving their proportionate share of the state's 23 emissions reduction limits through 2050. 24 (5) By December 1, 2027, and by December 1st of each year that is 25 one year after the end of a compliance period, and in compliance with 26 RCW 43.01.036, the department must submit a report to the legislature 27 that includes a comprehensive review of the implementation of the 28 program to date, including but not limited to outcomes relative to 29 the state's emissions reduction limits, overburdened communities, 30 covered entities, and emissions-intensive, trade-exposed businesses. 31 The department must transmit the report to the environmental justice 32 council at the same time it is submitted to the legislature. 33 (6) The department must bring forth agency request legislation if 34 the department finds that any provision of this chapter prevents 35 linking Washington's cap and invest program with that of any other 36 jurisdiction. 37 Sec. 12. RCW 70A.65.200 and 2024 c 352 s 8 are each amended to 38 read as follows: 39 p. 24 HB 2251 (1) All covered and opt-in entities are required to submit 1 compliance instruments in a timely manner to meet the entities' 2 compliance obligations and shall comply with all requirements for 3 monitoring, reporting, holding, and transferring emission allowances 4 and other provisions of this chapter. 5 (2) If a covered or opt-in entity does not submit sufficient 6 compliance instruments to meet its compliance obligation by the 7 specified transfer dates, a penalty of four allowances for every one 8 compliance instrument that is missing must be submitted to the 9 department within six months. When a covered entity or opt-in entity 10 reasonably believes that it will be unable to meet a compliance 11 obligation, the entity shall immediately notify the department. Upon 12 receiving notification, the department shall issue an order requiring 13 the entity to submit the penalty allowances. 14 (3) If a covered entity or opt-in entity fails to submit penalty 15 allowances as required by subsection (2) of this section, the 16 department must issue an order or issue a penalty of up to $10,000 17 per day per violation, or both, for failure to submit penalty 18 allowances as required by subsection (2) of the section. The order 19 may include a plan and schedule for coming into compliance. 20 (4) The department may issue a penalty of up to $50,000 per day 21 per violation for violations of RCW 70A.65.100(8) (a) through (e). 22 (5) Except as provided in subsections (3) and (4) of this 23 section, any person that violates the terms of this chapter or an 24 order issued under this chapter incurs a penalty of up to $10,000 per 25 day per violation for each day that the person does not comply. All 26 penalties under subsections (3) and (4) of this section and this 27 subsection must be deposited into the climate ((investment)) 28 commitment act operating account created in ((RCW 70A.65.250)) 29 section 1 of this act. 30 (6) Orders and penalties issued under this chapter are appealable 31 to the pollution control hearings board under chapter 43.21B RCW. 32 (7) Until the department enters into a linkage agreement or until 33 the end of the first compliance period, whichever is sooner, the 34 department may reduce the amount of the penalty by adjusting the 35 monetary amount or the number of penalty allowances described in 36 subsections (2) and (3) of this section. 37 (8) An electric utility or natural gas utility must notify its 38 retail customers and the environmental justice council in published 39 p. 25 HB 2251 form within three months of paying a monetary penalty under this 1 section. 2 (9)(a) No city, town, county, township, or other subdivision or 3 municipal corporation of the state may implement a charge or tax 4 based exclusively upon the quantity of greenhouse gas emissions. 5 (b) No state agency may adopt or enforce a greenhouse gas pricing 6 or market-based emissions cap and reduce program for stationary 7 sources, or adopt or enforce emission limitations on greenhouse gas 8 emissions from stationary sources except as: 9 (i) Provided in this chapter; 10 (ii) Authorized or directed by a state statute in effect as of 11 July 1, 2022; or 12 (iii) Required to implement a federal statute, rule, or program. 13 (c) This chapter preempts the provisions of chapter 173-442 WAC, 14 and the department shall repeal chapter 173-442 WAC. 15 (10)(a) By December 1, 2023, the office of financial management 16 must submit a report to the appropriate committees of the legislature 17 that summarizes two categories of state laws other than this chapter: 18 (i) Laws that regulate greenhouse gas emissions from stationary 19 sources, and the greenhouse gas emission reductions attributable to 20 each chapter, relative to a baseline in which this chapter and all 21 other state laws that regulate greenhouse gas emissions are presumed 22 to remain in effect; and 23 (ii) Laws whose implementation may effectuate reductions in 24 greenhouse gas emissions from stationary sources. 25 (b) The state laws that the office of financial management may 26 address in completing the report required in this subsection include, 27 but are not limited to: 28 (i) Chapter 19.27A RCW; 29 (ii) Chapter 19.280 RCW; 30 (iii) Chapter 19.405 RCW; 31 (iv) Chapter 36.165 RCW; 32 (v) Chapter 43.21F RCW; 33 (vi) Chapter 70.30 RCW; 34 (vii) Chapter 70A.15 RCW; 35 (viii) Chapter 70A.45 RCW; 36 (ix) Chapter 70A.60 RCW; 37 (x) Chapter 70A.535 RCW; 38 (xi) Chapter 80.04 RCW; 39 (xii) Chapter 80.28 RCW; 40 p. 26 HB 2251 (xiii) Chapter 80.70 RCW; 1 (xiv) Chapter 80.80 RCW; and 2 (xv) Chapter 81.88 RCW. 3 (c) The office of financial management may contract for all or 4 part of the work product required under this subsection. 5 Sec. 13. RCW 70A.65.305 and 2024 c 375 s 8004 are each amended 6 to read as follows: 7 (1) Agencies that allocate funding or administer grant programs 8 appropriated from the climate ((investment)) commitment act operating 9 account created in ((RCW 70A.65.250,)) section 1 of this act and the 10 climate commitment act capital account created in ((RCW 70A.65.260, 11 and the natural climate solutions account created in RCW 70A.65.270)) 12 section 2 of this act must offer early, meaningful, and individual 13 consultation with any affected federally recognized tribe on all 14 funding decisions and funding programs that may impact tribal 15 resources, including tribal cultural resources, archaeological sites, 16 sacred sites, fisheries, or other rights and interests in tribal 17 lands and lands within which a tribe or tribes possess rights 18 reserved or protected by federal treaty, statute, or executive order. 19 The consultation is independent of, and in addition to, any public 20 participation process required by federal or state law, or by a 21 federal or state agency, including the requirements of Executive 22 Order 21-02 related to archaeological and cultural resources, and 23 regardless of whether the agency receives a request for consultation 24 from a federally recognized tribe. The goal of the consultation 25 process is to identify tribal resources or rights potentially 26 affected by the funding decisions and funding programs, assess their 27 effects, and seek ways to avoid, minimize, or mitigate any adverse 28 effects on tribal resources or rights. 29 (2) At the earliest possible date prior to submittal of an 30 application, applicants for funding from the accounts created in 31 ((RCW 70A.65.250, 70A.65.260, and 70A.65.270)) sections 1 and 2 of 32 this act shall engage in a preapplication process with all affected 33 federally recognized tribes within the project area. ((During the 34 2023-2025 fiscal biennium, salmon habitat and climate resilience 35 projects funded from the natural climate solutions account created in 36 RCW 70A.65.270 that went through the application and prioritization 37 process before July 1, 2023, are exempt from the preapplication 38 requirements under this subsection.)) 39 p. 27 HB 2251 (a) The preapplication process must include the applicant 1 notifying the department of archaeology and historic preservation, 2 the department of fish and wildlife, and all affected federally 3 recognized tribes within the project area. The notification must 4 include geographical location, detailed scope of the proposed 5 project, preliminary application details available to federal, state, 6 or local governmental jurisdictions, and all publicly available 7 materials, including public funding sources. 8 (b) The applicant must also offer to discuss the project with the 9 department of archaeology and historic preservation, the department 10 of fish and wildlife, and all affected federally recognized tribes 11 within the project area. Discussions may include the project's impact 12 to tribal resources, including tribal cultural resources, 13 archaeological sites, sacred sites, fisheries, or other rights and 14 interests in tribal lands and lands within which a tribe or tribes 15 possess rights reserved or protected by federal treaty, statute, or 16 executive order. 17 (c) All affected federally recognized tribes may submit to the 18 appropriate agency or agencies a summary of tribal issues, questions, 19 concerns, or other statements regarding the project, which must 20 become part of the official application file. The summary does not 21 limit what issues affected federally recognized tribes may raise in 22 the consultation process identified in subsections (1), (3) through 23 (7), and (9) of this section. 24 (d) The notification and offer to initiate discussion must be 25 documented with the application when it is filed, and a copy of the 26 application must be delivered to the department of archaeology and 27 historic preservation, the department of fish and wildlife, and to 28 the affected federally recognized tribe or tribes. If the discussions 29 pursuant to (b) of this subsection do not occur, the applicant must 30 document the reason why the discussion or discussions did not occur. 31 (e) Nothing in this section may be interpreted to require the 32 disclosure of information that is exempt from disclosure pursuant to 33 RCW 42.56.300 or federal law, including section 304 of the national 34 historic preservation act of 1966. Any information that is exempt 35 from disclosure pursuant to RCW 42.56.300 or federal law, including 36 section 304 of the national historic preservation act of 1966, shall 37 not become part of the official application file. 38 (3) If any funding decision, program, project, or activity that 39 may impact tribal resources, including tribal cultural resources, 40 p. 28 HB 2251 archaeological sites, sacred sites, fisheries, or other rights and 1 interests in tribal lands and lands within which a tribe or tribes 2 possess rights reserved by federal treaty, statute, or executive 3 order is funded from the accounts created in ((RCW 70A.65.250, 4 70A.65.260, and 70A.65.270)) sections 1 and 2 of this act without 5 such a consultation with an affected federally recognized tribe, the 6 affected federally recognized tribe may request that all further 7 action on the decision, program, project, or activity cease until 8 meaningful consultation is completed. Upon receipt of such a request 9 by an agency or agencies with the authority to allocate funding or 10 administer grant programs from the accounts listed in subsection (1) 11 of this section in support of the proposed project, further action by 12 the agency or agencies on any decision, program, project, or activity 13 that would result in significant physical disturbance of the tribal 14 resource or resources described in this subsection must cease until 15 the consultation has been completed. 16 (4) Upon completion of agency and tribal consultation, an 17 affected federally recognized tribe may request a formal review of 18 the consultation by submitting a request to the governor's office of 19 Indian affairs and notifying the appropriate agencies and the 20 department of archaeology and historic preservation. The state 21 agencies and tribe must meet to initiate discussion within no more 22 than 20 days of the request. This consultation must be offered and 23 conducted separately with each affected federally recognized tribe, 24 unless the tribes agree to conduct a joint consultation with the 25 state. 26 (5) After the state agencies and tribe or tribes have conducted a 27 formal review under subsection (4) of this section, an affected 28 federally recognized tribe or state agency may request that the 29 governor and an elected tribal leader or leaders of a federally 30 recognized tribal government meet to formally consider the 31 recommendations from the parties. If requested, this meeting must 32 occur within 30 days of the request, except that a federally 33 recognized tribe may choose to opt out of the meeting. This timeline 34 may be extended by mutual agreement between the governor and the 35 tribal leaders. 36 (6) After the meeting identified in subsection (5) of this 37 section has occurred, the governor or an elected tribal leader of a 38 federally recognized tribe may call for the state and tribe or tribes 39 to enter into formal mediation, except that a federally recognized 40 p. 29 HB 2251 tribe may choose to opt out of the mediation. If entered into, the 1 mediation must be conducted as a government-to-government proceeding, 2 with each sovereign government retaining their right to a final 3 decision that meets their separate obligations and interests. 4 Mediators must be jointly selected by the parties to the mediation. 5 An agreement between the governor and a tribal leader or leaders 6 resulting from the mediation is formally recognized and binding on 7 the signatory parties. Absent an agreement, participation in 8 mediation does not preclude any additional steps that any party can 9 initiate, including legal review, to resolve a continuing 10 disagreement. 11 (7) During the proceedings outlined in subsections (4) through 12 (6) of this section, the agency or agencies with the authority to 13 allocate funding or administer grant programs from the accounts 14 listed in subsection (1) of this section in support of the proposed 15 project may not approve or release funding, or make other formal 16 decisions, including permitting, that advance the proposed project 17 except where required by law. 18 (8) By June 30, 2023, the governor's office of Indian affairs, in 19 coordination with the department of archaeology and historic 20 preservation and federally recognized tribes, shall develop a state 21 agency tribal consultation process, including best practices for 22 early, meaningful, and effective consultation, early notification and 23 engagement by applicants with federally recognized tribes as a part 24 of the preapplication process in subsection (2) of this section, and 25 protocols for communication and collaboration with federally 26 recognized tribes. The consultation process developed under this 27 section must be periodically reviewed and updated in coordination 28 with federally recognized tribes. The governor's office of Indian 29 affairs must provide training and other technical assistance to state 30 agencies, as they implement the required consultation. 31 Notwithstanding the governor's office of Indian affairs' ongoing work 32 pursuant to this subsection, the provisions of subsections (1) 33 through (7) and (9) of this section become effective as of June 9, 34 2022. 35 (9) The requirements of this section apply to local governments 36 that receive funding from the accounts created in ((RCW 70A.65.250, 37 70A.65.260, and 70A.65.270)) sections 1 and 2 of this act, where that 38 funding is disbursed to project and program applicants. Where 39 requested, the governor's office of Indian affairs must provide 40 p. 30 HB 2251 training and other technical assistance to local government agencies 1 as they implement the consultation requirements of this section. 2 (10) Any agency subject to or implementing this section may adopt 3 rules in furtherance of its duties under this section. 4 (11) Subject to the availability of amounts appropriated for this 5 specific purpose, the department must establish a tribal capacity 6 grant program to provide funding to federally recognized tribes for 7 the costs of implementing this section. 8 Sec. 14. RCW 76.04.196 and 2025 c 93 s 2 are each amended to 9 read as follows: 10 (1) Subject to the availability of amounts appropriated for this 11 specific purpose, the office of risk management shall, in 12 consultation with the department, establish a prescribed fire claims 13 fund pilot program for the purposes of: 14 (a) Supporting coverage for losses from prescribed fires and 15 cultural burning on department protected lands and on tribal lands 16 where an agreement exists between the Indian tribe and the department 17 or where approved by the Indian tribe. The fund would not be utilized 18 when prescribed fires or cultural burning have federal tort claims 19 act coverage under a federally recognized burn plan; and 20 (b) Supporting nonstate and nonfederal entities that are alleged 21 to have caused damages resulting from appropriately conducted 22 prescribed fires or cultural burning on department protected lands 23 and tribal lands as described in (a) of this subsection. 24 (2) To be eligible for reimbursement under this section, a claim 25 must meet the criteria in (a) and (b) of this subsection. 26 (a) The claim results from a prescribed fire or cultural burn 27 conducted on department protected lands and tribal lands as described 28 in subsection (1)(a) of this section: 29 (i) By a certified burn manager, under an approved burn plan, 30 with applicable permits and in accordance with any other applicable 31 conditions or requirements as determined by the department; or 32 (ii) By a cultural fire practitioner, in accordance with any 33 applicable burn plan or permit. 34 (b) The claim is for: 35 (i) Property or economic damage, as described under RCW 36 76.04.760(3) (a), (c), and (d), suffered by the claimant as a result 37 of the prescribed fire or cultural burn; 38 p. 31 HB 2251 (ii) Reasonable costs authorized for reimbursement by the 1 department under RCW 76.04.475, related to the prescribed fire or 2 cultural burn; or 3 (iii) Costs of suppression of an escapement for which a person is 4 liable to a third party. 5 (c) A claim for damage suffered as a result of a prescribed fire 6 or cultural burn started, spread, or otherwise caused by a criminal 7 or negligent act is not eligible for reimbursement under this 8 section. 9 (3) Upon submission of a claim, the department shall determine 10 and certify to the office of risk management whether the claim meets 11 the criteria in subsection (2) of this section. 12 (4) The office of risk management may reimburse an eligible claim 13 in an amount equal to or less than the actual losses suffered by the 14 claimant, not to exceed $2,000,000 per claim. The payment of a claim 15 under this section is conditional on the availability of specific 16 funding for this purpose, and nothing in this section shall be 17 construed to create an entitlement to reimbursement or payment of any 18 claim. The total amount paid for claims may not exceed the amounts 19 available in the account established in subsection (7) of this 20 section. 21 (5)(a) The office of risk management shall collaborate with the 22 department, other relevant state agencies, the Washington prescribed 23 fire council, cultural fire practitioners, and certified burn 24 managers to establish guidelines governing the pilot program and the 25 administration of the account established in subsection (7) of this 26 section, including: 27 (i) Procedures for the submission of claims; 28 (ii) Any additional criteria for claim eligibility, as 29 appropriate; and 30 (iii) A methodology or structure for how the payment of claims 31 will be prioritized in the event that eligible claims exceed the 32 amounts available in the account established in subsection (7) of 33 this section. 34 (b) The office of risk management and the department may adopt 35 rules to implement this section. 36 (c) Guidelines and any rules adopted under this section must be 37 made publicly available on the websites of the office of risk 38 management and the department. 39 p. 32 HB 2251 (6) This section does not limit the ability of a person to assert 1 a claim for damages arising from a prescribed fire under any other 2 law. A court shall offset any award of damages to a claimant under an 3 action arising from the same set of alleged facts by the amount of 4 reimbursement provided under this section. 5 (7)(a) The prescribed fire claims account is created in the state 6 treasury. Moneys in the account may be spent only after 7 appropriation. Expenditures from the account may only be used for the 8 reimbursement of claims under this section. 9 (b) Upon the expiration of this section, any remaining amounts in 10 the account must be deposited in the ((natural climate solutions)) 11 climate commitment act capital account created in section 2 of this 12 act. 13 (8) For the purposes of this section: 14 (a) "Certified burn manager" means a prescribed burn manager 15 certified under RCW 76.04.183 or a prescribed fire burn boss 16 certified under the national wildfire coordinating group standards. 17 (b) "Cultural fire practitioner" means a person approved by an 18 Indian tribe as having experience in burning to meet cultural goals 19 or objectives, including subsistence, ceremonial activities, 20 biodiversity, or other benefits. 21 (c) "Department protected lands" has the same meaning as in RCW 22 76.04.005. 23 (d) "Indian tribe" has the same meaning as in RCW 43.376.010. 24 (9) This section expires June 30, 2033. 25 Sec. 15. RCW 76.13.120 and 2024 c 158 s 1 are each amended to 26 read as follows: 27 (1) The legislature finds that the state should acquire easements 28 primarily along riparian and other sensitive aquatic areas from 29 qualifying small forestland owners willing to sell or donate 30 easements to the state provided that the state will not be required 31 to acquire the easements if they are subject to unacceptable 32 liabilities. Therefore the legislature establishes a forestry 33 riparian easement program. 34 (2) The definitions in this subsection apply throughout this 35 section and RCW 76.13.100, 76.13.110, 76.13.140, and 76.13.160 unless 36 the context clearly requires otherwise. 37 p. 33 HB 2251 (a) "Forestry riparian easement" means an easement covering 1 qualifying timber granted voluntarily to the state by a qualifying 2 small forestland owner. 3 (b) "Qualifying small forestland owner" means a landowner meeting 4 all of the following characteristics as of the date the department 5 offers compensation for a forestry riparian easement: 6 (i) Is a small forestland owner as defined in (d) of this 7 subsection; and 8 (ii) Is an individual, partnership, corporation, or other 9 nongovernmental for-profit legal entity. 10 (c) "Qualifying timber" means those forest trees on land owned by 11 a qualifying small forestland owner for which the small forestland 12 owner is willing to grant the state a forestry riparian easement and 13 meets all of the following: 14 (i) The forest trees are covered by a forest practices 15 application that the small forestland owner is required to leave 16 unharvested under the rules adopted under RCW 76.09.040, 76.09.055, 17 and 76.09.370 or that is made uneconomic to harvest by those rules; 18 (ii) The forest trees are within or bordering a commercially 19 reasonable harvest unit as determined under rules adopted by the 20 forest practices board, or for which an approved forest practices 21 application for timber harvest cannot be obtained because of 22 restrictions under the forest practices rules; 23 (iii) The forest trees are located within, or affected by forest 24 practices rules pertaining to any one, or all, of the following: 25 (A) Riparian or other sensitive aquatic areas; 26 (B) Channel migration zones; or 27 (C) Areas of potentially unstable slopes or landforms, verified 28 by the department, and must meet all of the following: 29 (I) Are addressed in a forest practices application; 30 (II) Are adjacent to a commercially reasonable harvest area; and 31 (III) Have the potential to deliver sediment or debris to a 32 public resource or threaten public safety. 33 (d) "Small forestland owner" means a landowner meeting all of the 34 following characteristics: 35 (i) A forestland owner as defined in RCW 76.09.020 whose interest 36 in the land and timber is in fee or who has rights to the timber to 37 be included in the forestry riparian easement that extend at least 40 38 years from the date the completed forestry riparian easement 39 application associated with the easement is submitted; 40 p. 34 HB 2251 (ii) An entity that has harvested from its own lands in this 1 state during the three years prior to the year of application an 2 average timber volume that would qualify the owner as a small 3 harvester under RCW 84.33.035; and 4 (iii) An entity that certifies at the time of application that it 5 does not expect to harvest from its own lands more than the volume 6 allowed by RCW 84.33.035 during the 10 years following application. 7 If a landowner's prior three-year average harvest exceeds the limit 8 of RCW 84.33.035, or the landowner expects to exceed this limit 9 during the 10 years following application, and that landowner 10 establishes to the department's reasonable satisfaction that the 11 harvest limits were or will be exceeded to raise funds to pay estate 12 taxes or equally compelling and unexpected obligations such as court- 13 ordered judgments or extraordinary medical expenses, the landowner 14 shall be deemed to be a small forestland owner. For purposes of 15 determining whether a person qualifies as a small forestland owner, 16 the small forestland owner office, created in RCW 76.13.110, shall 17 evaluate the landowner under this definition, pursuant to RCW 18 76.13.160, as of the date that the forest practices application is 19 submitted and the date that the department offers compensation for 20 the forestry riparian easement. A small forestland owner can include 21 an individual, partnership, corporation, or other nongovernmental 22 legal entity. If a landowner grants timber rights to another entity 23 for less than five years, the landowner may still qualify as a small 24 forestland owner under this section. If a landowner is unable to 25 obtain an approved forest practices application for timber harvest 26 for any of his or her land because of restrictions under the forest 27 practices rules, the landowner may still qualify as a small 28 forestland owner under this section. 29 (e) "Completion of harvest" means that the trees have been 30 commercially harvested from an area and that further entry into that 31 area by mechanized logging or slash treating equipment is not 32 expected. 33 (3) Nothing in the eligibility limit identified in subsection 34 (2)(c)(i) through (iii) of this section precludes inclusion of land 35 in future mitigation programs. 36 (4) The department is authorized and directed to accept and hold 37 in the name of the state of Washington forestry riparian easements 38 granted by qualifying small forestland owners covering qualifying 39 timber and to pay compensation to the landowners in accordance with 40 p. 35 HB 2251 this section. The department may not transfer the easements to any 1 entity other than another state agency. 2 (5) Forestry riparian easements shall be effective for 40 years 3 from the date of the completed forestry riparian easement 4 application, unless the easement is voluntarily terminated earlier by 5 the department, based on a determination that termination is in the 6 best interest of the state, or under the terms of a termination 7 clause in the easement. 8 (6) Forestry riparian easements shall be restrictive of the 9 timber only, and shall preserve all lawful uses of the easement 10 premises by the landowner that are consistent with the terms of the 11 easement and the requirement to protect riparian functions during the 12 term of the easement, subject to the restriction that the leave trees 13 required by the rules to be left on the easement premises may not be 14 cut during the term of the easement. No right of public access to or 15 across, or any public use of the easement premises is created by this 16 statute or by the easement. Forestry riparian easements shall not be 17 deemed to trigger the compensating tax of or otherwise disqualify 18 land from being taxed under chapter 84.33 or 84.34 RCW. 19 (7) The small forestland owner office shall determine what 20 constitutes a completed application for a forestry riparian easement. 21 An application shall, at a minimum, include documentation of the 22 owner's status as a qualifying small forestland owner, identification 23 of location and the types of qualifying timber, and notification of 24 completion of harvest, if applicable. 25 (8) Upon receipt of the qualifying small forestland owner's 26 forestry riparian easement application, and subject to the 27 availability of amounts appropriated for this specific purpose, the 28 following must occur: 29 (a) The small forestland owner office must determine the 30 compensation to be offered to the qualifying small forestland owner 31 for qualifying timber after the department accepts the completed 32 forestry riparian easement application and the landowner has 33 completed marking the boundary of the area containing the qualifying 34 timber. The legislature recognizes that there is not readily 35 available market transaction evidence of value for easements of the 36 nature required by this section, and thus establishes the methodology 37 provided in this subsection to ascertain the value for forestry 38 riparian easements. Values so determined may not be considered 39 competent evidence of value for any other purpose. 40 p. 36 HB 2251 (b) The small forestland owner office, subject to the 1 availability of amounts appropriated for this specific purpose, is 2 responsible for assessing the volume of qualifying timber. However, 3 no more than 50 percent of the total amounts appropriated for the 4 forestry riparian easement program may be applied to determine the 5 volume of qualifying timber for completed forestry riparian easement 6 applications. Based on the volume established by the small forestland 7 owner office and using data obtained or maintained by the department 8 of revenue under RCW 84.33.074 and 84.33.091, the small forestland 9 owner office shall attempt to determine the fair market value of the 10 qualifying timber as of the date of the completed harvest. To the 11 extent reasonably possible, the forestry riparian easement 12 applications should be processed in the order received. Removal of 13 any qualifying timber before the expiration of the easement must be 14 in accordance with the forest practices rules and the terms of the 15 easement. There shall be no reduction in compensation for reentry. 16 (9)(a) Subject to the availability of amounts appropriated for 17 this specific purpose, the small forestland owner office shall offer 18 compensation for qualifying timber to the qualifying small forestland 19 owner in the amount of 90 percent of the value determined by the 20 small forestland owner office, plus the compliance and reimbursement 21 costs as determined in accordance with RCW 76.13.140. However, 22 compensation for any qualifying small forestland owner for qualifying 23 timber located on potentially unstable slopes or landforms may not 24 exceed a total of $150,000 during any biennial funding period. 25 (b) If the landowner accepts the offer for qualifying timber, the 26 department shall pay the compensation promptly upon: 27 (i) Completion of harvest in the area within a commercially 28 reasonable harvest unit with which the forestry riparian easement is 29 associated under an approved forest practices application, unless an 30 approved forest practices application for timber harvest cannot be 31 obtained because of restrictions under the forest practices rules; 32 (ii) Verification that the landowner has no outstanding 33 violations under chapter 76.09 RCW or any associated rules; and 34 (iii) Execution and delivery of the easement to the department. 35 (c) Upon donation or payment of compensation, the department may 36 record the easement. 37 (10)(a) The forest practices board shall adopt rules under the 38 administrative procedure act, chapter 34.05 RCW, to implement the 39 forestry riparian easement program, including the following: 40 p. 37 HB 2251 (i) A standard version of a forestry riparian easement 1 application as well as all additional documents necessary or 2 advisable to create the forestry riparian easements as provided for 3 in this section; 4 (ii) Standards for descriptions of the easement premises with a 5 degree of precision that is reasonable in relation to the values 6 involved; 7 (iii) Methods and standards for cruises and valuation of forestry 8 riparian easements for purposes of establishing the compensation. The 9 department shall perform the timber cruises of forestry riparian 10 easements required under this chapter and chapter 76.09 RCW. Timber 11 cruises are subject to amounts appropriated for this purpose. 12 However, no more than 50 percent of the total appropriated funding 13 for the forestry riparian easement program may be applied to 14 determine the volume of qualifying timber for completed forestry 15 riparian easement applications. Any rules concerning the methods and 16 standards for valuations of forestry riparian easements shall apply 17 only to the department, qualifying small forestland owners, and the 18 small forestland owner office; 19 (iv) A method to determine that a forest practices application 20 involves a commercially reasonable harvest, and adopt criteria for 21 entering into a forestry riparian easement where a commercially 22 reasonable harvest is not possible or a forest practices application 23 that has been submitted cannot be approved because of restrictions 24 under the forest practices rules; 25 (v) A method to address blowdown of qualified timber falling 26 outside the easement premises; 27 (vi) A formula for sharing of proceeds in relation to the 28 acquisition of qualified timber covered by an easement through the 29 exercise or threats of eminent domain by a federal or state agency 30 with eminent domain authority, based on the present value of the 31 department's and the landowner's relative interests in the qualified 32 timber; 33 (vii) A method to determine timber that is qualifying timber 34 because it is rendered uneconomic to harvest by the rules adopted 35 under RCW 76.09.055 and 76.09.370; 36 (viii) A method for internal department review of small 37 forestland owner office compensation decisions under this section; 38 and 39 p. 38 HB 2251 (ix) Consistent with RCW 76.13.180, a method to collect 1 reimbursement from landowners who received compensation for a 2 forestry riparian easement and who, within the first 10 years after 3 receipt of compensation for a forestry riparian easement, sells the 4 land on which an easement is located to a nonqualifying landowner. 5 (b) At least semiannually, the department shall consult with the 6 small forestland owner advisory committee established in RCW 7 76.13.110(4) to review landowner complaints, administrative 8 processes, rule recommendations, and related issues where the 9 department is actively seeking the small forestland owner advisory 10 committee's advice on potential improved efficiencies and 11 effectiveness. 12 (11) The legislature finds that the overall societal benefits of 13 economically viable working forests are multiple, and include the 14 protection of clean, cold water, the provision of wildlife habitat, 15 the sheltering of cultural resources from development, and the 16 natural carbon storage potential of growing trees. As such, working 17 forests and the forestry riparian easement program may be part of the 18 state's overall carbon sequestration strategy. If the state creates a 19 climate strategy, the department must share information regarding the 20 carbon sequestration benefits of the forestry riparian easement 21 program with other state programs using methods and protocols 22 established in the state climate strategy that attempt to quantify 23 carbon storage or account for carbon emissions. The department must 24 promote the expansion of funding for the forestry riparian easement 25 program and the ecosystem services supported by the program based on 26 the findings stated in RCW 76.13.100. Nothing in this subsection 27 allows a landowner to be reimbursed by the state more than once for 28 the same forest riparian easement application. 29 (12) It is the intent of the legislature that the small 30 forestland owner office complete forestry riparian easement program 31 application transactions within two years of the application receipt 32 consistent with the goals of ((RCW 70A.65.270(2)(b)(iii))) section 33 2(1)(n)(iii) of this act. 34 NEW SECTION. Sec. 16. The following acts or parts of acts are 35 each repealed: 36 (1) RCW 70A.65.250 (Climate investment account) and 2025 c 424 s 37 973 & 2024 c 376 s 911; 38 p. 39 HB 2251 (2) RCW 70A.65.260 (Climate commitment account) and 2025 c 424 s 1 974, 2023 c 475 s 939, 2022 c 179 s 17, & 2021 c 316 s 29; and 2 (3) RCW 70A.65.270 (Natural climate solutions account) and 2021 c 3 316 s 30. 4 NEW SECTION. Sec. 17. This act takes effect July 1, 2027. 5 --- END --- p. 40 HB 2251

CERTIFICATION OF ENROLLMENT ENGROSSED SECOND SUBSTITUTE HOUSE BILL 2251 Chapter 219, Laws of 2026 69th Legislature 2026 Regular Session CLIMATE COMMITMENT ACT—ACCOUNTS EFFECTIVE DATE: July 1, 2027 Passed by the House March 11, 2026 Yeas 54 Nays 40 LAURIE JINKINS Speaker of the House of Representatives Passed by the Senate March 6, 2026 Yeas 34 Nays 14 DENNY HECK President of the Senate CERTIFICATE I, Bernard Dean, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is ENGROSSED SECOND SUBSTITUTE HOUSE BILL 2251 as passed by the House of Representatives and the Senate on the dates hereon set forth. BERNARD DEAN Chief Clerk Approved March 25, 2026 11:25 AM FILED March 25, 2026 BOB FERGUSON Governor of the State of Washington Secretary of State State of Washington AN ACT Relating to climate commitment act accounts; amending RCW 1 70A.65.100, 70A.65.230, 70A.65.280, 70A.65.300, 70A.65.040, 2 70A.65.060, 70A.65.200, 70A.65.305, 76.04.196, 76.13.120, 70A.65.240, 3 70A.65.302, 70A.535.180, 82.08.994, and 82.17.030; reenacting and 4 amending RCW 43.21B.300 and 70A.65.030; adding new sections to 5 chapter 70A.65 RCW; creating a new section; repealing RCW 70A.65.250, 6 70A.65.260, and 70A.65.270; and providing an effective date. 7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON: 8 NEW SECTION. Sec. 1. A new section is added to chapter 70A.65 9 RCW to read as follows: 10 (1) The climate commitment act operating account is created in 11 the state treasury. Receipts from the auction of allowances 12 authorized in this chapter must be deposited into the account as 13 provided in RCW 70A.65.100. Moneys in the account may be spent only 14 after appropriation. The legislature intends expenditures from the 15 account to supplement, not supplant, existing expenditures for 16 similar purposes. Expenditures from the account may be used only for 17 the following purposes: 18 (a) The department's costs to administer the program under this 19 chapter, in an amount not to exceed $25,000,000 per fiscal year 20 ENGROSSED SECOND SUBSTITUTE HOUSE BILL 2251 AS AMENDED BY THE SENATE Passed Legislature - 2026 Regular Session State of Washington 69th Legislature 2026 Regular Session By House Transportation (originally sponsored by Representatives Fitzgibbon, Gregerson, Parshley, and Thomas) p. 1 E2SHB 2251.SL adjusted by the implicit price deflator averaged for each fiscal 1 year, as described in RCW 70A.65.100(7)(a); 2 (b) Programs, activities, and projects in the operating budget 3 that reduce greenhouse gas emissions, increase resilience to the 4 impacts of climate change, result in long-term environmental 5 benefits, or otherwise achieve the purposes of this chapter; 6 (c) Tribal capacity grants for tribal consultation under RCW 7 70A.65.305 or tribal projects and activities related to climate 8 resilience and adaptation, clean energy, state or federal grant 9 funding applications, or other related work; 10 (d) The working families' tax credit in RCW 82.08.0206; 11 (e) The same authorized uses as the growth management planning 12 and environmental review fund established in RCW 36.70A.490; 13 (f) Reduction and mitigation of impacts from greenhouse gases and 14 copollutants in overburdened communities, including strengthening the 15 air quality monitoring network required in RCW 70A.65.020; 16 (g) Projects or activities to promote electrification or reduce 17 the greenhouse gas emissions associated with electricity production, 18 distribution, or consumption, including: (i) Utility-scale renewable 19 resources and nonemitting electric generation, as those terms are 20 defined in RCW 19.405.020; (ii) distributed generation; (iii) 21 utility-scale and behind-the-meter energy storage; (iv) demand-side 22 technologies and strategies; (v) grid modernization projects; and 23 (vi) research, development, demonstration, or deployment of new and 24 emerging clean firm energy generation or storage technologies; 25 (h) Increased energy efficiency or reduced greenhouse gas 26 emissions for industrial facilities including, but not limited to, 27 combined heat and power, district energy, on-site renewables such as 28 solar and wind power, and less emissions-intensive fuel sources; 29 (i) Increased energy efficiency or reduced greenhouse gas 30 emissions for the agricultural sector including, but not limited to, 31 fertilizer management, soil management, bioenergy, biofuels, grants 32 and other financial incentives for agricultural equipment or food 33 processing, renewable energy projects, farmworker housing 34 weatherization programs, dairy digester research and development, 35 alternative manure management, and the sustainable farms and fields 36 grant program under RCW 89.08.615; 37 (j) Increased energy efficiency or reduced greenhouse gas 38 emissions in new and existing residential, commercial, and industrial 39 buildings, including low carbon architecture, alternative building 40 p. 2 E2SHB 2251.SL materials that result in a lower carbon footprint over the life cycle 1 of the building and component building materials, electric 2 appliances, and equipment for space and water heating; 3 (k) The expansion of clean manufacturing capacity in communities 4 across Washington, including related community investments such as 5 transportation, municipal service delivery, and technology 6 investments, with an emphasis on communities in greatest need of job 7 creation and economic development and potential for commute 8 reduction; 9 (l) Improved energy affordability and reduced energy burden for 10 people with lower incomes, including bill assistance, energy 11 efficiency and weatherization programs, and community renewable 12 energy projects that allow qualifying participants to own or receive 13 the benefits of those projects at reduced or no cost; 14 (m) Assistance for affected fossil fuel workers during the 15 transition to a clean energy economy, including (i) full wage 16 replacement, health benefits, and pension contributions for every 17 worker within five years of retirement; (ii) full wage replacement, 18 health benefits, and pension contributions for every worker with at 19 least one year of service for each year of service up to five years 20 of service; (iii) wage insurance for up to five years for workers 21 reemployed who have more than five years of service; (iv) up to two 22 years of retraining costs, including tuition and related costs, based 23 on in-state community and technical college costs; (v) peer 24 counseling services during transition; (vi) employment placement 25 services, prioritizing employment in the clean energy sector; (vii) 26 relocation expenses; and (viii) workforce development, including 27 forest health workforce initiatives under RCW 76.04.521 and education 28 or jobs related to the clean energy economy; 29 (n) Reduced emissions from landfills and waste-to-energy 30 facilities through diversion of organic materials, methane capture or 31 conversion strategies, installation of gas collection devices and gas 32 control systems, monitoring and reporting of methane emissions, or 33 other means, prioritizing funding needed for any activities by local 34 governments to comply with chapter 70A.540 RCW; 35 (o) Carbon dioxide removal and carbon dioxide capture and 36 mineralization or sequestration; 37 (p) Activities to support efforts to mitigate and adapt to the 38 effects of climate change affecting Indian tribes; 39 p. 3 E2SHB 2251.SL (q) Environmental justice activities, including implementation of 1 chapter 70A.02 RCW; 2 (r) Electric vehicles and related costs, such as equipment and 3 infrastructure, and alternative fuel; 4 (s) Clean water investments that improve resilience from climate 5 impacts. Funding under this subsection (1)(s) must be used to: 6 (i) Restore and protect estuaries, fisheries, and marine 7 shoreline habitats and prepare for sea level rise; 8 (ii) Increase carbon storage in the ocean or aquatic and coastal 9 ecosystems; 10 (iii) Increase the ability to remediate and adapt to the impacts 11 of ocean acidification; 12 (iv) Reduce flood risk and restore natural floodplain ecological 13 function; 14 (v) Increase the sustainable supply of water and improve aquatic 15 habitat, including groundwater mapping and modeling; 16 (vi) Improve infrastructure treating stormwater from previously 17 developed areas within an urban growth boundary designated under 18 chapter 36.70A RCW, with a preference given to projects that use 19 green stormwater infrastructure; 20 (vii) Either retain or increase, or both, greenhouse gas 21 sequestration and storage benefits from forests, forested wetlands, 22 agricultural soils, tidally influenced agricultural or grazing lands, 23 or freshwater, saltwater, or brackish aquatic lands; or 24 (viii) Either preserve or establish, or both, greenhouse gas 25 sequestration by protecting or planting trees in marine shorelines 26 and freshwater riparian areas sufficient to promote climate 27 resilience, protect cold water fisheries, and achieve water quality 28 standards; 29 (t) Healthy forest investments to improve resilience from climate 30 impacts, including but not limited to: (i) Increased forest and 31 community resilience to wildfire; and (ii) improved forest health, 32 including reduced vulnerability to changes in hydrology, insect 33 infestation, and other impacts of climate change; and 34 (u) Payments to agricultural fuel purchasers. 35 (2) The legislature intends that at least 25 percent of the total 36 appropriations each biennium from this account and the climate 37 commitment act capital account created in section 2 of this act are 38 made for the purposes of the clean water and healthy forest 39 p. 4 E2SHB 2251.SL investments in subsection (1)(s) and (t) of this section or section 1 2(1) (m) and (n) of this act. 2 (3) Moneys in the account may not be used for projects or 3 activities that would violate tribal treaty rights or result in 4 significant long-term damage to critical habitat or ecological 5 functions. 6 (4) Projects or activities funded from the account must meet high 7 labor standards, including: (a) Employer-paid sick leave programs and 8 other health care benefits; (b) employer-contributed retirement 9 plans; (c) pay practices in relation to living wage indicators, such 10 as the federal poverty level; (d) efforts to evaluate pay equity 11 based on gender identity, race, and other protected status under 12 Washington law; (e) career development opportunities, such as 13 apprenticeship programs, internships, job-shadowing, and on-the-job 14 training; and (f) employment assistance and employment barriers for 15 justice-affected individuals. 16 (5) Projects or activities funded from the account must maximize 17 access to economic benefits from such projects for local workers and 18 diverse businesses. 19 NEW SECTION. Sec. 2. A new section is added to chapter 70A.65 20 RCW to read as follows: 21 (1) The climate commitment act capital account is created in the 22 state treasury. Receipts from the auction of allowances authorized in 23 this chapter must be deposited into the account as provided in RCW 24 70A.65.100. Moneys in the account may be spent only after 25 appropriation. The legislature intends expenditures from the account 26 to supplement, not supplant, existing expenditures for similar 27 purposes. Expenditures from the account may be used only for the 28 following purposes: 29 (a) Programs, activities, and projects in the capital budget that 30 reduce greenhouse gas emissions, increase resilience to the impacts 31 of climate change, result in long-term environmental benefits, or 32 otherwise achieve the purposes of this chapter; 33 (b) Reduction and mitigation of impacts from greenhouse gases and 34 copollutants in overburdened communities, including strengthening the 35 air quality monitoring network required in RCW 70A.65.020; 36 (c) Projects or activities to promote electrification or reduce 37 the greenhouse gas emissions associated with electricity production, 38 distribution, or consumption, including: (i) Utility-scale renewable 39 p. 5 E2SHB 2251.SL resources and nonemitting electric generation, as those terms are 1 defined in RCW 19.405.020; (ii) distributed generation; (iii) 2 utility-scale and behind-the-meter energy storage; (iv) demand-side 3 technologies and strategies; (v) grid modernization projects; and 4 (vi) research, development, demonstration, or deployment of new and 5 emerging clean firm energy generation or storage technologies; 6 (d) Increased energy efficiency or reduced greenhouse gas 7 emissions for industrial facilities including, but not limited to, 8 combined heat and power, district energy, on-site renewables such as 9 solar and wind power, and less emissions-intensive fuel sources; 10 (e) Increased energy efficiency or reduced greenhouse gas 11 emissions for the agricultural sector including, but not limited to, 12 fertilizer management, soil management, bioenergy, biofuels, grants 13 and other financial incentives for agricultural equipment or food 14 processing, renewable energy projects, farmworker housing 15 weatherization programs, dairy digester research and development, and 16 alternative manure management; 17 (f) Increased energy efficiency or reduced greenhouse gas 18 emissions in new and existing residential, commercial, and industrial 19 buildings, including low carbon architecture, alternative building 20 materials that result in a lower carbon footprint over the life cycle 21 of the building and component building materials, electric 22 appliances, and equipment for space and water heating; 23 (g) The expansion of clean manufacturing capacity in communities 24 across Washington, including related community investments such as 25 transportation, municipal service delivery, and technology 26 investments, with an emphasis on communities in greatest need of job 27 creation and economic development and potential for commute 28 reduction; 29 (h) Improved energy affordability and reduced energy burden for 30 people with lower incomes, including energy efficiency and 31 weatherization programs, and community renewable energy projects that 32 allow qualifying participants to own or receive the benefits of those 33 projects at reduced or no cost; 34 (i) Reduced emissions from landfills and waste-to-energy 35 facilities through diversion of organic materials, methane capture or 36 conversion strategies, installation of gas collection devices and gas 37 control systems, monitoring and reporting of methane emissions, or 38 other means, prioritizing funding needed for any activities by local 39 governments to comply with chapter 70A.540 RCW; 40 p. 6 E2SHB 2251.SL (j) Carbon dioxide removal and carbon dioxide capture and 1 mineralization or sequestration; 2 (k) Activities to support efforts to mitigate and adapt to the 3 effects of climate change affecting Indian tribes, including capital 4 investments in support of the relocation of Indian tribes located in 5 areas at heightened risk due to anticipated sea level rise, flooding, 6 or other disturbances caused by climate change. The legislature 7 intends to dedicate at least $50,000,000 per biennium from the 8 account for purposes of this subsection when the department's most 9 recent baseline climate commitment act forecast projects 10 $1,000,000,000 or more for the biennium in total revenue to the 11 state. When the department's most recent baseline climate commitment 12 act forecast projects less than $1,000,000,000 for the biennium, the 13 legislature intends to dedicate at least five percent of total 14 projected revenue to the state for the biennium for the purposes of 15 this subsection; 16 (l) Electric vehicle infrastructure, including infrastructure in 17 buildings; 18 (m) Clean water investments that improve resilience from climate 19 impacts. Funding under this subsection (1)(m) must be used to: 20 (i) Restore and protect estuaries, fisheries, and marine 21 shoreline habitats and prepare for sea level rise; 22 (ii) Make fish passage correction investments, such as those 23 identified in the cost-share barrier removal program for small 24 forestland owners created in RCW 76.13.150 and those that are 25 considered by the fish passage barrier removal board created in RCW 26 77.95.160; 27 (iii) Increase carbon storage in the ocean or aquatic and coastal 28 ecosystems; 29 (iv) Increase the ability to mitigate, remediate, and adapt to 30 the impacts of ocean acidification; 31 (v) Reduce flood risk and restore natural floodplain ecological 32 function; 33 (vi) Increase the sustainable supply of water and improve aquatic 34 habitat, including groundwater mapping and modeling; 35 (vii) Improve infrastructure treating stormwater from previously 36 developed areas within an urban growth boundary designated under 37 chapter 36.70A RCW, with a preference given to projects that use 38 green stormwater infrastructure; 39 p. 7 E2SHB 2251.SL (viii) Either preserve or increase, or both, greenhouse gas 1 sequestration and storage benefits in forests, forested wetlands, 2 agricultural soils, tidally influenced agricultural or grazing lands, 3 or freshwater, saltwater, or brackish aquatic lands; or 4 (ix) Either preserve or establish, or both, greenhouse gas 5 sequestration by protecting or planting trees in marine shorelines 6 and freshwater riparian areas sufficient to promote climate 7 resilience, protect cold water fisheries, and achieve water quality 8 standards; and 9 (n) Healthy forest investments to improve resilience from climate 10 impacts. Funding under this subsection (1)(n) must be used for 11 projects that will: 12 (i) Increase forest and community resilience to wildfire in the 13 face of increased seasonal temperatures and drought; 14 (ii) Improve forest health and reduce vulnerability to changes in 15 hydrology, insect infestation, and other impacts of climate change; 16 or 17 (iii) Prevent emissions by retaining natural and working lands 18 against the threat of conversion to development or loss of critical 19 habitat, through actions that include, but are not limited to, the 20 creation of new conservation lands, community forests, or increased 21 support to small forestland owners through assistance programs 22 including, but not limited to, the forest riparian easement program 23 and the family forest fish passage program. It is the intent of the 24 legislature that not less than $10,000,000 be expended each biennium 25 for the forestry riparian easement program created in chapter 76.13 26 RCW or for riparian easement projects funded under the agricultural 27 conservation easements program established under RCW 89.08.530, or 28 similar riparian enhancement programs when the department's most 29 recent baseline climate commitment act forecast projects 30 $1,000,000,000 or more for that biennium in total revenue to the 31 state. When the department's most recent baseline climate commitment 32 act forecast projects less than $1,000,000,000 for that biennium, the 33 legislature intends to dedicate at least one percent of total 34 projected revenue to the state for the biennium for the purposes of 35 the forestry riparian easement program and similar programs. 36 (2) The legislature intends that at least 25 percent of the total 37 appropriations each biennium from this account and the climate 38 commitment act operating account created in section 1 of this act are 39 made for the purposes of the clean water and healthy forest 40 p. 8 E2SHB 2251.SL investments in subsection (1)(m) and (n) of this section and section 1 1(1) (s) and (t) of this act. 2 (3) Moneys in the account may not be used for projects or 3 activities that would violate tribal treaty rights or result in 4 significant long-term damage to critical habitat or ecological 5 functions. 6 (4) Moneys in the account must be spent in a manner that is 7 consistent with scientific assessment of current and future climate 8 risks such as those encompassed in the state's current climate 9 resilience strategy developed under chapter 70A.05 RCW. 10 Sec. 3. RCW 70A.65.100 and 2024 c 352 s 5 are each amended to 11 read as follows: 12 (1) Except as provided in RCW 70A.65.110, 70A.65.120, and 13 70A.65.130, the department shall distribute allowances through 14 auctions as provided in this section and in rules adopted by the 15 department to implement these sections. An allowance is not a 16 property right. 17 (2)(a) The department shall hold a maximum of four auctions 18 annually, plus any necessary reserve auctions. An auction may include 19 allowances from the annual allowance budget of the current year and 20 allowances from the annual allowance budgets from prior years that 21 remain to be distributed. The department must transmit to the 22 environmental justice council an auction notice at least 60 days 23 prior to each auction, as well as a summary results report and a 24 postauction public proceeds report within 60 days after each auction. 25 The department must communicate the results of the previous calendar 26 year's auctions to the environmental justice council on an annual 27 basis beginning in 2024. 28 (b) The department must make future vintage allowances available 29 through parallel auctions at least twice annually in addition to the 30 auctions through which current vintage allowances are exclusively 31 offered under (a) of this subsection. 32 (3) The department shall engage a qualified, independent 33 contractor to run the auctions. The department shall also engage a 34 qualified financial services administrator to hold the bid 35 guarantees, evaluate bid guarantees, and inform the department of the 36 value of bid guarantees once the bids are accepted. 37 (4) Auctions are open to covered entities, opt-in entities, and 38 general market participants that are registered entities in good 39 p. 9 E2SHB 2251.SL standing. The department shall adopt by rule the requirements for a 1 registered entity to register and participate in a given auction. 2 (a) Registered entities intending to participate in an auction 3 must submit an application to participate at least 30 days prior to 4 the auction. The application must include the documentation required 5 for review and approval by the department. A registered entity is 6 eligible to participate only after receiving a notice of approval by 7 the department. 8 (b) Each registered entity that elects to participate in the 9 auction must have a different representative. Only a representative 10 with an approved auction account is authorized to access the auction 11 platform to submit an application or confirm the intent to bid for 12 the registered entity, submit bids on behalf of the registered entity 13 during the bidding window, or to download reports specific to the 14 auction. 15 (5) The department may require a bid guarantee, payable to the 16 financial services administrator, in an amount greater than or equal 17 to the sum of the maximum value of the bids to be submitted by the 18 registered entity. 19 (6) To protect the integrity of the auctions, a registered entity 20 or group of registered entities with a direct corporate association 21 are subject to auction purchase and holding limits. The department 22 may impose additional limits if it deems necessary to protect the 23 integrity and functioning of the auctions: 24 (a) A covered entity or an opt-in entity may not buy more than 25 25 percent of the allowances offered during a single auction; 26 (b) A general market participant may not buy more than four 27 percent of the allowances offered during a single auction; 28 (c) Until Washington links with a jurisdiction that does not have 29 this requirement, a general market participant may not in aggregate 30 own more than 10 percent of total allowances to be issued in a 31 calendar year; 32 (d) No registered entity may buy more than the entity's bid 33 guarantee; and 34 (e) No registered entity may buy allowances that would exceed the 35 entity's holding limit at the time of the auction. 36 (7)(((a) For fiscal year 2023, upon completion and verification 37 of the auction results, the financial services administrator shall 38 notify winning bidders and transfer the auction proceeds to the state 39 treasurer for deposit as follows: (i) $127,341,000 must first be 40 p. 10 E2SHB 2251.SL deposited into the carbon emissions reduction account created in RCW 1 70A.65.240; and (ii) the remaining auction proceeds to the climate 2 investment account created in RCW 70A.65.250 and the air quality and 3 health disparities improvement account created in RCW 70A.65.280. 4 (b) For fiscal year 2024, upon completion and verification of the 5 auction results, the financial services administrator shall notify 6 winning bidders and transfer the auction proceeds to the state 7 treasurer for deposit as follows: (i) $356,697,000 must first be 8 deposited into the carbon emissions reduction account created in RCW 9 70A.65.240, except during fiscal year 2024, the deposit as provided 10 in this subsection (7)(b)(i) may be prorated equally across each of 11 the auctions occurring in fiscal year 2024; and (ii) the remaining 12 auction proceeds to the climate investment account created in RCW 13 70A.65.250 and the air quality and health disparities improvement 14 account created in RCW 70A.65.280, which may be prorated equally 15 across each of the auctions occurring in fiscal year 2024. 16 (c) For fiscal year 2025, upon completion and verification of the 17 auction results, the financial services administrator shall notify 18 winning bidders and transfer the auction proceeds to the state 19 treasurer for deposit as follows: (i) $366,558,000 must first be 20 deposited into the carbon emissions reduction account created in RCW 21 70A.65.240, except that during fiscal year 2025, the deposit as 22 provided in this subsection (7)(c)(i) may be prorated equally across 23 each of the auctions occurring in fiscal year 2025; and (ii) the 24 remaining auction proceeds to the climate investment account created 25 in RCW 70A.65.250 and the air quality and health disparities 26 improvement account created in RCW 70A.65.280, which may be prorated 27 equally across each of the auctions occurring in fiscal year 2025. 28 (d) For fiscal years 2026 through 2037, upon)) Upon completion 29 and verification of the results of each auction ((results)), the 30 financial services administrator shall notify winning bidders and 31 transfer the auction proceeds to the state treasurer for deposit as 32 follows: 33 (((i) $359,117,000 per year must first be deposited into the 34 carbon emissions reduction account created in RCW 70A.65.240; and 35 (ii) the remaining auction proceeds to the climate investment account 36 created in RCW 70A.65.250 and the air quality and health disparities 37 improvement account created in RCW 70A.65.280. 38 (e) The deposits into the carbon emissions reduction account 39 pursuant to (a) through (d) of this subsection must not exceed 40 p. 11 E2SHB 2251.SL $5,200,000,000 over the first 16 fiscal years and any remaining 1 auction proceeds must be deposited into the climate investment 2 account created in RCW 70A.65.250 and the air quality and health 3 disparities improvement account created in RCW 70A.65.280. 4 (f) For fiscal year 2038 and each year thereafter, upon 5 completion and verification of the auction results, the financial 6 services administrator shall notify winning bidders and transfer the 7 auction proceeds to the state treasurer for deposit as follows: (i) 8 50 percent of the auction proceeds to the carbon emissions reduction 9 account created in RCW 70A.65.240; and (ii) the remaining auction 10 proceeds to the climate investment account created in RCW 70A.65.250 11 and the air quality and health disparities improvement account 12 created in RCW 70A.65.280)) (a) First, each fiscal year an amount 13 must be deposited in the climate commitment act operating account 14 created in section 1 of this act as follows: $25,000,000 for fiscal 15 year 2028, increased each subsequent fiscal year by the implicit 16 price deflator averaged for each fiscal year using the official 17 current base rate, compiled by the bureau of economic analysis, 18 United States department of commerce. The department must calculate 19 this amount for every fiscal year and communicate it to the state 20 treasurer, the office of financial management, and legislative staff. 21 The legislature intends the funding in (a) of this subsection to be 22 used primarily for the department's costs to administer this chapter. 23 (b) The remaining auction proceeds each fiscal year after the 24 distribution in (a) of this subsection must be deposited as follows: 25 (i) 73 percent to the climate commitment act transportation 26 account created in RCW 70A.65.240. However, for fiscal year 2029, the 27 amount of the deposit to the climate commitment act transportation 28 account is $300,000,000 or 73 percent, whichever is greater. When 29 total revenue to the climate commitment act transportation account 30 under this subsection reaches a maximum of $359,117,000 for the 31 fiscal year, revenue under this subsection (7)(b)(i) is instead 32 deposited into the climate commitment act capital account created in 33 section 2 of this act; 34 (ii) 12 percent to the climate commitment act operating account 35 created in section 1 of this act. However, in fiscal year 2029, in 36 addition to the distribution in (a) of this subsection, the amount of 37 the deposit into the climate commitment act operating account is 50 38 percent of the remaining amount after making the distribution in (a) 39 of this subsection and the deposit under (b)(i) of this subsection. 40 p. 12 E2SHB 2251.SL When total revenue to the climate commitment act operating account 1 under (a) and (b)(ii) of this subsection reaches a maximum of 2 $80,000,000 for the fiscal year, revenue under this subsection 3 (7)(b)(ii) is instead deposited into the climate commitment act 4 capital account created in section 2 of this act; and 5 (iii) 15 percent to the climate commitment act capital account 6 created in section 2 of this act. However, for fiscal year 2029, the 7 amount of the deposit into the climate commitment act capital account 8 is 50 percent of the remaining amount after making the distribution 9 in (a) of this subsection and the deposit under (b)(i) of this 10 subsection. 11 (8) The department shall adopt by rule provisions to guard 12 against bidder collusion and minimize the potential for market 13 manipulation. A registered entity may not release or disclose any 14 bidding information including: Intent to participate or refrain from 15 participation; auction approval status; intent to bid; bidding 16 strategy; bid price or bid quantity; or information on the bid 17 guarantee provided to the financial services administrator. The 18 department may cancel or restrict a previously approved auction 19 participation application or reject a new application if the 20 department determines that a registered entity has: 21 (a) Provided false or misleading facts; 22 (b) Withheld material information that could influence a decision 23 by the department; 24 (c) Violated any part of the auction rules; 25 (d) Violated registration requirements; or 26 (e) Violated any of the rules regarding the conduct of the 27 auction. 28 (9) Records containing the following information are confidential 29 and are exempt from public disclosure in their entirety: 30 (a) Bidding information as identified in subsection (8) of this 31 section; 32 (b) Information contained in the secure, online electronic 33 tracking system established by the department pursuant to RCW 34 70A.65.090(6); 35 (c) Financial, proprietary, and other market sensitive 36 information as determined by the department that is submitted to the 37 department pursuant to this chapter; 38 (d) Financial, proprietary, and other market sensitive 39 information as determined by the department that is submitted to the 40 p. 13 E2SHB 2251.SL independent contractor or the financial services administrator 1 engaged by the department pursuant to subsection (3) of this section; 2 and 3 (e) Financial, proprietary, and other market sensitive 4 information as determined by the department that is submitted to a 5 jurisdiction with which the department has entered into a linkage 6 agreement pursuant to RCW 70A.65.210, and which is shared with the 7 department, the independent contractor, or the financial services 8 administrator pursuant to a linkage agreement. 9 (10) Any cancellation or restriction approved by the department 10 under subsection (8) of this section may be permanent or for a 11 specified number of auctions and the cancellation or restriction 12 imposed is not exclusive and is in addition to the remedies that may 13 be available pursuant to chapter 19.86 RCW or other state or federal 14 laws, if applicable. 15 (11) The department shall design allowance auctions so as to 16 allow, to the maximum extent practicable, linking with external 17 greenhouse gas emissions trading programs in other jurisdictions and 18 to facilitate the transfer of allowances when the state's program has 19 entered into a linkage agreement with other external greenhouse gas 20 emissions trading programs. The department may conduct auctions 21 jointly with linked jurisdictions. 22 (12) In setting the number of allowances offered at each auction, 23 the department shall consider the allowances in the marketplace due 24 to the marketing of allowances issued as required under RCW 25 70A.65.110, 70A.65.120, and 70A.65.130 in the department's 26 determination of the number of allowances to be offered at auction. 27 The department shall offer only such number of allowances at each 28 auction as will enhance the likelihood of achieving the goals of RCW 29 70A.45.020. 30 Sec. 4. RCW 70A.65.230 and 2025 c 417 s 806 are each amended to 31 read as follows: 32 (1) It is the intent of the legislature that each ((year)) 33 biennium the total investments made through the ((carbon emissions 34 reduction)) climate commitment act transportation account created in 35 RCW 70A.65.240, the ((climate commitment account created in RCW 36 70A.65.260, the natural climate solutions account created in RCW 37 70A.65.270)) climate commitment act operating account created in 38 section 1 of this act, the climate commitment act capital account 39 p. 14 E2SHB 2251.SL created in section 2 of this act, and the air quality and health 1 disparities improvement account created in RCW 70A.65.280, achieve 2 the following: 3 (a) A minimum of not less than 35 percent and a goal of 40 4 percent of total investments that provide direct and meaningful 5 benefits to vulnerable populations within the boundaries of 6 overburdened communities identified under chapter 70A.02 RCW; and 7 (b) In addition to the requirements of (a) of this subsection, a 8 minimum of not less than 10 percent of total investments that are 9 used for programs, activities, or projects ((formally)) supported by 10 ((a resolution of)) an Indian tribe, with priority given to otherwise 11 qualifying projects directly administered or proposed by an Indian 12 tribe. Investments that meet the requirement of this subsection 13 (1)(b) may include a letter of support from an Indian tribe, funding 14 provided to or requested by an Indian tribe, a formal resolution of 15 an Indian tribe, or similar expressions of support from an Indian 16 tribe. An investment that meets the requirements of both this 17 subsection (1)(b) and (a) of this subsection may count toward the 18 minimum percentage targets for both subsections. 19 (2) The expenditure of moneys under this chapter must be 20 consistent with applicable federal, state, and local laws, and treaty 21 rights including, but not limited to, prohibitions on uses of funds 22 imposed by the state Constitution. 23 (3) For the purposes of this section, "benefits" means 24 investments or activities that: 25 (a) Reduce vulnerable population characteristics, environmental 26 burdens, or associated risks that contribute significantly to the 27 cumulative impact designation of overburdened communities; 28 (b) Meaningfully protect an overburdened community from, or 29 support community response to, the impacts of air pollution or 30 climate change; or 31 (c) Meet a community need identified by vulnerable members of the 32 overburdened community that is consistent with the intent of this 33 chapter. 34 (((4) The state must develop a process by which to evaluate the 35 impacts of the investments made under this chapter, work across state 36 agencies to develop and track priorities across the different 37 eligible funding categories, and work with the environmental justice 38 council pursuant to RCW 70A.65.040.)) 39 p. 15 E2SHB 2251.SL Sec. 5. RCW 70A.65.280 and 2021 c 316 s 31 are each amended to 1 read as follows: 2 (1) The air quality and health disparities improvement account is 3 created in the state treasury. Moneys in the account may be spent 4 only after appropriation. Expenditures from the account are intended 5 to: 6 (a) Improve air quality through the reduction of criteria 7 pollutants, including through effective air quality monitoring and 8 the establishment of adequate baseline emissions data; and 9 (b) Reduce health disparities in overburdened communities by 10 improving health outcomes through the reduction or elimination of 11 environmental harms and the promotion of environmental benefits. 12 (2) Moneys in the account may be used for ((either)) operating 13 budget, capital budget, or transportation budget purposes((, or 14 both)). Moneys in the account may not be used for projects that would 15 violate tribal treaty rights or result in significant long-term 16 damage to critical habitat or ecological functions. Investments from 17 the account must result in long-term environmental benefits and 18 increased resilience to the impacts of climate change. 19 (((3) It is the intent of the legislature that not less than 20 $20,000,000 per biennium be dedicated to the account for the purposes 21 of the account.)) 22 Sec. 6. RCW 70A.65.300 and 2025 c 424 s 975 are each amended to 23 read as follows: 24 (1) The department shall prepare, post on the department website, 25 and submit to the appropriate committees of the legislature ((an 26 annual)) a report that identifies all distributions of moneys from 27 the accounts created in RCW 70A.65.240 ((through)), 70A.65.280, 28 section 1 of this act, and section 2 of this act. 29 (2) The report must identify, at a minimum((, the)): 30 (a) The recipient of the funding, the amount of the funding, the 31 purpose of the funding, the actual end result or use of the funding, 32 whether the project that received the funding produced any verifiable 33 reduction in greenhouse gas emissions or other long-term impact to 34 emissions, and if so, the quantity of reduced greenhouse gas 35 emissions, the cost per carbon dioxide equivalent metric ton of 36 reduced greenhouse gas emissions, and a comparison to other 37 greenhouse gas emissions reduction projects in order to facilitate 38 p. 16 E2SHB 2251.SL the development of cost-benefit ratios for greenhouse gas emissions 1 reduction projects; and 2 (b) The expenditures that provide direct and meaningful benefits 3 to vulnerable populations within the boundaries of overburdened 4 communities as described in RCW 70A.65.030 and 70A.65.230, and the 5 expenditures that are supported by an Indian tribe as described in 6 RCW 70A.65.230, including: 7 (i) The amount of each expenditure that provides direct and 8 meaningful benefits to vulnerable populations within the boundaries 9 of overburdened communities; 10 (ii) An explanation of how the expenditure provides such 11 benefits; 12 (iii) The methods by which overburdened communities and 13 vulnerable populations were identified by the agency and an 14 explanation of the outcomes of those identification processes, 15 including the geographic location impacted by the expenditure where 16 relevant, and the geographic boundaries of overburdened communities 17 identified by the agency; and 18 (iv) The amount of each expenditure used for programs, 19 activities, or projects supported by an Indian tribe. 20 (3) The department shall require by rule that recipients of funds 21 from the accounts created in RCW 70A.65.240 through 70A.65.280, 22 section 1 of this act, and section 2 of this act report to the 23 department, in a form and manner prescribed by the department, the 24 information required for the department to carry out the department's 25 duties established in this section. 26 (4) ((The department shall update its website with the 27 information described in subsection (2) of this section as 28 appropriate but no less frequently than once per calendar year. 29 (5) The)) After the conclusion of each fiscal year through fiscal 30 year 2027, the department shall submit ((its)) the report under this 31 section to the appropriate committees of the legislature ((with the 32 information described in subsection (2) of this section)) and update 33 its website no later than ((September 30)) December 31st of each 34 year. ((For fiscal year 2025, the report must be submitted no later 35 than November 30, 2024. During the 2025-2027 fiscal biennium, the 36 report must be submitted no later than November 30 of each fiscal 37 year.)) Beginning with the 2027-2029 biennium, after the conclusion 38 of each biennium the department shall submit the report on a biennial 39 basis by December 31st of each odd-numbered year. 40 p. 17 E2SHB 2251.SL NEW SECTION. Sec. 7. (1) Following the fiscal closure of the 1 2025-2027 biennium, the state treasurer must transfer the remaining 2 balance of the climate investment account created in RCW 70A.65.250, 3 the climate commitment account created in RCW 70A.65.260, and the 4 natural climate solutions account created in RCW 70A.65.270 into the 5 climate commitment act capital account created in section 2 of this 6 act. 7 (2) After the effective date of this section, the state treasurer 8 must transfer any amounts directed to be deposited into the climate 9 investment account created in RCW 70A.65.250, the climate commitment 10 account created in RCW 70A.65.260, or the natural climate solutions 11 account created in RCW 70A.65.270 into the climate commitment act 12 capital account created in section 2 of this act. 13 Sec. 8. RCW 43.21B.300 and 2025 c 316 s 302 and 2025 c 58 s 3008 14 are each reenacted and amended to read as follows: 15 (1) Any civil penalty provided in RCW 18.104.155, 70A.15.3160, 16 70A.205.280, 70A.230.080, 70A.300.090, 70A.20.050, 70A.245.040, 17 70A.245.050, 70A.245.070, 70A.245.080, 70A.245.130, 70A.245.140, 18 70A.65.200, 70A.430.070, 70A.455.090, 70A.500.260, 70A.505.110, 19 70A.555.110, 70A.560.020, 70A.208.230, 70A.565.030, 86.16.081, 20 88.46.090, 90.03.600, 90.46.270, 90.48.144, 90.56.310, 90.56.330, and 21 90.64.102 and chapter 70A.355 RCW shall be imposed by a notice in 22 writing, either by certified mail with return receipt requested or by 23 personal service, to the person incurring the penalty from the 24 department or the local air authority, describing the violation with 25 reasonable particularity. For penalties issued by local air 26 authorities, within 30 days after the notice is received, the person 27 incurring the penalty may apply in writing to the authority for the 28 remission or mitigation of the penalty. Upon receipt of the 29 application, the authority may remit or mitigate the penalty upon 30 whatever terms the authority in its discretion deems proper. The 31 authority may ascertain the facts regarding all such applications in 32 such reasonable manner and under such rules as it may deem proper and 33 shall remit or mitigate the penalty only upon a demonstration of 34 extraordinary circumstances such as the presence of information or 35 factors not considered in setting the original penalty. 36 (2) Any penalty imposed under this section may be appealed to the 37 pollution control hearings board in accordance with this chapter if 38 the appeal is filed with the hearings board and served on the 39 p. 18 E2SHB 2251.SL department or authority 30 days after the date of receipt by the 1 person penalized of the notice imposing the penalty or 30 days after 2 the date of receipt of the notice of disposition by a local air 3 authority of the application for relief from penalty. 4 (3) A penalty shall become due and payable on the later of: 5 (a) 30 days after receipt of the notice imposing the penalty; 6 (b) 30 days after receipt of the notice of disposition by a local 7 air authority on application for relief from penalty, if such an 8 application is made; or 9 (c) 30 days after receipt of the notice of decision of the 10 hearings board if the penalty is appealed. 11 (4) If the amount of any penalty is not paid to the department 12 within 30 days after it becomes due and payable, the attorney 13 general, upon request of the department, shall bring an action in the 14 name of the state of Washington in the superior court of Thurston 15 county, or of any county in which the violator does business, to 16 recover the penalty. If the amount of the penalty is not paid to the 17 authority within 30 days after it becomes due and payable, the 18 authority may bring an action to recover the penalty in the superior 19 court of the county of the authority's main office or of any county 20 in which the violator does business. In these actions, the procedures 21 and rules of evidence shall be the same as in an ordinary civil 22 action. 23 (5) All penalties recovered shall be paid into the state treasury 24 and credited to the general fund except the following: 25 (a) Penalties imposed pursuant to RCW 18.104.155 must be credited 26 to the reclamation account as provided in RCW 18.104.155(7); 27 (b) Penalties imposed pursuant to RCW 70A.15.3160 must be 28 disposed of pursuant to RCW 70A.15.3160; 29 (c) Penalties imposed pursuant to RCW 70A.230.080, 70A.300.090, 30 70A.430.070, 70A.555.110, 70A.560.020, and 70A.565.030 must be 31 credited to the model toxics control operating account created in RCW 32 70A.305.180; 33 (d) Penalties imposed pursuant to RCW 70A.245.040, 70A.245.050, 34 and chapter 70A.208 RCW must be credited to the recycling enhancement 35 account created in RCW 70A.245.100; 36 (e) Penalties imposed pursuant to RCW 70A.500.260 must be 37 deposited into the electronic products recycling account created in 38 RCW 70A.500.130; 39 p. 19 E2SHB 2251.SL (f) Penalties imposed pursuant to RCW 70A.65.200 must be credited 1 to the climate ((investment)) commitment act operating account 2 created in ((RCW 70A.65.250)) section 1 of this act; 3 (g) Penalties imposed pursuant to RCW 90.56.330 must be credited 4 to the coastal protection fund established in RCW 90.48.390; and 5 (h) Penalties imposed pursuant to RCW 70A.355.070 must be 6 credited to the underground storage tank account created in RCW 7 70A.355.090. 8 Sec. 9. RCW 70A.65.030 and 2025 c 424 s 972, 2025 c 417 s 804, 9 and 2025 c 58 s 3011 are each reenacted and amended to read as 10 follows: 11 (1) Except as provided in subsection (4) of this section, each 12 year or biennium, as appropriate, when allocating funds from the 13 ((carbon emissions reduction)) climate commitment act transportation 14 account created in RCW 70A.65.240, the climate commitment act 15 operating account created in ((RCW 70A.65.260)) section 1 of this 16 act, the ((natural climate solutions)) climate commitment act capital 17 account created in ((RCW 70A.65.270)) section 2 of this act, ((the 18 climate investment account created in RCW 70A.65.250,)) or the air 19 quality and health disparities improvement account created in RCW 20 70A.65.280, or administering grants or programs funded by the 21 accounts, agencies shall conduct an environmental justice assessment 22 consistent with the requirements of RCW 70A.02.060 and establish a 23 minimum of not less than 35 percent and a goal of 40 percent of total 24 investments that provide direct and meaningful benefits to vulnerable 25 populations within the boundaries of overburdened communities 26 through: (a) The direct reduction of environmental burdens in 27 overburdened communities; (b) the reduction of disproportionate, 28 cumulative risk from environmental burdens, including those 29 associated with climate change; (c) the support of community led 30 project development, planning, and participation costs; or (d) 31 meeting a community need identified by the community that is 32 consistent with the intent of this chapter or RCW 70A.02.010. 33 (2) The allocation of funding under subsection (1) of this 34 section must adhere to the following principles, additional to the 35 requirements of RCW 70A.02.080: (a) Benefits and programs should be 36 directed to areas and targeted to vulnerable populations and 37 overburdened communities to reduce statewide disparities; (b) 38 investments and benefits should be made roughly proportional to the 39 p. 20 E2SHB 2251.SL health disparities that a specific community experiences, with a goal 1 of eliminating the disparities; (c) investments and programs should 2 focus on creating environmental benefits, including eliminating 3 health burdens, creating community and population resilience, and 4 raising the quality of life of those in the community; and (d) 5 efforts should be made to balance investments and benefits across the 6 state and within counties, local jurisdictions, and unincorporated 7 areas as appropriate to reduce disparities by location and to ensure 8 efforts contribute to a reduction in disparities that exist based on 9 race or ethnicity, socioeconomic status, or other factors. 10 (3) Except as provided in subsection (4) of this section, state 11 agencies allocating funds or administering grants or programs from 12 the ((carbon emissions reduction)) climate commitment act 13 transportation account created in RCW 70A.65.240, the climate 14 commitment act operating account created in ((RCW 70A.65.260)) 15 section 1 of this act, the ((natural climate solutions)) climate 16 commitment act capital account created in ((RCW 70A.65.270)) section 17 2 of this act, ((the climate investment account created in RCW 18 70A.65.250,)) or the air quality and health disparities improvement 19 account created in RCW 70A.65.280, must: 20 (a) Report ((annually)) biennially to the environmental justice 21 council created in RCW 70A.02.110 regarding progress toward meeting 22 environmental justice and environmental health goals; 23 (b) Consider recommendations by the environmental justice 24 council; and 25 (c)(i) If the agency is not a covered agency subject to the 26 requirements of chapter 70A.02 RCW, create and adopt a community 27 engagement plan to describe how it will engage with overburdened 28 communities and vulnerable populations in allocating funds or 29 administering grants or programs from the climate investment account. 30 (ii) The plan must include methods for outreach and communication 31 with those who face barriers, language or otherwise, to 32 participation. 33 (4) ((During the 2023-2025 and 2025-2027 fiscal biennia:)) 34 (a) The requirement of subsection (1) of this section to conduct 35 an environmental justice assessment applies only to covered agencies 36 as defined in RCW 70A.02.010 and to significant agency actions as 37 defined in RCW 70A.02.010. 38 (b) Agencies shall coordinate with the department and the office 39 of financial management to achieve total statewide spending from the 40 p. 21 E2SHB 2251.SL accounts listed in subsection (1) of this section of not less than 35 1 percent and a goal of 40 percent of total investments that provide 2 direct and meaningful benefits to vulnerable populations within the 3 boundaries of overburdened communities as otherwise described in 4 subsection (1)(a) through (d) of this section and in accordance with 5 RCW 70A.65.230. 6 (c) The requirements of subsection (3)(c) of this section for 7 agencies other than covered agencies to create and adopt community 8 engagement plans apply only to executive branch agencies and 9 institutions of higher education, as defined in RCW 28B.10.016, 10 receiving total appropriations of more than $2,000,000 ((for the 11 2023-2025 fiscal)) per biennium from the accounts listed in 12 subsection (1) of this section. 13 Sec. 10. RCW 70A.65.040 and 2025 c 417 s 805 are each amended to 14 read as follows: 15 (1) The environmental justice council created in RCW 70A.02.110 16 must provide recommendations to the legislature, agencies, and the 17 governor in the development and implementation of the program 18 established in RCW 70A.65.060 through 70A.65.210, and the programs 19 funded from the ((carbon emissions reduction)) climate commitment act 20 transportation account created in RCW 70A.65.240, the climate 21 commitment act operating account created in ((RCW 70A.65.260)) 22 section 1 of this act, and the ((natural climate solutions)) climate 23 commitment act capital account created in ((RCW 70A.65.270, and the 24 climate investment account created in RCW 70A.65.250)) section 2 of 25 this act. 26 (2) In addition to the duties and authorities granted in chapter 27 70A.02 RCW to the environmental justice council, the environmental 28 justice council must: 29 (a) Provide recommendations to the legislature, agencies, and the 30 governor in the development of: 31 (i) The program established in RCW 70A.65.060 through 70A.65.210 32 including, but not limited to, linkage with other jurisdictions, 33 protocols for establishing offset projects and securing offset 34 credits, designation of emissions-intensive and trade-exposed 35 industries under RCW 70A.65.110, and administration of allowances 36 under the program; and 37 (ii) Investment plans and funding proposals for the programs 38 funded from the climate ((investment)) commitment act operating 39 p. 22 E2SHB 2251.SL account created in ((RCW 70A.65.250)) section 1 of this act for the 1 purpose of providing environmental benefits and reducing 2 environmental health disparities within overburdened communities; 3 (b) Provide a forum to analyze policies adopted under this 4 chapter to determine if the policies lead to improvements within 5 overburdened communities; 6 (c) Recommend procedures and criteria for evaluating programs, 7 activities, or projects; 8 (d) Recommend copollutant emissions reduction goals in 9 overburdened communities; 10 (e) Evaluate the level of funding provided to assist vulnerable 11 populations, low-income individuals, and impacted workers and the 12 funding of projects and activities located within or benefiting 13 overburdened communities; 14 (f) Recommend environmental justice and environmental health 15 goals for programs, activities, and projects funded from the climate 16 investment account, and review agency annual reports on outcomes and 17 progress toward meeting these goals; 18 (g) Provide recommendations to implementing agencies for 19 meaningful consultation with vulnerable populations, including 20 community engagement plans under RCW 70A.65.020 and 70A.65.030; and 21 (h) Recommend how to support public participation through 22 capacity grants for participation. 23 (3) For the purpose of performing the duties under subsection (2) 24 of this section, two additional tribal members are added to the 25 council. 26 Sec. 11. RCW 70A.65.060 and 2024 c 352 s 2 are each amended to 27 read as follows: 28 (1) In order to ensure that greenhouse gas emissions are reduced 29 by covered entities consistent with the limits established in RCW 30 70A.45.020, the department must implement a cap on greenhouse gas 31 emissions from covered entities and a program to track, verify, and 32 enforce compliance through the use of compliance instruments. 33 (2) The program must consist of: 34 (a) Annual allowance budgets that limit emissions from covered 35 entities, as provided in this section and RCW 70A.65.070 and 36 70A.65.080; 37 p. 23 E2SHB 2251.SL (b) Defining those entities covered by the program, and those 1 entities that may voluntarily opt into coverage under the program, as 2 provided in this section and RCW 70A.65.070 and 70A.65.080; 3 (c) Distribution of emission allowances, as provided in RCW 4 70A.65.100, and through the allowance price containment provisions 5 under RCW 70A.65.140 and 70A.65.150; 6 (d) Providing for offset credits as a method for meeting a 7 compliance obligation, pursuant to RCW 70A.65.170; 8 (e) Defining the compliance obligations of covered entities, as 9 provided in chapter 316, Laws of 2021; 10 (f) Establishing the authority of the department to enforce the 11 program requirements, as provided in RCW 70A.65.200; 12 (g) ((Creating a climate investment account for the deposit of 13 receipts from the distribution of emission allowances, as provided in 14 RCW 70A.65.250; 15 (h))) Providing for the transfer of allowances and recognition of 16 compliance instruments, including those issued by jurisdictions with 17 which Washington has linkage agreements; 18 (((i))) (h) Providing monitoring and oversight of the sale and 19 transfer of allowances by the department; 20 (((j))) (i) Creating a price ceiling and associated mechanisms as 21 provided in RCW 70A.65.160; and 22 (((k))) (j) Providing for the allocation of allowances to 23 emissions-intensive, trade-exposed industries pursuant to RCW 24 70A.65.110. 25 (3) The department shall consider opportunities to implement the 26 program in a manner that allows linking the state's program with 27 those of other jurisdictions. The department must evaluate whether 28 such linkage will provide for a more cost-effective means for covered 29 entities to meet their compliance obligations in Washington while 30 recognizing the special characteristics of the state's economy, 31 communities, and industries. The department is authorized to enter 32 into a linkage agreement with another jurisdiction after conducting 33 an environmental justice assessment and after formal notice and 34 opportunity for a public hearing, and when consistent with the 35 requirements of RCW 70A.65.210. The department is authorized to 36 withdraw from a linkage agreement and every linkage agreement must 37 provide that the department reserves the right to withdraw from the 38 agreement. 39 p. 24 E2SHB 2251.SL (4) During the 2022 regular legislative session, the department 1 must bring forth agency request legislation developed in consultation 2 with emissions-intensive, trade-exposed businesses, covered entities, 3 environmental advocates, and overburdened communities that outlines a 4 compliance pathway specific to emissions-intensive, trade-exposed 5 businesses for achieving their proportionate share of the state's 6 emissions reduction limits through 2050. 7 (5) By December 1, 2027, and by December 1st of each year that is 8 one year after the end of a compliance period, and in compliance with 9 RCW 43.01.036, the department must submit a report to the legislature 10 that includes a comprehensive review of the implementation of the 11 program to date, including but not limited to outcomes relative to 12 the state's emissions reduction limits, overburdened communities, 13 covered entities, and emissions-intensive, trade-exposed businesses. 14 The department must transmit the report to the environmental justice 15 council at the same time it is submitted to the legislature. 16 (6) The department must bring forth agency request legislation if 17 the department finds that any provision of this chapter prevents 18 linking Washington's cap and invest program with that of any other 19 jurisdiction. 20 Sec. 12. RCW 70A.65.200 and 2024 c 352 s 8 are each amended to 21 read as follows: 22 (1) All covered and opt-in entities are required to submit 23 compliance instruments in a timely manner to meet the entities' 24 compliance obligations and shall comply with all requirements for 25 monitoring, reporting, holding, and transferring emission allowances 26 and other provisions of this chapter. 27 (2) If a covered or opt-in entity does not submit sufficient 28 compliance instruments to meet its compliance obligation by the 29 specified transfer dates, a penalty of four allowances for every one 30 compliance instrument that is missing must be submitted to the 31 department within six months. When a covered entity or opt-in entity 32 reasonably believes that it will be unable to meet a compliance 33 obligation, the entity shall immediately notify the department. Upon 34 receiving notification, the department shall issue an order requiring 35 the entity to submit the penalty allowances. 36 (3) If a covered entity or opt-in entity fails to submit penalty 37 allowances as required by subsection (2) of this section, the 38 department must issue an order or issue a penalty of up to $10,000 39 p. 25 E2SHB 2251.SL per day per violation, or both, for failure to submit penalty 1 allowances as required by subsection (2) of the section. The order 2 may include a plan and schedule for coming into compliance. 3 (4) The department may issue a penalty of up to $50,000 per day 4 per violation for violations of RCW 70A.65.100(8) (a) through (e). 5 (5) Except as provided in subsections (3) and (4) of this 6 section, any person that violates the terms of this chapter or an 7 order issued under this chapter incurs a penalty of up to $10,000 per 8 day per violation for each day that the person does not comply. All 9 penalties under subsections (3) and (4) of this section and this 10 subsection must be deposited into the climate ((investment)) 11 commitment act operating account created in ((RCW 70A.65.250)) 12 section 1 of this act. 13 (6) Orders and penalties issued under this chapter are appealable 14 to the pollution control hearings board under chapter 43.21B RCW. 15 (7) Until the department enters into a linkage agreement or until 16 the end of the first compliance period, whichever is sooner, the 17 department may reduce the amount of the penalty by adjusting the 18 monetary amount or the number of penalty allowances described in 19 subsections (2) and (3) of this section. 20 (8) An electric utility or natural gas utility must notify its 21 retail customers and the environmental justice council in published 22 form within three months of paying a monetary penalty under this 23 section. 24 (9)(a) No city, town, county, township, or other subdivision or 25 municipal corporation of the state may implement a charge or tax 26 based exclusively upon the quantity of greenhouse gas emissions. 27 (b) No state agency may adopt or enforce a greenhouse gas pricing 28 or market-based emissions cap and reduce program for stationary 29 sources, or adopt or enforce emission limitations on greenhouse gas 30 emissions from stationary sources except as: 31 (i) Provided in this chapter; 32 (ii) Authorized or directed by a state statute in effect as of 33 July 1, 2022; or 34 (iii) Required to implement a federal statute, rule, or program. 35 (c) This chapter preempts the provisions of chapter 173-442 WAC, 36 and the department shall repeal chapter 173-442 WAC. 37 (10)(a) By December 1, 2023, the office of financial management 38 must submit a report to the appropriate committees of the legislature 39 that summarizes two categories of state laws other than this chapter: 40 p. 26 E2SHB 2251.SL (i) Laws that regulate greenhouse gas emissions from stationary 1 sources, and the greenhouse gas emission reductions attributable to 2 each chapter, relative to a baseline in which this chapter and all 3 other state laws that regulate greenhouse gas emissions are presumed 4 to remain in effect; and 5 (ii) Laws whose implementation may effectuate reductions in 6 greenhouse gas emissions from stationary sources. 7 (b) The state laws that the office of financial management may 8 address in completing the report required in this subsection include, 9 but are not limited to: 10 (i) Chapter 19.27A RCW; 11 (ii) Chapter 19.280 RCW; 12 (iii) Chapter 19.405 RCW; 13 (iv) Chapter 36.165 RCW; 14 (v) Chapter 43.21F RCW; 15 (vi) Chapter 70.30 RCW; 16 (vii) Chapter 70A.15 RCW; 17 (viii) Chapter 70A.45 RCW; 18 (ix) Chapter 70A.60 RCW; 19 (x) Chapter 70A.535 RCW; 20 (xi) Chapter 80.04 RCW; 21 (xii) Chapter 80.28 RCW; 22 (xiii) Chapter 80.70 RCW; 23 (xiv) Chapter 80.80 RCW; and 24 (xv) Chapter 81.88 RCW. 25 (c) The office of financial management may contract for all or 26 part of the work product required under this subsection. 27 Sec. 13. RCW 70A.65.305 and 2024 c 375 s 8004 are each amended 28 to read as follows: 29 (1) Agencies that allocate funding or administer grant programs 30 appropriated from the climate ((investment)) commitment act operating 31 account created in ((RCW 70A.65.250,)) section 1 of this act and the 32 climate commitment act capital account created in ((RCW 70A.65.260, 33 and the natural climate solutions account created in RCW 70A.65.270)) 34 section 2 of this act, including any new appropriations greater than 35 $2,000,000 per biennium which fit the description of executive order 36 21-02, must offer early, meaningful, and individual consultation with 37 any affected federally recognized tribe on all funding decisions and 38 funding programs that may impact tribal resources, including tribal 39 p. 27 E2SHB 2251.SL cultural resources, archaeological sites, sacred sites, fisheries, or 1 other rights and interests in tribal lands and lands within which a 2 tribe or tribes possess rights reserved or protected by federal 3 treaty, statute, or executive order. The consultation is independent 4 of, and in addition to, any public participation process required by 5 federal or state law, or by a federal or state agency, including the 6 requirements of Executive Order 21-02 related to archaeological and 7 cultural resources, and regardless of whether the agency receives a 8 request for consultation from a federally recognized tribe. The goal 9 of the consultation process is to identify tribal resources or rights 10 potentially affected by the funding decisions and funding programs, 11 assess their effects, and seek ways to avoid, minimize, or mitigate 12 any adverse effects on tribal resources or rights. 13 (2) At the earliest possible date prior to submittal of an 14 application, applicants for funding from the accounts created in 15 ((RCW 70A.65.250, 70A.65.260, and 70A.65.270)) sections 1 and 2 of 16 this act shall engage in a preapplication process with all affected 17 federally recognized tribes within the project area. ((During the 18 2023-2025 fiscal biennium, salmon habitat and climate resilience 19 projects funded from the natural climate solutions account created in 20 RCW 70A.65.270 that went through the application and prioritization 21 process before July 1, 2023, are exempt from the preapplication 22 requirements under this subsection.)) 23 (a) The preapplication process must include the applicant 24 notifying the department of archaeology and historic preservation, 25 the department of fish and wildlife, and all affected federally 26 recognized tribes within the project area. The notification must 27 include geographical location, detailed scope of the proposed 28 project, preliminary application details available to federal, state, 29 or local governmental jurisdictions, and all publicly available 30 materials, including public funding sources. 31 (b) The applicant must also offer to discuss the project with the 32 department of archaeology and historic preservation, the department 33 of fish and wildlife, and all affected federally recognized tribes 34 within the project area. Discussions may include the project's impact 35 to tribal resources, including tribal cultural resources, 36 archaeological sites, sacred sites, fisheries, or other rights and 37 interests in tribal lands and lands within which a tribe or tribes 38 possess rights reserved or protected by federal treaty, statute, or 39 executive order. 40 p. 28 E2SHB 2251.SL (c) All affected federally recognized tribes may submit to the 1 appropriate agency or agencies a summary of tribal issues, questions, 2 concerns, or other statements regarding the project, which must 3 become part of the official application file. The summary does not 4 limit what issues affected federally recognized tribes may raise in 5 the consultation process identified in subsections (1), (3) through 6 (7), and (9) of this section. 7 (d) The notification and offer to initiate discussion must be 8 documented with the application when it is filed, and a copy of the 9 application must be delivered to the department of archaeology and 10 historic preservation, the department of fish and wildlife, and to 11 the affected federally recognized tribe or tribes. If the discussions 12 pursuant to (b) of this subsection do not occur, the applicant must 13 document the reason why the discussion or discussions did not occur. 14 (e) Nothing in this section may be interpreted to require the 15 disclosure of information that is exempt from disclosure pursuant to 16 RCW 42.56.300 or federal law, including section 304 of the national 17 historic preservation act of 1966. Any information that is exempt 18 from disclosure pursuant to RCW 42.56.300 or federal law, including 19 section 304 of the national historic preservation act of 1966, shall 20 not become part of the official application file. 21 (3) If any funding decision, program, project, or activity that 22 may impact tribal resources, including tribal cultural resources, 23 archaeological sites, sacred sites, fisheries, or other rights and 24 interests in tribal lands and lands within which a tribe or tribes 25 possess rights reserved by federal treaty, statute, or executive 26 order is funded from the accounts created in ((RCW 70A.65.250, 27 70A.65.260, and 70A.65.270)) sections 1 and 2 of this act without 28 such a consultation with an affected federally recognized tribe, the 29 affected federally recognized tribe may request that all further 30 action on the decision, program, project, or activity cease until 31 meaningful consultation is completed. Upon receipt of such a request 32 by an agency or agencies with the authority to allocate funding or 33 administer grant programs from the accounts listed in subsection (1) 34 of this section in support of the proposed project, further action by 35 the agency or agencies on any decision, program, project, or activity 36 that would result in significant physical disturbance of the tribal 37 resource or resources described in this subsection must cease until 38 the consultation has been completed. 39 p. 29 E2SHB 2251.SL (4) Upon completion of agency and tribal consultation, an 1 affected federally recognized tribe may request a formal review of 2 the consultation by submitting a request to the governor's office of 3 Indian affairs and notifying the appropriate agencies and the 4 department of archaeology and historic preservation. The state 5 agencies and tribe must meet to initiate discussion within no more 6 than 20 days of the request. This consultation must be offered and 7 conducted separately with each affected federally recognized tribe, 8 unless the tribes agree to conduct a joint consultation with the 9 state. 10 (5) After the state agencies and tribe or tribes have conducted a 11 formal review under subsection (4) of this section, an affected 12 federally recognized tribe or state agency may request that the 13 governor and an elected tribal leader or leaders of a federally 14 recognized tribal government meet to formally consider the 15 recommendations from the parties. If requested, this meeting must 16 occur within 30 days of the request, except that a federally 17 recognized tribe may choose to opt out of the meeting. This timeline 18 may be extended by mutual agreement between the governor and the 19 tribal leaders. 20 (6) After the meeting identified in subsection (5) of this 21 section has occurred, the governor or an elected tribal leader of a 22 federally recognized tribe may call for the state and tribe or tribes 23 to enter into formal mediation, except that a federally recognized 24 tribe may choose to opt out of the mediation. If entered into, the 25 mediation must be conducted as a government-to-government proceeding, 26 with each sovereign government retaining their right to a final 27 decision that meets their separate obligations and interests. 28 Mediators must be jointly selected by the parties to the mediation. 29 An agreement between the governor and a tribal leader or leaders 30 resulting from the mediation is formally recognized and binding on 31 the signatory parties. Absent an agreement, participation in 32 mediation does not preclude any additional steps that any party can 33 initiate, including legal review, to resolve a continuing 34 disagreement. 35 (7) During the proceedings outlined in subsections (4) through 36 (6) of this section, the agency or agencies with the authority to 37 allocate funding or administer grant programs from the accounts 38 listed in subsection (1) of this section in support of the proposed 39 project may not approve or release funding, or make other formal 40 p. 30 E2SHB 2251.SL decisions, including permitting, that advance the proposed project 1 except where required by law. 2 (8) By June 30, 2023, the governor's office of Indian affairs, in 3 coordination with the department of archaeology and historic 4 preservation and federally recognized tribes, shall develop a state 5 agency tribal consultation process, including best practices for 6 early, meaningful, and effective consultation, early notification and 7 engagement by applicants with federally recognized tribes as a part 8 of the preapplication process in subsection (2) of this section, and 9 protocols for communication and collaboration with federally 10 recognized tribes. The consultation process developed under this 11 section must be periodically reviewed and updated in coordination 12 with federally recognized tribes. The governor's office of Indian 13 affairs must provide training and other technical assistance to state 14 agencies, as they implement the required consultation. 15 Notwithstanding the governor's office of Indian affairs' ongoing work 16 pursuant to this subsection, the provisions of subsections (1) 17 through (7) and (9) of this section become effective as of June 9, 18 2022. 19 (9) The requirements of this section apply to local governments 20 that receive funding from the accounts created in ((RCW 70A.65.250, 21 70A.65.260, and 70A.65.270)) sections 1 and 2 of this act, where that 22 funding is disbursed to project and program applicants. Where 23 requested, the governor's office of Indian affairs must provide 24 training and other technical assistance to local government agencies 25 as they implement the consultation requirements of this section. 26 (10) Any agency subject to or implementing this section may adopt 27 rules in furtherance of its duties under this section. 28 (11) Subject to the availability of amounts appropriated for this 29 specific purpose, the department must establish a tribal capacity 30 grant program to provide funding to federally recognized tribes for 31 the costs of implementing this section. 32 Sec. 14. RCW 76.04.196 and 2025 c 93 s 2 are each amended to 33 read as follows: 34 (1) Subject to the availability of amounts appropriated for this 35 specific purpose, the office of risk management shall, in 36 consultation with the department, establish a prescribed fire claims 37 fund pilot program for the purposes of: 38 p. 31 E2SHB 2251.SL (a) Supporting coverage for losses from prescribed fires and 1 cultural burning on department protected lands and on tribal lands 2 where an agreement exists between the Indian tribe and the department 3 or where approved by the Indian tribe. The fund would not be utilized 4 when prescribed fires or cultural burning have federal tort claims 5 act coverage under a federally recognized burn plan; and 6 (b) Supporting nonstate and nonfederal entities that are alleged 7 to have caused damages resulting from appropriately conducted 8 prescribed fires or cultural burning on department protected lands 9 and tribal lands as described in (a) of this subsection. 10 (2) To be eligible for reimbursement under this section, a claim 11 must meet the criteria in (a) and (b) of this subsection. 12 (a) The claim results from a prescribed fire or cultural burn 13 conducted on department protected lands and tribal lands as described 14 in subsection (1)(a) of this section: 15 (i) By a certified burn manager, under an approved burn plan, 16 with applicable permits and in accordance with any other applicable 17 conditions or requirements as determined by the department; or 18 (ii) By a cultural fire practitioner, in accordance with any 19 applicable burn plan or permit. 20 (b) The claim is for: 21 (i) Property or economic damage, as described under RCW 22 76.04.760(3) (a), (c), and (d), suffered by the claimant as a result 23 of the prescribed fire or cultural burn; 24 (ii) Reasonable costs authorized for reimbursement by the 25 department under RCW 76.04.475, related to the prescribed fire or 26 cultural burn; or 27 (iii) Costs of suppression of an escapement for which a person is 28 liable to a third party. 29 (c) A claim for damage suffered as a result of a prescribed fire 30 or cultural burn started, spread, or otherwise caused by a criminal 31 or negligent act is not eligible for reimbursement under this 32 section. 33 (3) Upon submission of a claim, the department shall determine 34 and certify to the office of risk management whether the claim meets 35 the criteria in subsection (2) of this section. 36 (4) The office of risk management may reimburse an eligible claim 37 in an amount equal to or less than the actual losses suffered by the 38 claimant, not to exceed $2,000,000 per claim. The payment of a claim 39 under this section is conditional on the availability of specific 40 p. 32 E2SHB 2251.SL funding for this purpose, and nothing in this section shall be 1 construed to create an entitlement to reimbursement or payment of any 2 claim. The total amount paid for claims may not exceed the amounts 3 available in the account established in subsection (7) of this 4 section. 5 (5)(a) The office of risk management shall collaborate with the 6 department, other relevant state agencies, the Washington prescribed 7 fire council, cultural fire practitioners, and certified burn 8 managers to establish guidelines governing the pilot program and the 9 administration of the account established in subsection (7) of this 10 section, including: 11 (i) Procedures for the submission of claims; 12 (ii) Any additional criteria for claim eligibility, as 13 appropriate; and 14 (iii) A methodology or structure for how the payment of claims 15 will be prioritized in the event that eligible claims exceed the 16 amounts available in the account established in subsection (7) of 17 this section. 18 (b) The office of risk management and the department may adopt 19 rules to implement this section. 20 (c) Guidelines and any rules adopted under this section must be 21 made publicly available on the websites of the office of risk 22 management and the department. 23 (6) This section does not limit the ability of a person to assert 24 a claim for damages arising from a prescribed fire under any other 25 law. A court shall offset any award of damages to a claimant under an 26 action arising from the same set of alleged facts by the amount of 27 reimbursement provided under this section. 28 (7)(a) The prescribed fire claims account is created in the state 29 treasury. Moneys in the account may be spent only after 30 appropriation. Expenditures from the account may only be used for the 31 reimbursement of claims under this section. 32 (b) Upon the expiration of this section, any remaining amounts in 33 the account must be deposited in the ((natural climate solutions)) 34 climate commitment act capital account created in section 2 of this 35 act. 36 (8) For the purposes of this section: 37 (a) "Certified burn manager" means a prescribed burn manager 38 certified under RCW 76.04.183 or a prescribed fire burn boss 39 certified under the national wildfire coordinating group standards. 40 p. 33 E2SHB 2251.SL (b) "Cultural fire practitioner" means a person approved by an 1 Indian tribe as having experience in burning to meet cultural goals 2 or objectives, including subsistence, ceremonial activities, 3 biodiversity, or other benefits. 4 (c) "Department protected lands" has the same meaning as in RCW 5 76.04.005. 6 (d) "Indian tribe" has the same meaning as in RCW 43.376.010. 7 (9) This section expires June 30, 2033. 8 Sec. 15. RCW 76.13.120 and 2024 c 158 s 1 are each amended to 9 read as follows: 10 (1) The legislature finds that the state should acquire easements 11 primarily along riparian and other sensitive aquatic areas from 12 qualifying small forestland owners willing to sell or donate 13 easements to the state provided that the state will not be required 14 to acquire the easements if they are subject to unacceptable 15 liabilities. Therefore the legislature establishes a forestry 16 riparian easement program. 17 (2) The definitions in this subsection apply throughout this 18 section and RCW 76.13.100, 76.13.110, 76.13.140, and 76.13.160 unless 19 the context clearly requires otherwise. 20 (a) "Forestry riparian easement" means an easement covering 21 qualifying timber granted voluntarily to the state by a qualifying 22 small forestland owner. 23 (b) "Qualifying small forestland owner" means a landowner meeting 24 all of the following characteristics as of the date the department 25 offers compensation for a forestry riparian easement: 26 (i) Is a small forestland owner as defined in (d) of this 27 subsection; and 28 (ii) Is an individual, partnership, corporation, or other 29 nongovernmental for-profit legal entity. 30 (c) "Qualifying timber" means those forest trees on land owned by 31 a qualifying small forestland owner for which the small forestland 32 owner is willing to grant the state a forestry riparian easement and 33 meets all of the following: 34 (i) The forest trees are covered by a forest practices 35 application that the small forestland owner is required to leave 36 unharvested under the rules adopted under RCW 76.09.040, 76.09.055, 37 and 76.09.370 or that is made uneconomic to harvest by those rules; 38 p. 34 E2SHB 2251.SL (ii) The forest trees are within or bordering a commercially 1 reasonable harvest unit as determined under rules adopted by the 2 forest practices board, or for which an approved forest practices 3 application for timber harvest cannot be obtained because of 4 restrictions under the forest practices rules; 5 (iii) The forest trees are located within, or affected by forest 6 practices rules pertaining to any one, or all, of the following: 7 (A) Riparian or other sensitive aquatic areas; 8 (B) Channel migration zones; or 9 (C) Areas of potentially unstable slopes or landforms, verified 10 by the department, and must meet all of the following: 11 (I) Are addressed in a forest practices application; 12 (II) Are adjacent to a commercially reasonable harvest area; and 13 (III) Have the potential to deliver sediment or debris to a 14 public resource or threaten public safety. 15 (d) "Small forestland owner" means a landowner meeting all of the 16 following characteristics: 17 (i) A forestland owner as defined in RCW 76.09.020 whose interest 18 in the land and timber is in fee or who has rights to the timber to 19 be included in the forestry riparian easement that extend at least 40 20 years from the date the completed forestry riparian easement 21 application associated with the easement is submitted; 22 (ii) An entity that has harvested from its own lands in this 23 state during the three years prior to the year of application an 24 average timber volume that would qualify the owner as a small 25 harvester under RCW 84.33.035; and 26 (iii) An entity that certifies at the time of application that it 27 does not expect to harvest from its own lands more than the volume 28 allowed by RCW 84.33.035 during the 10 years following application. 29 If a landowner's prior three-year average harvest exceeds the limit 30 of RCW 84.33.035, or the landowner expects to exceed this limit 31 during the 10 years following application, and that landowner 32 establishes to the department's reasonable satisfaction that the 33 harvest limits were or will be exceeded to raise funds to pay estate 34 taxes or equally compelling and unexpected obligations such as court- 35 ordered judgments or extraordinary medical expenses, the landowner 36 shall be deemed to be a small forestland owner. For purposes of 37 determining whether a person qualifies as a small forestland owner, 38 the small forestland owner office, created in RCW 76.13.110, shall 39 evaluate the landowner under this definition, pursuant to RCW 40 p. 35 E2SHB 2251.SL 76.13.160, as of the date that the forest practices application is 1 submitted and the date that the department offers compensation for 2 the forestry riparian easement. A small forestland owner can include 3 an individual, partnership, corporation, or other nongovernmental 4 legal entity. If a landowner grants timber rights to another entity 5 for less than five years, the landowner may still qualify as a small 6 forestland owner under this section. If a landowner is unable to 7 obtain an approved forest practices application for timber harvest 8 for any of his or her land because of restrictions under the forest 9 practices rules, the landowner may still qualify as a small 10 forestland owner under this section. 11 (e) "Completion of harvest" means that the trees have been 12 commercially harvested from an area and that further entry into that 13 area by mechanized logging or slash treating equipment is not 14 expected. 15 (3) Nothing in the eligibility limit identified in subsection 16 (2)(c)(i) through (iii) of this section precludes inclusion of land 17 in future mitigation programs. 18 (4) The department is authorized and directed to accept and hold 19 in the name of the state of Washington forestry riparian easements 20 granted by qualifying small forestland owners covering qualifying 21 timber and to pay compensation to the landowners in accordance with 22 this section. The department may not transfer the easements to any 23 entity other than another state agency. 24 (5) Forestry riparian easements shall be effective for 40 years 25 from the date of the completed forestry riparian easement 26 application, unless the easement is voluntarily terminated earlier by 27 the department, based on a determination that termination is in the 28 best interest of the state, or under the terms of a termination 29 clause in the easement. 30 (6) Forestry riparian easements shall be restrictive of the 31 timber only, and shall preserve all lawful uses of the easement 32 premises by the landowner that are consistent with the terms of the 33 easement and the requirement to protect riparian functions during the 34 term of the easement, subject to the restriction that the leave trees 35 required by the rules to be left on the easement premises may not be 36 cut during the term of the easement. No right of public access to or 37 across, or any public use of the easement premises is created by this 38 statute or by the easement. Forestry riparian easements shall not be 39 p. 36 E2SHB 2251.SL deemed to trigger the compensating tax of or otherwise disqualify 1 land from being taxed under chapter 84.33 or 84.34 RCW. 2 (7) The small forestland owner office shall determine what 3 constitutes a completed application for a forestry riparian easement. 4 An application shall, at a minimum, include documentation of the 5 owner's status as a qualifying small forestland owner, identification 6 of location and the types of qualifying timber, and notification of 7 completion of harvest, if applicable. 8 (8) Upon receipt of the qualifying small forestland owner's 9 forestry riparian easement application, and subject to the 10 availability of amounts appropriated for this specific purpose, the 11 following must occur: 12 (a) The small forestland owner office must determine the 13 compensation to be offered to the qualifying small forestland owner 14 for qualifying timber after the department accepts the completed 15 forestry riparian easement application and the landowner has 16 completed marking the boundary of the area containing the qualifying 17 timber. The legislature recognizes that there is not readily 18 available market transaction evidence of value for easements of the 19 nature required by this section, and thus establishes the methodology 20 provided in this subsection to ascertain the value for forestry 21 riparian easements. Values so determined may not be considered 22 competent evidence of value for any other purpose. 23 (b) The small forestland owner office, subject to the 24 availability of amounts appropriated for this specific purpose, is 25 responsible for assessing the volume of qualifying timber. However, 26 no more than 50 percent of the total amounts appropriated for the 27 forestry riparian easement program may be applied to determine the 28 volume of qualifying timber for completed forestry riparian easement 29 applications. Based on the volume established by the small forestland 30 owner office and using data obtained or maintained by the department 31 of revenue under RCW 84.33.074 and 84.33.091, the small forestland 32 owner office shall attempt to determine the fair market value of the 33 qualifying timber as of the date of the completed harvest. To the 34 extent reasonably possible, the forestry riparian easement 35 applications should be processed in the order received. Removal of 36 any qualifying timber before the expiration of the easement must be 37 in accordance with the forest practices rules and the terms of the 38 easement. There shall be no reduction in compensation for reentry. 39 p. 37 E2SHB 2251.SL (9)(a) Subject to the availability of amounts appropriated for 1 this specific purpose, the small forestland owner office shall offer 2 compensation for qualifying timber to the qualifying small forestland 3 owner in the amount of 90 percent of the value determined by the 4 small forestland owner office, plus the compliance and reimbursement 5 costs as determined in accordance with RCW 76.13.140. However, 6 compensation for any qualifying small forestland owner for qualifying 7 timber located on potentially unstable slopes or landforms may not 8 exceed a total of $150,000 during any biennial funding period. 9 (b) If the landowner accepts the offer for qualifying timber, the 10 department shall pay the compensation promptly upon: 11 (i) Completion of harvest in the area within a commercially 12 reasonable harvest unit with which the forestry riparian easement is 13 associated under an approved forest practices application, unless an 14 approved forest practices application for timber harvest cannot be 15 obtained because of restrictions under the forest practices rules; 16 (ii) Verification that the landowner has no outstanding 17 violations under chapter 76.09 RCW or any associated rules; and 18 (iii) Execution and delivery of the easement to the department. 19 (c) Upon donation or payment of compensation, the department may 20 record the easement. 21 (10)(a) The forest practices board shall adopt rules under the 22 administrative procedure act, chapter 34.05 RCW, to implement the 23 forestry riparian easement program, including the following: 24 (i) A standard version of a forestry riparian easement 25 application as well as all additional documents necessary or 26 advisable to create the forestry riparian easements as provided for 27 in this section; 28 (ii) Standards for descriptions of the easement premises with a 29 degree of precision that is reasonable in relation to the values 30 involved; 31 (iii) Methods and standards for cruises and valuation of forestry 32 riparian easements for purposes of establishing the compensation. The 33 department shall perform the timber cruises of forestry riparian 34 easements required under this chapter and chapter 76.09 RCW. Timber 35 cruises are subject to amounts appropriated for this purpose. 36 However, no more than 50 percent of the total appropriated funding 37 for the forestry riparian easement program may be applied to 38 determine the volume of qualifying timber for completed forestry 39 riparian easement applications. Any rules concerning the methods and 40 p. 38 E2SHB 2251.SL standards for valuations of forestry riparian easements shall apply 1 only to the department, qualifying small forestland owners, and the 2 small forestland owner office; 3 (iv) A method to determine that a forest practices application 4 involves a commercially reasonable harvest, and adopt criteria for 5 entering into a forestry riparian easement where a commercially 6 reasonable harvest is not possible or a forest practices application 7 that has been submitted cannot be approved because of restrictions 8 under the forest practices rules; 9 (v) A method to address blowdown of qualified timber falling 10 outside the easement premises; 11 (vi) A formula for sharing of proceeds in relation to the 12 acquisition of qualified timber covered by an easement through the 13 exercise or threats of eminent domain by a federal or state agency 14 with eminent domain authority, based on the present value of the 15 department's and the landowner's relative interests in the qualified 16 timber; 17 (vii) A method to determine timber that is qualifying timber 18 because it is rendered uneconomic to harvest by the rules adopted 19 under RCW 76.09.055 and 76.09.370; 20 (viii) A method for internal department review of small 21 forestland owner office compensation decisions under this section; 22 and 23 (ix) Consistent with RCW 76.13.180, a method to collect 24 reimbursement from landowners who received compensation for a 25 forestry riparian easement and who, within the first 10 years after 26 receipt of compensation for a forestry riparian easement, sells the 27 land on which an easement is located to a nonqualifying landowner. 28 (b) At least semiannually, the department shall consult with the 29 small forestland owner advisory committee established in RCW 30 76.13.110(4) to review landowner complaints, administrative 31 processes, rule recommendations, and related issues where the 32 department is actively seeking the small forestland owner advisory 33 committee's advice on potential improved efficiencies and 34 effectiveness. 35 (11) The legislature finds that the overall societal benefits of 36 economically viable working forests are multiple, and include the 37 protection of clean, cold water, the provision of wildlife habitat, 38 the sheltering of cultural resources from development, and the 39 natural carbon storage potential of growing trees. As such, working 40 p. 39 E2SHB 2251.SL forests and the forestry riparian easement program may be part of the 1 state's overall carbon sequestration strategy. If the state creates a 2 climate strategy, the department must share information regarding the 3 carbon sequestration benefits of the forestry riparian easement 4 program with other state programs using methods and protocols 5 established in the state climate strategy that attempt to quantify 6 carbon storage or account for carbon emissions. The department must 7 promote the expansion of funding for the forestry riparian easement 8 program and the ecosystem services supported by the program based on 9 the findings stated in RCW 76.13.100. Nothing in this subsection 10 allows a landowner to be reimbursed by the state more than once for 11 the same forest riparian easement application. 12 (12) It is the intent of the legislature that the small 13 forestland owner office complete forestry riparian easement program 14 application transactions within two years of the application receipt 15 consistent with the goals of ((RCW 70A.65.270(2)(b)(iii))) section 16 2(1)(n)(iii) of this act. 17 Sec. 16. RCW 70A.65.240 and 2022 c 182 s 101 are each amended to 18 read as follows: 19 (1) The ((carbon emissions reduction)) climate commitment act 20 transportation account is created in the state treasury. Moneys in 21 the account may be spent only after appropriation. Expenditures from 22 the account are intended to affect reductions in transportation 23 sector carbon emissions through a variety of carbon reducing 24 investments. These can include, but are not limited to: 25 Transportation alternatives to single occupancy passenger vehicles; 26 reductions in single occupancy passenger vehicle miles traveled; 27 reductions in per mile emissions in vehicles, including through the 28 funding of alternative fuel infrastructure and incentive programs; 29 and emission reduction programs for freight transportation, including 30 motor vehicles and rail, as well as for ferries and other maritime 31 and port activities. Expenditures from the account may only be made 32 for transportation carbon emission reducing purposes and may not be 33 made for highway purposes authorized under the 18th Amendment of the 34 Washington state Constitution, other than specified in this section, 35 and shall be made in accordance with subsection (2) of this section. 36 It is the legislature's intent that expenditures from the account 37 used to reduce carbon emissions be made with the goal of achieving 38 p. 40 E2SHB 2251.SL equity for communities that historically have been omitted or 1 adversely impacted by past transportation policies and practices. 2 (2) Appropriations in an omnibus transportation appropriations 3 act from the ((carbon emissions reduction)) climate commitment act 4 transportation account shall be made exclusively to fund the 5 following activities: 6 (a) Active transportation; 7 (b) Transit programs and projects; 8 (c) Alternative fuel and electrification; 9 (d) Ferries; and 10 (e) Rail. 11 Sec. 17. RCW 70A.65.302 and 2025 c 417 s 814 are each amended to 12 read as follows: 13 (1) State agencies that receive or have received appropriations 14 from the ((carbon emissions reduction)) climate commitment act 15 transportation account in an omnibus transportation appropriations 16 act are required to report information to estimate emission 17 reductions from fuel conversion activities funded from these 18 appropriations to the legislature, as well as any requested 19 information necessary for the estimation and analysis of projected 20 and realized emission reductions, using the reporting tool developed 21 by the joint transportation committee in accordance with section 22 204(7), chapter 472, Laws of 2023 in a form and manner prescribed by 23 the joint transportation committee. 24 (2) Reports must include initial reporting of projected emission 25 reductions at the time of expenditure and continued reporting of 26 factors to be used to calculate estimated realized emission 27 reductions in subsequent years. 28 (3) The reporting requirement in this section is in addition to 29 the reporting requirements of RCW 70A.65.300. 30 (4) For purposes of this section, "fuel conversion" means the 31 purchase of zero emission or hybrid electric vehicles, vessels, or 32 off-road equipment and the charging or fueling infrastructure needed 33 to support zero emission or hybrid electric vehicles or vessels. 34 Sec. 18. RCW 70A.535.180 and 2025 c 319 s 3 are each amended to 35 read as follows: 36 (1)(a) All regulated parties and credit generators are required 37 to submit reports under RCW 70A.535.070 in a timely manner to meet 38 p. 41 E2SHB 2251.SL the entities' compliance obligations and shall comply with all 1 requirements for recordkeeping, reporting, transacting credits, 2 obtaining a carbon intensity calculation, and other provisions of 3 this chapter. 4 (b) The department may issue a corrective action order to a 5 person that does not comply with a requirement of this chapter. 6 (2) Each deficit for which a registered party does not retire a 7 corresponding credit at the end of a compliance period constitutes a 8 separate violation of this chapter unless that registered party 9 participates in the credit clearance market as required under RCW 10 70A.535.030(8). For each violation, the department may issue a 11 penalty of up to four times the maximum posted price of the most 12 recent credit clearance market. 13 (3) The department may issue a penalty for any misreporting by a 14 party that results in the claim of credits that does not meet the 15 requirements of this chapter or the failure to report a deficit. The 16 penalty issued under this subsection may be up to $1,000 per credit 17 or deficit in violation of the requirements of this chapter. A 18 registered party may not be penalized under this subsection if any 19 misreporting in a quarterly report is corrected by the end of that 20 quarter's reporting period. 21 (4) The department may issue a penalty of up to $10,000 per day 22 each day a registered party does not submit a report under RCW 23 70A.535.070 by the reporting deadline. 24 (5) The department may issue a penalty for credits generated in 25 exceedance of a carbon intensity standard adopted by the department 26 for that year of up to $1,000 per credit for each illegitimate credit 27 generated as a result of the incorrect carbon intensity score. 28 (6) The department may issue a penalty of up to $25,000 per month 29 that a regulated party is not registered with the department in 30 violation of RCW 70A.535.070. 31 (7) The department may issue to any participating electric 32 utility a penalty of up to four times the credit revenue improperly 33 spent in violation of RCW 70A.535.080 or rules adopted to implement 34 that section. 35 (8) The department may issue a penalty of up to $50,000 or 36 $10,000 per day for a violation of the third-party verification 37 requirements adopted by the department under RCW 70A.535.030(3)(c) 38 for as long as the registered party remains out of compliance with 39 these requirements. However, the department shall not issue a penalty 40 p. 42 E2SHB 2251.SL to a registered party for a violation of third-party verification 1 requirements that the registered party demonstrates to the department 2 was due to an error made by the third-party verifier. 3 (9) For violations other than those described in subsections (2) 4 through (8) of this section, the department may issue a penalty of up 5 to $10,000 per day per violation for each day any registered party 6 violates the terms of this chapter or an order issued under this 7 chapter. 8 (10) An electric utility must notify its retail customers in 9 published form within three months of paying a monetary penalty under 10 this section. 11 (11) Penalties and orders issued under this section may be 12 appealed to the pollution control hearings board created in chapter 13 43.21B RCW. Penalties collected under this chapter must be deposited 14 in the ((carbon emissions reduction)) climate commitment act 15 transportation account created in RCW 70A.65.240. 16 Sec. 19. RCW 82.08.994 and 2025 c 417 s 809 are each amended to 17 read as follows: 18 (1) The tax levied by RCW 82.08.020 does not apply to sales of 19 zero emission buses purchased by: 20 (a) A transit agency; or 21 (b) A federally recognized Indian tribe to provide public 22 transportation services. 23 (2) Sellers may make tax exempt sales under this section only if 24 the buyer provides the seller with an exemption certificate in a form 25 and manner prescribed by the department. The seller must retain a 26 copy of the certificate for the seller's files. 27 (3) For the purposes of this section: 28 (a) "Transit agency" means a city-owned transit system, county 29 transportation authority, metropolitan municipal corporation, public 30 transportation benefit area, unincorporated transportation benefit 31 area, or regional transit authority. 32 (b) "Zero emission bus" means a bus that emits no exhaust gas 33 from the onboard source of power, other than water vapor. 34 (4) On the last day of February, May, August, and November of 35 each year, the state treasurer, based upon information provided by 36 the department, must transfer from the ((carbon emissions reduction)) 37 climate commitment act transportation account to the general fund a 38 sum equal to the dollar amount that would otherwise have been 39 p. 43 E2SHB 2251.SL deposited into the general fund during the prior calendar quarter but 1 for the exemption provided in this section and RCW 82.12.994. 2 Information provided by the department to the state treasurer must be 3 based on the best available data, except that the department may 4 provide estimates of taxes exempted under this section until such 5 time as retailers are able to report such exempted amounts on their 6 tax returns. 7 (5)(a) The department must provide notification on its website 8 monthly of the amount in exemptions issued and the amount remaining 9 under this section and RCW 82.12.994 before the limit described in 10 (b) of this subsection has been reached, and, once that limit has 11 been reached, the date the exemption expires pursuant to (b) of this 12 subsection. 13 (b) The exemption under this section expires after the last day 14 of the calendar month immediately following the month the department 15 determines the total amount of state sales and use tax exemptions 16 issued under this section and RCW 82.12.994 reaches or exceeds 17 $14,000,000. 18 (6) By July 1, 2026, and every six months thereafter until the 19 exemptions in this section and RCW 82.12.994 expire, based on the 20 best available data, the department must report the following 21 information to the transportation committees of the legislature: 22 (a) The cumulative number of vehicles that qualified for the 23 exemption under this section and RCW 82.12.994 by month of purchase 24 and vehicle make and model; and 25 (b) The dollar amount of all state retail sales and use taxes 26 exempted under this section and RCW 82.12.994, by fiscal year. 27 Sec. 20. RCW 82.17.030 and 2025 c 419 s 4 are each amended to 28 read as follows: 29 (1) Beginning May 20, 2025, for purposes of model year 2024 30 program implementation, an excise tax is imposed on the banking and 31 sale of surplus ZEV credits as verified by the department of ecology 32 for each model year. The excise tax imposed under this section does 33 not apply to pooled surplus ZEV credits. 34 (a) For a ZEV credit sold to another manufacturer, the amount of 35 the tax with respect to such sale is equal to the credit sales price 36 reported under RCW 82.17.020 multiplied by a rate of two percent. 37 (b) For a ZEV credit banked by a manufacturer, and thus 38 considered sold under this chapter, the amount of tax with respect to 39 p. 44 E2SHB 2251.SL the privilege of holding a banked ZEV credit for use in a future 1 model year is equal to the average ZEV credit price calculated by the 2 department under subsection (3) of this section, multiplied by the 3 rate of 10 percent. For purposes of the tax imposed under this 4 chapter, a banked ZEV credit held at the start of the next model year 5 is considered sold. 6 (2) For each year of zero-emission vehicle program implementation 7 that a ZEV credit is banked or continues to be banked, the 8 manufacturer must pay the tax specified in subsection (1)(b) of this 9 section. The tax in subsection (1)(b) of this section applies to 10 banked credits that were generated prior to model year 2024 that 11 continue to be banked during implementation of the program for 12 purposes of model year 2024 or subsequent model years. 13 (3) Based on the ZEV credit sales prices reported to the 14 department under RCW 82.17.020: 15 (a) For each model year, the department must calculate the 16 average ZEV credit price and share this information with the 17 department of ecology for publication. The average ZEV credit price 18 for a model year must be calculated by aggregating the reported sales 19 prices of ZEV credits under RCW 82.17.020 by all manufacturers that 20 reported transactions for the model year. If there were no 21 transactions of ZEV credits reported to the department for a specific 22 model year, the department must apply the average ZEV credit price 23 for the most recent model year for which such data are available for 24 purposes of that specific model year. 25 (b) Beginning November 1, 2026, and each year thereafter, the 26 department must calculate the amount of the tax by each manufacturer 27 due under this section. The department must notify the manufacturer 28 of their tax liability for the most recent reporting year no later 29 than January 31st of the immediately following calendar year, except 30 that the department may notify the manufacturer of their tax 31 liability for both model year 2024 and model year 2025 no later than 32 January 31, 2027. 33 (c) Once the average ZEV credit price has been calculated and is 34 published to the department of ecology's website, the amount is 35 considered final and cannot be altered based on amended information 36 received by the department from the department of ecology or a 37 participating manufacturer. 38 p. 45 E2SHB 2251.SL (4) Penalties and interest under chapter 82.32 RCW will apply to 1 any tax liability not paid by the due date of the notice of tax 2 liability under subsection (3) of this section. 3 (5) The proceeds from the tax imposed under this chapter must be 4 deposited as follows: 5 (a) 30 percent to the electric vehicle incentive account created 6 in RCW 43.330.365; 7 (b)(i) Until June 30, 2027, 70 percent to the state general fund; 8 and 9 (ii) Beginning July 1, 2027, 70 percent to the ((carbon emissions 10 reduction)) climate commitment act transportation account created in 11 RCW 70A.65.240. 12 NEW SECTION. Sec. 21. The following acts or parts of acts are 13 each repealed: 14 (1) RCW 70A.65.250 (Climate investment account) and 2025 c 424 s 15 973 & 2024 c 376 s 911; 16 (2) RCW 70A.65.260 (Climate commitment account) and 2025 c 424 s 17 974, 2023 c 475 s 939, 2022 c 179 s 17, & 2021 c 316 s 29; and 18 (3) RCW 70A.65.270 (Natural climate solutions account) and 2021 c 19 316 s 30. 20 NEW SECTION. Sec. 22. This act takes effect July 1, 2027. 21 Passed by the House March 11, 2026. Passed by the Senate March 6, 2026. Approved by the Governor March 25, 2026. Filed in Office of Secretary of State March 25, 2026. --- END --- p. 46 E2SHB 2251.SL