WAWG State Legislative Report, week 9

By Diana Carlen
WAWG Lobbyist

March 10 marked the 61st day of the 2023 Legislative Session. On March 8, the Legislature reached a milestone — the deadline to pass bills out of the house of origin which means House bills must have been voted out of the House and Senate bills must have been voted out of the Senate. Bills that did not meet that deadline are considered “dead” and ineligible to move forward this year, unless considered “necessary to implement the budget.” In total, the House and Senate passed just over 500 bills.

The focus of the Legislature has now shifted from floor action back to meeting in committees, holding public hearings, and voting on bills that the opposite chamber approved. Bills need to pass out of their respective policy committees by March 29 to continue to advance through the legislative process.

Initial Cap-and-Trade Auction Results Released

On March 7, initial results were released from the first cap-and-invest auction, and the state brought in more money than previously forecasted.

All 6,185,222 allowances offered for sale by Ecology sold. Each allowance represents one metric ton of greenhouse gas emissions. The settlement price was $48.50 per allowance, up from the floor price of $22.20. The Seattle Times reported that the auction generated an estimated $300 million. Ecology will confirm the total revenue raised from the first auction at the end of the month.

Last fall, Ecology estimated the state would bring in around $480 million from auctions in 2023 based on an allowance price of around $32. Ecology will hold three more auctions this year. If allowances stay at the current price, the auctions will bring in almost three times as money this year than what Ecology previously predicted.

Money generated from the auction will be allocated in the state budget for programs to further reduce carbon emissions. The governor’s proposed biennial budget, released late last year, called for about $1.7 billion of Climate Commitment Act revenue to be spent. Legislative budget proposals are anticipated later this month and auction proceeds are predicted to be spent in all three budget categories: operating, transportation and capital.

Ecology’s summary report along with a list of qualified bidders can be found here. On March 28, Ecology is expected to release additional information detailing the amount of revenue raised from Tuesday’s auction.

Train Length Restriction Bill Fails to Make Cutoff Deadline

Legislation restricting the length of certain trains failed to move by the House of Origin cutoff. House bill 1839 would have limited train lengths to 7,500 feet and require railroads to obtain approval from the Utilities and Transportation Commission to exceed that length up to a maximum of 10,000 feet. The bill would have created a patchwork of rules across a national rail system, resulting in supply chain delays and increased costs. Railroads, ports and agriculture were opposed to the bill because it would negatively impact marine cargo and transport of agricultural products.

While the train length legislation failed to make the cutoff deadline, another rail bill dealing with family and medical leave did pass. SB 5267 as initially introduced would have established a family and medical leave standard for railroad workers, but received significant opposition.

When passed by the Senate this week, ESSB 5267 was significantly amended to prohibit a railroad carrier from taking adverse actions against employees for certain unpaid family and medical absences. Notably, the new requirements for carriers do not apply to class III railroads.

WRAP Act Stalls in Legislature

In a significant turn of events, momentum on the complex legislation known as the WRAP Act (House Bill 1131) which would have overalled the state’s recycling system stalled, and the bill failed to receive a vote out of the House of Representatives ahead of the house of origin deadline. The legislation would have established an EPR system, made changes to minimum postconsumer recycled content, outlined truth in labeling specifications, and created producer responsibilities for beverage containers.

The bill received strong pushback from the business community, including garbage haulers, throughout the legislative process. We will continue to keep an eye on the proposal as legislation can always come back in different forms until the Legislature officially adjourns in April.

Notable Floor Action This Week Before Cutoff:

  • Clean Energy (SHB 1589) is legislation brought at the request of Puget Sound Energy. If enacted, the bill would provide a glide-path for the utility moving away from providing natural gas service as a response to concerns about carbon emissions. Under the legislation, PSE would stop connecting new gas customers after June 30, 2023, and would begin filing a gas decarbonization plan with the Washington Utilities and Transportation Commission beginning in 2026. The bill was amended on the floor to create exemptions to the prohibition on the extension of natural gas service for certain types of facilities, including manufacturing (NAIC codes beginning with 31, 32 or 33). The bill does not call for discontinuing existing gas customers. The bill passed out of the House 52-44.
  • Clean Energy Siting (E2SHB 1216). This bill creates an expedited permitting process to make it easier to permit certain types of energy and clean manufacturing projects, helping meet the state’s clean energy goals. The bill was amended on the House floor to include certain projects or facility upgrades undertaken by emissions-intensive trade-exposed industries to the definition of clean energy product manufacturing facility. The bill passed the House by a vote of 75-20.
  • Pesticide Advisory Board (HB 1019), would establish a formal and permanent Pesticide Advisory Board to advise the Department of Agriculture. The bill was amended to include a migrant farmworker to the voting membership of the Board. The House unanimously voted the bill off the floor.
  • Pesticide Application (SB 5330) is Washington State Department of Agriculture (WSDA) request legislation. This bill is the first step in implementing the modified Washington State plan for certified applicators that was approved by the EPA. The bill makes several amendments to the Washington pesticide application act. The bill passed the Senate unanimously.

Notable Bills Considered “Necessary to Implement the Budget” and Still Alive:

  • Tax Preferences for Dairy, Fruit and Vegetable, and Seafood Processors (HB 1573), sponsored by Rep. Alicia Rule (D-Blaine), would extend the expiration date of business and occupation tax preferences for dairy, fruit and vegetable, and seafood processors by a decade. The expiration date would be moved from July 1, 2025, to July 1, 2035.
  • Reusable Packing Materials (HB 1422), sponsored by Rep. Larry Springer (D-Kirkland), clarifies that renting or leasing of packing material under a packing material sharing and reuse program is not subject to retail sales and use tax. The clarification provided by HB 1422 is necessary as a recent Washington Court of Appeals decision determined that reusable wooden pallets leased by food manufacturers constituted a “retail sale” and are subject to sales and use taxes.
  • Sales Tax Remittance for Farmers (House Bill 1757), sponsored by Rep. Chris Corry (R-Yakima). As background, in 2007 the Legislature enacted a B&O tax exemption for farmers providing custom farming services to other farmers. While the preference expired at the end of 2020, the Legislature permanently reauthorized the tax preferences beginning July 2022. HB 1757 would provide a sales and use tax exemption via a remittance to farmers who paid B&O taxes on activities that would have been exempt if the custom farming exemption had not lapsed. Eligible activities would have taken place between December 31, 2020, and July 1, 2022. The bill passed out of the House Finance Committee this week.
  • Freight Railroad Infrastructure (HB 1371) sponsored by Rep. Andrew Barkis (R-Olympia) is designed to incentivize maintenance, preservation, and new investment in short line rail by providing a public utility tax, a retail sales tax and a B&O tax exemption.