Official Text and Analysis.

Directs the Department of Ecology (ECY) to adopt a rule establishing a Clean Fuels Program to limit the greenhouse gas emissions per unit of transportation fuel energy to 10 percent below 2017 levels by 2028 and 20 percent below 2017 levels by 2035.

Directs the Department of Ecology (ECY) to adopt a rule establishing a Clean Fuels Program (CFP) to limit the greenhouse gas emissions per unit of transportation fuel energy to 10 percent below 2017 levels by 2028 and 20 percent below 2017 levels by 2035.

Exempts fuel used off-road in vehicles used primarily to transport logs and dyed special fuel used by certain construction, mining, and timber harvest vehicles ("Exempt Fuels") from greenhouse gas (GHG) emission intensity reductions until January 1, 2028, after which the Clean Fuels Program's GHG emission reduction intensity requirements apply to those fuels. (2) Makes the Exempt Fuels eligible to generate credits until 2028. (3) Authorizes the Department of Ecology to adopt rules to specify standards allowing persons to qualify for the exemptions for Exempt Fuels.

Exempts dyed special fuels used for agricultural purposes exempt from state motor fuel taxation from Clean Fuels Program carbon intensity reduction requirements until 2028, but makes those fuels eligible to earn Clean Fuels Program credits.

Requires that clean fuels program rules adopted by the department of ecology exclude from credit-generating eligibility any transportation fuels that are wholly or partly derived from palm oil.

Requires the Department of Ecology to consider associated land use changes when determining the carbon intensity of transportation fuel produced from sugar cane..

Authorizes the Clean Fuels Program rules adopted by the Department of Ecology to allow the generation of credits for activities that support the reduction of greenhouse gas emissions associated with transportation ("Supportive Credit Generation Activities"), including, at minimum: (a) Carbon capture and sequestration projects; (b) electricity supplied as a transportation fuel from zero carbon resources; (c) the provision of zero emission vehicle infrastructure; and (d) smart vehicle charging technology. (2) Authorizes the Department of Ecology's Clean Fuels Program rules to limit the number of credits that may be generated from Supportive Credit Generation Activities. (3) Requires the Clean Fuels Program rules adopted by the Department of Ecology to establish transportation fuel carbon intensity reduction requirements based on the carbon intensity of gasoline and gasoline substitutes and diesel and diesel substitutes. (4) Encourages the Department of Ecology's rules to encourage Clean Fuel Program participants with the opportunity to demonstrate carbon intensity values that take into account emissions from production facilities and elsewhere in the production cycle, where such rules would not produce results counter to emission reduction goals or prove administratively burdensome..

Adds a referendum clause, making the establishment of a clean fuels program subject to a vote of the people at the next state general election.

Requires the department of ecology to contract for an independent consultant to complete the annual estimates of the probable costs or cost savings per gallon of gasoline attributable to the clean fuels program. Requires these cost estimates to be announced in a press release to the news media and reported to the house and senate transportation committees at the same time that the department of ecology posts its annual program report online by May 1st of each year.

Establishes that a portion of retail sales and use taxes on motor vehicles be deposited in the motor vehicle fund to fund transportation infrastructure, beginning with twenty percent of such collections in fiscal year 2020 and escalating to 100 percent of such collections in fiscal year 2024, except where otherwise provided by law. Adds a provision to the section of the bill that declares legislative findings and intent.

Exempts transportation fuel used by energy intensive trade-exposed (EITE) facilities from the greenhouse gas emission intensity reduction requirements of the clean fuels program. Requires the department of ecology to adopt criteria to identify EITE facilities by rule based on the criteria of other state carbon reduction programs, and requires the department of ecology's rule to identify food processing plants as EITE facilities.

Exempts fuel used in the operation of commercial food transport vehicles from clean fuels program greenhouse gas emission intensity reduction requirements.

Adds legislative findings to the intent section regarding existing taxes and regulatory mandates on fossil fuel used for transportation.

Requires the department of ecology's rules to exempt from clean fuel program requirements or to attribute zero life-cycle greenhouse gas emissions to the following: (1) Certain fuels brought in via a supply tank; (2) fuels that are prohibited from regulation under the state or federal Constitution or federal laws; (3) electricity used as transportation fuel that was originated with certain coal-fired electric generation facilities; (4) certain transportation fuels used for agricultural purposes; and (5) transportation fuels used by certain persons associated with the extraction, manufacture, processing, or sale of timber.

Attributes zero associated lifecycle greenhouse gas emissions to electricity from hydroelectric generation, including incremental hydroelectric generation. Requires electricity produced from hydroelectric generation, including incremental hydroelectricity, to be provided credit under the clean fuels program when used as a transportation fuel.

Provides that the clean fuels program's transportation fuel carbon intensity reductions may only be implemented each biennium after the office of financial management completes an analysis of the program's impacts on state agencies and local governments from anticipated transportation fuel price increases, and the legislature specifically appropriates funds in the next session's operating budget to address the fiscal impacts to state agencies and local governments. Requires funds to address the costs to counties, cities, towns, and special purpose districts to be appropriated to the department of commerce for distribution.

Restores existing provisions that address the allocation of transportation funds to the connecting Washington account from other transportation accounts in the event of the establishment of a low carbon fuel standard or similar programs.

Adds definitions for the terms "price" and "cost" applicable to the Clean Fuels Program.

Directs the Department of Ecology (ECY) to adopt a rule establishing a Clean Fuels Program (CFP) to limit the greenhouse gas emissions per unit of transportation fuel energy to 10 percent below 2017 levels by 2028 and 20 percent below 2017 levels by 2035.