Lubricant emissions

AN ACT Relating to exempting emissions associated with lubricants 1
from coverage under the cap and invest program; and amending RCW 2
70A.65.080. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 70A.65.080 and 2025 c 282 s 2 are each amended to 5
read as follows: 6
(1) A person is a covered entity as of the beginning of the first 7
compliance period and all subsequent compliance periods if the person 8
reported emissions under RCW 70A.15.2200 for any calendar year from 9
2015 through 2019, or if additional data provided as required by this 10
chapter indicates that emissions for any calendar year from 2015 11
through 2019 equaled or exceeded any of the following thresholds, or 12
if the person is a first jurisdictional deliverer and imports 13
electricity into the state during the compliance period:14
(a) Where the person owns or operates a facility and the 15
facility's emissions equal or exceed 25,000 metric tons of carbon 16
dioxide equivalent; 17
(b) Where the person is a first jurisdictional deliverer and 18
generates electricity in the state and emissions associated with this 19
generation equals or exceeds 25,000 metric tons of carbon dioxide 20
equivalent; 21
S-3490.1
SENATE BILL 5856
State of Washington 69th Legislature 2026 Regular Session
By Senators Schoesler, Chapman, Short, Torres, Gildon, Warnick,
Muzzall, Boehnke, Dozier, Fortunato, and J. Wilson
Prefiled 12/08/25. Read first time 01/12/26. Referred to Committee
on Environment, Energy & Technology.
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(c)(i) Where the person is a first jurisdictional deliverer 1
importing electricity into the state and: 2
(A) For specified sources, the cumulative annual total of 3
emissions associated with the imported electricity exceeds 25,000 4
metric tons of carbon dioxide equivalent; 5
(B) For unspecified sources, the cumulative annual total of 6
emissions associated with the imported electricity exceeds 0 metric 7
tons of carbon dioxide equivalent; or 8
(C) For electricity purchased from a federal power marketing 9
administration pursuant to section 5 (b) of the Pacific Northwest 10
electric power planning and conservation act of 1980, P.L. 96-501, if 11
the department determines such electricity is not from a specified 12
source, the cumulative annual total of emissions associated with the 13
imported electricity exceeds 25,000 metric tons of carbon dioxide 14
equivalent. 15
(ii) In consultation with any linked jurisdiction to the program 16
created by this chapter, by October 1, 2026, the department, in 17
consultation with the department of commerce and the utilities and 18
transportation commission, shall adopt by rule a methodology for 19
addressing imported electricity associated with a centralized 20
electricity market; 21
(d) Where the person is a supplier of fossil fuel other than 22
natural gas and from that fuel 25,000 metric tons or more of carbon 23
dioxide equivalent emissions would result from the full combustion or 24
oxidation, excluding the amounts for fuel products that are produced 25
or imported with a documented final point of delivery outside of 26
Washington and combusted outside of Washington; and27
(e)(i) Where the person supplies natural gas in amounts that 28
would result in exceeding 25,000 metric tons of carbon dioxide 29
equivalent emissions if fully combusted or oxidized, excluding the 30
amounts for fuel products that are produced or imported with a 31
documented final point of delivery outside of Washington and 32
combusted outside of Washington, and excluding the amounts: (A) 33
Supplied to covered entities under (a) through (d) of this 34
subsection; and (B) delivered to opt-in entities; 35
(ii) Where the person who is not a natural gas company and has a 36
tariff with a natural gas company to deliver to an end-use customer 37
in the state in amounts that would result in exceeding 25,000 metric 38
tons of carbon dioxide equivalent emissions if fully combusted or 39
oxidized, excluding the amounts: (A) Supplied to covered entities 40
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under (a) through (d) of this subsection; and (B) the amounts 1
delivered to opt-in entities; 2
(iii) Where the person is an end-use customer in the state who 3
directly purchases natural gas from a person that is not a natural 4
gas company and has the natural gas delivered through an interstate 5
pipeline to a distribution system owned by the purchaser in amounts 6
that would result in exceeding 25,000 metric tons of carbon dioxide 7
equivalent emissions if fully combusted or oxidized, excluding the 8
amounts: (A) Supplied to covered entities under (a) through (d) of 9
this subsection; and (B) delivered to opt-in entities.10
(2) A person is a covered entity as of the beginning of the 11
second compliance period and all subsequent compliance periods if the 12
person reported emissions under RCW 70A.15.2200 or provided emissions 13
data as required by this chapter for any calendar year from 2023 14
through 2025, where the person owns or operates a waste to energy 15
facility utilized by a county and city solid waste management program 16
and the facility's emissions equal or exceed 25,000 metric tons of 17
carbon dioxide equivalent. 18
(3) A person is a covered entity as of the beginning of the third 19
compliance period, and all subsequent compliance periods if the 20
person reported emissions under RCW 70A.15.2200 or provided emissions 21
data as required by this chapter for 2027 or 2028, where the person 22
owns or operates a railroad company, as that term is defined in RCW 23
81.04.010, and the railroad company's emissions equal or exceed 24
25,000 metric tons of carbon dioxide equivalent. 25
(4) When a covered entity reports, during a compliance period, 26
emissions from a facility under RCW 70A.15.2200 that are below the 27
thresholds specified in subsection (1) or (2) of this section, the 28
covered entity continues to have a compliance obligation through the 29
current compliance period. When a covered entity reports emissions 30
below the threshold for each year during an entire compliance period, 31
or has ceased all processes at the facility requiring reporting under 32
RCW 70A.15.2200, the entity is no longer a covered entity as of the 33
beginning of the subsequent compliance period unless the department 34
provides notice at least 12 months before the end of the compliance 35
period that the facility's emissions were within 10 percent of the 36
threshold and that the person will continue to be designated as a 37
covered entity in order to ensure equity among all covered entities. 38
Whenever a covered entity ceases to be a covered entity, the 39
department shall notify the appropriate policy and fiscal committees 40
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of the legislature of the name of the entity and the reason the 1
entity is no longer a covered entity. 2
(5) For types of emission sources described in subsection (1) of 3
this section that begin or modify operation after January 1, 2023, 4
and types of emission sources described in subsection (2) of this 5
section that begin or modify operation after 2027, coverage under the 6
program starts in the calendar year in which emissions from the 7
source exceed the applicable thresholds in subsection (1) or (2) of 8
this section, or upon formal notice from the department that the 9
source is expected to exceed the applicable emissions threshold, 10
whichever happens first. Sources meeting these conditions are 11
required to transfer their first allowances on the first transfer 12
deadline of the year following the year in which their emissions were 13
equal to or exceeded the emissions threshold. 14
(6) For emission sources described in subsection (1) of this 15
section that are in operation or otherwise active between 2015 and 16
2019 but were not required to report emissions for those years under 17
RCW 70A.15.2200 for the reporting periods between 2015 and 2019, 18
coverage under the program starts in the calendar year following the 19
year in which emissions from the source exceed the applicable 20
thresholds in subsection (1) of this section as reported pursuant to 21
RCW 70A.15.2200 or provided as required by this chapter, or upon 22
formal notice from the department that the source is expected to 23
exceed the applicable emissions threshold for the first year that 24
source is required to report emissions, whichever happens first. 25
Sources meeting these criteria are required to transfer their first 26
allowances on the first transfer deadline of the year following the 27
year in which their emissions, as reported under RCW 70A.15.2200 or 28
provided as required by this chapter, were equal to or exceeded the 29
emissions threshold. 30
(7) The following emissions are exempt from coverage in the 31
program, regardless of the emissions reported under RCW 70A.15.2200 32
or provided as required by this chapter: 33
(a) Emissions from the combustion of aviation fuels;34
(b) Emissions from watercraft fuels supplied in Washington that 35
are combusted outside of Washington; 36
(c) Emissions from a coal-fired electric generation facility 37
exempted from additional greenhouse gas limitations, requirements, or 38
performance standards under RCW 80.80.110; 39
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(d) Carbon dioxide emissions from the combustion of biomass or 1
biofuels; 2
(e)(i) Motor vehicle fuel or special fuel that is used 3
exclusively for agricultural purposes by a farm fuel user. This 4
exemption is available only if a buyer of motor vehicle fuel or 5
special fuel provides the seller with an exemption certificate in a 6
form and manner prescribed by the department. Prior to January 1, 7
2030, this exemption is available whether motor vehicle fuel or 8
special fuel is used to propel a motor vehicle or not, but beginning 9
January 1, 2030, this exemption only applies to motor vehicle fuel or 10
special fuel that the farm fuel user uses to propel a motor vehicle.11
(ii) The department must determine a method for expanding the 12
exemption provided under (e)(i) of this subsection to include fuels 13
used for the purpose of transporting agricultural products on public 14
highways. The department must maintain this expanded exemption until 15
December 31, 2029, in order to provide the agricultural sector with a 16
feasible transition period. 17
(iii) For the purposes of this subsection: 18
(A) "Agricultural purposes" and "farm fuel user" have the same 19
meanings as provided in RCW 82.08.865; 20
(B) "Motor vehicle fuel" means gasoline, the chief use of which 21
is as a fuel for the propulsion of motor vehicles or vessels; and22
(C) "Special fuel" means diesel, liquefied petroleum gas (also 23
called propane), and biodiesel; 24
(f) Emissions from facilities with North American industry 25
classification system code 92811 (national security); ((and))26
(g) Emissions from municipal solid waste landfills that are 27
subject to, and in compliance with, chapter 70A.540 RCW; and28
(h) Emissions from the combustion, oxidation, other process, or 29
end use of a lubricant, as that term is defined in 40 C.F.R. Sec. 30
98.6 (2025). This exemption applies regardless of whether a supplier 31
demonstrates to the department a lubricant is not combusted or 32
oxidized. 33
(8) The department shall not require multiple covered entities to 34
have a compliance obligation for the same emissions. The department 35
may by rule authorize refineries, fuel suppliers, facilities using 36
natural gas, and natural gas utilities to provide by agreement for 37
the assumption of the compliance obligation for fuel or natural gas 38
supplied and combusted in the state. The department must be notified 39
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of such an agreement at least 12 months prior to the compliance 1
obligation period for which the agreement is applicable.2
(9)(a) The legislature intends to promote a growing and 3
sustainable economy and to avoid leakage of emissions from 4
manufacturing to other locations. The legislature further intends to 5
see innovative new businesses locate and grow in Washington that 6
contribute to Washington's prosperity and environmental objectives.7
(b) Consistent with the intent of the legislature to avoid the 8
leakage of emissions to other jurisdictions, in achieving the state's 9
greenhouse gas limits in RCW 70A.45.020, the state, including lead 10
agencies under chapter 43.21C RCW, shall pursue the limits in a 11
manner that recognizes that the siting and placement of new or 12
expanded best-in-class facilities with lower carbon emitting 13
processes is in the economic and environmental interests of the state 14
of Washington. 15
(c) In conducting a life-cycle analysis, if required, for new or 16
expanded facilities that require review under chapter 43.21C RCW, a 17
lead agency must evaluate and attribute any potential net cumulative 18
greenhouse gas emissions resulting from the project as compared to 19
other existing facilities or best available technology including 20
best-in-class facilities and emerging lower carbon processes that 21
supply the same product or end use. The department may adopt rules to 22
determine the appropriate threshold for applying this analysis.23
(d) Covered emissions from an entity that is or will be a covered 24
entity under this chapter may not be the basis for denial of a permit 25
for a new or expanded facility. Covered emissions must be included in 26
the analysis undertaken pursuant to (c) of this subsection. Nothing 27
in this subsection requires a lead agency or a permitting agency to 28
approve or issue a permit to a permit applicant, including to a new 29
or expanded fossil fuel project. 30
(e) A lead agency under chapter 43.21C RCW or a permitting agency 31
shall allow a new or expanded facility that is a covered entity or 32
opt-in entity to satisfy a mitigation requirement for its covered 33
emissions under this chapter and under any greenhouse gas emission 34
mitigation requirements for covered emissions under chapter 43.21C 35
RCW by submitting to the department the number of compliance 36
instruments equivalent to its covered emissions during a compliance 37
period. 38
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