Senate Bill 6240 — An Act Relating to Jet Fuel (State of Washington, 2024 Regular Session)

Summary

Senate Bill 6240 of the 68th Legislature, 2024 Regular Session, State of Washington, by Senator Warnick. The act relates to jet fuel, amending RCW 82.04.287, 82.04.436, and 70A.535.150. Section 1 states that the legislature intends to support the development of the alternative jet fuels industry in Washington by expanding existing tax preferences. Section 2 amends RCW 82.04.287 to set a tax rate of 0.275 percent on manufacturing and on sales of alternative jet fuel, taking effect after notice of facilities with a cumulative production capacity of at least 20,000,000 gallons each year. A last section provides that listed sections take effect July 1, 2024.

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Full text

     S-3964.3

                               SENATE BILL 6240


     State of Washington       68th Legislature       2024 Regular Session

     By Senator Warnick




 1       AN ACT Relating to jet fuel; amending RCW 82.04.287, 82.04.436,
 2   and 70A.535.150; creating new sections; and providing an effective
 3   date.


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


 5       NEW SECTION.   Sec. 1.    The legislature intends to support the
 6   development of the alternative jet fuels industry in Washington by
 7   expanding existing tax preferences to encourage businesses to locate
 8   in distressed areas of the state. The legislature intends for the
 9   incentives to be focused on the beginning of commercial production
10   levels when they provide the most productive benefits, while
11   providing opportunities for workforce development and long-term
12   employment opportunities in distressed areas.


13       Sec. 2.   RCW 82.04.287 and 2023 c 232 s 9 are each amended to
14   read as follows:
15       (1) Upon every person engaging within the state in the business
16   of manufacturing alternative jet fuel; as to such persons, the amount
17   of the tax with respect to such business is, in the case of
18   manufacturers, equal to the value of the product manufactured, or in
19   the case of processors for hire, equal to the gross income of the
20   business, multiplied by the rate of 0.275 percent.
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 1       (2) Upon every person engaging in making sales, at retail or
 2   wholesale, of manufactured alternative jet fuel; as to such persons,
 3   the amount of the tax with respect to such business is equal to the
 4   gross proceeds of sales of the alternative jet fuel, multiplied by
 5   the rate of 0.275 percent.
 6       (3) For the purposes of this section, "alternative jet fuel"
 7   means a fuel that can be blended and used with conventional petroleum
 8   jet fuels without the need to modify aircraft engines and existing
 9   fuel distribution infrastructure and that has lower greenhouse gas
10   emissions based on a full life-cycle analysis when compared to
11   conventional petroleum jet fuel for which it is capable as serving as
12   a substitute, as certified by the department of ecology using the
13   methods for determining the carbon intensity of fuels under chapter
14   70A.535 RCW. "Alternative jet fuel" includes jet fuels derived from
15   coprocessed feedstocks at a conventional petroleum refinery as
16   certified by the department of ecology using the methods for
17   determining the carbon intensity of fuels under chapter 70A.535 RCW.
18       (4) A person reporting under the tax rate provided in this
19   section must file a complete annual tax performance report with the
20   department under RCW 82.32.534.
21       (5)(a) ((The)) Except as provided in (b) of this subsection, the
22   tax rate under subsections (1) and (2) of this section takes effect
23   on the first day of the first calendar quarter following the month in
24   which the department receives notice from the department of ecology
25   that there are one or more facilities operating in this state with a
26   cumulative production capacity of at least 20,000,000 gallons of
27   alternative jet fuel each year, as required in RCW 70A.535.150.
28       (b) For a business that produces alternative jet fuel and is
29   located in a distressed area in this state, the tax rate under
30   subsections (1) and (2) of this section takes effect on the first day
31   of the first calendar quarter following the month in which the
32   department receives notice from the department of ecology, as
33   required in RCW 70A.535.150, that the particular facility has a
34   facility-specific production capacity of at least 500,000 gallons of
35   alternative jet fuel each year.
36       (((b))) (c) The tax rate expires nine calendar years after the
37   close of the calendar year in which the ((tax rate under subsections
38   (1) and (2) of this section takes effect)) department receives notice
39   from the department of ecology that there are one or more facilities
40   operating in this state with a cumulative production capacity of at
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1    least 20,000,000 gallons of alternative jet fuel each year, as
2    required in RCW 70A.535.150.
3        (6) For purposes of this section, "distressed area" and
4    "qualifying county" have the same meanings as in RCW 82.04.436.


 5       Sec. 3.   RCW 82.04.436 and 2023 c 232 s 10 are each amended to
 6   read as follows:
 7       (1)(a) Subject to the limits and provisions of this section, a
 8   credit is allowed against the tax otherwise due under this chapter
 9   for persons engaged in the manufacturing of alternative jet fuel.
10       (b) Except as provided in (c) of this subsection, the credit
11   under this section is equal to $1 for each gallon of alternative jet
12   fuel that has at least 50 percent less carbon dioxide equivalent
13   emissions than conventional petroleum jet fuel and is sold during the
14   prior calendar year by:
15       (i) A business that produces alternative jet fuel and is located
16   in a qualifying county; ((or))
17       (ii) A business's designated alternative jet fuel blender that is
18   located in this state; or
19       (iii) A business that produces alternative jet fuel and is
20   located in a distressed area in the state.
21       (c) The credit amount under (b) of this subsection must increase
22   by 2 cents for each additional one percent reduction in carbon
23   dioxide equivalent emissions beyond 50 percent, not to exceed $2 for
24   each gallon of alternative jet fuel.
25       (d) A person may ((not)) receive credit under ((both)) either
26   (b)(i) ((and)), (ii), or (iii) of this subsection.
27       (e) The credit under this section is calculated only on the
28   portion of jet fuel that is considered alternative jet fuel and does
29   not include conventional petroleum jet fuel when such fuels are
30   blended or otherwise used in a jet fuel mixture.
31       (f) A credit under ((this section)) (b)(i) or (ii) of this
32   subsection may not be claimed until the department of ecology
33   verifies that there are one or more facilities operating in this
34   state with cumulative production capacity of at least 20,000,000
35   gallons of alternative jet fuel each year and has provided such
36   notice to the department.
37       (g) A credit under this section may not be claimed by a business
38   under (b)(iii) of this subsection (1) until after June 30, 2025, and
39   after the department of ecology has provided notice to the department
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 1   that it verified that the business is operating a facility with a
 2   facility-specific production capacity of at least 500,000 gallons of
 3   alternative jet fuel each year.
 4       (h) Contract pricing for sales of alternative jet fuel between a
 5   person claiming the credit under this section and the final consumer
 6   must reflect the per gallon credit under (b) and (c) of this
 7   subsection.
 8       (((h))) (i) A credit under this section may not be claimed until
 9   the department of ecology, in consultation with the department of
10   archaeology and historic preservation, verifies that the person
11   applying for the credit is not engaged in the manufacturing of
12   alternative jet fuel on the footprint of a structure listed with the
13   department of archaeology and historic preservation as a historic
14   cemetery or tribal burial grounds as per chapter 27.44 or 68.60 RCW.
15   If the department of ecology has not made a determination within 60
16   days of the person requesting verification under this subsection, the
17   application is deemed to be verified.
18       (2) A person may not receive credit under this section for
19   amounts claimed as credits under RCW 82.04.4361 or chapter 82.16 RCW.
20       (3) To claim a credit under this section a person must
21   electronically file with the department all returns, forms, and any
22   other information required by the department, in an electronic format
23   as provided or approved by the department.
24       (4) To claim a credit under this section, the person applying
25   must:
26       (a) Complete an application for the credit which must include:
27       (i) The name, business address, and tax identification number of
28   the applicant;
29       (ii) Documentation of the total amount of alternative jet fuel
30   manufactured and sold in the prior calendar year;
31       (iii) Documentation sufficient for the department to verify that
32   the alternative jet fuel for which the credit is being claimed meets
33   the definition in RCW 82.04.287(3) and the carbon intensity reduction
34   benchmarks under subsection (1)(b) and (c) of this section, as
35   certified by the department of ecology under chapter 70A.535 RCW;
36       (iv)   Documentation   sufficient  to   verify   compliance   with
37   subsection (1)(((g))) (h) of this section; and
38       (v) Any other information deemed necessary by the department to
39   support administration or reporting of the program.


                                     p. 4                          SB 6240
 1       (b) Obtain a carbon intensity score from the department of
 2   ecology prior to submitting an application to the department.
 3       (5) The department must notify applicants of credit approval or
 4   denial within 60 days of receipt of a final application and
 5   documentation.
 6       (6) If a person fails to supply the information as required in
 7   subsection (4) of this section, the department must deny the
 8   application.
 9       (7)(a) The credit under this section may only be claimed against
10   taxes due under RCW 82.04.287, less any taxable amount for which a
11   credit is allowed under RCW 82.04.440.
12       (b) A credit earned during one calendar year may be carried over
13   and claimed against taxes incurred for the next subsequent calendar
14   year but may not be carried over for any calendar year thereafter.
15       (c) No refunds may be granted for credits under this section.
16       (8) For the purposes of this section:
17       (a) "Alternative jet fuel" has the same meaning as in RCW
18   70A.535.010.
19       (b) "Carbon dioxide equivalent" has the same meaning as in RCW
20   70A.45.010.
21       (c) "Distressed area" means a county that has been designated as
22   such by January 1, 2024, by the employment security department
23   pursuant to RCW 43.168.020.
24       (d) "Qualifying county" means a county that has a population less
25   than 650,000 at the time an application for a credit under this
26   section is received by the department.
27       (9)(a) Credits may be earned beginning on the first day of the
28   first calendar quarter following the month in which notices under
29   subsection (1)(f) or (g) of this section ((was)), respectively, were
30   received by the department.
31       (b) Credits may not be earned beginning nine calendar years after
32   the close of the calendar year in which the ((credit may be earned,
33   as provided in (a) of this subsection)) department receives notice
34   from the department of ecology that there are one or more facilities
35   operating in this state with a cumulative production capacity of at
36   least 20,000,000 gallons of alternative jet fuel each year, as
37   required in RCW 70A.535.150.
38       (10) A person claiming the credit provided in this section must
39   file a complete annual tax performance report with the department
40   under RCW 82.32.534.
                                     p. 5                          SB 6240
 1       Sec. 4. RCW 70A.535.150 and 2023 c 232 s 3 are each amended to
 2   read as follows:
 3       (1) By no later than December 31, 2023, the department must allow
 4   one or more carbon intensity pathways for alternative jet fuel.
 5       (2) The department must allow biomethane to be claimed as the
 6   feedstock for renewable diesel and alternative jet fuel consistent
 7   with that allowable for compressed natural gas, liquefied natural
 8   gas, liquefied compressed natural gas, or hydrogen production. The
 9   department must include in the report required by RCW 70A.535.090(1)
10   information that includes the amount, generation date, and geographic
11   origin of renewable thermal certificates representing the biomethane
12   environmental attributes claimed by each reporting entity for the
13   fuels described in this subsection.
14       (3) The department must notify the department of revenue within
15   30 days when any facility capable of producing at least 500,000
16   gallons of alternative jet fuel each year is operating in a
17   distressed area in this state and when one or more facilities capable
18   of producing a cumulative production capacity of at least 20,000,000
19   gallons of alternative jet fuel each year are operating in this
20   state.


21       NEW SECTION.   Sec. 5.   (1) This section is the tax preference
22   performance statement for sections 2 through 4, chapter . . ., Laws
23   of 2024 (sections 2 through 4 of this act). This performance
24   statement is only intended to be used for subsequent evaluation of
25   the tax preferences. It is not intended to create a private right of
26   action by any party or be used to determine eligibility for the
27   preferential tax treatment.
28       (2) The tax preference performance statement in section 8,
29   chapter 232, Laws of 2023 applies to the expansion of the tax
30   preferences in sections 2 through 4 of this act.


31       NEW SECTION.    Sec. 6.    If any provision of this act or its
32   application to any person or circumstance is held invalid, the
33   remainder of the act or the application of the provision to other
34   persons or circumstances is not affected.


35      NEW SECTION.   Sec. 7.   RCW 82.32.805 does not apply to this act.



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1       NEW SECTION.   Sec. 8.   Sections 2 through 4 of this act take
2   effect July 1, 2024.

                                 --- END ---




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