COMMISSION 
AGENDA MEMORANDUM                        Item No.          9a 
BRIEFING ITEM                             Date of Meeting      October 9, 2018 
DATE:     October 2, 2018 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Eric ffitch, Manager, State Government Relations Manager 
SUBJECT:  Presentation on Washington Initiative 1631, state carbon "pollution fee" proposal 
BALLOT TITLE:  Initiative Measure No. 1631 concerns pollution. This measure would charge
pollution fees on sources of greenhouse gas pollutants and use the revenue to
reduce pollution, promote clean energy, and address climate impacts, under
oversight of a public board. [As filed March 13, 2018: An Act relating to reducing
pollution by investing in clean air, clean energy, clean water, healthy forests, and
healthy communities by imposing a fee on large emitters based on their pollution;
and adding a new chapter to Title 70 RCW.] 
EXECUTIVE SUMMARY 
Commissioners have asked staff to recommend a position on Initiative 1631, the state ballot
initiative that would impose a "pollution fee," set to be considered by Washington state voters
in the upcoming November 6, 2018, election. 
This memo seeks to: 
- Summarize the specifics of Initiative 1631 
- Recap Commission-adopted state environmental policy objectives 
Commission objectives: 
- Reduce greenhouse gas emissions associated with Port of Seattle operations and the
operations of our tenants/business lines 
- Promote public policy that leads to the large-scale adoption of sustainable aviation
fuels, and other renewable fuels, consistent with recent Commission motion 
- Demonstrate leadership in addressing the underlying causes of climate change and
adapting our operations to meet that challenge 
Background on Initiative 1631: 
On January 10, 2018, Senator Carlyle introduced a bill in the Washington State Legislature to
put a price on carbon emissions. That bill was developed in concert with Governor Inslee and
his staff, and if enacted would have resulted in a $20/ton tax on carbon emissions beginning
July 1, 2019. The Port of Seattle Commission endorsed the broad policy proposal in a letter sent
from Commission President Gregoire to Senator Carlyle and Governor Inslee on February 10,
2018. 

Template revised April 12, 2018.

COMMISSION AGENDA  Briefing Item No. _9a_                                Page 2 of 7 
Meeting Date: October 9, 2018 

SB 6203 passed the Senate's Energy, Environment, and Technology Committee by a vote of 6-3,
and the Senate Ways and Means Committee by a vote of 13-10. However, despite that
progress, a raft of changes made to the initial language at each step in the process, and
significant advocacy from the Governor's staff and myriad stakeholders, SB 6203 did not
advance for a vote on the full Senate floor. 
With the failure to advance carbon pricing policy through the legislature, advocates turned to
the prospects of a ballot initiative. On March 13, 2018, Initiative 1631 was filed with the
Washington State Secretary of State. According to the ballot measure summary, Initiative 1631
seeks to "impose pollution fees on certain large emitters of greenhouse gas pollutants based on
rules determining carbon content, starting in 2020." 
The section below features a high-level summary of that proposal, including notes on how it
differs from the Inslee/Carlyle proposal (SB 6203). 
Overview of I-1631/Comparison to SB 6203: 
Initiative 1631                       SB 6203 (Inslee/Carlyle) 
Tax/Fee                $15/ton, beginning 2020           $20/ton, beginning 2019 
Annual increase         $2/ton  annually,  adjusted  for  3.5 percent annually, adjusted for
inflation                                inflation 
Revenue generated      $2.24b over next five years         $3.3 billion over next four years 
Clean                 70 percent on "clean air and  50     percent     on     clean
energy/transportation  clean    energy    investments"  energy/transportation (to include
spend:                 (including  transportation-related  research    on    clear    energy
carbon emissions)                  technologies;     utility     scale
renewable energy) 
- 15    percent    of    this
category to reduce energy
burden on low income 
- $50m over four years to
help workers transitioning
from  energy  intensive
industries 
Natural resources        25 percent for "clean water and  35 percent for "natural resources
healthy forests" (to include  investments," including: 
wildfire risk, flood risk, etc.)               - Forest health 
- Commercial   ag/irrigation
systems 

Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. _9a_                                Page 3 of 7 
Meeting Date: October 9, 2018 
Transitioning            5     percent     for     "healthy 15 percent to "families who see
families/communities?   communities"                      increased cost of  living or lost
jobs" 
- Includes:           wildfire
preparedness;  relocating
communities  on  tribal
lands     impacted     by
flooding and sea level rise;
education      programs
related to climate change 
Exemptions                - TransAlta  coal  transition     - TransAlta  Coal  transition
power                          power 
- Coal    facilities    closing      - Agriculture/timber 
before 2025 (i.e. Colstrip 1       - Aviation fuels 
& 2)                              - Biofuels 
- Public transportation            - Exported  fossil  fuels  and
- State-owned vehicles               electricity 
- Aviation fuels                     - Oil refineries permitted to
- Marine fuels                         retain   10   percent   of
- On-farm diesel                      penalty     for     carbon
- U.S. Government                   reduction projects 
Total business classes   23                                 55 
exempted 
Other notes: 
- Impact to price of diesel fuels under I-1631: According to an article published in the
Seattle Times on September 16th, passage of Initiative 1631 would result in an estimated 
14 cents per gallon increase in the price of gasoline, and an estimated 15 cents per
gallon increase in the cost of diesel. 
Even with the exemptions for marine fuels and aircraft fuel, passage of the initiative
would result in some increased costs for Port of Seattle and Northwest Seaport Alliance
operations. Staff from POS and NWSA calculated the estimated annual cost to nonexempt
users that are either port tenants, stakeholders, or play some role in the supply
chain. Those estimates are briefly summarized as follows: 
o  Total yearly fee for non-exempt sectors, Port of Seattle: $181,201 (this includes
potential cost increases to fuel for recreational vessels, which likely fall outside
the marine fuels exemption in I-1631) 
o  Total yearly fee for non-exempt sectors, Northwest Seaport Alliance: $3,886,272 

Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. _9a_                                Page 4 of 7 
Meeting Date: October 9, 2018 

- Tax v. fee: The 'fee' legal structure used in Initiative 1631 limits the uses of revenue
from the policy to addressing carbon/pollution issues, not broader issues like rural
economic development (as in 6203) or tax reform (as in I-732). However, from a pricing
perspective, the difference between a fee and tax is not directly relevant. 
- Oversight of revenue in I-1631: Implementation of I-1631 would be entrusted to a
"Public Oversight Board," established within the Executive Office of the Governor. The
board would be comprised of fifteen voting members, including: 
o  Chairperson, appointed by the Governor 
o  Six panel co-chairs (of the panels established by the measure) 
o  Four at-large voting members, appointed by the Governor (must include a tribal
rep; and a rep from a pollution/health action area) 
o  Commissioner of Public Lands, Director of Department of Ecology, Department
of Commerce, and Recreation and Conservation Office 
Current POS/NWSA positions: To provide brief context to this debate, below you can find the
existing Port of Seattle and NWSA legislative policy positions on this issue generally: 
- Port of Seattle's state legislative agenda for the 2018 session includes the following
policy statements: 
o  Policies that promote use of clean energy technology and support a statewide
reduction in greenhouse gas emissions, and that can be implemented in ways:
that leverage our state's competitiveness; maintain the efficient operation of
essential public facilities such as airports and seaports; and support equity
between our business partners. 
o  Policies that promote the use of low-carbon fuels for transportation, and
otherwise support the continued reduction in the cost of low-carbon energy
sources to consumers in the state, including potential legislative changes to
allow for electrification of large-scale transportation infrastructure. 
o  State support for partnership with the Port on aviation biofuels, including statelevel
actions intended to drive development of biofuels within the state for use
at in-state transportation facilities. 
o  Support state actions that promote climate change resilience, and support
collaboration with other government agencies in this effort, including a focus on
resilience within the transportation network. 
o  Policies that reduce carbon and air pollution emissions for passengers and
employees traveling to and from Port facilities, including promoting improving
the efficient efficiency of public transit transportation improvements, public
transit, and increasing the availability of low carbon fuels. 
- The Northwest Seaport Alliance's state legislative agenda  for 2018 includes the
following policy statement: 

Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. _9a_                                Page 5 of 7 
Meeting Date: October 9, 2018 

o  Environmental Policies: Support environmental policies based on science that
are achievable, verifiable and provide substantive environmental benefit, and
can be implemented in ways that minimize negative impacts on competitiveness
and cargo diversion. 
o  Sustainability: Support funding for environmental projects at seaports that
result in substantive and measurable sustainable benefits, while aiding economic
development. 
o  Climate Change: Support funding for environmental projects at seaports that
result in substantive and measurable greenhouse gas and black carbon emissions
reductions and improved resiliency of port infrastructure and equipment in the
face of climate change. Support efforts to reduce greenhouse gas and black
carbon emissions provided those efforts do not result in a consequential loss of
cargo volumes in the gateway; should these efforts generate additional revenue
for the government (such as through a mechanism like a carbon tax), support
efforts to invest this revenue into climate change adaptation, further emission
reductions,  energy  conservation  and  transportation  and  freight  mobility
infrastructure. 
Glossary of terms related to carbon policy proposals 
Carbon policy definitions: Because the ubiquitous discussion of carbon policy in recent months
and years has led to the frequent conflation or interchanging of policy terms that can have
different meanings in practice, staff consider it useful to include a brief glossary of the terms, at
the very least in order to ensure uniformity in the context of our internal policy discussion: 
- Carbon tax: Widely defined as a tax or a fee on the act of emitting carbon through the
combustion of fossil fuels. This would be imposed by a government entity, and collected
using existing tax-collection mechanisms. The tax is paid upstream, at the point where
fuels are put into the stream of commerce (or imported into the tax jurisdiction). Fuel
suppliers and processors are free to pass along the cost of the tax to the extent that
market conditions allow. Placing a tax on carbon gives consumers and producers a
monetary incentive to reduce their carbon dioxide emissions. 
As a policy tool, the carbon tax is intended to provide an economic incentive for the
adoption of energy sources with lower carbon emissions through higher pricing of fossil
fuels. 
- Low carbon fuel standard: Government policy that puts a limit on the amount of
greenhouse gas emissions that can come from a single "unit" of energy source, usually
limited to transportation fuels. That limit is sometimes called a "carbon intensity
baseline" (in California, "carbon intensity standards"). Fuels that have low carbon

Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. _9a_                                Page 6 of 7 
Meeting Date: October 9, 2018 
intensity  emit  fewer  greenhouse  gases,  and  therefore  would  fall  under  that
government-approved baseline. In a typical low-carbon fuel standard policy program,
those fuels earn credits that represent how far under the government-set level their
emission fall. Whereas those fuels that emit more than the government-prescribed limit
would be penalized. Compared with a carbon tax that usually applies to "tailpipe" or
combustion emissions, low carbon fuel standards encompass the entire lifecycle
emissions (aka carbon intensity) of fuels. 
- Cap-and-trade: Government policy that puts a limit on the amount of greenhouse gas
emissions that can come from sectors of the economy such as energy use and fuel
production. Market participants within those sectors have individual caps established as
an extension of the overall cap and must work to reduce their emissions to level
establish in their cap. Those that are able to reduce below the cap are able to resell their
"allowances" to other market participants that are unable or unwilling to reduce their
emissions to fall within their cap. 
Other Regional Approaches to Carbon Policy 
Summary: 
The Governor's proposed carbon tax from the 2018 legislative session, as well as the "pollution
fee" proposed by Initiative 1631, is most similar to the BC program, which taxes fuel when it is
purchased. However, the BC program does not include electricity. Both the WA proposals and
the BC program are based on a set tax per metric ton (MT) of CO2 for conventional fuels. The
carbon intensity of alternative or bio-/renewable-blended fuels are not factored into the
equation. Alternative fuels are excluded from the tax. Although the BC tax rate has been static
for 6 years, it is scheduled to begin climbing again in 2018. 
The OR and CA programs are low carbon fuel standards, based on the carbon intensity of each
fuel. These programs do not tax carbon; rather, they require fuel distributors to meet carbon
intensity standards which become incrementally tougher each year.  (The Fitzgibbon low
carbon fuel standard proposal from the 2018 legislative session, HB 2338, took this approach.) 
ATTACHMENTS TO THIS BRIEFING 
(1)   Presentation slides 
(2)   Ballot title letter for Initiative 1631 
(3)   Complete Initiative 1631 text 
(4)   Letters to Senator Carlyle and Governor Inslee, re: carbon tax proposed in State
Legislature, dated February 10, 2018 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
October 24, 2017  The commission approved state legislative and policy priorities for 2018
that included "Supportand advocate for continued state investment in environmental

Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. _9a_                                Page 7 of 7 
Meeting Date: October 9, 2018 
cleanup   programs  and  state-level  policies  that  promote  the  adoption  and 
implementation of clean energy sources to reduce the state's reliance on fossil fuels and
seek to eliminate greenhouse gas emissions." 

















Template revised September 22, 2016.