HB1659 – Increasing oversight of the cap and invest program’s auctions and markets; report on transferring their management from Ecology to an independent body. (Dead.)
Prime Sponsor – Representative Dye (R; 9th District; Southeast Washington) (Co-Sponsor Klicker- R)
Current status – Referred to the House Committee oin Environment and Energy. Still in committee by cutoff.
Next step would be – Dead bill.
Legislative tracking page for the bill.

Summary –
The bill would have the the Washington State Institute for Public Policy report to the Legislature on transferring the regulation and oversight of the cap and invest program’s auctions and markets from the Department of Ecology to a new independent body. Its primary function would be ensuring the fair, efficient, and orderly functioning of the markets, and the report have to consider how to maximize its independence from other environmental regulatory agencies and ensure its neutrality with respect to the greenhouse gas emissions reduction policy outcomes the program intends to achieve.

The report would recommend criteria to consider in establishing such an office, agency, or entity. It would address how other jurisdictions with greenhouse gas emission trading programs balance public transparency with the interests of market participants in confidentiality; identify any policies they’ve established to prevent agency employees from providing advantages or insider information to market participants after leaving state service; and identify best practices to maximize public information and market oversight without detracting from market participation or efficient functioning. It would have to assess whether Ecology’s rules to guard against bidder collusion and minimize the potential for market manipulation are consistent with best practices in other jurisdictions with similar programs for balancing public disclosure and transparency with the need to guard against bidder collusion and minimize the potential for market manipulation. The report could include recommendations for changes to the Clean Energy Transformation Act or any of Ecology’s rules implementing it.

To provide accountability, oversight, and improve the program, the bill would have the State Auditor conduct a comprehensive performance audit covering its first compliance period by December 31st 2026. The audit would evaluate the program’s efficiency and effectiveness with the goal of making it work better, compare what Ecology was doing with leading practices and look for ways to obtain improved outcomes including reduced costs or better processes for delivering the same service. At a minimum, it would compare the program’s effectiveness and efficiency wiyh other programs’, including its costs per metric ton of greenhouse gas emissions reductions compared with those of reductions achieved under “other greenhouse gas emissions reduction programs,” the relative cost of program administration born directly or indirectly by regulated entities, and whether state oversight of the third-party auction provider is consistent with best practices. The bill would add an evaluation of whether the rules adopted by Ecology to guard against bidder collusion and minimize the potential for market manipulation have been successful to the existing requirements for a JLARC report on the program’s first five years by December 2029. It would require certain information about the program’s operations to be available through public disclosure.