Molly Barker and Ankur Tohan*
Carbon regulation in Washington is about to get more complicated. In March 2021, the Washington State Department of Ecology (DOE) issued a conceptual framework and draft rulemaking language for public comment on Greenhouse Gas Assessments for Projects (the “GAP Rule”). The release of the GAP Rule may—as a result of providing the first framework of its kind in the state for evaluating carbon footprints on major industrial projects—lay the groundwork for more enforceable carbon regulations. The GAP Rule may also increase competition on low carbon project design or may prompt the allocation of more corporate dollars toward mandated mitigation measures.
Applicability and Standardized Criteria
The GAP Rule is intended to standardize criteria regulators and lead agencies use to evaluate industrial and fossil fuel projects. The GAP Rule’s criteria only apply to either (1) new projects or facilities, or (2) changes to existing facilities. To trigger the application GAP Rule criteria, an emission threshold of 10,000 metric tons of carbon dioxide equivalent or more per year must be met. Notably, the GAP Rule will not apply to housing development projects, highway and road projects, passenger rail projects, projects that meet a categorical exemption under the Washington State Environmental Policy Act (SEPA), projects that have already completed SEPA environmental review, and non-project proposals (like rulemaking, policies, or development regulations). Once threshold criteria are met, regulators and lead agencies will use standardized benchmarks to assess project impacts. These criteria include ascertaining global warming potential, calculating energy consumption and generation, calculating lifecycle emissions, and identifying methods for carbon mitigation of a given project. The GAP Rule, however, will not determine whether a particular project should be approved by the regulators, as that falls outside the scope of the purpose of the GAP Rule.
Components of GAP Rule
Operation of the GAP Rule is intended to include three steps. The first is the initial screening process, which determines whether the rule applies to a facility based on its potential to emit greenhouse gases (GHGs). The second step is an environmental assessment (EA), which includes (i) a facility analysis, (ii) a life cycle analysis, and (iii) an energy analysis. The facility analysis assesses on-site emissions of the facility at the core project infrastructure (including construction, operation and decommissioning); the life cycle analysis (LCA) evaluates the facility’s actual emissions, including inputs and outputs both upstream and downstream; the energy analysis reviews how the project may change energy flow, use, supply, output or load. The third step involves developing a mitigation plan that explains what offsetting measures will be taken based on the findings in the EA report.
The GAP Rule is unique, in part, because of the LCA and energy analysis undertaken under the EA. The LCA is geographically far reaching: the upstream boundary captures the point of resource extraction or acquisition within its emissions evaluation, and the downstream boundary captures either the point of combustion (if the output is an energy product) or the point of first potential use (if the output is a non-energy product). The energy analysis is more qualitative than the LCA in that it evaluates if the project will create a new type or form of an energy supply or a new route of an existing energy supply.
Finally, the mitigation plan is intended to quantify a certain amount of GHG emissions to be mitigated per year. This calculation will be based on the GHG footprint of the project as determined in the EA. Mitigation will be allowed through purchasing offsets through pre-approved carbon markets or through funding projects directly. If the latter mitigation approach is chosen, the mitigation project must have a nexus to the proposed project and must prioritize either minority communities of color, low-income communities, tribal communities, or communities disproportionately affected by climate change or otherwise affected by the project. The mitigation cannot be part of the proposed project’s original design and operational plan.
Impact of GAP Rule
The GAP Rule will impact the SEPA review process and it will provide a more standardized and expansive set of tools from which to evaluate a project’s carbon footprint. Additionally, the GAP Rule may ultimately necessitate a separate permit from DOE that could be issued following a Mitigated Determination of Nonsignificance or following a full EIS.
Outstanding Questions Remain
There remain uncertainties surrounding implementation of the proposed Gap Rule. For example, should out-of-state GHG emissions associated with projects be included in EAs? And should out-of-state mitigation measures be allowed and, if so, what will need to be shown to prove that in-state mitigation is not available (and should that be a prerequisite)? Finally, if a proposed project supports de-carbonization, should its otherwise required mitigation measures be reduced or eliminated; and, if so, how will project proponents or DOE define, determine, and demonstrate a carbon-supporting project that should receive such treatment or exemption?
The GAP Rule will undoubtedly provide fertile ground for companies to invest in carbon reducing technologies at the outset of project planning.
*Molly Barker an associate at the K&L Gates LLP in its environmental, land use and natural resources group. She is a member of the environment, land and natural resources practice group. Molly’s practices focuses on environmental regulatory compliance, contaminated sites, renewable energy permitting and development, and natural resource issues. Molly’s energy experience ranges from permitting matters in front of the Federal Energy Regulatory Commission and state power siting boards, to preparing solar power purchase agreements for clients working to reduce their overall carbon footprint. She regularly works with timber and agribusiness clients on conservation efforts and natural resource issues. She also advises during the environmental due diligence period on a variety of mergers and acquisitions.
* Ankur Tohan is a partner in the firm’s Seattle office and a practice group coordinator for the firm’s global environment, land and natural resources practice group. Ankur’s practice focuses on energy infrastructure and natural resource development, compliance counseling, and defense of governmental and citizen enforcement actions. With an emphasis on renewable energy development and carbon management, Ankur advises a variety of industries on issues related to energy transition, expanding opportunities in the blue economy, as well as the impact of shifting carbon policies. Ankur is one of the editors for the firm’s Carbon Quarterly – an industry focused publication looking at key developments in the carbon space around the United States.
 Washington Dep’t of Ecology, Draft GAP Rule Conceptual Framework for Informal Review Greenhouse Gas Assessment for Projects (GAP) Rule Washington Administrative Code (WAC) 173-445 (March 2021), https://ecology.wa.gov/DOE/files/36/36bdb605-225d-4a74-9edd-8bc600714977.pdf. [hereinafter Draft Conceptual Framework].
 Washington Dep’t of Ecology, Draft GAP Rule Language For Informal Review: Greenhouse Gas Assessment for Projects (GAP) Rule Washington Administrative Code (WAC) 173-445 (March 2021), https://ecology.wa.gov/DOE/files/3b/3b625dfc-8fe8-4125-a395-b43f0c620376.pdf. [hereinafter Draft GAP Rule].
 Washington Dep’t of Ecology, Chapter 173-445 WAC rulemaking webpage, available at https://ecology.wa.gov/Regulations-Permits/Laws-rules-rulemaking/Rulemaking/WAC-173-445 (Last visited August 3, 2021).
 Washington Dep’t of Ecology, Draft GAP Rule Conceptual Framework for Informal Review Greenhouse Gas Assessment for Projects (GAP) Rule Washington Administrative Code (WAC) 173-445 (March 2021), https://ecology.wa.gov/DOE/files/36/36bdb605-225d-4a74-9edd-8bc600714977.pdf, at 7.
 Id. at 18–26.
 DOE, Conceptual Framework at 18–31.
 Id. at 22–23.
 Id. at 27–30.