HOUSE BILL REPORT

SHB 523

BYHouse Committee on Environmental Affairs (originally sponsored by Representatives Hine and Allen)

Providing for the financing of pollution control facilities.

House Committe on Environmental Affairs

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (9)

     Signed by Representatives Rust, Chair; Valle, Vice Chair; Brekke, Ferguson, Jesernig, Pruitt, Schoon, D. Sommers and Walker.

House Staff:Bonnie Austin (786-7107)

AS PASSED HOUSE MARCH 9, 1987

BACKGROUND:

In 1986 the legislature enacted the Water Quality Joint Development Act (WQJDA) which authorized public bodies to enter into service agreements with private parties for water pollution control facilities. Such "privatization" involves private sector financing, ownership, construction, operation and maintenance of pollution control facilities (sewage treatment plants) that provide services to a public body.

Under the WQJDA, the legislature provided that public bodies which participate in privatization agreements are eligible for all grants and loans that would otherwise be available to public bodies.  These grants or loans must be used either for a public ownership interest and/or to defray payments made to the service provider.

In 1980 the voters of the state approved Referendum 39 which authorized the state finance commission to issue up to $450 million in general obligation bonds to provide funds for the planning, design, construction, acquisition, construction, and improvement of public waste disposal and management.  The proceeds, administered by the Department of Ecology and deposited in the Waste Disposal Facilities Revolving Account, are used in part for grants and loans to public bodies.

The Centennial Clean Water Act (CCWA) established the Water Quality Account administered by the Department of Ecology.  A fiscal year total of $40 million was guaranteed, funded by the cigarette and tobacco products tax, the sales tax recapture, and general fund money if necessary.

The Attorney General's Office has concluded in a memorandum to the Department of Ecology that funds otherwise available to public bodies under the Centennial Clean Water Act (CCWA) cannot be used for grants or loans to public bodies entering into privatization agreements under the WQJDA.  The definition of "water pollution control facilities" in the CCWA is limited to those "owned or operated by public bodies". Article II, Section 37 of the Washington constitution, which prohibits the revision of a law without setting forth in full length the section amended, prevents the assumption that the legislature intended in the WQJDA to amend the definitions in the CCWA.  Under this analysis, Referendum 39 money would similarly be limited, since it defines "waste disposal and management facilities" as those owned or operated by public bodies.

Procurement procedures under the Joint Development Act include a bidder's conference and an opportunity for resubmittal of proposals submitted.  Service providers must prove that costs will be lower than if the project were done by a public body.  An appeal process exists to challenge the approval of a contract.  A public hearing must be conducted and written findings that the project is in the public interest must be made.

SUMMARY:

Funds in the waste disposal facilities revolving account and the water quality account may be used to assist a public body to obtain an ownership interest in waste disposal and management facilities and/or to defray a part of payments made under a service agreement to a service provider. Funds used to pay a service provider may be dispersed either periodically or in a lump sum and shall be equivalent to a loan or grant that would otherwise be made.

The definitions of "waste disposal and management facilities" in Referendum 39 and "water pollution control facilities" in the Centennial Clean Water Act are amended to eliminate the references to public operation and ownership.

Public bidding requirements otherwise applicable to first class city and county agreements do not apply to agreements entered into in compliance with the procurement procedures set forth in the Water Quality Joint Development Act.

The state treasurer is authorized to issue warrants for loans and grants upon authentication and certification by the agency head or designee.

EFFECT OF SENATE AMENDMENT(S):  The Senate amendments clarify that a public body may not provide funds to a private entity before services are rendered or materials are provided.

Fiscal Note:    Requested February 3, 1987.

Effective Date:The bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:     City of Lynnwood; Coalition for Clean Water; Department of Ecology.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     In 1986 the legislature authorized public bodies to enter into privatization agreements.  An Attorney General's memo has prevented Centennial Clean Water Act funds from being granted or loaned for this purpose due to a technical, definitional inconsistency.  This bill simply clears up this inconsistency and makes no policy changes.

House Committee - Testimony Against: None Presented.

VOTE ON FINAL PASSAGE:

     Yeas 93; Absent 2; Excused 3

Absent:    Representatives R. King and Locke

Excused:   Representatives Day, McMullen and Wineberry