AN ACT Relating to
heating oil pollution liability; amending RCW 82.38.090; adding a new section
to chapter 70.148 RCW; adding a new chapter to Title 70 RCW; and providing an
expiration date.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec.
1. It is the intent of the
legislature to establish a temporary regulatory program to assist owners and
operators of heating oil tanks. The legislature finds that it is in the best
interests of all citizens for heating oil tanks to be operated safely and for
tank leaks or spills to be dealt with expeditiously. The legislature further
finds that it is necessary to protect tank owners from the financial hardship
related to damaged heating oil tanks. The problem is especially acute because
owners and operators of heating oil tanks used for space heating have been
unable to obtain pollution liability insurance or insurance has been
unaffordable.
NEW SECTION. Sec.
2. This chapter may be known
and cited as the Washington state heating oil pollution liability protection
act.
NEW SECTION. Sec.
3. Unless the context
clearly requires otherwise, the definitions in this section apply throughout
this chapter.
(1) "Accidental
release" means a sudden or nonsudden release of heating oil, occurring
after the effective date of this act, from operating a heating oil tank that
results in bodily injury, property damage, or a need for corrective action,
neither expected nor intended by the owner or operator.
(2) "Bodily
injury" means bodily injury, sickness, or disease sustained by a person,
including death at any time, resulting from the injury, sickness, or disease.
(3)(a) "Corrective
action" means those actions reasonably required to be undertaken by the
insured to remove, treat, neutralize, contain, or clean up an accidental
release in order to comply with a statute, ordinance, rule, regulation,
directive, order, or similar legal requirement, in effect at the time of an
accidental release, of the United States, the state of Washington, or a
political subdivision of the United States or the state of Washington.
"Corrective action" includes, where agreed to in writing, in advance
by the insurer, action to remove, treat, neutralize, contain, or clean up an
accidental release to avert, reduce, or eliminate the liability of the insured
for corrective action, bodily injury, or property damage. "Corrective
action" also includes actions reasonably necessary to monitor, assess, and
evaluate an accidental release.
(b) "Corrective
action" does not include:
(i) Replacement or
repair of heating oil tanks or other receptacles; or
(ii) Replacement or
repair of piping, connections, and valves of tanks or other receptacles.
(4) "Defense
costs" include the costs of legal representation, expert fees, and related
costs and expenses incurred in defending against claims or actions brought by
or on behalf of:
(a) The United States,
the state of Washington, or a political subdivision of the United States or
state of Washington to require corrective action or to recover costs of
corrective action; or
(b) A third party for
bodily injury or property damage caused by an accidental release.
(5)
"Director" means the director of the Washington state pollution
liability insurance agency or the director's appointed representative.
(6) "Heating
oil" means any petroleum product used for space heating in oil-fired
furnaces, heaters, and boilers, including stove oil, diesel fuel, or kerosene.
"Heating oil" does not include petroleum products used as fuels in
motor vehicles, marine vessels, trains, buses, aircraft, or any off-highway
equipment not used for space heating, or for industrial processing or the
generation of electrical energy.
(7) "Heating oil
tank" means a tank and its connecting pipes, whether above or below
ground, or in a basement, with pipes connected to the tank for space heating of
human living or working space on the premises where the tank is located.
"Heating oil tank" does not include a decommissioned or abandoned
heating oil tank, or a tank used solely for industrial process heating purposes
or generation of electrical energy.
(8)
"Occurrence" means an accident, including continuous or repeated
exposure to conditions, that results in a release from a heating oil tank.
(9) "Owner or
operator" means a person in control of, or having responsibility for, the
daily operation of a heating oil tank.
(10) "Pollution
liability insurance agency" means the Washington state pollution liability
insurance agency.
(11) "Property
damage" means:
(a) Physical injury to,
destruction of, or contamination of tangible property, including the loss of
use of the property resulting from the injury, destruction, or contamination;
or
(b) Loss of use of
tangible property that has not been physically injured, destroyed, or
contaminated but has been evacuated, withdrawn from use, or rendered
inaccessible because of an accidental release.
(12)
"Release" means a spill, leak, emission, escape, or leaching into the
environment.
(13) "Remedial
action costs" means reasonable costs that are attributable to or
associated with a remedial action.
(14) "Tank"
means a stationary device, designed to contain an accumulation of heating oil,
that is constructed primarily of nonearthen materials such as concrete, steel,
fiberglass, or plastic that provides structural support.
(15) "Third-party
liability" means the liability of a heating oil tank owner to another
person due to property damage or personal injury that results from a leak or
spill.
NEW SECTION. Sec.
4. The director shall:
(1) Design a program
for providing pollution liability insurance for heating oil tanks that provides
sixty thousand dollars per occurrence coverage and aggregate limits, and
protects the state of Washington from unwanted or unanticipated liability for
accidental release claims;
(2) Administer,
implement, and enforce the provisions of this chapter. To assist in
administration of the program, the director is authorized to appoint up to two
employees who are exempt from the civil service law, chapter 41.06 RCW, and who
shall serve at the pleasure of the director;
(3) Administer the
heating oil pollution liability trust account, as established under section 7
of this act;
(4) Employ and
discharge, at his or her discretion, agents, attorneys, consultants, companies,
organizations, and employees as deemed necessary, and to prescribe their duties
and powers, and fix their compensation;
(5) Adopt rules under
chapter 34.05 RCW as necessary to carry out the provisions of this chapter;
(6) Design and from
time to time revise a reinsurance contract providing coverage to an insurer or
insurers meeting the requirements of this chapter. The director is authorized
to provide reinsurance through the pollution liability insurance agency trust
account;
(7) Solicit bids from
insurers and select an insurer to provide pollution liability insurance for
third-party bodily injury and property damage, and corrective action to owners
and operators of heating oil tanks;
(8) Register, and
design a means of accounting for, operating heating oil tanks.
NEW SECTION. Sec.
5. (1) In selecting an
insurer to provide pollution liability insurance coverage to owners and
operators of heating oil tanks used for space heating, the director shall
evaluate bids based upon criteria established by the director that shall
include:
(a) The insurer's
ability to underwrite pollution liability insurance;
(b) The insurer's
ability to settle pollution liability claims quickly and efficiently;
(c) The insurer's
estimate of underwriting and claims adjustment expenses;
(d) The insurer's
estimate of premium rates for providing coverage;
(e) The insurer's
ability to manage and invest premiums; and
(f) The insurer's
ability to provide risk management guidance to insureds.
(2) The director shall
select the bidder most qualified to provide insurance consistent with this
chapter and need not select the bidder submitting the least expensive bid. The
director may consider bids by groups of insurers and management companies who
propose to act in concert in providing coverage and who otherwise meet the
requirements of this chapter.
(3) Owners and
operators of heating oil tanks, or sites containing heating oil tanks where a
preexisting release has been identified or where the owner or operator knows of
a preexisting release are eligible for coverage under the program subject to
the following conditions:
(a) The owner or
operator must have a plan for proceeding with corrective action; and
(b) If the owner or
operator files a claim with the insurer, the owner or operator has the burden
of proving that the claim is not related to a preexisting release until the
owner or operator demonstrates to the satisfaction of the director that
corrective action has been completed.
NEW SECTION. Sec.
6. (1) The activities and
operations of the program are exempt from the provisions and requirements of
Title 48 RCW and to the extent of their participation in the program, the
activities and operations of the insurer selected by the director to provide
liability insurance coverage to owners and operators of heating oil tanks are
exempt from the requirements of Title 48 RCW except for:
(a) Chapter 48.03 RCW
pertaining to examinations;
(b) RCW 48.05.250
pertaining to annual reports;
(c) Chapter 48.12 RCW
pertaining to assets and liabilities;
(d) Chapter 48.13 RCW
pertaining to investments;
(e) Chapter 48.30 RCW
pertaining to deceptive, false, or fraudulent acts or practices; and
(f) Chapter 48.92 RCW
pertaining to liability risk retention.
(2) To the extent of
their participation in the program, the insurer selected by the director to
provide liability insurance coverage to owners and operators of heating oil
tanks shall not participate in the Washington insurance guaranty association
nor shall the association be liable for coverage provided to owners and
operators of heating oil tanks issued in connection with the program.
NEW SECTION. Sec.
7. (1) The heating oil
pollution liability trust account is created in the custody of the state
treasurer. All receipts from the pollution liability insurance fee collected under
section 8 of this act and reinsurance premiums shall be deposited into the
account. Expenditures from the account may be used only for the purposes set
out under this chapter. Only the director or the director's designee may
authorize expenditures from the account. The account is subject to allotment
procedures under chapter 43.88 RCW, but no appropriation is required for
expenditures. Any residue in the account shall be transferred at the end of
the biennium to the pollution liability insurance agency trust account.
(2) Money in the
account may be used by the director for the following purposes:
(a) Corrective action
costs;
(b) Third-party
liability claims;
(c) Costs associated
with claims administration;
(d) Purchase of an
insurance policy to cover all registered heating oil tanks, and reinsurance of
the policy; and
(e) Administrative
expenses of the program, including personnel, equipment, and supplies.
NEW SECTION. Sec.
8. (1) A pollution liability
insurance fee of six-tenths of one cent per gallon of heating oil purchased
within the state shall be imposed on every special fuel dealer, as the term is
defined in chapter 82.38 RCW, making sales of heating oil to a user or consumer.
(2) The pollution
liability insurance fee shall be remitted by the special fuel dealer to the
department of licensing with payment of the special fuel dealer tax.
(3) The fee proceeds
shall be used for the specific regulatory purposes of this chapter.
(4) The fee imposed by
this section shall not apply to heating oil exported or sold for export from
the state.
NEW SECTION. Sec.
9. The following shall be
confidential and exempt under chapter 42.17 RCW, subject to the conditions set
forth in this section:
(1) All examination and
proprietary reports and information obtained by the director and the director's
staff in soliciting bids from insurers and in monitoring the insurer selected
by the director may not be made public or otherwise disclosed to any person,
firm, corporation, agency, association, governmental body, or other entity.
(2) All information
obtained by the director or the director's staff related to registration of heating
oil tanks to be insured may not be made public or otherwise disclosed to any
person, firm, corporation, agency, association, governmental body, or other
entity.
(3) The director may
furnish all or part of examination reports prepared by the director or by any
person, firm, corporation, association, or other entity preparing the reports
on behalf of the director to:
(a) The Washington
state insurance commissioner;
(b) A person or
organization officially connected with the insurer as officer, director,
attorney, auditor, or independent attorney or independent auditor; and
(c) The attorney
general in his or her role as legal advisor to the director.
NEW SECTION. Sec.
10. Nothing contained in this
chapter shall authorize any commercial conduct which is prohibited by RCW
19.86.020 through 19.86.060, and no section of this chapter shall be deemed to
be an implied repeal of any of those sections of the Revised Code of
Washington.
NEW SECTION. Sec.
11. The director shall report
by December 31 of each year to the legislature on the status of the regulatory
program under this chapter.
NEW SECTION. Sec.
12. A new section is added
to chapter 70.148 RCW to read as follows:
The director shall
provide reinsurance through the pollution liability insurance program trust
account to the heating oil pollution liability protection program under
sections 1 through 11 of this act.
Sec. 13. RCW 82.38.090 and 1994 c
262 s 23 are each amended to read as follows:
It shall be unlawful
for any person to act as a special fuel dealer or a special fuel user in this
state unless such person is the holder of an uncanceled special fuel dealer's
or a special fuel user's license issued to him or her by the department.
A special fuel dealer's
license authorizes a person to deliver previously untaxed special fuel into the
fuel supply tanks of motor vehicles, collect the special fuel tax on behalf of
the state at the time of delivery, and remit the taxes collected to the state
as provided herein. A licensed special fuel dealer may also deliver untaxed
special fuel into bulk storage facilities of a licensed special fuel user or
dealer without collecting the special fuel tax. Special fuel dealers, when
making deliveries of special fuel into bulk storage to any person not holding a
valid special fuel license, must collect the special fuel tax at time of
delivery, unless the person to whom the delivery is made is specifically
exempted from the tax as provided herein.
A special fuel user's
license authorizes a person to purchase special fuel into bulk storage for use
in motor vehicles either on or off the public highways of this state without
payment of the special fuel tax at time of purchase. Holders of special fuel
licenses are all subject to the bonding, reporting, tax payment, and
record-keeping provisions of this chapter. All purchases of special fuel by a
licensed special fuel user directly into the fuel supply tank of a motor
vehicle are subject to the special fuel tax at time of purchase. Special
authorization may be given to farmers, logging companies, and construction
companies to purchase special fuel directly into the supply tanks of nonhighway
equipment or into portable slip tanks for nonhighway use without payment of the
special fuel tax. ((Persons utilizing special fuel for heating purposes
only are not required to be licensed.))
Special fuel users
operating motor vehicles in interstate commerce having two axles and a gross
vehicle weight or registered gross vehicle weight not exceeding twenty-six
thousand pounds are not required to be licensed. Special fuel users operating
motor vehicles in interstate commerce having two axles and a gross vehicle weight
or registered gross vehicle weight exceeding twenty-six thousand pounds, or
having three or more axles regardless of weight, or a combination of vehicles,
when the combination exceeds twenty-six thousand pounds gross vehicle weight,
must comply with the licensing and reporting requirements of this chapter. A
copy of the license must be carried in each motor vehicle entering this state
from another state or province.
NEW SECTION. Sec.
14. Sections 1 through 11 of
this act shall expire June 1, 2001.
NEW SECTION. Sec.
15. Sections 1 through 11 of
this act shall constitute a new chapter in Title 70 RCW.
NEW SECTION. Sec.
16. If any provision of this
act or its application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other persons or
circumstances is not affected.
