SENATE BILL REPORT

                   SB 5926

              As Reported By Senate Committee On:

    Environmental Quality & Water Resources, March 2, 1999

Title:  An act relating to the oil spill response tax.

Brief Description:  Reducing the account balance requirements necessary for the imposition of the oil spill response tax.

Sponsors:  Senators Fraser, Eide, Jacobsen and McAuliffe; by request of Office of Financial Management.

Brief History:

Committee Activity:  Environmental Quality & Water Resources:  2/23/99, 2/25/99, 3 /2/99 [w/oRec-WM].

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY & WATER RESOURCES

Majority Report:  That it be referred to Committee on Ways & Means without recommendation.

  Signed by Senators Fraser, Vice Chair; Eide, Vice Chair; Jacobsen and McAuliffe.

Staff:  Richard Rodger (786-7461)

Background:  The state imposes two taxes on the importation of crude oil into the state when it is transported by vessel or barge over navigable waters.

The first tax is designated to the state's oil spill response account and is imposed at the rate of one cent per barrel.  The tax is collected until the account exceeds $10 million.  The tax is reimposed if the account then falls below $9 million.

The second tax is designated to the oil spill administration account and is imposed at the rate of four cents per gallon.

The state expects a shortfall in the administration account in both the current and next biennia.  This is due to refunds required when oil is transported out of the state and because of the need to fund a rescue tug for the Straits of Juan de Fuca.

Summary of Bill:  The cap on the oil spill response account is lowered to $8.5 million and once that amount is exceeded, it is not reimposed until the account falls below $7.5 million.

The State Treasurer is authorized to transfer funds from the response account to the administration account in both this biennium and next biennium.

Appropriation:  None.

Fiscal Note:  Not requested.

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

Testimony For:  An audit of the oil spill administration account resulted in refunds due to the exportation of oil out of state.  The shortfall can be met by transferring funds form the oil spill response account.  This transfer will not cost the oil industry any additional money, as the cap on the response account will be lowered too.  The proposed transfer will also cover the cost of a rescue tug for the Straits of Juan de Fuca.  This tug is need to help prevent ships which have lost power from running aground, an identified risk in the Vople study.  WSPA support the rescue tug if the cost is spread among all the beneficiaries.

Testimony Against:  This bill provides open-ended authority for the State Treasurer to transfer funds.  The problem of shortfalls in the account needs a permanent fix, as the audits will continue to deplete the administration account.  The Volpe study identified other areas as posing a higher risk of collisions and groundings.  The rescue tug is not needed because the industry is developing the international tug of opportunity system (ITOS) and developing a risk management plan for the northern straits.

Testified:  Tom Fitzsimmons. Dept. of Ecology (pro); Dan Riley, Western States Petroleum Assn. (con); Randy Ray (con); Doug Coburn (con); Don Sytsma (con); Rick Wickman (con); Bruce Wishart, People for Puget Sound (pro with concerns); J. Grahame Bell (pro).