S-1406.2  _______________________________________________

                         SENATE BILL 5909

          _______________________________________________

State of Washington      57th Legislature     2001 Regular Session

By Senators Fraser, Regala, Spanel and Thibaudeau

Read first time 02/07/2001.  Referred to Committee on Environment, Energy & Water.

Revising financial responsibility requirements for vessels.

    AN ACT Relating to financial responsibility requirements for vessels and facilities; amending RCW 88.40.011, 88.40.020, 88.40.025, and 88.40.040; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  The legislature finds that the current financial responsibility laws for vessels and facilities are in need of update and revision.  These changes are necessary due to the increased risks of spills, the length of time that has passed since the current standards were put in place, the recent changes that have occurred in federal statutory and case law, the comparative standards of other western states, and the recent experiences of other states with spills.  The legislature intends that, whenever possible, the standards set for Washington state provide the highest level of protection consistent with other western states and to ultimately achieve a more uniform system of financial responsibility on the Pacific Coast.

    Sec. 2.  RCW 88.40.011 and 2000 c 69 s 30 are each amended to read as follows:

    Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

    (1) "Cargo vessel" means a self-propelled ship in commerce, other than a tank vessel or a passenger vessel, of three hundred or more gross tons, including but not limited to, commercial fish processing vessels and freighters.

    (2) "Bulk" means material that is stored or transported in a loose, unpackaged liquid, powder, or granular form capable of being conveyed by a pipe, bucket, chute, or belt system.

    (3) "Covered vessel" means a tank vessel, cargo vessel, or passenger vessel.

    (4) "Department" means the department of ecology.

    (5) "Director" means the director of the department of ecology.

    (6)(a) "Facility" means any structure, group of structures, equipment, pipeline, or device, other than a vessel, located on or near the navigable waters of the state that transfers oil or hazardous substances in bulk to or from a tank vessel or pipeline, that is used for producing, storing, handling, transferring, processing, or transporting oil or hazardous substances in bulk.

    (b) A facility does not include any:  (i) Railroad car, motor vehicle, or other rolling stock while transporting oil over the highways or rail lines of this state; (ii) retail motor vehicle motor fuel outlet; (iii) facility that is operated as part of an exempt agricultural activity as provided in RCW 82.04.330; (iv) underground storage tank regulated by the department or a local government under chapter 90.76 RCW; or (v) marine fuel outlet that does not dispense more than three thousand gallons of fuel to a ship that is not a covered vessel, in a single transaction.

    (7) "Hazardous substances" means any substance listed as of March 1, 2001, in Table 302.4 of 40 C.F.R. Part 302 adopted ((August 14, 1989,)) under section 101(14) of the federal comprehensive environmental response, compensation, and liability act of 1980, as amended by P.L. 99‑499.  The following are not hazardous substances for purposes of this chapter:

    (a) Wastes listed as F001 through F028 in Table 302.4; ((and))

    (b) Wastes listed as K001 through K136 in Table 302.4; and

(c) The noncompound metals antimony, arsenic, beryllium, cadmium, chromium, copper, lead, nickel, selenium, silver, thallium, and zinc, when in solid form in a particle larger than one hundred micrometers (0.004 inches) in diameter.

    (8) (("Inland barge" means any barge operating on the waters of the state and certified by the coast guard as an inland barge.

    (9))) "Navigable waters of the state" means those waters of the state, and their adjoining shorelines, that are subject to the ebb and flow of the tide and/or are presently used, have been used in the past, or may be susceptible for use to transport intrastate, interstate, or foreign commerce.

    (((10))) (9) "Oil" or "oils" means any naturally occurring liquid hydrocarbons at atmospheric temperature and pressure coming from the earth, including condensate and natural gasoline, and any fractionation thereof, including, but not limited to, crude oil, petroleum, gasoline, fuel oil, diesel oil, oil sludge, oil refuse, and oil mixed with wastes other than dredged spoil.  Oil does not include any substance listed as of March 1, 2001, in Table 302.4 of 40 C.F.R. Part 302 adopted ((August 14, 1989,)) under section 101(14) of the federal comprehensive environmental response, compensation, and liability act of 1980, as amended by P.L. 99‑499.

    (((11))) (10) "Offshore facility" means any facility located in, on, or under any of the navigable waters of the state, but does not include a facility any part of which is located in, on, or under any land of the state, other than submerged land.

    (((12))) (11) "Onshore facility" means any facility any part of which is located in, on, or under any land of the state, other than submerged land, that because of its location, could reasonably be expected to cause substantial harm to the environment by discharging oil into or on the navigable waters of the state or the adjoining shorelines.

    (((13))) (12)(a) "Owner or operator" means (i) in the case of a vessel, any person owning, operating, or chartering by demise, the vessel; (ii) in the case of an onshore or offshore facility, any person owning or operating the facility; and (iii) in the case of an abandoned vessel or onshore or offshore facility, the person who owned or operated the vessel or facility immediately before its abandonment.

    (b) "Operator" does not include any person who owns the land underlying a facility if the person is not involved in the operations of the facility.

    (((14))) (13) "Passenger vessel" means a ship of three hundred or more gross tons with a fuel capacity of at least six thousand gallons carrying passengers for compensation.

    (((15))) (14) "Ship" means any boat, ship, vessel, barge, or other floating craft of any kind.

    (((16))) (15) "Spill" means an unauthorized discharge of oil into the waters of the state.

    (((17))) (16) "Tank vessel" means a ship that is constructed or adapted to carry, or that carries, oil in bulk as cargo or cargo residue, and that:

    (a) Operates on the waters of the state; or

    (b) Transfers oil in a port or place subject to the jurisdiction of this state.

    (((18))) (17) "Waters of the state" includes lakes, rivers, ponds, streams, inland waters, underground water, salt waters, estuaries, tidal flats, beaches and lands adjoining the seacoast of the state, sewers, and all other surface waters and watercourses within the jurisdiction of the state of Washington.

    Sec. 3.  RCW 88.40.020 and 2000 c 69 s 31 are each amended to read as follows:

    (1) Any ((inland)) barge that transports hazardous substances in bulk as cargo, using any port or place in the state of Washington or the navigable waters of the state shall establish evidence of financial responsibility in the amount of the greater of ((one)) five million dollars, or ((one)) three hundred ((fifty)) dollars per gross ton of such vessel.

    (2)(a) Except as provided in (b) or (c) of this subsection or subsection (5) of this section, a tank vessel that carries oil as cargo in bulk shall demonstrate financial responsibility to pay at least five hundred million dollars.  The amount of financial responsibility required under this subsection is seven hundred fifty million dollars after January 1, 2002, and one billion dollars after January 1, 2004.

    (b) The director by rule may establish a lesser standard of financial responsibility for tank vessels or barges of three hundred gross tons or less.  The standard shall set the level of financial responsibility based on the quantity of cargo the tank vessel or barge is capable of carrying.  The director shall not set the standard for tank vessels or barges of three hundred gross tons or less below that required under federal law.

    (c) The owner or operator of a tank vessel who is a member of an international protection and indemnity mutual organization and is covered for oil pollution risks up to the amounts required under this section is not required to demonstrate financial responsibility under this chapter.  The director ((may)) shall require the owner or operator of a tank vessel to prove membership in such an organization.

    (3) A cargo vessel or passenger vessel that carries oil as fuel shall demonstrate financial responsibility to pay ((the greater of at least six hundred dollars per gross ton or five hundred thousand)), except as provided in subsection (5) of this section, at least three hundred million dollars.

    (4) The documentation of financial responsibility shall demonstrate the ability of the document holder to meet state and federal financial liability requirements for the actual costs for removal of oil or hazardous substance spills, for natural resource damages, for civil penalties and fines imposed, for removal of shipwrecks and ship debris from the lands and waters of the state, and for necessary expenses related to a spill, or substantial threat of a spill, involving oil or a hazardous substance.

    (5) The department may by rule set a lesser amount of financial responsibility for a tank vessel, cargo vessel, or passenger vessel that meets safety performance or other standards ((for construction, propulsion, equipment, and personnel)) established by the department.  The department shall require as a minimum level of financial responsibility under this subsection the same level of financial responsibility required under federal law.

    (6) This section shall not apply to a covered vessel owned or operated by the federal government or by a state or local government.

    Sec. 4.  RCW 88.40.025 and 1991 c 200 s 704 are each amended to read as follows:

(1) An onshore or offshore facility shall demonstrate financial responsibility in an amount determined by the department, and established by rule, as necessary to compensate the state and affected counties and cities for damages that might occur during a reasonable worst case spill of oil or hazardous substances from that facility into the navigable waters of the state and for civil penalties and fines imposed.  The department shall consider such matters as:  (a) The amount of oil or hazardous substances that could be spilled into the navigable waters from the facility((,)); (b) the cost of cleaning up the spilled oil((,)) or hazardous substances; (c) the frequency of operations at the facility((,)); (d) the amount of civil penalties and fines that could be imposed; (e) the damages that could result from the spill; and (f) the commercial availability and affordability of financial responsibility.

(2) This section shall not apply to an onshore or offshore facility owned or operated by the federal government or by the state or local government.

NEW SECTION. Sec. 5.  To assist the department in determining the proper levels of financial responsibility for onshore and offshore facilities, as required under RCW 88.40.025, the department shall contract with the Washington state institute for public policy to obtain an independent economic analysis regarding adequate levels of financial responsibility.  In conducting the analysis, the institute shall consider the matters identified in RCW 88.40.025.  The analysis shall be completed and delivered to the legislature and governor by September 1, 2002.

    Sec. 6.  RCW 88.40.040 and 2000 c 69 s 33 are each amended to read as follows:

    (1) The department shall deny entry to the waters of the state to any vessel that does not meet the financial responsibility requirements of this chapter, except when such denial may pose a risk of injury to the vessel's crew or passengers.  Any vessel owner or operator that does not meet the financial responsibility requirements of this chapter and any rules prescribed thereunder or the federal oil pollution act of 1990 shall be reported by the department to the United States coast guard.

    (2) The department shall enforce section 1016 of the federal oil pollution act of 1990 as authorized by section 1019 of the federal act.

NEW SECTION. Sec. 7.  The department of ecology is encouraged to work with the States/British Columbia oil spill task force, which was created by a memorandum of cooperation signed in 1989, to seek uniformity in the standards of financial responsibility for vessels and facilities.

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