BILL REQ. #:  S-3472.5 

Read first time 01/12/2004.   Referred to Committee on Natural Resources, Energy & Water.

     AN ACT Relating to underground petroleum storage tanks; and amending RCW 70.148.005, 70.148.020, 70.149.010, 70.149.040, 70.149.070, and 70.149.080.

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

Sec. 1   RCW 70.148.005 and 1990 c 64 s 1 are each amended to read as follows:
     (1) The legislature finds that:
     (a) Final regulations adopted by the United States environmental protection agency (EPA) require owners and operators of underground petroleum storage tanks to demonstrate financial responsibility for accidental releases of petroleum as a precondition to continued ownership and operation of such tanks;
     (b) Financial responsibility is demonstrated through the purchase of pollution liability insurance or an acceptable alternative such as coverage under a state financial responsibility program, in the amount of at least five hundred thousand dollars per occurrence and one million dollars annual aggregate depending upon the nature, use, and number of tanks owned or operated;
     (c) Many owners and operators of underground petroleum storage tanks cannot purchase pollution liability insurance either because private insurance is unavailable at any price or because owners and operators cannot meet the rigid underwriting standards of existing insurers, nor can many owners and operators meet the strict regulatory standards imposed for alternatives to the purchase of insurance; and
     (d) Without a state financial responsibility program for owners and operators of underground petroleum storage tanks, many tank owners and operators will be forced to discontinue the ownership and operation of these tanks.
     (2) The purpose of this chapter is to create a state financial responsibility program meeting EPA standards for owners and operators of underground petroleum storage tanks in a manner that:
     (a) Minimizes state involvement in pollution liability claims management and insurance administration;
     (b) Protects the state of Washington from unwanted and unanticipated liability for accidental release claims;
     (c) Creates incentives for private insurers to provide needed liability insurance; and
     (d) Parallels generally accepted principles of insurance and risk management.
     To that end, this chapter establishes a ((temporary)) program to provide pollution liability reinsurance at a price that will encourage a private insurance company or risk retention group to sell pollution liability insurance in accordance with the requirements of this chapter to owners and operators of underground petroleum storage tanks, thereby allowing the owners and operators to comply with the financial responsibility regulations of the EPA.
     (3) It is not the intent of this chapter to permit owners and operators of underground petroleum storage tanks to obtain pollution liability insurance without regard to the quality or condition of their storage tanks or without regard to the risk management practices of tank owners and operators, nor is it the intent of this chapter to provide coverage or funding for past or existing petroleum releases. Further, it is the intent of the legislature that the program follow generally accepted insurance underwriting and actuarial principles and to deviate from those principles only to the extent necessary and within the tax revenue limits provided, to make pollution liability insurance reasonably affordable and available to owners and operators who meet the requirements of this chapter, particularly to those owners and operators whose underground storage tanks meet a vital economic need within the affected community.

Sec. 2   RCW 70.148.020 and 1999 c 73 s 1 are each amended to read as follows:
     (1) The pollution liability insurance program trust account is established in the custody of the state treasurer. All funds appropriated for this chapter and all premiums collected for reinsurance shall be deposited in the account. Expenditures from the account shall be used exclusively for the purposes of this chapter including payment of costs of administering the pollution liability insurance and underground storage tank community assistance programs. Expenditures for payment of administrative and operating costs of the agency are subject to the allotment procedures under chapter 43.88 RCW and may be made only after appropriation by statute. No appropriation is required for other expenditures from the account.
     (2) Each calendar quarter, the director shall report to the insurance commissioner the loss and surplus reserves required for the calendar quarter. The director shall notify the department of revenue of this amount by the fifteenth day of each calendar quarter.
     (3) ((Each calendar quarter the director shall determine the amount of reserves necessary to fund commitments made to provide financial assistance under RCW 70.148.130 to the extent that the financial assistance reserves do not jeopardize the operations and liabilities of the pollution liability insurance program. The director shall notify the department of revenue of this amount by the fifteenth day of each calendar quarter. The director may immediately establish an initial financial assistance reserve of five million dollars from available revenues. The director may not expend more than fifteen million dollars for the financial assistance program.
     (4))) This section expires June 1, ((2001 [2007])) 2007.

Sec. 3   RCW 70.149.010 and 1995 c 20 s 1 are each amended to read as follows:
     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.

Sec. 4   RCW 70.149.040 and 1997 c 8 s 1 are each amended to read as follows:
     The director shall:
     (1) Design a program for providing pollution liability insurance for heating oil tanks that provides up to 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 RCW 70.149.070;
     (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 program 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;
     (9) Implement a program to provide advice and technical assistance to owners and operators of active and abandoned heating oil tanks if contamination from an active or abandoned heating oil tank is suspected. Advice and assistance regarding administrative and technical requirements may include observation of testing or site assessment and review of the results of reports. If the director finds that contamination is not present or that the contamination is apparently minor and not a threat to human health or the environment, the director may provide written opinions and conclusions on the results of the investigation to owners and operators of active and abandoned heating oil tanks. The agency is authorized to collect, from persons requesting advice and assistance, the costs incurred by the agency in providing such advice and assistance. The costs may include travel costs and expenses associated with review of reports and preparation of written opinions and conclusions. Funds from cost reimbursement must be deposited in the heating oil pollution liability trust account. The state of Washington, the pollution liability insurance agency, and its officers and employees are immune from all liability, and no cause of action arises from any act or omission in providing, or failing to provide, such advice, opinion, conclusion, or assistance; ((and))
     (10) Establish a public information program to provide information regarding liability, technical, and environmental requirements associated with active and abandoned heating oil tanks;
     (11) Monitor agency expenditures and seek to minimize costs and maximize benefits to ensure responsible financial stewardship;
     (12) Create an advisory committee of stakeholders to advise the director on all aspects of program operations and fees authorized by this chapter. The committee should meet at least quarterly, or more frequently at the discretion of the director; and
     (13) If necessary, adopt appropriate user fees to supplement program funding.

Sec. 5   RCW 70.149.070 and 1997 c 8 s 2 are each amended to read as follows:
     (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 RCW 70.149.080 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)) calendar year to the pollution liability insurance program 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, supplies, and providing advice and technical assistance.

Sec. 6   RCW 70.149.080 and 1995 c 20 s 8 are each amended to read as follows:
     (1) A pollution liability insurance fee of ((six-tenths of one)) up to one and two-tenths cents 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.