Title: An act relating to the pollution liability insurance agency.

Brief Description: Reauthorizing the pollution liability insurance agency.

Sponsors: Representatives Kagi, Kretz, B. Sullivan and Ericks; by request of Pollution Liability Insurance Agency.

Brief History:

Financial Institutions & Insurance: 1/24/06 [DPS].

HOUSE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 11 members: Representatives Kirby, Chair; Ericks, Vice Chair; Roach, Ranking Minority Member; Tom, Assistant Ranking Minority Member; Newhouse, O'Brien, Santos, Serben, Simpson, Strow and Williams.

Staff: Jon Hedegard (786-7127).

Background:

The Pollution Liability Insurance Agency's (PLIA) mission is to make pollution liability insurance available and affordable to the owners and operators of heating oil tanks and underground storage tanks by offering reinsurance services to the insurance industry. A heating oil tank is a tank for space heating of a home or working space. An underground storage tank is a commercial tank or a combination of tanks used to store an accumulation of petroleum.

The PLIA and its programs do not receive state general funds. Funding comes from two sources: (1) a pollution liability fee imposed on dealers making sales of heating oil to a homeowner or a consumer which is deposited into the Heating Oil Pollution Liability Trust Account (HOPLT Account); and (2) an excise tax on the wholesale value of petroleum which is deposited into the Pollution Liability Trust Account (PLT Account). If the costs and claims of the heating oil tank program exceed the amount contributed to that account, the law provides that the difference is to be paid out of the PLT Account. If, on the other hand, there is a residue in the HOPLT Account at the end of the calendar year, it is to be transferred to the PLT Account.

The Director of the PLIA (Director) is required to evaluate the effects of the program on the private market for liability insurance for owners and operators of underground storage tanks. The Director is required to make recommendations to the Legislature concerning continuance of the program.

The programs and the PLIA are scheduled to expire on June 1, 2007.

Summary of Substitute Bill:

The June 1, 2007, expiration date for them PLIA is repealed. The PLIA and its programs are made permanent. The expiration date for the PLT Account is extended until 2013. The interest generated by the PLT Account will remain in the PLT Account rather than being transferred to the state General Fund.

The ongoing requirements that the Director evaluate the effects of the program on the private market for liability insurance and make recommendations to the Legislature concerning continuance of the program are repealed.

Substitute Bill Compared to Original Bill:

An expiration clause concerning the Pollution Liability Insurance Program Trust Account is reinserted. The expiration clause is extended from the current expiration date of June 1, 2007, until June 1, 2013.

Appropriation: None.

Fiscal Note: Available.

Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed, except for section 5, relating to interest relating to the PLT Account, which takes effect July 1, 2006.

Testimony For: The PLIA program is a partnership between the industry and the State to address leaks and spills. It is funded by fees, not the General Fund. It is a program that has worked well for all parties. The PLIA program has been reauthorized twice. The Governor believes that it should be made permanent. There was a budget issue last year involving funds in one of the PLIA accounts. I understand concern that it may be appropriate to extend the expiration date instead of making the program permanent at this time. All of the stakeholders have worked on this bill. Continuing the program is in everyone's best interest. The program is responsible and reasonable. A new sunset date is not a concern. In fact, a future budget raid might cause stakeholders to want to end the program. The Governor believes that the PLIA is a necessary and successful program. The PLIA should be extended. The Governor did reverse the second half of the fund transfer from the PLIA account. The bill also allows interest to remain in the account and benefit the people who pay into the program. The bill ensures that businesses and homeowners that need the PLIA will have the program.

Testimony Against: None.

Persons Testifying: Representative Kagi, prime sponsor; Lynn Gooding, Pollution Liability Insurance Agency; and Charlie Brown, Washington Oil Marketers Association.

Persons Signed In To Testify But Not Testifying: None.