HOUSE BILL REPORT
SHB 2678
As Passed House:
February 14, 2006
Title: An act relating to the pollution liability insurance agency.
Brief Description: Reauthorizing the pollution liability insurance agency.
Sponsors: By House Committee on Financial Institutions & Insurance (originally sponsored by Representatives Kagi, Kretz, B. Sullivan and Ericks; by request of Pollution Liability Insurance Agency).
Brief History:
Financial Institutions & Insurance: 1/24/06 [DPS];
Appropriations: 2/1/06, 2/2/06 [DPS(FII)].
Floor Activity:
Passed House: 2/14/06, 95-1.
Brief Summary of Substitute Bill |
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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).
HOUSE COMMITTEE ON APPROPRIATIONS
Majority Report: The substitute bill by Committee on Financial Institutions & Insurance be substituted therefor and the substitute bill do pass. Signed by 30 members: Representatives Sommers, Chair; Fromhold, Vice Chair; Alexander, Ranking Minority Member; Anderson, Assistant Ranking Minority Member; McDonald, Assistant Ranking Minority Member; Armstrong, Bailey, Buri, Chandler, Clements, Cody, Conway, Darneille, Dunshee, Grant, Haigh, Hinkle, Hunter, Kagi, Kenney, Kessler, Linville, McDermott, Miloscia, Pearson, Priest, Schual-Berke, P. Sullivan, Talcott and Walsh.
Staff: Alicia Paatsch (786-7178).
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). The excise tax
includes a "trigger" mechanism based on the amount of funds in the Pollution Liability
Insurance Program Trust Account. The tax will only be imposed for a succeeding calendar
quarter if: (1) the tax was levied the prior quarter and the account balance is less than $15
million. Most recently, the tax was effective from July 1, 2003, through June 30, 2004. The
entire tax is currently scheduled to expire on June 1, 2007.
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.
Appropriation: None.
Fiscal Note: Available.
Effective Date: 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: (Financial Institutions & Insurance) 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 For: (Appropriations) We support the reauthorization of the PLIA. The Governor shows support by not making the second transfer from the dedicated account to the State General Fund and by allowing the account to keep its own interest. Other accounts like this have their interest deposited into the General Fund, so this is a policy shift. We want the account to sunset so that it can have a necessary review. Language in the Federal Energy Act may require that revenue stay in the account; otherwise, the state would not be qualified to get federal funds in support of underground storage tanks.
Testimony Against: (Financial Institutions & Insurance) None.
Testimony Against: (Appropriations) None.
Persons Testifying: (Financial Institutions & Insurance) Representative Kagi, prime sponsor; Lynn Gooding, Pollution Liability Insurance Agency; and Charlie Brown, Washington Oil Marketers Association.
Persons Testifying: (Appropriations) Representative Kagi, prime sponsor; Charlie Brown, Washington Oil Marketers Association; Lynn Gooding, Pollution Liability Insurance Agency; and Greg Hanon, Western States Petroleum Association.