"NEW SECTION.  Sec. 1   (1) The legislature finds that contaminated storm water runoff is a major water pollution problem in the state creating a significant burden on the rivers, aquifers, lakes, and streams across Washington. In addition, mitigating the burdens of storm water and storm water pollution is one of the Puget Sound partnership's top strategic priorities for Puget Sound recovery.
     (2) The legislature recognizes that the burden of storm water pollution is a function of both increased volumes of storm water runoff due to the expansion of impervious surfaces and the toxic substances that pollute the runoff. Local governments may address the burdens created by increased impervious surface through storm water utility fees, but it has been difficult to regulate the toxic substances that contaminate storm water runoff and result in nonpoint source pollution.
     (3) The legislature finds that contamination from one category of toxic substances, petroleum products, accounts for a significant portion of the total pollution load in Puget Sound and other areas in the state.
     (4) The legislature finds that, although future expenditures for required storm water remediation have not been fully quantified, existing information shows that near-term costs for storm water permit compliance and retrofit projects are in excess of one billion dollars. To meet federal storm water permit requirements and complete other storm water projects necessary to meet water quality recovery goals, more than two hundred fifty million dollars will need to be spent by cities, counties, ports, and the state department of transportation every year. The fee imposed in section 3 of this act on petroleum products, which account for between forty-five percent and sixty-five percent of storm water pollution, will generate less than half of the minimum of the annual costs of necessary storm water remediation projects.
     (5) The legislature finds that the burden of storm water pollution from petroleum products is difficult to offset because the source of pollution is not a single physical point, but occurs wherever the petroleum products are purchased, consumed, or used. Nonpoint pollution sources like petroleum and petroleum byproducts contaminate storm water through a multitude of pathways. Combustion of gasoline, diesel, residual fuel oil, and other petroleum products emit pollutants such as hydrocarbons, polycyclic aromatic hydrocarbons, zinc, and arsenic, which then disperse and depose on the ground. Petroleum-based chemicals leach from substances like paving asphalt. Oil and grease drip from vehicles and equipment onto roads and parking lots. When rainwater flows across impervious surfaces, these contaminants are mobilized and transported to water bodies.
     (6) The legislature finds that the possession of petroleum and petroleum byproducts such as asphalt and road oil, lubricants, motor vehicle fuel, and motor diesel fuel directly contributes to storm water contamination because once these products are present in the state, the immediate, foreseeable, and unavoidable consequences of their distribution and use are emissions that significantly contribute to storm water pollution.
     (7) The legislature finds that the federal government and the state of Washington have identified remediation of storm water runoff through national pollutant discharge elimination system phase I and II as a requirement for the state and local jurisdictions. Impacts from the polluted storm water may be mitigated through retrofit projects for existing infrastructure.
     (8) The legislature finds that resources needed to offset the direct burdens of storm water polluted by these substances are insufficient to meet existing needs. Existing funding is raised largely by local governments and is disproportionately borne by fees levied on individual developers and property owners.
     (9) Finally, the legislature finds that imposing a fee on the first in-state possession of petroleum products that contribute to nonpoint storm water pollution is the most administratively feasible method of regulation that proportionally allocates the costs of offsetting the burdens that these products place on the environment. The legislature therefore authorizes a fee to regulate nonpoint source pollution from petroleum products and offset the burdens that such nonpoint pollution places on the environment and the waters of the state.

NEW SECTION.  Sec. 2   A new section is added to chapter 90.48 RCW to read as follows:
     (1) The water pollution account is created in the state treasury. All fees collected under section 3 of this act must be deposited in the account. Moneys in the account may be spent only after appropriation. Expenditures from the account must be used on activities or capital projects that mitigate or prevent storm water pollution by petroleum products or storm water pollution associated with petroleum products.
     (2) After deducting the department's administrative costs associated with collecting the fees and administering a competitive grant process:
     (a) Approximately forty percent of the moneys must be allocated through the grant process to local governments to fund activities or capital projects that address petroleum contamination of storm water through the implementation of the national pollutant discharge elimination system programs permitted under this chapter. To be eligible, local governments must provide fifty percent of project or activity costs from other nonstate fund sources. To qualify for funding, applicants must also demonstrate the following:
     (i) A clear relationship between petroleum products that contribute to storm water pollution and the project's or activity's outcomes; and
     (ii) For project proposals, that the project is an identified priority based on an analysis of ecological or water quality needs throughout the jurisdiction, basin, or watershed.
     (b) Approximately forty percent of the moneys must be allocated through the grant process to local governments for retrofit projects that address petroleum contamination of storm water. The moneys must be prioritized for projects that utilize low-impact development retrofit strategies, but moneys may be awarded for other retrofit projects if the site does not lend itself to low-impact development techniques. After December 31, 2012, in order to qualify for funding, applicants must demonstrate the following:
     (i) A clear relationship between petroleum products that contribute to storm water pollution and the project's outcomes; and
     (ii) That the project is an identified priority based on an analysis of ecological or water quality needs throughout the jurisdiction, basin, or watershed.
     (c) Approximately ten percent of the money must be allocated as grants to the department of transportation to fund activities or capital projects that address petroleum contamination of storm water related to existing transportation infrastructure through the implementation of the department of transportation's national pollutant discharge elimination system programs permitted under this chapter. To qualify for funding, the department must demonstrate the following:
     (i) A clear relationship between petroleum products that contribute to storm water pollution and the project's or activity's outcomes; and
     (ii) For project proposals, that the project is an identified priority based on an analysis of ecological or water quality needs throughout the jurisdiction, basin, or watershed.
     (d) Approximately ten percent of the money must be allocated through either existing storm water grant programs or the grant process to projects under (a) or (b) of this subsection and to the highest priority projects based upon ecological and water quality benefits determined by the department. For projects qualifying under this subsection (2)(d), moneys may be allocated to meet the matching requirements under (a) of this subsection to jurisdictions that demonstrate economic hardship in meeting the matching requirement. To qualify for funding, applicants must also demonstrate the following:
     (i) A clear relationship between petroleum products that contribute to storm water pollution and the project's outcomes; and
     (ii) That the project is an identified priority based on an analysis of ecological or water quality needs throughout the jurisdiction, basin, or watershed.
     (3) The department shall develop criteria for administering the program and ranking projects for funding. In developing criteria applicable to projects in the Puget Sound basin, the department shall consult with the Puget Sound partnership. All projects approved for funding must demonstrate the potential to achieve clear ecological or water quality benefits. The department shall endeavor to distribute the moneys within each geographic region of the state in proportion to the severity of impacts on the state's waters from petroleum contamination.
     (4) Administration of the grant program, including the collection of fees under section 3 of this act, must be paid for out of the water pollution account. Notwithstanding program implementation costs, no more than three percent of the moneys from the account may be used to administer the grant program on a continuing basis.
     (5) The department shall initiate the grant application process by July 1, 2010.
     (6) By December 1, 2011, and every two years thereafter, the department shall report to the governor and the appropriate committees of the legislature on the progress of the program and the suitability of the percentage allocations specified in subsection (2)(a) through (d) of this section.
     (7) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Low-impact development" means a storm water management and land development strategy applied at the parcel and subdivision level that emphasizes conservation and use of on-site natural features integrated with engineered, small-scale hydrologic controls to more closely mimic predevelopment hydrologic functions.
     (b) "Retrofit" means the renovation of existing development to improve or eliminate storm water problems associated with the site.
     (c) "Capital project" means the capital project, including the construction and associated costs, described in capital budget instructions issued by the office of financial management.

NEW SECTION.  Sec. 3   A new section is added to chapter 90.48 RCW to read as follows:
     (1) Effective January 1, 2010, a fee is imposed on the first possession of petroleum products that contribute to storm water pollution, as defined in subsection (6) of this section, for the purpose of offsetting the burden caused by petroleum pollution of storm water in this state. The fee is one dollar and fifty cents per barrel of petroleum product that contributes to storm water pollution.
     (2) Fees collected under this section must be deposited in the water pollution account created in section 2 of this act and applied solely for the pollution prevention and mitigation purposes permitted under section 2 of this act and for the administration of the program required under section 2 of this act.
     (3) The fee must be collected by the department. No later than January 1, 2010, the department shall adopt rules governing the collection of the fees. The department may enter into agreements with other state agencies to facilitate the most efficient collection system.
     (4) It is the intent of this section to impose a fee only once for petroleum products that contribute to storm water pollution that are possessed in this state. Accordingly, the fee is imposed on the first possession of such products. The fee is not imposed on the possession of small amounts of petroleum products that is first possessed by a consumer or by a retailer for the purpose of sale to ultimate consumers.
     (5) Petroleum products exported from or sold for export from the state are not subject to the fee imposed under this section.
     (6) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Barrel" means a unit of measurement of volume equal to forty-two United States gallons of petroleum product.
     (b) "Control" means the power to sell or use the petroleum product or to authorize the sale or use by another.     
     (c) "Petroleum products that contribute to storm water pollution" means asphalt and road oil, lubricants, motor vehicle fuel, motor diesel fuel, and residual fuel oil, and any other petroleum substance that the department determines contributes to storm water pollution in the state. The term does not include crude oil, aviation gasoline, jet fuel, home heating oil, dyed special fuel, or clear special fuel used for agricultural purposes.
     (d) "Possession" means the act of taking control of the petroleum product located within this state, whether the person taking control does so by bringing, receiving, creating, or extracting the petroleum product in this state, and includes both actual and constructive possession. "Actual possession" occurs when the person with control obtains physical possession. "Constructive possession" occurs when the person with control does not obtain physical possession."