Background:

Model Toxics Control Account.

Initiative Measure No. 97, approved by a citizen vote in 1988, created the Model Toxics Control Act, which funds hazardous waste clean-up through a tax on the wholesale value of hazardous substances. The tax is imposed on the first in-state possessor of hazardous substances at the rate of 0.7 percent, or $7 per $1,000. The Department of Ecology’s (DOE) Toxic Cleanup Program administers the investigation and clean-up programs.

Federal Clean Water Act.

The federal Clean Water Act (CWA) sets a national goal to restore and maintain the chemical, physical, and biological integrity of the nation's waters and to eliminate pollutant discharges into navigable waters. The CWA defines "pollutant" broadly to include a variety of materials that may be discharged into water through human activities, construction, industrial processes, or other methods. Among other requirements, the CWA sets effluent limitations for discharges of pollutants to navigable waters and requires states to adopt surface water quality standards to protect humans, fish, and other aquatic life.

State Water Pollution Control.

The CWA authorizes the U. S. Environmental Protection Agency (EPA) to delegate regulatory water pollution authority to designated state agencies. The EPA has delegated this authority to the DOE.

The DOE administers three water quality grant programs:

The Water Pollution Control Revolving Fund provides loans for water pollution control facilities and related activities that contribute to achievement of state and federal water pollution control requirements. Funding is provided from the EPA for this program.
The Centennial Clean Water Program provides grants and loans for hardship water pollution control facility construction projects and nonpoint source pollution activity projects.
The CWA Section 319 Nonpoint Source Program provides grants for nonpoint pollution control activity projects that meet state and federal criteria.

Puget Sound Partnership Action Agenda.

The Puget Sound Partnership's Puget Sound Action Agenda (Action Agenda), which outlines the immediate and long-term actions necessary to restore and protect Puget Sound, was released in 2008. State law includes legislative intent to align state funding with the Action Agenda's policies.

Motor Vehicle Account.

Funds in the Motor Vehicle Account are used by state agencies for the use of counties, cities, and towns' roads, streets, and highway purposes, including facilities for pedestrians, equestrians, or bicyclists.

Puget Sound Recovery Account.

Funds in the Puget Sound Recovery Account are used for the protection and recovery of Puget Sound.

Oil Spill Prevention Account.

Funds in the Oil Spill Prevention Account are used to fund oil spill prevention and preparedness programs.

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Summary of Substitute Bill:

Increase in Hazardous Substance Tax.

Beginning May 1, 2010, the Hazardous Substance Tax rate is increased from 0.7 percent to 2.0 percent. The additional taxes are deposited into the Clean Water Legacy Fund created in the bill. The funds are then transferred to the new Storm Water Account, a new Water Quality Action Account, the Oil Spill Prevention Account, the Puget Sound Recovery Account, and the Motor Vehicle Account. A portion of the taxes are also deposited into the State General Fund.

Through June 30, 2011, the additional Hazardous Substance Tax revenues are allocated as follows:

20 percent is deposited in the new Storm Water Account;
2.45 percent is deposited in the Oil Spill Prevention Account;
2.05 percent is deposited in the Puget Sound Recovery Account;
2.05 percent is deposited in the new Water Quality Action Account;
5 percent is deposited in the Motor Vehicle Account; and
68.45 percent is deposited in the State General Fund.

Between July 1, 2011, and July 1, 2013, the additional Hazardous Substance Tax revenues are allocated as follows:

20 percent is deposited in the new Storm Water Account;
1.8 percent is deposited in the Oil Spill Prevention Account;
2.4 percent is deposited in the Puget Sound Recovery Account;
2.4 percent is deposited in the new Water Quality Action Account;
5 percent is deposited in the Motor Vehicle Account; and
68.4 percent is deposited in the State General Fund.

Between July 1, 2013, and July 1, 2015, the additional Hazardous Substance Tax revenues are allocated as follows:

45 percent is deposited in the new Storm Water Account;
1.8 percent is deposited in the Oil Spill Prevention Account;
4.5 percent is deposited in the Puget Sound Recovery Account;
4.4 percent is deposited in the new Water Quality Action Account;
10 percent is deposited in the Motor Vehicle Account; and
34.3 percent is deposited in the State General Fund.

After June 30, 2015, the additional Hazardous Substance Tax revenues are allocated as follows:

69.2 percent is deposited in the new Storm Water Account;
1.8 percent is deposited in the Oil Spill Prevention Account;
9.5 percent is deposited in the Puget Sound Recovery Account;
9.5 percent is deposited in the new Water Quality Action Account; and
10 percent is deposited in the Motor Vehicle Account.

Hazardous Substance Tax Revenue Deposited in the Storm Water Account.

A new Storm Water Account is created in the State Treasury. The DOE is responsible for distributing funds in the account to local governments as grants. Grant monies must be used by local governments in three primary ways:

to fund local government projects or activities that mitigate or prevent contamination of storm water or the recontamination of receiving waters previously remediated. Monies allocated for this purpose must be matched by local funds. Generally, 50 percent of the money in the Storm Water Account must be used for these purposes;
to fund retrofit programs that address contamination of storm water or projects that reduce toxic diesel emissions and mitigate the air deposition of storm water. Generally, 40 percent of the funds in the Storm Water Account must be used for these purposes; and
to fund existing storm water grant programs. Generally, 10 percent of the funds in the Storm Water Account must be used for these purposes.

The DOE must consult with stakeholders in developing criteria for administering the grant programs and ranking projects on their water quality benefits. With respect to projects in the Puget Sound basin, the DOE must consult with the Puget Sound Partnership to ensure that grants are for projects and activities that are consistent with the prioritization of the 2020 Action Agenda. The grant application process must be initiated by July 1, 2010.

By December 1, 2013, and every two years thereafter, the DOE must report to the Governor and the appropriate legislative committees on the progress of the grant programs provided through the Storm Water Account and the suitability of the percentage allocations.

Hazardous Substance Tax Revenue Deposited in the Motor Vehicle Account.

Additional hazardous substance tax revenues deposited in the Motor Vehicle Account must be used to fund activities or projects that address contamination of storm water through transportation infrastructure. Revenues may not be used for construction of storm water facilities associated with new road construction.

Hazardous Substance Tax Revenue Deposited in the Puget Sound Recovery Account.

Additional hazardous substance tax revenues deposited in the Puget Sound Recovery Account must be used to fund activities or projects that are consistent with the prioritization of the 2020 Action Agenda.

Hazardous Substance Tax Revenue Deposited in the State Clean Water Account.

The Water Quality Action Account is created in the State Treasury. The additional hazardous substance tax revenues deposited in the Water Quality Action Account must be used to fund state responsibilities to prevent water pollution, to create and maintain a Storm Water Technology Center to assist businesses and government by developing resources for new clean water practices and technologies, to improve water research and monitoring, to develop clean water guidance and best practices for surface runoff, and to improve source control actions.

Hazardous Substance Tax Revenue Deposited in the Oil Spill Prevention Account.

Additional hazardous substance tax revenues deposited in the Oil Spill Prevention Account are to be used for previously authorized purposes related to oil spill prevention and preparedness programs.

Substitute Bill Compared to Original Bill:

The intent for the use of the additional tax imposed and deposited into the State General Fund is removed. The date that the additional tax is imposed is changed from July 1, 2010, to May 1, 2010. The additional tax is deposited into the Clean Water Legacy Fund created in the bill for collection, and the funds are then transferred to the six accounts included in the underlying bill, with the following changes:

collections through 2011: Oil Spill Prevention Account – 2.45 percent (previously 1.9 percent) and a change for the State General Fund;
collections between July 1, 2011, and June 30, 2013: Storm Water Account – 20 percent (previously 45 percent), Oil Spill Prevention Account – 1.8 percent (previously 1.20 percent), and a change for the State General Fund;
collections between July 1, 2013, and June 30, 2015: Oil Spill Prevention Account – 1.8 percent (previously 1.1 percent) and a change for the State General Fund; and
collections after July 1, 2015: Oil Spill Prevention Account – 1.8 percent (previously 1 percent).

The DOE administration costs may be no more than 4 percent of appropriations.

The uses of Storm Water Account grants to local governments is changed by adding projects, for local governments covered by Phase I and Phase II permits, that mitigate or prevent recontamination of receiving waters previously remediated under federal or state approved activities, and retrofit projects that reduce toxic diesel emissions.

The Washington State Department of Transportation (WSDOT) must report biennially, beginning in 2011, to the Governor and the Legislature. The allowance that the WSDOT may deduct 4 percent for administration costs is removed.

The name of the State Clean Water Account is changed to the Water Quality Action Account, and the uses of the Water Quality Action Account are changed by including prevention of pollution in marine receiving waters and removing uses related to oil spills.

Staff Summary of Public Testimony:

(In support) Storm water is a major threat to the Puget Sound. If we do not deal with storm water, we will not be able to rescue Puget Sound. This bill will help to fund an adequate program at the DOE. This bill is an investment in the future of our state, and we need to begin work now. This is a fair way to address this issue.

The bill provides important environmental stewardship and will lead to additional, sustainable jobs.

Local governments are responsible for cleaning up water. If they do not clean up the water, they will have to deal with the liability later. Cities and counties are in a budget crisis and need help to pay for the contaminated water problem. The city rate-payers are not the only people who drive on the roads and create polluted storm water runoff.

Everyone creates polluted runoff when they live their daily lives, and many people are affected by contaminated water and fish. The polluted environment cost money for clean-up and for loss of industry. A healthy environment promotes a healthy economy.

(Opposed) The bill will have a detrimental effect on refineries, which will result in a loss of family-wage jobs that provide good benefits, along with community support. The refineries may move because of the additional cost, and other producers from out-of-state will benefit. The other producers do not necessarily follow our environmental regulations.

The lost community support includes environmental work performed by volunteers who are refinery workers and their families.

The bill creates an unfair tax on businesses to pay for social problems and the State General Fund problem. The tax will be used to backfill the State General Fund.

This tax will also affect agricultural products that farmers will have to pay. Farmers cannot pass the cost onto others.