AN ACT Relating to the financing of water pollution control facilities and activities; reenacting and amending RCW 82.24.260; adding a new chapter to Title 70 RCW; adding a new section to chapter 35.23 RCW; adding a new section to chapter 35.94 RCW; adding a new section to chapter 36.34 RCW; adding a new section to chapter 39.04 RCW; adding a new section to chapter 54.04 RCW; adding a new section to chapter 56.08 RCW; adding a new section to chapter 57.08 RCW; adding a new section to chapter 90.70 RCW; adding a new section to chapter 82.24 RCW; adding a new section to chapter 82.26 RCW; making appropriations; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. The long-range health and environmental goals for the state of Washington require the protection of the state's surface and underground waters for the health, safety, use, and enjoyment of its people. It is the purpose of this chapter to provide financial assistance in the achievement of state and federal water pollution control requirements for the protection of the state's waters.

It is the intent of the legislature that distribution of moneys for water pollution control facilities under this chapter be made on an equitable basis taking into consideration legal mandates, local effort, ratepayer impacts, and past distributions of state and federal moneys for water pollution control facilities.

It is the intent of this chapter that the cost of any water pollution control facility attributable to increased or additional capacity that exceeds one hundred ten percent of existing needs at the time of application for assistance under this chapter shall be entirely a local or private responsibility. It is the intent of this chapter that industrial pretreatment be paid by industries and that the water quality account shall not be used for such purposes.

It is the intent of the legislature that public bodies be authorized to provide service from water pollution control facilities by means of service agreements with public or private parties as provided in this chapter.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Eligible cost" means the cost of that portion of a water pollution control facility that can be financed under this chapter excluding any portion of a facility's cost attributable to capacity that is in excess of that reasonably required to address one hundred ten percent of the applicant's needs for water pollution control existing at the time application is submitted for assistance under this chapter.

(2) "Water pollution control facilities" or "facilities" means any facilities or systems owned or operated by a public body, or owned or operated by any person or entity for the purpose of providing service to a public body, for the control, collection, storage, treatment, disposal, or recycling of wastewater, including but not limited to sanitary sewage, storm water, residential, commercial, industrial, and agricultural wastes, which are causing water quality degradation due to concentrations of conventional, nonconventional, or toxic pollutants. Water pollution control facilities include all equipment, utilities, structures, real property, and interests in and improvements on real property necessary for or incidental to such purpose. Water pollution control facilities also include such facilities, equipment, and collection systems as are necessary to protect federally designated sole source aquifers.

(3) "Water pollution control activities" means actions taken by a public body for the following purposes: (a) To prevent or mitigate pollution of underground water; (b) to control nonpoint sources of water pollution; (c) to restore the water quality of fresh water lakes; and (d) to maintain or improve water quality through the use of water pollution control facilities or other means.

(4) "Public body" means the state of Washington or any agency, county, city or town, conservation district, other political subdivision, municipal corporation, quasi-municipal corporation, and those Indian tribes now or hereafter recognized as such by the federal government.

(5) "Water pollution" means such contamination, or other alteration of the physical, chemical, or biological properties of any waters of the state, including change in temperature, taste, color, turbidity, or odor of the waters, or such discharge of any liquid, gaseous, solid, radioactive, or other substance into any waters of the state as will or is likely to create a nuisance or render such waters harmful, detrimental, or injurious to the public health, safety, or welfare, or to domestic, commercial, industrial, agricultural, recreational, or other legitimate beneficial uses, or to livestock, wild animals, birds, fish, or other aquatic life.

(6) "Nonpoint source water pollution" means pollution that enters any waters of the state from any dispersed water-based or land-use activities, including, but not limited to, atmospheric deposition, surface water runoff from agricultural lands, urban areas, and forest lands, subsurface or underground sources, and discharges from boats or other marine vessels.

(7) "Sole source aquifer" means the sole or principal source of public drinking water for an area designated by the Administrator of the Environmental Protection Agency pursuant to Public Law 93-523, Sec. 1424(b).

(8) "Agreement" means any agreement to which a public body and a service provider are parties by which the service provider agrees to deliver service to such public body in connection with its design, financing, construction, ownership, operation, or maintenance of a facility in accordance with this chapter.

(9) "Service provider" means any privately owned or publicly owned for-profit or nonprofit corporation, partnership, joint venture, association, or other person or entity which is legally capable of contracting for and providing service with respect to the design, financing, ownership, construction, operation, or maintenance of a facility in accordance with this chapter.

NEW SECTION. Sec. 3. The water quality account is hereby created in the state treasury. Moneys deposited in the account may be used only in a manner consistent with section 5 of this act before July 1, 1987, and after June 30, 1987, in a manner to be determined by the legislature consistent with information provided pursuant to section 7 of this act. Moneys deposited in the account shall be administered by the department of ecology and shall be subject to legislative appropriation. Not more than three percent of the funds appropriated from the account may be used for program administration. Moneys placed in the account shall include tax receipts as provided in sections 8 and 10 of this act, principal and interest from the repayment of any loans granted pursuant to this chapter, and any other moneys appropriated to the account by the legislature. All earnings from investment of balances in the water quality account, except as provided in RCW 43.84.090, shall be credited to the water quality account.

NEW SECTION. Sec. 4. There is hereby appropriated from the general fund‑-state and local improvements revolving account‑-waste disposal and management facilities 1980 (Referendum 39) to the department of ecology an amount not to exceed twenty million dollars for the fiscal year ending June 30, 1987, or so much thereof as is required, for the following purposes:

(1) Not to exceed one million five hundred thousand dollars for planning assistance to any ground water management area created pursuant to chapter 453, Laws of 1985, provided that such assistance does not exceed fifty percent of the estimated annual cost of such planning activity.

(2) Not to exceed five hundred thousand dollars for nonpoint source pollution control activities, provided that such assistance does not exceed fifty percent of the eligible cost of any such activity.

(3) Not to exceed four million dollars to assist any aquifer protection area created pursuant to chapter 425, Laws of 1985, provided such assistance does not exceed the amount of any local revenues pledged to the activities of such district.

(4) Not to exceed five hundred thousand dollars for the acquisition of organic laboratory capability to be jointly used with the department of social and health services to test and analyze waters, including those subject to use for public drinking water supplies.

(5) Not to exceed thirteen million five hundred thousand dollars for water pollution control facilities that are determined by the department of ecology to be of highest priority for receipt of state assistance solely for design of such facilities. Such assistance shall not exceed fifty percent of the eligible cost of any such facility.

NEW SECTION. Sec. 5. (1) There is hereby appropriated to the office of financial management from the water quality account for the biennium ending June 30, 1987, the sum of one hundred fifty thousand dollars, or so much thereof as may be necessary, for the planning requirements in section 7 of this act.

(2) There is hereby appropriated to the department of ecology from the water quality account for the biennium ending June 30, 1987, the sum of two hundred fifty thousand dollars, or so much thereof as may be necessary, for the requirements in section 7 of this act.

NEW SECTION. Sec. 6. No grant or loan made in this chapter for fiscal year 1987 shall be construed to establish a precedent for levels of grants or loans made from the water quality account thereafter.

NEW SECTION. Sec. 7. (1) The office of financial management, with the assistance of the department of ecology and other appropriate state agencies and representatives of local government, shall develop a plan for state financial assistance for future water pollution control facilities and activities in conformance with the intent and purposes of this chapter. The plan shall be presented to the legislature no later than January 1, 1987, and shall include but not be limited to the following:

(a) An evaluation of the total cost to public bodies throughout the state constructing water pollution control facilities and undertaking water pollution control activities, including an identification of the federal, state, and local resources and mechanisms available to address water quality needs; the need for and appropriate level of state assistance for such facilities and activities and the appropriate level of such assistance; and an evaluation of whether such assistance should be in the form of loans, grants, or a combination thereof.

(b) Recommendations for the establishment of a state revolving loan fund program for water pollution control expenditures, including the terms and rate of interest to be charged on state loans.

(c) A description of criteria for the equitable distribution of state moneys based upon the intent and policies of this chapter. This element shall include a compilation of current local household sewerage rates imposed throughout the state and a forecast of future sewerage rates throughout the state based upon the costs of construction and of proper operation and maintenance of water pollution control facilities. Such forecast shall include estimates of the impact on future household sewerage rates of varying levels of state assistance.

(d) An assessment of the capacity of local entities providing sewerage services to raise the capital necessary to comply with federal and state wastewater treatment requirements and to provide proper operation and maintenance of water pollution control facilities.

(e) An evaluation of the feasibility of debt service agreement with local entities where the state would assist local jurisdictions to defray the debt service on locally issued bonds.

(f) An assessment of and recommendations for improved coordination of all water quality management activities among state agencies and between the state and local governments.

(2) The director of ecology shall report to the legislature by January 1, 1987, an evaluation of the water quality protection needs for the state, excluding the geographic area covered by the Puget Sound water quality authority's management plan for Puget Sound. The evaluation should include, but not be limited to:

(a) An assessment of future water pollution control facility needs to accommodate population and economic growth, including those facilities under compliance orders and other legal mandates. This shall include consideration of the appropriate state role in financing such needs.

(b) The needs of public bodies for:

(i) Ground water protection planning and implementation including source protection plans for public water systems;

(ii) Control of nonpoint pollution from agriculture, urban stormwater runoff, forest practices, and on-site sewage disposal;

(iii) Shellfish protection;

(iv) Lake restoration; and

(v) Greatest reasonable reduction of combined sewer overflows.

(d) The adequacy of monitoring and laboratory capabilities for conducting a state-wide water quality protection program.

The report shall incorporate the timetables established in RCW 90.44.400 through 90.44.440 for ground water management activities and the timetables established in RCW 90.48.460 through 90.48.490 for review of industrial discharge standards and reduction of combined sewer overflows. The report shall specify criteria for establishing priorities among various water quality needs, including an identification of key problem areas, requirements of existing state and federal legislation, an evaluation of local governments' readiness to proceed in meeting various needs, and the constraints impeding progress. In developing the evaluation, the director shall coordinate with the office of financial management and the Puget Sound water quality authority and shall consult with other appropriate state agencies.

NEW SECTION. Sec. 8. A new section is added to chapter 90.70 RCW to read as follows:

The Puget Sound water quality authority shall, in addition to carrying out its duties under this chapter, make recommendations for implementation of waivers from the uniform national requirements of secondary treatment. In making recommendations, the authority shall consider the criteria specified in the federal clean water act.

NEW SECTION. Sec. 9. A new section is added to chapter 82.24 RCW to read as follows:

There is hereby levied and there shall be collected by the department of revenue from the persons mentioned in and in the manner provided by this chapter, an additional tax upon the sale, use, consumption, handling, possession, or distribution of cigarettes in an amount equal to the rate of four mills per cigarette.

The moneys collected under this section shall be deposited in the water quality account under section 3 of this act through June 30, 2021, and in the general fund thereafter.

Sec. 10. Section 7, chapter 157, Laws of 1972 ex. sess. as last amended by section 217, chapter 3, Laws of 1983 and by section 3, chapter 189, Laws of 1983 and RCW 82.24.260 are each reenacted and amended to read as follows:

Any retailer who sells or otherwise disposes of any unstamped cigarettes other than (1) a federal instrumentality with respect to sales to authorized military personnel and (2) a federally recognized Indian tribal organization with respect to sales to enrolled members of the tribe shall collect from the buyer or transferee thereof the tax imposed on such buyer or transferee by ((~~RCW 82.24.020, 82.24.025,~~)) this chapter and RCW 28A.47.440 and remit the same to the department after deducting from the tax collected the compensation he would have been entitled to under the provisions of this chapter and RCW 28A.47.440 if he had affixed stamps to the unstamped cigarettes. Such remittance shall be made at the same time and manner as remittances of the retail sales tax as required under chapters 82.08 and 82.32 RCW. In the event the retailer fails to collect the tax from the buyer or transferee, or fails to remit the same, the retailer shall be personally liable therefor, and shall be subject to the administrative provisions of RCW 82.24.230 with respect to the collection thereof by the department. The provisions of this section shall not relieve the buyer or possessor of unstamped cigarettes from personal liability for the tax imposed by ((~~RCW 82.24.020, 82.24.025,~~)) this chapter and RCW 28A.47.440.

Nothing in this section shall relieve a wholesaler or a retailer from the requirements of affixing stamps pursuant to RCW 82.24.040 and 82.24.050.

NEW SECTION. Sec. 11. A new section is added to chapter 82.26 RCW to read as follows:

(1) In addition to the taxes imposed under RCW 82.26.020, there is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all tobacco products in this state at the rate of sixteen and three-fourths percent of the wholesale sales price of such tobacco products. Such tax shall be imposed at the time the distributor (a) brings, or causes to be brought, into this state from without the state tobacco products for sale, (b) makes, manufactures, or fabricates tobacco products in this state for sale in this state, or (c) ships or transports tobacco products to retailers in this state, to be sold by those retailers.

(2) The moneys collected under this section shall be deposited in the water quality account under section 3 of this act through June 30, 2021, and in the general fund thereafter.

NEW SECTION. Sec. 12. (1) Public bodies may enter into agreements with service providers for the furnishing of service in connection with water pollution control facilities pursuant to the process set forth in section 13 of this act. The agreements may provide that a public body pay a minimum periodic fee in consideration of the availability of the service without regard to the amount of service actually used during all or any part of the contractual period. Agreements may be for a term not to exceed forty years or the life of the facility, whichever is longer, and may be renewable.

(2) The source of funds to meet periodic payment obligations assumed by a public body pursuant to an agreement permitted under this section may be paid from taxes, or solely from user fees, charges, or other revenues pledged to the payment of the periodic obligations, or both.

NEW SECTION. Sec. 13. The legislative authority of a public body may secure services by means of an agreement with a service provider. Such an agreement may obligate a service provider to finance, construct, own, operate, or maintain water pollution control facilities by which services are provided to the public body. Service agreements and related agreements under this chapter shall be entered into in accordance with the following procedure:

(1) The legislative authority of the public body shall publish notice that it is seeking to secure certain specified services by means of entering into an agreement with a service provider. The notice shall be published in the official newspaper of the public body, or if there is no official newspaper then in a newspaper in general circulation within the boundaries of the public body, at least once each week for two consecutive weeks. The final notice shall appear not less than sixty days before the date for submission of proposals. The notice shall state (a) the nature of the services needed, (b) the location in the public body's offices where the requirements and standards for construction, operation, or maintenance of projects needed as part of the services are available for inspection, and (c) the final date for the submission of proposals. The legislative authority may undertake a prequalification process by the same procedure set forth in this subsection.

(2) The request for proposals shall (a) indicate the time and place responses are due, (b) include evaluation criteria to be considered in selecting a service provider, (c) specify minimum requirements or other limitations applying to selection, (d) insofar as practicable, set forth terms and provisions to be included in the service agreement, and (e) require the service provider to demonstrate in its proposal that a public body's annual costs will be lower under its proposal than they would be if the public body financed, constructed, owned, operated, and maintained facilities required for service.

(3) The criteria set forth in the request for proposals shall be those determined to be relevant by the legislative authority of the public body, which may include but shall not be limited to: The respondent's prior experience, including design, construction, or operation of other similar facilities; respondent's management capability, schedule availability, and financial resources; cost of the service; nature of facility design proposed by respondents; system reliability; performance standards required for the facilities; compatibility with existing service facilities operated by the public body or other providers of service to the public body; project performance warranties; penalty and other enforcement provisions; environmental protection measures to be utilized; and allocation of project risks. The legislative authority may designate persons or entities (a) to assist it in issuing the request for proposals, to ensure that proposals will be responsive to its needs, and (b) to assist it in evaluating the proposals received.

(4) After proposals under subsections (1) through (3) of this section have been received, the legislative authority of the public body shall determine, on the basis of its review of the proposals and any recommendations of the designated persons or entities, whether one or more proposals have been received from respondents which are (a) determined to be qualified to provide the requested services, and (b) responsive to the notice and evaluation criteria (which shall include, but not be limited to, cost of services). If two or more such proposals are determined to have been received, the legislative authority of the public body shall hold discussions with at least the two respondents whose proposals were considered most responsive, to assure its full understanding of the proposals. Any respondent with whom discussions are held shall be accorded a reasonable opportunity for revision of its proposal prior to commencement of the negotiation provided in subsection (5) of this section, for the purpose of obtaining best and final proposals.

(5) After such discussions, if any, are held, the public body may negotiate and, with approval of the legislative authority, contract with the respondent whose proposal it determines to be the most advantageous to the public body, considering the criteria set forth in the request for proposals. If the negotiation is unsuccessful, the public body may commence negotiations with any other qualified respondent.

(6) Any person aggrieved by the legislative authority's approval of a contract may appeal the determination to an appeals board selected by the public body, which shall consist of not less than three qualified persons. Such board shall promptly hear and determine whether the public body entered into the agreement in accordance with this chapter and other applicable law. The hearing shall comply with chapter 34.04 RCW. The board shall have the power only to affirm or void the agreement.

NEW SECTION. Sec. 14. A public body may sell, lease, or assign public property for fair market value to any service provider as part of a service agreement entered into under the authority of this chapter. The property sold or leased shall be used by the provider, directly or indirectly, in providing services to the public body. Such use may include demolition, modification, or other use of the property as may be necessary to execute the purposes of the service agreement.

NEW SECTION. Sec. 15. A public body which enters into a service agreement pursuant to this chapter, under which a facility is owned wholly or partly by a service provider, shall be eligible for a grant or loan to the extent permitted by law or regulation as if the entire portion of the facility dedicated to service to such public body were publicly owned. The grant or loan shall be made to and shall inure to the benefit of the public body and not the service provider.

NEW SECTION. Sec. 16. Sections 12 through 15 of this act shall be deemed to provide an additional method for the provision of services from and in connection with facilities and shall be regarded as supplemental and additional to powers conferred by other state laws and by federal laws.

NEW SECTION. Sec. 17. A new section is added to chapter 35.23 RCW to read as follows:

RCW 35.23.352 does not apply to agreements entered into under authority of chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 18. A new section is added to chapter 35.94 RCW to read as follows:

This chapter does not apply to dispositions of utility property in connection with an agreement entered into pursuant to chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 19. A new section is added to chapter 36.34 RCW to read as follows:

RCW 36.34.150 through 36.34.190 shall not apply to agreements entered into pursuant to chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 20. A new section is added to chapter 39.04 RCW to read as follows:

This chapter does not apply to agreements entered into under authority of chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 21. A new section is added to chapter 54.04 RCW to read as follows:

RCW 54.04.070 through 54.04.090 shall not apply to agreements entered into under authority of chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 22. A new section is added to chapter 56.08 RCW to read as follows:

RCW 56.08.070, 56.08.080 through 56.08.090, and 56.08.120 through 56.08.160 shall not apply to an agreement entered into under authority of chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 23. A new section is added to chapter 57.08 RCW to read as follows:

RCW 57.08.015, 57.08.016, 57.08.050, 57.08.120, and 57.08.130 shall not apply to agreements entered into under authority of chapter 70.-- RCW (sections 1 through 7 and 12 through 16 of this act).

NEW SECTION. Sec. 24. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 25. Sections 1 through 7 and 12 through 16 of this act shall constitute a new chapter in Title 70 RCW.

NEW SECTION. Sec. 26. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately except sections 9 through 11 of this act shall take effect April 1, 1986.