SENATE BILL REPORT

SB 6741

BYSenators Metcalf, Kreidler and Sellar

Relating to storage tanks.

Senate Committee on Environment & Natural Resources

Senate Hearing Date(s):February 4, 1988

Majority Report:     That Substitute Senate Bill No. 6741 be substituted therefor, and the substitute bill do pass and be referred to Ways & Means Committee.

     Signed by Senators Metcalf, Chairman; Smith, Vice Chairman; Barr, Benitz, Kreidler, Patterson.

Senate Staff:Henry Yates (786-7708)

                February 5, 1988

Senate Committee on Ways & Means

Senate Hearing Date(s):February 5, 1988; February 8, 1988

Majority Report:     That Substitute Senate Bill No. 6741 as recommended by Committee on Environment & Natural Resources be substituted therefor, and the substitute bill be referred to Committee on Rules without recommendation.

     Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bauer, Bluechel, Cantu, Deccio, Gaspard, Hayner, Johnson, Lee, Moore, Newhouse, Vognild, Warnke, Zimmerman.

Senate Staff:Chuck Langen (786-7715)

                February 9, 1988

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 8, 1988

BACKGROUND:

Storage tanks, especially those located underground, are being recognized as a major environmental issue due to the number of tanks and the threat that they pose to groundwater. According to a recent Department of Ecology notification program, more than 33,000 underground tanks were identified.  More than 40 percent of these tanks are over 15 years old, at which time they become statistically more likely to leak. Estimates on the number of leaking tanks varies widely, from 1 percent to 20 percent depending on the source.  Approximately 60 percent of the state's population relies on groundwater for drinking.

Washington has no program which comprehensively addresses underground storage tanks. In pursuing enforcement action on those whose tanks are leaking, the agency must use other laws, such as water pollution and hazardous waste statutes.

The federal government has developed several storage tank regulatory programs, primarily aimed at underground tanks.  In 1984, Congress passed legislation (Subtitle I, Resource Conservation and Recovery Act) requiring all tank owners to notify state environmental agencies by May 1986 that they have tanks.  This process has been completed in Washington.

In 1986, as part of the reauthorized federal Superfund hazardous waste cleanup law, Congress required owners or operators of tanks to have at least $1 million of insurance or other proof of financial responsibility for tanks and created a fund for cleaning up leaking tanks for which there is no owner.

Last October, the state Superfund law (ESB 6085) partially exempted petroleum from its regulatory provisions until July 1990, unless a storage tank bill is enacted with specific funding.

SUMMARY:

Senate Bill No. 6741 was introduced by title only.

EFFECT OF PROPOSED SUBSTITUTE:

Underground storage tank is defined to mean any one or a combination of tanks, including connected underground pipes used to contain regulated substances, which include petroleum and various chemical compounds.  In order to be classified as an underground tank, at least 10 percent of the volume must be beneath the surface of the ground.  There are several exemptions including farm or residential tanks of 1,100 gallons or less capacity used for storing motor fuel for noncommercial purposes, heating oil tanks with oil used on the premises and others.

A registration fee is imposed on persons who provided notification as a result of a 1986 federal law requiring persons with tanks to contact the Department of Ecology.  The department is to set the fee by rule at a level sufficient to pay the reasonable and necessary costs incurred in administering and enforcing the chapter.  The fee cannot exceed a base rate of $25.00 and must be set based on a specified schedule.  The fund balance cannot exceed $5 million in the initial year.  No other government entity is to levy a fee on the ownership or operation of an underground storage tank. 

Within one year, the department is to adopt rules regarding requirements for underground storage tanks that are no more or no less stringent than federal law.  The laws are to supersede and preempt all other related laws and regulations of local government entities.  The rules are to address specific requirements for leak detection, inventory control, tank testing, record maintenance, reporting of and action on spills, closure of tanks, performance standards for tanks and prevention of substance delivery if there is noncompliance.  The department may adopt rules that take into account the environmental sensitivity of an area if asked to do so by the local government.

Within twelve months of the availability of a risk retention pool, the owner or operator of an underground storage tank containing petroleum is to demonstrate financial responsibility. The owner or operator must be able to pay at least $100,000 per occurrence for cleanup and not less than $300,000 for bodily injury or property damage.  The Washington petroleum underground storage tank fund is to provide financial responsibility in excess of these amounts.

The Washington petroleum underground storage tank fund is to be established and subject to legislative appropriation.  It is to be used by the Department of Ecology to administer and enforce this chapter.  It is to be used to contract for or guarantee payment of cleanup costs and compensation paid to third parties for bodily injury or property damage.  If, after February 28, 1989, the fund balance falls below $500,000, the department is to transfer funds from the risk retention pool to the underground storage tank fund to meet its obligation.  If the balance of both funds after February 28, 1989 is less than $500,000, the department is to impose a two-tenths of one percent tax multiplied by the wholesale value of petroleum products.

Monies in the petroleum underground storage tank fund are to be used to pay for petroleum cleanup if specific criteria are met, compensate third parties under certain circumstances and to pay the state's share in a federal cleanup activity.  The department is also to be provided a maximum of $1.6 million annually to administer the program.  An owner or operator of the storage tank can apply to the fund to receive money for cleanup above $100,000 and for third party compensation at levels above $300,000.  Persons who do not comply with department rules or do not pay a fee are ineligible to use the fund.

A claim may be paid by the department for cleanup of a site if there is an unauthorized release of petroleum from an underground storage tank, action is required based on Ecology rule and the person has demonstrated evidence of financial responsibility. The person wanting money from the fund must certify that the action to be taken is reasonable and necessary.

A claim may be paid by the department for the amount above $300,000 in cases where there has been severe bodily injury or property damage if several criteria are met.  In order to have a claim paid, the injury or property damage award must be the subject of a legally binding or a court-approved settlement.

The state petroleum underground storage tank risk retention pool account is to be established.  The pool is designed to provide insurance coverage of up to $100,000 for cleanup or corrective action and $300,000 for bodily injury.  Persons can join the risk retention pool if a good faith effort has been made to secure other forms of financial assurance and they comply with all underground storage tank requirements and the tanks are not leaking.

Persons using the risk retention pool are subject to a $5000 deductible amount.  Each member of the pool is to pay $325 annually and the fund is to be maintained so that there is no more than $400 per tank in it.  The fund total is to be $5 million and an advisory group is to aid the department in setting premiums.  If, after February 28, 1989, funds in the risk retention pool fall below $500,000, the department is to transfer monies from the underground storage tank fund to the pool.  If both funds are below $500,000, a 90 day long two- tenths of one percent tax on petroleum products is to be levied.

Farm tanks of any capacity which are used for motor fuel, tanks used for storing heating oil on the premises and any underground tank containing petroleum are subject to the enforcement provisions of the act. If there is a reasonable basis to believe that a violation may or has occurred, officers and other representatives of the department can enter at reasonable times, inspect and obtain samples of the contamination and conduct or require monitoring and testing.  Most information obtained is to be available to the public.

The department is to allow the owners or operators of storage tanks to submit information on records required to be maintained under this act.  The department may inspect underground storage tanks and must consider specific criteria in establishing inspection schedules.

If the department's director has discovered or suspects an underground storage tank violation, he or she must first try to remedy it through conciliation and persuasion.  If this does not work, the agency may issue an enforcement order or file for an order in superior court.  If an owner or operator fails to take action, the department can move to remedy or prevent a fire or emergency. Civil penalties of up to $10,000 per tank are allowed for violations of the agency's rules or provisions of the act.  If a violator fails to comply with an agency enforcement order, a civil penalty of up to $25,000 can be issued for each day of noncompliance.  The court must take into consideration specific factors when determining the amount of civil penalty to be levied.

The director is to establish an underground storage tank advisory group consisting of persons from specific disciplines.

The department, within one year, is to adopt rules defining above-ground storage tanks and submit a report on the issue to the legislature.  Specific information is to be included.

A special excise tax of two-tenths of one percent multiplied by the wholesale value of petroleum products is to be imposed and the funds deposited into the underground storage tank fund.  The tax is imposed on the first possession of the petroleum product in the state.  Exemptions are provided including successive possession, personal or domestic uses of petroleum products, possession of petroleum coke, liquid fuel or fuel gas used in petroleum processing or petroleum products exported for use outside the state.  Credit is allowed for any petroleum product tax paid to another state if tax is due on the product in Washington.

Appropriation:  $450,000

Revenue:   yes

Fiscal Note:    requested February 4, 1988

Senate Committee - Testified:   ENVIRONMENT & NATURAL RESOURCES: Randy Ray, Washington State Wheat Growers (pro); Don Wessels, Inland Empire Fuel (pro); Tim Hamilton, United Automotive Trades Organization (pro); Earl Tower, Dept. of Ecology; Kathleen Collins, Association of Washington Cities