FINAL BILL REPORT

HB 2242

                                  C 2 L 89 E1

BYRepresentatives Phillips, Van Luven, May, Holland, Hankins, Moyer, Patrick, Miller, Schoon, Winsley, Brough, Ballard, Wood, D. Sommers, Horn, S. Wilson, Chandler, and Ferguson

Prescribing financial responsibility for vessels that spill oil and establishing guidelines for management of Washington's coast.

SYNOPSIS AS ENACTED

BACKGROUND:

Financial Responsibility

Under the federal Water Pollution Control Act, owners and operators of vessels over 300 gross tons are required to post evidence of financial responsibility to the federal government for meeting liability for spills of oil and hazardous substances.  The amount required for inland barges is $125 per gross ton or $125,000, whichever is greater.  The amount required for all other vessels is $150 per gross ton or $250,000, whichever is greater.  Financial responsibility may be established by evidence of insurance, surety bonds, or qualification as a self-insurer.

Owners and operators who fail to comply with financial responsibility requirements are subject to a federal penalty of $10,000.  The Coast Guard may deny entry to any port or place in the United States, or detain at any port or place in the United States, any vessel which does not produce evidence of financial responsibility upon request.

Seven of the 24 coastal states have followed the lead of the federal government and enacted financial responsibility requirements for liability to the state for oil and hazardous substance spills.  Although the state Water Pollution Control Act does impose liability for spills, it does not contain financial responsibility requirements.

Ocean Management

The ocean sea floor and resources off Washington's coast are owned by the state from extreme low tide to three miles seaward, and by the federal government from three miles seaward to two hundred miles seaward.  There are at present few statewide regulations, guidelines, or policies for the use or development of Washington's coastal resources.  While local, coastal governments have some authority to regulate coastal resources, these governments have done little to address coastal resource management through their shoreline management programs or under existing laws.

The federally owned waters off Washington's coast are governed by many federal laws and agencies.  Of immediate concern to the State of Washington is the Mineral Management Service (MMS), which is responsible for the development of mineral and other resources within federally owned ocean waters.  The MMS is authorized to lease ocean areas for purposes of exploration, development, and extraction of mineral resources.  The MMS is required under the Outer Continental Shelf Lands Act (OCSLA) to develop five year lease plans relating to the exploration and extraction of oil and gas.

The MMS' current five year lease plan provides for a lease sale of ocean areas off the coasts of Washington and Oregon in April of 1992.  As preliminary steps to the sale itself, MMS will request statements of interest from the oil industry in 1989 and will identify the sale area in 1990.

Under the OCSLA, the Secretary of the Interior must consider recommendations from an adjacent state's governor concerning the size, location, and timing of a proposed lease sale.  The federal Coastal Zone Management Act (CZMA) and current case law do not provide for any state input in deciding when or whether a lease sale should be held, nor in deciding what areas will be included in the lease sale.  The CZMA does, however, provide for some state input after the lease sale.  The CZMA directs that federal agencies conduct and support activities directly affecting the coastal zone in a manner which is, to the maximum extent practicable, consistent with approved state management programs.  It also provides that any applicant for a federal license to conduct an activity affecting land or water uses in the coastal zone of a state must provide a state approved certification of consistency with that state's management program.  This requirement of certification also applies to any plans for exploration or development of, or production from, any area which has been leased under the OCSLA.

The approved state management program consists of the adjacent state's "coastal authorities" laws and regulations that have been approved by the Secretary of Commerce.  At present, the approved coastal authorities for Washington include the Shoreline Management Act(SMA) and county and city master programs, certain environmental laws, and the Energy Facilities Site Locations Act.

Because of this system, any exploration, development, or production activities conducted or permitted by MMS must be consistent with the above sections of Washington law.  There is, however, dispute as to the extent to which actions must be consistent.

In 1987, due to concern over the upcoming lease sale, the Washington Legislature and the Governor took several actions.  The Governor wrote to the Department of the Interior suggesting that the lease sale may need to be delayed, and stating that he does not support leasing north of the forty-seventh parallel or within 12 miles of Gray's Harbor, Willapa Bay, and Columbia River estuaries.  Further, several committees were formed and/or asked to conduct studies on aspects of the proposed lease sale.  These groups include the Legislature's Joint Select Committee on Marine and Ocean Resources, the University of Washington Sea Grant program, and several task forces.

SUMMARY:

Owners or operators of vessels over 300 gross tons that transport petroleum products in the state are required to establish evidence of financial responsibility to the state to cover liability for cleanup, natural resource damages, and civil penalties and fines.  The amount required is $1 million or $150 per gross ton, whichever is greater.

Evidence of financial responsibility may be established by one or a combination of the following methods:  (1) insurance; (2) surety bonds; (3) qualification as a self-insurer; or (4) other evidence acceptable to the director of the Department of Ecology.

Owners or operators of barges and oil tankers must keep documentation of evidence of financial responsibility on the vessel and on file with Ecology.  Other vessel owners and operators must keep their Coast Guard certificate indicating compliance with federal requirements on the vessel.

The Secretary of Transportation is required to suspend the operating privileges of vessel owners or operators that do not meet financial responsibility requirements.  Failure to comply with financial responsibility requirements subjects the owner or operator of a vessel to a $10,000 civil penalty.

Legislative policies regarding coastal waters off Washington are adopted.  These policies will guide the decision-making process for the management, conservation, use, and development of natural resources in Washington's coastal waters. Among these policies are the following:  (1) There shall be no leasing of state-owned tidal or submerged lands along the Washington coast from Cape Flattery south to Cape Disappointment, nor in Grays Harbor, Willapa Bay, and the Columbia river downstream from the Longview bridge, for purposes of oil or gas exploration, development, or production.  This policy will expire on July 1, 1995, unless extended by the Legislature; (2)  If conflicts arise, priority shall be given to resource uses and activities that will not adversely impact renewable resources over uses which are likely to have an adverse impact on renewable resources; (3)  The state shall actively encourage the conservation of liquid fossil fuels and explore available methods of encouraging such conservation; (4) Generally, fishing and currently existing commercial uses are excluded from having to meet the planning and project review criteria; and (5) The state shall participate to the maximum extent possible in federal ocean and marine resource decisions.

Planning and project review criteria are established.  These set the minimum standards which must be met before the state may support any activities that are likely to have an adverse impact on marine life, fishing, aquaculture, recreation, navigation, air or water quality, or other existing ocean or coastal uses.  The criteria include a demonstrated significant need for the activity; no reasonable alternative to the activity; no likely long-term significant adverse impacts to coastal or marine resources or uses; minimization of adverse environmental and social impacts; compensation for adverse impacts; plans and sufficient performance bonding to ensure site rehabilitation; and compliance with all applicable laws.

The Departments of Natural Resources and Ecology shall complete an analysis of the potential positive and negative impacts of leasing state coastal waters for oil and gas development.  This analysis shall be done at the direction of the Joint Select Committee on Marine and Ocean Resources, and it shall be presented to the Legislature no later than September 1, 1994.

Local governments are directed to review and amend their shoreline master programs to ensure that they conform with the policies and intent of this bill.  The Washington State Energy Office is directed to prepare a report on liquid fossil fuel supply and demand, on strategies for conserving those fuels, and on ways of implementing those strategies.

The Shoreline Management Act is amended to direct the Department of Ecology to consult with affected state agencies, local governments, Indian tribes, and the public prior to responding to federal coastal zone management consistency certifications.

The Joint Select Committee on Marine and Ocean Resources is extended until June 30, 1994, and it is assigned additional tasks.

VOTES ON FINAL PASSAGE:

      House 96   0

      Senate    46     0

EFFECTIVE:August 9, 1989